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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Tracs (Engineering) Ltd v Sampson & Ors [2001] EWCA Civ 1195 (20 July 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1195.html Cite as: [2001] EWCA Civ 1195

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR LEIGHTON WILLIAMS QC)

		Royal Courts of Justice Strand London WC2 Friday, 20th July 2001

1. LORD JUSTICE CHADWICK: This is an application for permission to appeal against an order made today by Mr Leighton Williams QC, sitting as a Deputy Judge of the High Court in the Queen's Bench Division, in proceedings brought by TRACS (Engineering) Ltd against Mr Roderick Sampson, Ms (or Mrs) Linda Wilson and PWME Limited. The substance of the claim in the proceedings is that the claimant, TRACS (Engineering) Ltd, asserts that the first and second defendants, Mr Sampson and Ms Wilson, have diverted a contract for the construction of a depot in connection with the Channel Tunnel rail link to a company PWME Limited of which they are directors and which (I think) it is said that they control. The contract is made with AMEC Spie Rail Systems.
2. As explained to me, PWME Limited invoices AMEC Spie for work done under the contract on a weekly or fortnightly basis. The invoiced amounts are for labour costs and the cost of hiring machinery, with an uplift of 9 per cent to cover administrative overheads and costs. I am told that PWME Limited has no business other than the management of this contract; and that, for practical purposes, it has no assets other than the benefit of the contract.
3. In those circumstances, it is plainly in the interests of both PWME Limited and of TRACS (Engineering) Ltd that this contract, which has some four to five weeks to run, should be performed to completion and to the satisfaction of the client, AMEC Spie, so that whatever profit can be derived from the performance of the contract is available either for the benefit of PWME. Or to meet the claim of TRACS (Engineering) that it is entitled to the fruits of that contract.
4. Litigation appears to have been in suit for the last month or so, since the first and second defendants fell out with the individual controlling TRACS (Engineering). That litigation has given rise to a number of freezing orders in the Queen's Bench Division; and, ultimately, to the order made by Mr Leighton Williams against which permission to appeal is sought. That order appoints Ms Jacqueline Stephenson of Messrs Neville Russell, well-known accountants as receiver - to take possession of, collect and get in the property of PWME Limited and preserve its assets, to raise and borrow money, and to carry on its business.
5. For practical purposes, as it seems to me, all that the receiver could do would be to take over the management of the AMEC Spie contract. For that purpose she would have to employ somebody - probably the first and second defendants - to conduct the day-to-day operations of PWME. It seems to me unlikely that an accountant from London EC3 is going to be personally involved in the day-to-day work of constructing a railway depot in Kent.
6. The matter has come before this Court at very short notice. There has been no opportunity to consider the substantial bundles of documents so as to form a view - even a preliminary view - whether this is a matter in which permission to appeal should be granted. What I propose to do, therefore, is to adjourn the application for permission to appeal to come before the Court on Thursday of next week - at a time which will have to be fixed through the Civil Appeals Office. The application should be listed for a one-hour appointment.
7. The question, therefore, is what to do in the meantime. Should the appointment of the receiver be stayed for the period of six days or so to enable the matter to come back before this Court with a proper transcript of the judge's reasons for his decision; or should the receiver be allowed to take office with the risk that, when the matter does come back, the Court, with a much fuller understanding of the position, may come to the conclusion that permission to appeal should be granted and the order appointing the receiver stayed?
8. It seems to me that the only proper course that this Court can take, in the circumstances with which it is faced, is to stay the execution of the order made by Mr Leighton Williams QC over until the matter comes before it on Thursday of next week.
9. The reasons that lead me to that view are these. First, it seems to me that the appointment of a receiver is likely to give rise to expense which will be out of all proportion to the profit which is capable of being derived from this contract. Second, the claimant, TRACS (Engineering) Ltd, does not know what its assets and liabilities are; and so is in no position to give a cross-undertaking as to damages, if it turns out that the appointment of the receiver should not have been made, which can be regarded as being of any value. Third, the operation of this contract seems to me to depend entirely upon the proper monitoring of the cash coming into the company from the client, AMEC Spie, and going out of the company in payment of labour and hire charges. That monitoring can be conducted satisfactorily, under arrangements to which I shall refer in due course, without the need for the appointment of a receiver. Fourth, a payment from AMEC Spie having been received today, the next in-flow of money to PWME, as I have been told, is not due until next Friday, so that the matter will have been dealt with one way or the other before that money is in the company's hands. And, finally, the likely perception of the appointment of a receiver of PWME - whether rightly or wrongly – will be such as to destroy its credit, both with its bankers and with its clients; so that, if the appointment takes effect today, the probability is that the whole operation will be brought to an end before any proper consideration can have been given to the application for permission to appeal.
10. I appreciate that it is suggested by TRACS (Engineering) Ltd that - if no receiver us appointed – it, TRACS, will not feel able to make available any of its own labour force to perform the contract. That is because, it is said, TRACS can have not confidence that it will be paid. It is said, also, that PWME will not be able to obtain labour from any other source. If TRACS decides not to provide labour over the course of the next six days or so, then it may well be that the client, AMEC Spie, will be entitled to, and will, determine the contract. But that is a matter which lies in the hands of TRACS (Engineering). If it wishes to bring the contract to an end by that route, there is nothing that the Court can, or should, do to stop it.
11. But the Court cannot allow itself to be persuaded to appoint a receiver on the basis of the claimant's threat that he will destroy the asset if no appointment is made. There is no guarantee that, whatever the Court does, TRACS will provide labour. The important thing is to ensure that if TRACS does provide labour to perform the contract, then whatever funds are received by the company from AMEC Spie on the basis of an invoice for that labour will be available to pay for it. What I propose to do, therefore, is to direct that PWME is to supply to TRACS (Engineering) Ltd – or to a solicitor or accountant nominated by that company - a daily record of transactions on its trading account with its bankers, Royal Bank of Scotland, and is not to make payments out of that account in excess of £5,000 without prior notification to TRACS or its nominee; such notification to be not less than 24 hours before the making of the payment.
12. I will give liberty to TRACS (Engineering) to apply to this court without notice, or on very short notice, if that condition is not fulfilled. The intention is that TRACS should have its mind put at rest, so far as can be, that whatever moneys are coming into PWME in furtherance of this contract are being properly applied for the payment of the expenses in respect of which they are being received from the client, AMEC Spie.
13. I do not reserve the matter to myself. The Civil Appeals Office can list this case before any Court available to deal with the matter on Thursday. It is a matter which can be properly heard by a single Lord Justice.
Order: Execution of order stayed; no order as to costs.