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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

14 JUN 2010

s.375 and 271(3) of the Insolvency Act 1986 considered - Scottish & Newcastle Ltd. v Raguz [2010] EWHC 1384 (Ch) (10 June 2010)

Mrs Justice Proudman  has handed down her judgment in Scottish & Newcastle Ltd. v Raguz [2010] EWHC 1384 (Ch) (10 June 2010). The cases concerns a judicial use of sections 271(3) and 375 of the Insolvency Act 1986 (IA86) and an appeal against a bankruptcy order made by District Judge Nield against Mr Raguz which had been presented on 30 September 2009. The petitioners were Scottish & Newcastle Limited and the petition debt of £211,275 was undisputed. Mr Raguz appealed to Mrs Justice Proudman on two grounds. First, at first instance Mr Raguz contended that he was offering adequate security for the debt. Alternatively at first instance, he asked for the petition to be adjourned on the ground that as a result of a contemplated sale of the 55% shareholding in Impney Group Ltd he would soon receive funds sufficient to settle the debt. Impney owns and runs a large hotel ("the hotel") in Worcestershire called Chateau Impney.

Ms Marion Lonsdale for the debtor/appellant argued that District Judge Nield erred in (a) not dismissing the petition on the ground that the petitioner was acting unreasonably in refusing Mr Raguz's offer of security, and (b) in not adjourning the petition for 3 months pending the outcome of the sale of the Impney shares or a sale of Impney's assets. Scottish & Newcastle were represented by the newly silked Mr Jonathan Stoner QC.

There are a number of relevant provisions which the learned judge cites in her judgment. First, s.271 IA86 which notes:

"The court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied-

(a) that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented,

(b) that the acceptance of that offer would have required the dismissal of the petition, and
(c) that the offer has been unreasonably refused."

Second s. 375 IA86, which provides:

"(1) Every court having jurisdiction for the purposes of the Parts in this Group may review, rescind or vary any order made by it in the exercise of that jurisdiction.

(2) An appeal from a decision made in the exercise of jurisdiction by a county court…lies to a single judge of the High Court…"

Following an extensive review of the first instance judge's decision and the new evidence the learned judge notes, "This appeal must therefore fail under both heads. I was at first inclined to refuse permission to appeal under s. 375(2). However, there is considerable overlap in Miss Lonsdale's submissions on appeal and on review under s. 375(1). Permission is not required for a review. I do not wish the two parts of the appeal to operate on a different basis. I therefore refuse to review the decision of the Judge below for the reasons I have given. I give permission to appeal that decision but refuse the appeal on the merits."

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