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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 >> Pagemanor Ltd v Ryan & Ors [2002] EWCA Civ 1065 (12 July 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1065.html Cite as: [2002] EWCA Civ 1065

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Miss Sonia Proudman QC)

		Royal Courts of Justice Strand London WC2 Friday, 12th July 2002

1. LORD JUSTICE ROBERT WALKER:This is an application for security for costs of an appeal made under section 726 of the Companies Act 1985.
2. The applicants are two of the respondents to the appeal, Mr Michael Ryan and his wife, Mrs Doris Ryan. The respondent to the application is the appellant, a limited company called Pagemanor Limited, which is a company with an issued capital of £2 and a balance sheet which I can only describe as speculative, since the last registered accounts as at 5th January 2001 indicate that its only asset at that time was a debt which may prove to be a bad debt. Certainly the debt has been owing for some three years and nothing seems to have been recovered so far.
3. Pagemanor's appeal is from an order of Miss Sonia Proudman QC, made when she was sitting as a deputy judge of the Chancery Division on 5th February 2002. Her order dismissed an application by Pagemanor made under section 423 of the Insolvency Act 1986.
4. The background to this matter is complex and unedifying. I do not propose to go into it in detail. It would take a very long time to do so. It has been involved with a series of manoeuvres designed to make a quick profit from the purchase and resale of a tenanted council property without offending section 155 of the Housing Act 1985, which provides a clawback if properties which have been sold at heavy discounts are disposed of within three years.
5. The story also has other unsavoury features, including false information provided to the Abbey National Building Society. That occurred when Mr Martin Ryan, the brother of Mr Michael Ryan, and his wife, Mrs Lesley Ryan, obtained a 100 per cent mortgage from the Abbey National by providing false information in which both sides co-operated. By both sides, I mean Mr Martin Ryan and his wife and Mr Ian Taub, the individual who stands, at any rate in the United Kingdom, behind Pagemanor. I should mention that Pagemanor's only two issued shares are held by friends or relatives of Mr Taub resident in New York.
6. The events which I have very briefly described have led to no fewer than three actions. The first was an action by Pagemanor against Mr Martin Ryan and his wife, which started off in 1991 as proceedings for specific performance but then became, in 1994, a claim for restitution of money paid under a void contract. The contract was void because it did not comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The second were proceedings in which the current appeal is made: that is, proceedings by Pagemanor against all four of the Ryans under section 423 seeking to set aside a transaction between Mr Martin Ryan and his wife as vendors and Mr Michael Ryan and his wife as purchasers of the property. The third were proceedings for professional negligence brought by Pagemanor against a firm of solicitors called Kaye Tesler, who had acted for Pagemanor in the matter of the void contract.
7. The first proceedings resulted in a judgment for £20,000 with interest. That is the debt reflected in Pagemanor's balance sheet which has so far proved wholly irrecoverable. The second proceedings ended in the judgment of Miss Proudman dismissing the action. She did not give permission to appeal, but it was granted on paper by Lord Justice Chadwick on 13th May 2002. The third set of proceedings resulted first in an award against the solicitors of damages to be assessed and then proceedings, which seem to have been protracted, for the assessment of damages. As I understand it, they are still not entirely complete and Mr Christopher Spratt, appearing today for Pagemanor, has very fairly accepted that it is still uncertain whether or not the damages as ultimately assessed will exceed the payment into court, which is agreed to be either £50,000 or, more probably, £52,000.
8. In these circumstances I am satisfied, without going further into the details, that Pagemanor is a company which falls within section 726 and is in principle vulnerable to an order for security for costs.
9. Mr Spratt (who has appeared, as I guess, on instructions given at a fairly late hour) has relied on three points. The first point, to which I attach no real importance, is that the effect of the application for security has been to remove the appeal from the short warned list, in which it might otherwise have been heard this term. That is regrettable, but it is not, in my view, any fault of the applicants today, who have made their application with promptness. The second point on which Mr Spratt relies is that the respondents in this matter do not have clean hands and that the effect of an order for costs would be to stifle an appeal which may succeed. Indeed - and this is Mr Spratt's third point - he says that the appeal has not only a real prospect of success but a very good prospect of success. I attach no weight to that last point. It is implicit in the whole jurisdiction to award security for costs of an appeal that the appeal may fail; and it is seldom that the prospects of success on an appeal are relevant and very seldom, if ever, that they are determinative.
10. That leaves Mr Spratt's second and necessarily rather general point: that this is a case in which the respondents do not have clean hands and the effect of an order for security would be, Mr Spratt says, to stifle an appeal. I am not persuaded by that submission that it would be right to make no order at all. I am persuaded by it that I should make a relatively modest order, so as to leave some possibility that Pagemanor will be able to proceed with its appeal. Mr Spratt says that any order for security at all, at whatever level, will have the effect of stifling an appeal. That is no doubt said sincerely on instructions, but it is something that we hear quite often in this Court and it sometimes happens, after security has been ordered, that the party against whom it is ordered finds that it is after all possible to find it from somewhere.
11. These matters have to be dealt with in a fairly summary way. The sum which Mr Clarke asks for, £9,200 or thereabouts, seems to me to be not unreasonable. Nevertheless, for the reasons which I have mentioned I propose to make a substantial discount and to order security in the sum of £5,000 to be provided within 28 days, with the appeal to be stayed in the meantime and dismissed automatically without the need for further application if the security is not provided within 28 days.
Order: security in the sum of £5,000 to be provided within 28 days, with appeal to be stayed in the meantime and dismissed if security is not provided within that time; applicants to have costs of today summarily assessed at £2,000.