Arrow Nominees Inc & Anor v Blackledge & Ors

A charging order is ordinarily enforced by an application for sale. A prior direction controlling enforcement of an interim costs order does not require separate permission where it permits enforcement by charging order and reserves permission only for other methods, such as bankruptcy. The application for sale must be made to the court that issued the charging order. That court determines the evidence and terms of sale, including estimated price, method, conduct and who may bid. Concerns about undervaluation are matters for that court and any appeal from its decision.

The earlier proceedings concerned allegations of unfair conduct in the affairs of Bodycare (Health and Beauty) Limited. The proceedings were brought under section 459 of the Companies Act 1985. In 2000, the Court of Appeal brought the proceedings to an end because the conduct of Mr Tobias placed a fair trial at substantial risk. The court then made an interim costs order, permitting enforcement by charging order over the minority shares while restricting other enforcement steps.

After a further charging order was made over shares held by Arrow Nominees Inc, the Blackledge parties sought to apply for an order for sale. Mr and Mrs Tobias applied to vary a direction which appeared to require permission. The central issue was whether the 2000 order required permission from the Court of Appeal before an application for sale could be made.

Chadwick LJ gave the principal judgment, with Ward LJ agreeing. The court held that no permission was required to apply for an order for sale.

1. Construction of the 2000 order. The direction did not require the chargee to obtain further permission before enforcing the charging order by sale in the ordinary way. A charging order would have little practical purpose if it could not be enforced by an application for sale.
2. Purpose of the restriction. The direction was intended to prevent enforcement of the interim costs order by means other than realisation of the shares, particularly immediate bankruptcy proceedings. It did not restrict ordinary enforcement of a charging order by sale.
3. Role of the county court. The respondents could apply to the Manchester County Court, which had made the charging order, under Part 73 of the Civil Procedure Rules 1998. That court would consider the written evidence, including the estimated sale price, and determine the manner of sale, conduct of the sale and entitlement to bid. Its decision would be subject to the usual appeal route.
4. Scope of the decision. The Court of Appeal’s conclusion did not determine whether an order for sale should ultimately be made or the terms on which it should be made. Mr Tobias’s concerns about the price were matters for the Manchester County Court. Ward LJ expressed unease about the likely loss in value and encouraged mediation, but agreed that permission was unnecessary.

1. Court of Appeal (Civil Division): In the earlier 2000 appeal, the court indicated that it would allow the Blackledge respondents’ appeal against refusal to strike out the petition. Reasons were handed down on 22 June 2000, followed by an interim costs order on 27 July 2000.
2. Court of Appeal (Civil Division): On the present application concerning the 26 May 2004 direction, the court held that permission was not required before applying to the Manchester County Court for an order for sale. No citation for the decision below is stated in the judgment.