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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Hurst v BDO Stoy Hayward LLP [2006] EWHC 791 (Ch) (07 April 2006) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2006/791.html Cite as: [2006] EWHC 791 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		07/04/2006

Peter Smith J :


 


INTRODUCTION

1. This is an appeal by the Claimant against paragraph 2 and 3 of the order of Master Moncaster dated 10th October 2005 when he ordered:-

(1) The Claimant's Application for Summary Judgment and interim payment be dismissed.

(2) There be Summary Judgment for the Defendant and the Claimant's Claim be struck out.

(3) The Claimant pay the Defendant's costs of this Claim.

(4) Permission to the Claimant to appeal be refused.

2. The reasons for refusing permission to appeal was that it was plain on the Master's view that the Claimant had no prospects of succeeding on his claim and that an appeal would consequently not have any prospects of success.
3. The Claimant applied for permission to appeal on paper which was refused by Mann J on 8th December 2005 for the same reason. He renewed his application for an oral hearing and Warren J on 20th January 2006 granted permission to appeal.

NATURE OF THE APPEAL

4. Under CPR 52.11 the appeal is limited to a review of the decision of Master Moncaster and the Court may only allow an appeal if it is satisfied his decision is wrong or unjust because of a serious procedural or other irregularity in the proceedings before the Master. The latter point does not arise before me.
5. In paragraph 46 of his judgement the Learned Master concluded that the Claimant's suggestions were purely fanciful and in the realms of fantasy. He concluded in paragraph 48 that apart from the factual impossibility of the Petitioning Creditors ever agreeing to the proposal, on a legal point (a question as to the ability of the Registrar to make an order as contended by the Claimant) must fail. As a consequence he also dismissed the Claimant's cross summary judgment application.
6. The Master did not expressly refer to the well known decisions Swain v Hillman [2001] 1 All ER 91 at page 92 and Three Rivers v Bank of England [2003] 2 AC 1 at page 259 paragraph 89 and page 261 paragraph 97. However he plainly had them in mind when he considered the two applications before him.

BACKGROUND

7. The Claimant is and was at all material times a Solicitor having commenced practice in 1975. The Defendant is a firm of Chartered Accountants.
8. In the early 1990s the Claimant became involved in a dispute with some of his partners in his former firm which resulted in litigation (Hurst v Bryk & Ors [2002] 1 AC 185 which was pursued by the Claimant unsuccessfully to the House of Lords. It is this dispute which has really coloured the entirety of Mr Hurst's life ever since.
9. On 23rd May 1997 the former partners took steps to bankrupt the Claimant by serving on him a Statutory Demand for post dissolution rent. He applied unsuccessfully to set it aside and appealed also unsuccessfully to the High Court and the Court of Appeal. As a result the former partners on 21st June 2000 presented a Bankruptcy Petition against him which was hotly contested on several grounds but ultimately all were dismissed save for one point under section 271 (3) IA 1986. That point was adjourned for further consideration by Registrar James.
10. On 15th March 2001 the Claimant made an application for permission to issue an application for an interim order without at the same time filing a proposal in support of it as required by IR 5.5 (2). Registrar James gave permission on the Claimant's undertaking to file and serve the proposal within 7 days. The Petition was adjourned to 12th April 2001 to enable a proposal to be finalised and that came on before Registrar James together with the Claimant's application for an interim order. The Claimant produced to the Registrar a proposal in draft prepared by another firm of accountants Kroll Buchler Philips.
11. On that day Registrar James dismissed the application for an interim order and made a Bankruptcy order.
12. On 11th May 2001 the Claimant made an application to the Bankruptcy Court:-

(1) To review the order dismissing the application for an interim order pursuant to section 375 (1) IA 1986.

(2) To annul the bankruptcy order pursuant to section 282 IA 1986.

13. By that time the Claimant had dispensed with the services of Kroll Buchler Philips and attended at the Defendants offices and saw a Mr Supperstone a partner in the Defendants firm to assist him in the preparation of his proposal.
14. On 21st May 2001 Registrar James dismissed the application to annul but adjourned the application for a review. The next day the Claimant provided the Defendant with a draft IVA proposal which had previously been prepared by Kroll Buchler Philips and other documents.
15. On 31st May 2001 Mr Supperstone wrote to the Claimant confirming that the Defendant was prepared to assist the Claimant in drafting the documents and applying to the Court for an interim order.
16. On 12th June 2001 Mr Supperstone signed a nominees report in which he stated in his opinion a meeting of the Claimant's creditors should be summoned and held on 9th July 2001.
17. On 22nd June 2001 Registrar James considered the Claimant's application for a review of the order dismissing the application for an interim order. The Petitioners opposed the application.
18. On 11th July 2001 in a reserved judgment the Registrar gave reasons for its dismissal.
19. On 30th July 2001 Ferris J dismissed the Claimant's appeal from Registrar James' order dated 11th July 2001 inter alia on grounds that by reason of section 255 (1) (c) IA 1986 the Registrar had no jurisdiction to make an interim order whatever the merits of the proposal (reported Hurst v Bennett (2) [2002] BPIR 102.)
20. On 8th August 2001 Mummery LJ refused the Claimant permission to appeal against Ferris J's order on the same ground (Hurst v Bennett (2) [2002] BPIR 112.)
21. Mr Supperstone was appointed Trustee in Bankruptcy of the Claimant's estate on 11th October 2001.
22. In due course on 17th November 2003 Mr Supperstone as Trustee applied for an order for possession and sale of the property owned by the Claimant and his wife 73 Southway, Hampstead Garden Suburb, London NW11 ("the Property").
23. The Claimant and his wife defended the Possession proceedings on the basis that they did not own the Property in equal shares and also that Mrs Hurst was entitled to an equity of exoneration as to £37,000 being the sum borrowed by the Claimant from the Halifax Building Society in 1989 for the purpose of buying into a law firm of which the Claimant was a partner and which was secured on the Property.
24. On 21st December 2004 Registrar Jacques determined that the Property was held by Mr Hurst and his wife as tenants in common in equal shares but that his share which had in equity invested in Mr Supperstone as his Trustee in Bankruptcy was subject to a liability to exonerate Mrs Hurst for the charge in favour of the Halifax Building Society ("the equity of exoneration point"). He ordered possession and sale of the Property.
25. On 15th June 2005 Mr Michael Briggs QC (sitting as a Deputy Judge of the High Court) dismissed Mr Hurst's appeal against that order.

PROCEEDINGS AGAINST DEFENDANTS

26. On 28th February 2005 Mr Hurst issued proceedings against the Defendant. The Claim form and the Particulars of Claim were served on 28th June 2005.
27. The Claim form alleges 8 allegations of negligence in paragraph 13 but in the event Mr Hurst only proceeded with 5 of those namely (b) (d) (e) (f) (g).
28. The essence of those allegations stems from two points. First, Mr Hurst alleges that Mr Supperstone failed to incorporate in the proposal a paragraph to the effect that in the event of the Claimant's bankruptcy Mrs Hurst would be entitled to exercise equity of exoneration in relation to the loan from the Halifax Building Society and second, that Mr Supperstone failed to indicate in the proposal that in event of his Bankruptcy his beneficial interest in the Property would be less than 50% of its net value and third he had requested Mrs Hurst to sign a statement on 1st June 2001 confirming that the Property was owned as to 50% by the Claimant and 50% by Mrs Hurst.
29. Mr Hurst alleges that Registrar Jacques determined that the Claimant's contribution towards the purchase price initially was 38.3% and 61.7% from Mrs Hurst. Nevertheless taking in to account various factors (including the statements made for the IVA but not exclusively) he concluded that a fair share as between Mr Hurst and his wife would be 50%.
30. It is Mr Hurst's contention that if these two factors had been included in the proposal then the proposal would have been more valuable than bankruptcy and that would have led Registrar James instead of refusing to make the interim order on 11th July 2001 to grant it and that the creditors in any event would also have acceded to it.
31. The difference on the figures can be shown from paragraph 26 of the Defendant's skeleton argument. If the interest of only 38.3% is the correct position subject to an equity of exoneration the dividend to unsecured creditors on bankruptcy is 9.3 pence in the pound as opposed to 29.4 pence in the pound. If he is treated as having a 50% share but subject to an equity of exoneration the difference is 15.5 pence as opposed to 29.4 pence in the pound.
32. It is submitted in either case that the difference in outcomes between the bankruptcy and the IVA is relatively small. I will refer to that further in this judgment.
33. Mr Hurst contends that the more favourable outcome would have led to Registrar James accepting that the IVA was viable and he would therefore have made an interim order and further the Petitioners (his former partners) would have accepted that proposal.
34. He alleges that the Defendants was negligent in the way in which they acted for him in preparing and submitting the documents for a proposed second IVA.
35. The Defendants owed him a duty of care and a contractual duty to act reasonably in the preparation of the documents for the IVA, to advise on areas of Insolvency law and to present the proposed IVA to the Court in an articulate manner.
36. Master Moncaster did not believe that Mr Hurst's Petitioning Creditors would have readily accepted it that there would have been no contest in front of Registrar James and that the matter "would have gone through on the nod". This is the suggestion he described as being fanciful and in the realms of fantasy. Mr Hurst had put in a witness statement late in the day where he speaks of oral discussions which he had with a Mr Hood (one of his former partners) who apparently expressed the view that he was unhappy about making Mr Hurst bankrupt and that if these matters had been put forward he would have persuaded Mr Simmons in particular his most unpersuadable partner to consider an IVA. Master Moncaster viewed that evidence with some scepticism as it was without any corroboration and did not accept it was an accurate recollection.
37. Whilst that might have been the position in September of course the Defendants have had an opportunity to challenge that evidence but they have chosen not to do so. I approach this appeal on the basis that there was such a discussion arguably between Mr Hood and Mr Hurst.

THE PROPOSAL

38. The first proposal was prepared by Kroll Buchler Philips in draft form. In that Mr Hurst stated that he had injected capital of £37,000 in the partnership which had been lost (paragraph 2.23) and that he had a 50% interest in the Property "which is jointly owned by my wife and myself". No mention was made of the equity of exoneration nor was it suggested other than that Mr Hurst was entitled to 50% of the Property beneficially. The estimated statement of affairs married that. He also wrote to a second firm of Accountants on 29th April 2001BN Jackson Norton and at paragraph 10 (g) he once again referred to him having a 50% share of the net proceeds of sale. Both of these documents came into existence before the Defendants were retained. An action for negligence against Kroll has already been dismissed.
39. Mr Hurst first retained the Defendants on 15th May 2001. On 31st May 2001 the Defendants set out their retainer letter. It stated that they were prepared to assist him in drafting documents to apply to the Court for an interim order but such drafting was merely for the purpose of arranging your proposal to be put into a format which should be acceptable to the Court and at all times the proposal remain Mr Hurst's documents. As part of that exercise on 1st June 2001 Mr Supperstone wrote to Mrs Hurst saying that he had been instructed by Mr Hurst to assist with the proposals for his creditors and a copy of that draft proposal is with him for her to discuss. He said that he understood that the Property was jointly owned and will be sold but that to effect a sale it was necessary to receive co-operation and a form of undertaking for completion should be signed and returned to him. In the last paragraph he said "you should take independent legal advice regarding the proposal and the attached undertakings". Mrs Hurst returned the undertakings on 6th June 2001 stating in the last paragraph "I confirm that I have been advised to take independent legal advice in relation to the proposal and the above and have had the opportunity to take that advice".
40. It is not suggested that she took legal advice but it has been determined that she understood what she was signing.
41. A more detailed proposal was prepared and signed by Mr Hurst on 12th June 2001. In that document (paragraph 1.1.10) the partnership litigation was stated as being pending and under 5.4 and 5.5 other litigation was also shown to be pending. In the proposal it was suggested that under 1.5.1 (b) his supervisor would enter in to discussions with those representing his former partners to illicit a full and final partnership account. The supposed purpose was to determine the value of the asset. That was to be done at the expense of the creditors. In other words Mr Hurst wished to utilise the creditors' money via the IVA and the supervisor to continue his war against his former partners.
42. In exchange for that he proposed to hand over his 50% interest in the Property.
43. All of this was reflected in Mr Supperstone's nominees report but in that he stated he had made no independent investigation of the Defendants circumstances or statement of affairs and was unable to verify the statement or declaration made by the debtor.
44. None of these documents suggested that Mr Hurst was entitled to anything other than 50% equity in the Property in my view. I reject his submissions that it was in reality a concession of 50% for the purposes of the IVA only with an implied reservation that his wife would assert a larger share if the matter proceeded to bankruptcy.
45. In fact as the IVA proposal did not proceed, bankruptcy ensued, and in those proceedings as I have said Registrar Jacques and Mr Michael Briggs QC have determined the beneficial interest at 50% but subject to the equity of exoneration. Mr Hurst in his submissions submits that the only reason that Registrar Jacques and Mr Briggs QC came to that conclusion was based on these documents which it is said created an estoppel as against him and his wife in favour of the Trustee on behalf of the creditors.
46. This is simply not correct. It is a mis-reading of the judgments. It is true (for example) Registrar Jacques considered that the signed statements were significant (paragraph 11) and that they were binding on Mrs Hurst. However he did not believe Mr Hurst (paragraph 12) that his understanding as to equal beneficial ownership was based on advice given to him by solicitors in 1995. The Registrar formed the view that Mr Hurst was willing to say what best suited him. At the present time it suited him to minimise his interest whereas when seeking the interim order it suited him to maximise it. He gave another example of this convenient change of attitude. He took all factors into account (as can be seen in paragraph 16) including the documents it is true but also the respective contributions and the payments of the mortgage and the mortgage interest and the like and the contributions made by Mrs Hurst's father.
47. Mr Briggs QC came to the same conclusion. At paragraph 43 he rejected the contention that Mr Hurst asserted 50% on advice. At paragraph 48 he referred to a belated attempt to allege that Mrs Hurst's signature to the document of 6th June 2001 was procured by undue influence (unspecified) but determined there was no basis on which it could be introduced for the first time on appeal and had not been pursued below. Prior to that in paragraph 47 he accepted the Registrar's conclusion that Mrs Hurst knew precisely what she was doing and the effect of what she was doing concluded that the Registrar was fully entitled to reach that conclusion.
48. The key paragraph for Mr Hurst's argument is paragraph 63:-

"were it not for the 2001 statements and the fact that the persons to whom they were made have in effect succeeded to Mr Hurst's interest in the property I would have been inclined to think a 50/50 apportionment to the beneficial interest was a little less than fair to Mrs Hurst. But I find myself just as compelled as was the Learned Registrar to conclude in the light of those statements when evaluated together with all other relevant conduct at the time and subsequent to the purchase of the Property a 50/50 apportionment is fair both to Mrs Hurst and Mr Hurst's creditors".

49. In other words neither Registrar Jacques nor Mr Briggs QC determined the case solely on the documents that were signed. They both concluded from all the circumstances that the equity was 50/50 and that Mrs Hurst knew what she was signing and she signed it because she believed it was true.

REGISTRAR JAMES' JUDGMENT ON IVA APPLICATION

50. In order to understand Registrar James' judgment it is necessary to examine the judgment he gave on 12th April 2001. At that hearing he dismissed Mr Hurst's first attempt at obtaining an interim order and made a bankruptcy order. The written judgments set out his reasons. First at paragraph 9 (V) he expressed the view that it was not an appropriate case for granting an interim order for the purpose of Voluntary Arrangement because:

(a) Mr Hurst had failed to be transparent and make full disclosure

(b) It was putting off the inevitable

(c) It would not lead to finality. In addition at sub paragraph (VI) he expressed the view that this was a case where a Trustee should take full control of the debtor's affairs. It should not be left open to the debtor to continue in indefinite litigation and appeals under the freedom afforded by Voluntary Arangement.

51. I should say that that fear is well exemplified by what Mr Hurst has done despite the bankruptcy orders which are summarised in the chronology provided by the Defendants for the purpose of this appeal. He has left no stone unturned nor any possible target against whom in effect he wants to rerun the partnership dispute. Ultimately on 28th November 2002 I made a Grepe v Loam order by consent against him. Even that did not deter him making numerous applications to me as the supervising judge within the partnership dispute. In addition he has sued his former barrister, Kroll, he resisted with his wife the Trustees application for sale and he instituted the present proceedings.
52. At paragraph 37 of his judgment Registrar James said that the principle reasons for why the case was not a suitable case for Voluntary Arrangement were those set out in paragraph 9 (v) and 9 (vi). Voluntary Arangements are not to be used for the purpose of postponing the inevitability of a bankruptcy order and in the circumstances of this case he was concerned that the Voluntary Arrangement was unlikely to lead to finality. "Bearing in mind Mr Hurst's litigious track record I was of the view that there will be an abundant scope for appeals …. If ever there was a case suitable for Trustees to take control and bring finality to the debtor's affairs rather than allow the debtor to have continual control of his affairs to a Voluntary Arrangement albeit under supervision it seemed to me this must be it".
53. On the fresh application Registrar James' judgment of 11th July 2001 not only reiterated that point but also raised other factors which militated against the making of an interim order.
54. The first of those did not trouble him. Mr Adair opposed the making of an interim order on behalf of the Petitioners on two grounds. First he said section 255 (1) (c) prevented the Court from making an interim order within 12 months of a previous application. Second, he suggested in the alternative it would not be appropriate to grant an order for the reasons set out and accepted by the Registrar in his judgment.
55. The Registrar rejected Mr Adair's first submission and determined that he had a jurisdiction to deal with that point under section 375 IA 1975 relying in particular on the Court of Appeal decision re RS & M Engineering Co Ltd [1999] 2 BCLC 485.
56. On the merits (paragraph 12 etc) he reverted to paragraphs 36 and 37 of his judgment of 12th April and in particular his concern that the voluntary arrangement was unlikely to lead to finality. He pointed out that the proposal of the IVA involved litigation still being continued and in paragraph 14 after setting out the details of the partnership dispute concluded "not only did this part of the proposal indicate that Mr Hurst did not regard the question of account to be closed he was also indicating that it should be at his creditors expense but his supervisor would actively seek to re-open it".
57. Mr Hurst fastened on paragraph 17 of the judgment where he says "Mr Adair submitted that Mr Supperstone's estimate of the costs to the supervisor was likely to be exceeded if as Mr Adair anticipated that they would be there were challenges by Mr Hurst to decisions taken by the chairman of the meeting of creditors and subsequently by the supervisor. The comparatively small difference between the outcome for the creditors in a voluntary arrangement would simply be eroded by the additional costs of such proceedings". He in my view reverted to this in paragraph 63 of his judgment where he said "in my judgment the relatively small difference in the comparison of outcomes between the voluntary arrangement and bankruptcy which are represented by the saving of administrative costs and introduction of pension lump sums is not sufficient to outweigh the lack of viability of the proposal. There is a strong possibility there will be continuing litigation under a voluntary arrangement some of which will necessarily involve the supervisor himself and the saving of administrative costs is therefore probably exaggerated".
58. This is Mr Hurst's key point in the judgment. He submits that if the Registrar had been told that the outcome would have been greater he would in the light of this paragraph made an interim order and the Petitioners would have agreed it on commercial grounds.
59. He is wrong for a number of reasons. First that does not truly reflect in my view the Registrar's judgment. The key point in his judgment is what he said in paragraph 54:-

"The core reason why I do not consider it appropriate to grant an interim order in the present case is that I do not consider Mr Hurst's proposal to be serious and viable….. it is not serious in the sense that it is not likely to come out as the proposal purports that it will. It is not viable primarily but not exclusively because of Mr Hurst's litigious character".

In paragraph 55 he said it appears to him to be certain that there would be no end to the litigation and Mr Hurst was given the freedom to litigate which his proposal appeared to contemplate. He then went on to refer to the various disputes that Mr Hurst intends to litigate.

60. In paragraph 57 he said it was also not viable because it was abundantly clear that there was not the slightest prospect that the supervisor would achieve an account or realise an asset from Mr Hurst's previous partners. It seemed to him entirely wrong in principle this arrangement should be allowed to go ahead as long as it contemplated one of the main assets put forward was in effect a total denial of everything that had happened in litigation over the last 8 years. Further he pointed out wisely that if that were not enough it was the creditors who would be asked to bear the costs of negotiating the account. No creditor properly advised could be expected to vote in favour of such a proposition. A fortiori the Petitioners (although he concludes that he cannot be certain they had 25% being the amount necessary to oppose the IVA) would clearly not be willing to vote for an IVA which would in effect have assets which would otherwise be available to pay their debts used to conduct further litigation against them.
61. This is what paragraph 63 really means. Whatever are the outcomes it was not right Registrar James said to weigh those against the fact that there would be continuing litigation.
62. This is what Master Moncaster concluded. I cannot see any basis for saying there were no reasonable grounds for coming to such a conclusion. Indeed if I were hearing the case for the first time I would come to exactly the same conclusion. I cannot believe that it can be said with any credibility that the Petitioners would have allowed an IVA to go ahead. They were determined to make Mr Hurst bankrupt in the naïve belief (as it turned out) that that would put an end to his continuing rerunning of the partnership litigation. It certainly achieved that to a limited extent and probably now a final extent after many years of further fruitless litigation by Mr Hurst.
63. Nor for my part can it be said that Master Moncaster could not come to the conclusion that Registrar James would not have made the IVA even if the correct figures had been put forward. Once again I am firmly of the view that if I were hearing the matter again I would come to precisely the same conclusion. The reason is because Registrar James in his judgment refused the IVA because its lack of genuine purpose and concluded quite rightly that Mr Hurst would use it as a vehicle to prolong the war by other means.
64. Once again like the judgment of Mr Michael Briggs QC he quotes it out of context. I do not believe for one minute that these revised figures would have led Registrar James to change his mind one iota.
65. Mr Hurst submits that if there was a possibility then the loss of the chance should not be assessed at this stage nor even at trial stage; he submits that is a matter after liability is established. That is not in my view a correct analysis. If Master Moncaster was of the view that the prospect of establishing any percentage is fanciful it is quite wrong to allow the matter to go to trial with all the costs consequences if the result is going to be the same as appears at this summary judgment state. That seems to me to be the proper analysis. There is nothing to suggest that Mr Hurst would even reach the minimal 10% threshold that is referred to in his submissions as a possibility of the IVA having been made.
66. That is enough to dispose of Mr Hurst's appeal. I will go on to consider however the two alleged omissions by the Defendants.

THE TRUST ISSUE

67. I do not see how it can be argued with any credibility that the Defendants given the terms of their letter and given the material put before them which I have referred to above had any duty to challenge what Mr Hurst and his wife were saying as to their 50% entitlement. I refer to the judgments of Registrar Jacques and Mr Briggs QC. It is clear on those decisions that Mr Hurst did have a 50% equity in the Property and that was based not merely upon the statements he signed. Given the fact that Mr Hurst was a solicitor and given the fact that the Property was registered in joint names I do not see that it was incumbent upon the Defendants in effect to query that and require more costs incurred in investigating something which in my view has demonstrated by Registrar Jacques and Michael Briggs QC's judgments was actually the true position.
68. I conclude therefore that there are no grounds for suggesting that Master Moncaster could not have come to the conclusion that he did in that regard and I would again come to the same decision.

EQUITY OF EXONERATION

69. In my view this is arguably a failing on the Defendants. In bankruptcy cases like this where a property is owned by a husband and wife it is regularly the case that the husband persuades the wife to charge her share in the property for his own private or business debts. That is what he has done. The Defendants knew that there was a debt charged against the property to raise capital to buy in to the partnership. At this stage I am not prepared to say that that claim has no real prospect of success. It is different from the Trustee issue because it is a technical area which regularly arises in these cases and is something that the Defendants arguably or at least ought to have been aware of.
70. Nevertheless it has no impact whatsoever. The difference in my view would be minimal; it would simply provide a larger fund which Mr Hurst would then proceed to try and dissipate in his litigation. I do not believe for one minute this omission if it was put in the IVA would have led Registrar James to perform a judicial somersault and throw away all the other factors which he relied upon as the primary basis for his decision. Thus there is no link between the alleged negligence and any alleged loss.

THE JURISDICTION POINT

71. As I have said Registrar James determined that he had jurisdiction to review his decision of 12th April 2001 and thus make a second interim order by virtue of section 375 IA 1986. This was wrong as Ferris J and Mummery LJ respectively confirmed in the decisions referred to above.
72. Mr Hurst's claim requires the Court to award him damages on the basis that Registrar James would have made an order that he had no jurisdiction to make and that the Petitioners would have acquiesced in that.
73. This too in my view is fanciful. The Petitioners were rigorous in their opposition to the IVA. The first point they took was the jurisdiction. If Registrar James had been persuaded to make an IVA I have no doubt that the Petitioners would have appealed that decision. The evidence is overwhelmingly that way. I do not regard the conversations that Mr Hurst had with Mr Hood as being significant. I do not believe for one minute he would have persuaded Mr Simmonds not to see through the bankruptcy. That was the only avenue out for the partners from the partnership dispute. Undoubtedly the Petitioners would have appealed if IVA order had been made. The order would then have been over turned on jurisdictional grounds.
74. I do not accept Mr Hurst's submission that it would have been simply nodded through.
75. Further as a matter of policy I do not think it would be appropriate for a court to award a Claimant for damages based on an assumption that the Registrar would make an order that would be beyond his jurisdiction. On public policy grounds alone that seems to me to be a claim that the Court should not entertain. It would bring the Court in to disrepute if it awarded damages on the basis of an order which the Court had no jurisdiction to make. Nor can of course the parties consent to override the proviso. It is a time limit that is mandatory in statutory terms and neither the parties nor the Court can override it.
76. This too is fatal to Mr Hurst's appeal. Had any order been made it would have speedily been set aside by any creditor. Let us suppose for example the Petitioning creditors were less than 25% so could not oppose an IVA. They would nevertheless have frustrated that by an application to set aside. My observations as to the effect of the order were corrected by Mr Brougham QC who with Miss Hilliard appears for the Defendants. The order was one of the High Court and is not susceptible to judicial review and therefore would still be in effect even though beyond the jurisdiction of the Registrar. Nevertheless it would not take very long for the petitioning creditors for example to have it set aside. The speed with which Mr Hurst was able to get in front of Ferris J in the Court of Appeal demonstrates how quickly the IVA would have failed on this substantive jurisdictional basis.

CONCLUSION

77. I therefore determine that Mr Hurst's appeal should be dismissed. There is a consequence to that. The possession proceedings are currently stayed. They were stayed on the basis that it would be wrong to make a possession order whilst Mr Hurst had a viable claim for damages. The damages claim is of course not against Mr Supperstone as Trustee in Bankruptcy; it is against him as a member of the Defendants. Mr Hurst cannot set off any damages against his Trustee in Bankruptcy but his contention is that he would have funds to enable him to buy out the Trustee. Warren J refused a stay on 16th February 2006. He also refused permission to appeal. Mr Hurst has appealed that decision and on 7th March 2006 Neuberger LJ granted a stay until 4th April 2006 or if later the date upon which the appeal against the striking out was determined with a proviso that if that was after 10th April 2006 Mr Hurst should apply to Neuberger LJ in writing for an extension of time. Paragraph 3 of the order provided that if the stay was not lifted then the judge hearing the appeal against the strike out should have jurisdiction to determine the question determined by Warren J i.e. whether the execution of the order for possession should be stayed in the light of the negligence action and that reference can be made to Warren J's judgment.
78. I have determined that his claim for damages fails. There remains the question of the stay. I will hear submissions on that from Mr Hurst and the Trustee. It does not concern the Defendants in this case.
79. I am grateful to Mr Hurst for the considerate clear and reasoned submissions he has made both orally and in writing. I know he sincerely believes in his cause and will be disappointed by this judgment. I wish that he would put it all to one side and start again. I have made this observation to him before and I know Warren J made the same observation. I urge him to do so. As I have said Mr Hurst presents his case as a litigant in person in a courteous and reasoned manner. It is refreshing to see a litigant in person presenting those arguments in that way. Nevertheless the arguments have still failed and I really do think it is now time for Mr Hurst to put it all behind him and start his life again.