Barons Finance Ltd v Barons Bridging Finance 1 Ltd & Anor

A restraint order extending to company assets does not appoint the person subject to it as a receiver or confer standing to act for the companies. A post-petition assignment by a company is void under section 127 of the Insolvency Act 1986 unless validated. A person with no title to the relevant assets and no authority to represent the companies has no relevant interest in the proceedings. The court may permit discontinuance against that person and proceed without him. An appellate court may refuse a late adjournment sought to challenge an old winding-up order where the proposed challenge has no realistic prospect.

Barons Finance Ltd, in liquidation, challenged a deed purporting to assign its loan book to Barons Bridging Finance 1 Ltd and Reddy Corporation Ltd. The claim relied principally on section 127 of the Insolvency Act 1986, alongside provisions concerning transactions at an undervalue and transactions defrauding creditors.

The High Court, in [2018] EWHC 496 (Ch), allowed Finance to discontinue against Mr Gopee, ordered it to pay his costs, refused to adjourn the trial, and held the deed and related charge transfers void. Mr Gopee appealed, arguing that he had standing under a restraint order and later assignments, and sought an adjournment to challenge Finance’s winding-up order. The central issues were whether he had a relevant interest and whether the trial should have been postponed.

Appeal dismissed. Lord Justice Newey gave the judgment, with Lord Justice David Richards agreeing.

1. Proposed challenge to the winding-up order. The Court declined to adjourn the appeal so that Mr Gopee could belatedly challenge Finance’s winding-up order. More than seven years had elapsed, the time for appealing had expired, he had represented Finance when the order was made without raising the point, and there was no supporting evidence or realistic prospect of success. Although a winding-up order could in principle be challenged under rule 12.59(1) of the Insolvency (England and Wales) Rules 2016, that did not justify delaying the appeal.
2. Effect of the restraint order. Section 48 of the Proceeds of Crime Act 2002 empowers the Crown Court to appoint a receiver when making a restraint order. The order in this case contained no such appointment. Its provision that the companies’ assets were to be treated as Mr Gopee’s personal assets was a common-form extension of the restraint, intended to limit dealings with those assets. It conferred no new powers or standing on him.
3. Later assignments. The alleged assignments of 23 April 2017 were made while winding-up petitions against the relevant companies were pending. They were therefore invalidated by section 127 of the Insolvency Act 1986. No validation application had been made, despite the importance of the assignments to Mr Gopee’s defence. He consequently had neither title to the loans nor a right to speak for the companies.
4. Discontinuance and adjournment. Mr Gopee had no relevant interest in the proceedings. The Judge was therefore justified in allowing Finance to discontinue against him, and was entitled to proceed with the trial without his presence. The terms of the orders concerning registered charges did not require revision because there had been no relevant transfers or registrations in his favour.

1. Court of Appeal (Civil Division). The appeal against the High Court decision was dismissed.
2. High Court of Justice, Insolvency & Companies List. In [2018] EWHC 496 (Ch), the court refused an adjournment, allowed discontinuance against Mr Gopee, and held the deed and related charge transfers void.
3. Earlier Court of Appeal proceedings. An earlier appeal in the same litigation was allowed on the ground that the defendants had not received a fair trial, and the matter was remitted to the Chancery Division.