Sekhon v Bains

On a second-tier appeal, permission requires an important point of principle or practice, or another compelling reason. Unsupported allegations of procedural unfairness carry no weight where they are absent from the applicant’s skeleton argument and unsupported by the papers. Under the Insolvency Act 1986, the relevant question is whether an offer to secure or compound the petition debt was unreasonably refused. A creditor may reject an earlier offer yet act unreasonably in rejecting a later, materially better offer.

The applicant, a landlord, presented a bankruptcy petition against the guarantor of rent owed by a tenant company. The District Judge dismissed the petition under section 271(3) of the Insolvency Act 1986, finding that a later offer to discharge the debt and pay reasonable costs had been unreasonably refused, while apportioning costs between the parties. His Honour Judge Boggis QC upheld that order and ordered the creditor to pay the costs of the appeal. The applicant renewed an application for permission to appeal, alleging errors concerning the offers, costs and procedural fairness. The central issue was whether the proposed second-tier appeal satisfied the statutory and procedural permission threshold.

Application dismissed. Lord Justice Chadwick dealt with the renewed application for permission in the applicant’s absence. Notice had been sent to the solicitors on the record, and the papers disclosed no grounds warranting a further hearing.

1. The underlying bankruptcy issue had been correctly understood by the lower courts under section 271(3) of the Insolvency Act 1986. The creditor was entitled to refuse the earlier offer made in April 2000. The later and better offer made in May and July 2000 was different. The finding was that refusal of that offer was unreasonable. Grounds based on the supposed rejection of the April offer were therefore misconceived.
2. Allegations that the High Court hearing had been procedurally unfair might have supplied a compelling reason for an appeal if supported by a transcript or other material. They were not repeated in counsel’s skeleton argument and were unsupported by the appeal bundle. No weight could therefore be given to them.
3. This was a second-tier appeal for the purposes of section 55(1) of the Administration of Justice Act 1999 and CPR 53.12. Permission could be granted only if the proposed appeal raised an important point of principle or practice, or there was some other compelling reason for it to be heard. The applicant had not shown that either condition was met, and nothing in the papers suggested that such a showing could succeed.
4. In those circumstances, the proper course was to dismiss the application as bound to fail rather than relist it for an oral hearing, thereby causing further expense and delay. A transcript was directed to be prepared at public expense and sent to the applicant’s solicitors.

• Court of Appeal (Civil Division): On 20 November 2001, the renewed application for permission to appeal was dismissed.
• High Court, Chancery Division: His Honour Judge Boggis QC upheld the District Judge’s dismissal of the bankruptcy petition on 26 March 2001 and dismissed a later application on 16 July 2001.
• Birmingham County Court: District Judge Owen dismissed the bankruptcy petition on 24 January 2001 under section 271(3) of the Insolvency Act 1986, with a split costs order.