Nicoll v Promontoria (Ram 2) Ltd

A case-management decision may be challenged on appeal where it proceeds from a false premise. A new challenge requiring additional evidence should not ordinarily be admitted late in the hearing where the opposing party has been disadvantaged.

On an application to set aside a statutory demand, the court must consider whether there is a real prospect of successfully disputing the debt or title. The court need not determine the issue on the balance of probabilities. Evidence from both assignor and assignee that an assignment has taken effect, supported by subsequent conduct and directions for payment, may be sufficient to show that the assignment is complete and remove any realistically arguable contrary case.

Promontoria served a statutory demand on Mr Nicoll for more than £10 million, following the Co-operative Bank’s purported assignment of loan and security rights to Promontoria.

ICC Judge Burton dismissed Mr Nicoll’s application to set aside the demand. She permitted a limited challenge to the effectiveness of the assignment, despite the point having been raised only shortly before the hearing, and concluded that the assignment was effective.

Mr Nicoll appealed on issues concerning the completion date and redactions in the assignment documents. Promontoria cross-appealed, arguing that the effectiveness challenge should not have been admitted. The High Court had to determine both the procedural admissibility of the challenge and, if necessary, whether the evidence established a completed assignment.

1. Cross-appeal allowed; appeal dismissed. The judge below had exercised a case-management discretion on the mistaken premise that the validity of the assignment had been challenged from the outset in the same way as the later completion-date argument. The original complaint concerned different dealings between Mr Nicoll and the Bank and could not have concerned the assignment deed, which he had not seen.

2. A discretionary case-management decision may be impeached where it starts from a false premise. The completion-date challenge was a new point introduced shortly before trial. It required additional evidence from Promontoria. Having decided not to admit new matters requiring such evidence, the judge should have excluded the completion-date challenge altogether.

3. The substantive issue was nevertheless considered. The relevant question on an application to set aside a statutory demand was whether Mr Nicoll had a real prospect of establishing that the assignment had not taken place, rather than whether Promontoria had proved the matter on the balance of probabilities. The evidence was sufficient to remove any arguable or triable issue.

4. The notice of assignment, issued by both the assignor and assignee, clearly stated that the assignment had taken effect on 29 July 2016 and directed payment to Promontoria. That evidence was reinforced by the transfer of supporting security, Promontoria’s collection of payments and the Bank’s failure to seek payment. The overwhelming inference was that the parties treated the assignment as complete.

5. The court distinguished W F Harrison v Burke [1956] 1 WLR 419. That case concerned a notice which misstated the date of the assignment and pre-dated the assignment itself. The present notice identified the date on which the assignment was said to have occurred and was issued after that date.

6. Ennis Property Finance Limited v Thompson [2018] EWHC 1929 (Ch) supported treating the parties’ consistent acceptance of completion, together with the surrounding documents and conduct, as sufficient evidence for present purposes. The court did not decide the wider proposition that a debtor can never challenge the effectiveness of an assignment.

7. The court also criticised excessive and unexplained redactions. Commercial sensitivity alone does not justify redacting relevant material, and inappropriate redactions may prolong litigation or prevent a party from establishing its case.

• High Court (Chancery Division): allowed Promontoria’s cross-appeal and dismissed Mr Nicoll’s appeal.
• ICC Judge Burton: on 18 March 2019 dismissed the application to set aside the statutory demand and held that the assignment was effective.