Simon Carvill-Biggs & Anor v Ashley Valentine Reading

The Court considered whether a single-judge order made in insolvency proceedings under section 234(2) of the Insolvency Act 1986 could lawfully require occupiers to deliver up possession of residential property where the company only held the equity of redemption and LPA receivers had been appointed under a fixed charge. The court held that issues about the scope of section 234(2), the interaction with possession claims under CPR 55 and alleged abuse of process were matters of substance. Applying the balancing test derived from Hammond Suddard Solicitors v Agrichem, the court concluded that a stay of the High Court order for possession should be continued pending determination of the appeal because there was insufficient evidence that a short delay would cause material prejudice to the administrators or the mortgagee. The stay was maintained but varied by the imposition of a condition that the appellant pay £2,000 per month into court until final determination, to be released by agreement between the administrators and the LPA receivers (or TFG2 if the receivers were out of office).

Background and parties:

• The appellant and his family occupied a large residential property whose freehold title was held by Rose Cottage Farm Limited, a company of which the appellant was sole director. The company had taken a secured loan from TFG Capital No.2 Limited secured by a legal charge and a floating charge; LPA receivers were appointed under the legal mortgage. The occupiers asserted no formal tenancy or proprietary right to remain.
• TFG2 commenced possession proceedings in the Bromley County Court under CPR 55; meanwhile TFG2 appointed administrators under the company’s floating charge and the administrators issued an insolvency application in Leeds under the Insolvency Act 1986 seeking, among other relief, possession of the property.

Procedural posture:

• At first instance (Leeds Business and Property Courts) HHJ Klein ordered possession on the basis that the company "appeared to be entitled" to the property and that relief could be granted under section 234(2) of the Insolvency Act 1986. The appellant obtained permission to appeal from a single judge of this Court and a stay of execution was granted pending the appeal.
• The administrators applied to vary or set aside the stay. The Court of Appeal (Snowden LJ) determined that application on paper and at an oral hearing.

Issues framed:

1. Whether, given the prior appointment of LPA receivers and that the company’s interest was limited to the equity of redemption, the property could properly be treated as "property to which the company appears to be entitled" for the purposes of section 234(2) IA 1986;
2. Whether the High Court was right to treat the insolvency application as a proper vehicle for an order for possession rather than requiring a CPR 55 possession claim in the local county court;
3. Whether it was an abuse of process for the administrators (with or at the instigation of TFG2) to seek possession by issuing separate proceedings in a different court centre while CPR 55 proceedings were pending.

Court’s reasoning and decision:

• The single-judge procedure requirements in CPR PD 52C para 19 were explained: respondents should file submissions and evidence about an application for stay so the single judge can determine the stay issue without a hearing where appropriate. A respondent who later seeks reconsideration under CPR 52.24(6) is not entitled to an oral hearing as of right.
• On the merits of the variation application the court applied the Hammond Suddard balancing approach to the stay question, asking whether granting or refusing a stay would result in injustice. The judge found that eviction before the appeal would likely render the appeal academic and cause prejudice to the appellant; by contrast the administrators produced no evidence of material financial prejudice from a limited stay.
• The court rejected the characterization that the appeal raised only a point of form, noting that the section 234(2) question and the interaction with CPR 55 were matters of substance. Important factual conclusions included that the administrators produced no evidence they could sell or obtain rents from the property given the legal mortgage and the appointment of LPA receivers, and that the company’s equity of redemption appeared to be valueless on the figures before the court.
• The stay was therefore continued, but on condition that the appellant pay £2,000 per calendar month in cleared funds into court by the 28th day of each month, with release of the accumulated sum by joint agreement of the administrators and the LPA receivers (or TFG2 if the receivers are not in office), or application to the court to determine distribution.

The Court refused to set aside the stay of the High Court’s order for possession and continued the stay pending determination of the appeal, but varied the stay by imposing a condition that the appellant pay £2,000 per month into court. The court reached this result after applying the balancing test for stays (Hammond Suddard) and concluding that the administrators had not shown material prejudice from a short delay, that the question whether section 234(2) applied was substantive, and that the administrators had provided no evidence that they or the company could lawfully realise the Property while receivers remained appointed.

First instance: His Honour Judge Klein (sitting as a High Court judge, Business and Property Courts, Leeds) made an order for possession on 16 May 2024 in proceedings brought by the administrators (Claim No. CR-2023-LDS-001028). Prior to that TFG2 had issued possession proceedings in Bromley County Court under CPR 55. Permission to appeal to the Court of Appeal was granted by a single judge (Snowden LJ) on 9 July 2024 with a stay pending appeal. The administrators applied to vary/set aside that stay (Variation Application issued 18 July 2024). This judgment (Snowden LJ) on 5 September 2024 refused to discharge the stay but varied it by imposing a condition of payment into court. Neutral citation: [2024] EWCA Civ 1005.