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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 >> Admiral Scaffolding Group Ltd v Simms & Ors [2001] EWCA Civ 908 (8 June 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/908.html Cite as: [2001] EWCA Civ 908

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(Mr Justice Garland)

		Royal Courts of Justice Strand London WC2 Friday, 8th June 2001

Friday, 8th June 2001

1. LORD JUSTICE PETER GIBSON: The second defendant, Donald Bostel, seeks permission to appeal from part of an order made by Garland J on 19th December, that part being an order declaring Mr Bostel to be in contempt of court and refusing him a variation of an undertaking given by him to the court on 14th July 2000. He and the other two defendants, Paul Simms and Ancon Group Incorporated, also seek permission to appeal from part of another order made by the judge on 12th January of this year. By that part the judge refused to order the trial of a preliminary issue.
2. The background to these applications is this. The three defendants on 1st February 2000 sold their shares in Admiral Scaffolding Company Limited to the claimant for a sum in excess of £300,000 subject to an adjustment mechanism depending on the net asset value of the company as shown in interim accounts to be prepared by the auditors of the company, which were named, for the four months to 1st February 2000. The sale was completed, interim accounts were prepared, but the defendants say that the accounts were not audited by the auditors, and they claim that that was a requirement of the agreement for the sale of shares. On the basis of the accounts, the claimant says that over £200,000 is due from the defendants to the claimant.
3. The claimant applied for a freezing order against Mr Bostel. On 22nd May 2000 Mr Bostel gave an undertaking to Grigson J not to remove from the jurisdiction or dispose of any of his assets, save that he was to be entitled to incur reasonable living and legal expenses. He was to be further entitled to spend sums properly and reasonably incurred in purchasing a beneficial interest in an identified property, and he was to be entitled to dispose of his interest in the matrimonial home subject to the sale proceeds remaining subject to the undertaking.
4. On 14th July 2000 Mr Bostel was allowed to vary his undertaking. Thereby he undertook instead to maintain within England and Wales unencumbered assets beneficially owned by him to the value of at least £175,000, and not in any way to dispose of, or deal with, or diminish or encumber such assets so as to reduce the value of such assets to less than £175,000. The varied undertaking did not incorporate any exception, such as was included in the earlier undertaking, relating to living or legal expenses.
5. On 18th November Mr Bostel gave a witness statement in support of a further application to vary the undertaking so as to allow him to incur reasonable and ordinary living and legal expenses. He disclosed in that statement that the property, an interest in which he was by the undertaking of 22nd May to be allowed to purchase, was a property which his wife alone had contracted to purchase, and that subsequently he agreed to lend her £49,544 on a ten-year interest-free loan, but he disclosed that he had assets which he said amounted to just under £209,000. That was including the loan to his wife, which was included at its face value.
6. The claimant applied to commit Mr Bostel for contempt on the basis that he had reduced his assets below £175,000 in seven respects, one of which was the loan to his wife. That application came before Garland J on 19th December and was dealt with without oral evidence. There was some pressure of time that day to complete the hearing in an afternoon. The judge effectively dismissed all of the claimed contempts save for the loan to the wife. He held that that was a contempt because it should not be treated as an asset having value, and that, he said, brought Mr Bostel's total assets in England and Wales below £175,000. No further order was made in respect of that contempt, save that the judge made a freezing order on a Spanish property in which Mr Bostel has a beneficial interest.
7. Before us today the finding of contempt is the first matter on which Mr Downes, appearing for Mr Bostel, asks for permission to appeal. He says that the judge erred in two respects. First, he says, the judge overlooked the fact that on the evidence and on the facts as found by the judge at the date of the making of the loan, which was the act of contempt found by the judge, Mr Bostel's assets amounted to over £175,000 even if the value of the loan made in favour of the wife is ignored, and he submits that there could be in consequence no contempt. Second, he says that the judge was wrong to hold, in the absence of evidence, that the loan had no value. He pointed out that contempt proceedings require proof to the criminal standard. In my judgment, on the argument presented to us, it cannot be said that Mr Bostel has no real prospects of success on an appeal in relation to the finding of contempt. I say that primarily because of Mr Downes' first argument that the assets at the relevant date exceeded £175,000. On his further argument, I have to say that I am far more doubtful whether he has a properly arguable case. Even in contempt cases judges can properly adopt a commonsense approach to value. I deliberately intend to be discouraging to Mr Downes on this, although for my part I would not prevent the argument from being presented.
8. The judge on 19th December also refused to vary the undertaking given by Mr Bostel to allow Mr Bostel to spend money on living and legal expenses. The judge said that Mr Bostel had been remarkably reluctant to put his cards on the table as to what his assets were. The judge said that he was left in some doubt if Mr Bostel had yet to be entirely frank. He gave as his reason for declining to vary the undertaking the manner in which Mr Bostel had conducted himself and the fact that he had left the judge in doubt as to whether there had been full and frank disclosure. Mr Downes submits that it was a misuse by the judge of a freezing order to deprive the person to whom it is directed of money for living and legal expenses. Mr Downes further submits that the judge was punishing Mr Bostel for events in the past, and he said that that was not a correct way for the judge to exercise his discretion as to what was to happen in the future. Mr Downes has drawn our attention to the correspondence between the parties as showing that the claimant has been reasonable in response to Mr Bostel's requests. But the claimant's solicitors have not insisted on the full rigour of the judge's decision, because they have allowed Mr Bostel to receive £1,200 a month out of his pension of some £1,500 per month.
9. I need not go into any of these points in further detail for this reason. It seems to me that the finding of contempt on the part of Mr Bostel, which arguably was part of the conduct of Mr Bostel to which the judge referred when refusing to order a variation, may have affected the judge's conclusion. I think that the right order on this application in relation to that part of the judge's order is to adjourn it to the hearing of the appeal on the contempt point. The application can then be heard in the light of the decision on the appeal. I would add this comment, that in any event there is much to be said for formalising the informal arrangements which have been agreed between parties whereby the claimant, in apparent acceptance of the principle that Mr Bostel should be allowed at least his reasonable living expenses out of his assets, allows Mr Bostel to receive a substantial part of his pension.
10. On 12th January 2001 the judge dismissed Mr Bostel's application for the trial of a preliminary issue. That preliminary issue related to the point to which I have already adverted, that is to say whether the interim accounts, which were to govern whether there should be an adjustment to the price paid for the shares on their sale, needed to be audited by the company's auditors. Further points have arisen because the claimant claims that the defendants are estopped by convention from insisting on that requirement, if it be established, and they take the additional point that there should be rectification of the agreement. Further, the judge had earlier ordered that an independent firm of chartered accountants, Grant Thornton, be appointed as experts in the case, and directed that they carry out an audit of the interim accounts. The judge looked at the question of whether to order the trial of a preliminary issue as one of case management. He said that to have a trial of a preliminary issue might produce no measurable advantage and that there was no sufficient advantage in attempting to isolate an issue or issues.
11. Mr Downes, on this point acting for all the defendants, submits that the judge was plainly wrong and failed to give effect to the overriding objective. He stresses the saving in time and costs if the preliminary issue were allowed to be tried. His submissions commenced with him drawing our attention to certain correspondence which suggested that the direction for Grant Thornton to carry out an audit had run into certain practical difficulties. The judge had heard an argument from Mr Downes that a preliminary issue should be ordered so that the incurring of any more fees by Grant Thornton would be avoided. The judge had said that that was not a material factor at that stage, some time having elapsed since Grant Thornton was given the direction. Mr Downes also submits that there would be other costs saving if a preliminary issue were ordered. For example, he says that the points on estoppel and rectification might be avoided depending on the outcome of the trial of the preliminary issue.
12. Mr Downes' objection to the continuation of the Grant Thornton audit should, in my view, have been taken by way of an appeal from the judge's direction that there should be such an audit. But no appeal was brought, and Grant Thornton have no doubt carried on with the work which they were directed to do. I accept that the refusal by the judge of a preliminary issue was not an inevitable decision in the circumstances and that other judges might have taken a different view. But in my judgment this was a case management decision and the refusal to order a preliminary issue was one which was open to the judge to take. He had some familiarity with the case and he was in a good position to decide whether or not practical advantage would be likely to result.
13. I see no real prospect of this court interfering with the judge's exercise of discretion on this point. It seems to me to have been well within the proper ambit of his discretion. Accordingly, I would refuse permission to appeal on this point.
14. I cannot forbear to add that the sooner this case is set down and the points in issue decided, the better for all concerned.
15. LORD JUSTICE CLARKE: I agree. As to the finding of contempt, I am persuaded that the view I expressed on paper, namely that an appeal had no real prospect of success, was too harsh so far as the first point taken by Mr Downes is concerned. That first point is that the assets at the relevant date exceeded £175,000. As to the second point, I have not altered the view I expressed on paper, but I agree that it should be approached in the way suggested by my Lord. As to the preliminary issue, I do not wish to add anything to the judgment given by my Lord.
16. As to the variation issue, I would like simply to add this in underlining the comments which he has made. Since the decision and order of Garland J on 12th January 2001, the claimant has agreed that Mr Bostel should be permitted to expend reasonable living expenses out of the frozen assets. That seems to me to be very sensible. Although we have not heard submissions on behalf of the claimant, it also seems to me that, for the future, it is desirable that the usual proviso should be included in the order, just as it was in the original order made by Grigson J. As I see it, for the future, that provision should permit reasonable expenditure on both legal costs and living expenses. I see the force of Mr Downes' submission that the position should be regularised.
17. I hope that commonsense will prevail on this part of the case so that the parties may concentrate on resolving the issues between them on the merits. It is desirable that the parties should now spend less time and money on interlocutory skirmishing and should concentrate on resolving the true issues between them. The time has surely come, as my Lord has said, to give directions for the trial of the action as soon as reasonably practicable. As I see it, there is no need for those directions, or indeed a trial, to be delayed pending any appeal.
18. I agree with the orders proposed.
Order: Appeal allowed in part. Costs reserved to the appeal court.