Gibbons v Scottish & Newcastle Plc

On a second appeal, permission may be granted where the applicant shows an important point of principle or practice, or another compelling reason for the Court of Appeal to intervene. A compelling reason may arise where further evidence gives real substance to a proposed cross-claim which could affect the validity of a statutory demand, particularly where bankruptcy would otherwise follow. The court may extend time despite substantial delay where the matter is urgent and appropriate safeguards can protect the respondent. Conditions may include adducing the further evidence and commencing proceedings on the cross-claim within a specified period.

Mr Gibbons sought permission to appeal from an order of a Deputy Judge of the Chancery Division dated 7 December 1999. The Deputy Judge had dismissed his appeal against a District Judge’s refusal to set aside a statutory demand served by Scottish & Newcastle plc. The demand concerned an unsecured balance said to remain due under a loan and trading account after enforcement of security over licensed premises.

Mr Gibbons relied on a proposed counterclaim arising from alleged misrepresentations about the premises’ liquor licence. He also sought permission to appeal out of time and a stay pending the application. The central issues were whether the proposed counterclaim gave a compelling reason for a second appeal and whether the delay should be excused.

1. Application allowed. Permission to appeal was granted, time was extended subject to conditions, and a transcript was directed to be provided at public expense.
2. Under CPR 52.13, a second appeal requires an important point of principle or practice, or some other compelling reason for the Court of Appeal to deal with it. The applicant had identified a compelling reason because further information and proposed evidence gave substance to the alleged counterclaim, while refusal of permission exposed him to a serious risk of bankruptcy.
3. The proposed counterclaim could not be rejected merely because it had not been raised before service of the statutory demand. That circumstance could suggest that a claim was contrived, but it was not an inflexible rule. The applicant’s explanation that he had only recently obtained advice was reasonably arguable.
4. There was also an arguable issue as to whether the creditor, as successor or assignee of the original brewery’s loan account, took subject to equities or a set-off arising from the transaction that created the debt. The court did not finally determine that issue.
5. The valuation issue had fallen away because the property had been sold for approximately the relevant value. The proposed counterclaim nevertheless required further evidence, including particulars and contemporaneous documents, before its substance could properly be assessed.
6. Although the delay exceeded one year and was exceptionally long, it could be extended in this bankruptcy matter. The extension was conditional on an amended or additional application to adduce new evidence and on proceedings being issued against the creditor within three months. The creditor could apply to discharge the order if the cross-claim was statute-barred or was ultimately struck out.

• Court of Appeal (Civil Division): Permission to appeal granted under CPR 52.13; time extended subject to conditions.
• High Court, Chancery Division: On 7 December 1999, Deputy Judge Jarvis Q.C. dismissed an appeal from the refusal of the statutory demand application.
• Lancaster County Court: District Judge Nuttall refused to set aside the statutory demand.