Cox v Azdigh

Rent accruing during the currency of a partnership is a partnership debt, not solely the liability of one partner. It should be reflected in the dissolution accounts unless already included in an agreed buy-out settlement. Permission to challenge unsupported factual findings or speculative loss-of-earnings claims will not ordinarily be granted. In deciding whether to suspend a mortgage possession warrant, the court must consider the arrears, the prospect of paying them, and the borrower’s ability to meet current and future instalments. A speculative or delayed recovery from other litigation, an immediately enforceable judgment, and an unsuccessful proposed sale may justify refusing suspension. On a second appeal, permission requires an important point of principle or practice.

Mr Cox made two applications for permission to appeal. The first concerned Her Honour Judge Daley’s judgment in the Liverpool County Court arising from the dissolution of Mr Cox and Mr Azdigh’s informal 50/50 partnership. The issues included rent charged for the business premises, the treatment of partnership liabilities, and a rejected claim for loss of earnings.

The second concerned His Honour Judge Morgan’s dismissal in the Wigan County Court of Mr Cox’s appeal from a district judge’s refusal to suspend a warrant for possession obtained by Abbey National in respect of Mr Cox’s mortgaged home. The central issues were whether there was an arguable point in the partnership accounting and whether the mortgage possession warrant should be suspended.

Disposition. Lord Justice Tuckey granted an extension of time for the first application. Permission to appeal in the partnership action was granted on a limited basis concerning £1,150 of rent. Permission for the second appeal concerning the mortgage possession warrant was refused.

1. Rent amounting to 23 weeks’ arrears had accrued during the currency of the partnership. It was therefore a partnership debt for which Mr Cox was not solely responsible. If the agreed £3,500 buy-out had settled the indebtedness between the partners, that liability should have been taken into account in the settlement. If not, it should appear in the dissolution accounts as a partnership liability. The remaining 29 weeks’ arrears accrued after dissolution and were accepted to be Mr Cox’s sole responsibility.
2. There was no realistic prospect of permission being granted to challenge the trial judge’s factual findings concerning the loss-of-earnings claim. The judge had found that the business was not trading profitably and that the claim was unsupported by evidence. There were also legal difficulties in recovering such loss beyond a very short period.
3. The mortgage court had a discretion to suspend the possession order, but had to consider the amount of the arrears, the prospect of paying them off, and the borrower’s ability to make current and future repayments. Here the arrears were £5,276.55, the monthly instalment was £328, and Mr Cox’s benefits were about £200 per month.
4. The anticipated benefit from the partnership appeal was speculative and, in any event, would be small and delayed. Mr Cox could enforce the judgment already obtained in his favour. The claimed equity in the house had also produced no sale after two years on the market. The refusal to suspend the warrant was therefore well within the lower courts’ discretion and raised no important point of principle or practice warranting a second appeal.

A copy of the transcript was to be provided to Mr Cox at public expense.

• Court of Appeal (Civil Division): On 31 July 2002, Lord Justice Tuckey granted limited permission in the partnership action and refused permission in the mortgage possession matter.
• Liverpool County Court: Her Honour Judge Daley determined the partnership dispute and made monetary judgments in favour of both parties.
• Wigan County Court: His Honour Judge Morgan dismissed Mr Cox’s appeal from a district judge’s refusal to suspend the possession warrant.