Timmins v Conn [2004] EWCA Civ 1761

Case No A2/2004/1095[2004] EWCA Civ 1761
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(HIS HONOUR JUDGE MADDOCKS)
Venue Royal Courts of JusticeDate Monday, 22 November 2004
Strand
London, WC2
B E F O R E:
LORD JUSTICE CHADWICK
LORD JUSTICE LATHAM
SIR SWINTON THOMAS
Between
GEORGE EDWARD TIMMINSAppellant-v-
Between
STEPHEN LEONARD CONNRespondent
(Computer-Aided Transcript of the Stenograph Notes ofSmith Bernal Wordwave Limited190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838(Official Shorthand Writers to the Court)
MR MARK COOPER (instructed by Messrs Rigby & Co., Middlewich) appeared for AppellantMR PAUL TINDALL (instructed by Messrs Turner Parkinson, Manchester) appeared for Respondent
J U D G M E N T

LORD JUSTICE CHADWICK:

[1]This is an appeal from an order made on 7th May 2004 by His Honour Judge Maddocks, sitting as a judge of the High Court in the Manchester District Registry of the Chancery Division, in proceedings brought under section 263(3) of the Insolvency Act 1986. The applicant in those proceedings was Mr George Timmins. The respondent was Mr Stephen Conn, an Insolvency Practitioner and the Supervisor of a Voluntary Arrangement made between Mr Roger Fogg and his creditors.[2]Section 263 of the Insolvency Act is contained within Part 8 of that Act. That part of the Act relates to individual voluntary arrangements. It contains provisions which enable a debtor to make a proposal to his creditors for a composition in satisfaction of his debts or for a scheme of arrangement. The proposals must provide for some person, described in the Act as the nominee, to act in relation to the Voluntary Arrangement -- either as trustee or otherwise -- for the purposes of supervising its implementation. The nominee must be a person qualified to act as an insolvency practitioner or otherwise authorised. Where the debtor intends to make such a proposal, the nominee must make a report to the court and must summon a meeting of creditors -- see sections 256 and 257 of the Act.[3]The creditors' meeting, summoned pursuant to section 257, may approve the proposed Voluntary Arrangement with or without modification; but subject to the limitations that the meeting shall not approve the Voluntary Arrangement with a modification unless the debtor consents to each modification and it shall not approve a proposal or modification which affects the right of a secured creditor to enforce his security, except with the concurrence of the creditor -- see sections 258(2) and (4). The effect of the approval of the creditors' meeting under section 257 is that the Arrangement takes effect as if made by the debtor at the meeting and binds every person who, in accordance with the Insolvency Rules 1986, was entitled to vote at the meeting -- whether or not he was present or represented at it -- or would have been so entitled if he had notice of it, as if he were a party to the Arrangement -- see section 260(2). So, as explained by this court in Johnson v Davies [1998] 3 WLR 1299, the Arrangement takes place consensually as an arrangement between the debtor and each of the creditors and the nominee.[4]The provisions in section 263 of the Act apply where a Voluntary Arrangement has been approved by a creditors' meeting summoned under section 257 and has taken effect. The person who has been carrying out the functions as nominee becomes the Supervisor of the Arrangement -- see section 263(2). Section 263(3) is in these terms:
"If the debtor, or any of his creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court; and on such an application the court may- (a) confirm, reverse or modify any act or decision of the supervisor, (b) give him directions, or (c) make such other order as it thinks fit."
That is the statutory framework within which the application was made in this case.[5]The debtor, Mr Roger Fogg, had found himself in financial difficulties in 1996. With the assistance of insolvency practitioners, Messrs Stephen Conn and Co., a firm based in Manchester, he prepared a proposal under Part 8 of the 1986 Act. Mr Stephen Conn was named as the nominee in that proposal. In the statement of affairs which formed part of the proposal -- as was required under the Insolvency Rules -- Mr Fogg disclosed as his assets a domestic dwelling, No 24 Hunters Field, Shavington near Crewe, stated to be subject to a mortgage in favour of the Brittania Mortgage Company. The amount of the mortgage was stated to be £85,000. The statement of affairs disclosed that property 24 Hunters Field, Shavington, was property in which Mr Fogg and his wife were jointly interested. The effect of the proposal and its approval would be that, if their joint interest was as joint tenants in equity, the equitable joint tenancy would be severed; so that, on the coming into effect of the voluntary arrangement, the interests of Mr Fogg and his wife would be in equal half shares in common. So, without the consent of Mrs Fogg, the only interest in the dwelling house which could be an asset the subject of the Arrangement would be Mr Fogg's one-half undivided share. I say that because this was not a case in which Mrs Fogg was contributing her share in the property as an asset in the Arrangement.[6]Also included as assets, in the statement of affairs, were other land and trade debtors. It was proposed that Mr Fogg would make voluntary contributions. Preferential creditors were shown at £22,300 and non-preferential creditors at £159,474. Amongst the non-preferential creditors shown in the schedule annexed to the proposal -- was the National Westminster Bank Plc at £35,000 and the applicant, Mr Timmins, in an amount of £22,000. That is consistent, of course, with the National Westminster Bank not being treated as a secured creditor.[7]The terms proposed by the Arrangement included the following:
"3.1. Other than the Excluded Assets all of my Assets shall be included in the arrangement and shall be realised by myself or the supervisor for the benefit of the creditors. 3.2. The proceeds of realisation of the Assets shall be distributed in the manner set out in paragraph 5. 3.5. The arrangement shall continue for the Arrangement Period unless terminated earlier in accordance with the terms of paragraph 20. 3.7. The arrangement shall be conducted in accordance with the terms set out in this proposal."
In that context the Excluded Assets were defined as all of the excluded assets referred to as such in paragraph 6.2 of the proposal; and the Assets were defined as all real and personal property of any description wherever situated owned by Mr Fogg at the Commencement Date, other than the excluded assets. The Commencement Date was the date of approval of the Arrangement by the creditors at the creditors' meeting and the Arrangement Period was the period of five years starting on the Commencement Date, or the period from that date to the date of termination of the Arrangement in accordance with its terms.[8]Paragraph 6 of the proposals was headed "Assets". Paragraph 6.1 provided that:
"My domestic dwelling shall be excluded from my Arrangement."
Read with the statement of affairs, that had the effect of excluding the domestic dwelling identified as 24 Hunters Field, Shavington. 6.2 provided:
"The following property shall be excluded from the Arrangement..." 6.2.1 excluded clothing, furniture, household equipment and tools of trade. 6.2.2 excluded the benefit of an option agreement relating to land at the rear of 312 Newcastle Road, Shavington. 6.2.3 was in these terms: "
Any property which the Supervisor at any time during the Arrangement Period considers to be onerous." Paragraph 6.3 imposed a trust:
"In consideration of the Creditors' agreement to the Arrangement all of my legal and beneficial interest in the Assets and all sums realised in respect of the Assets shall from the Commencement Date be held by me in trust. The trustee shall be the Supervisor. The beneficiaries shall be all of the Creditors. The terms of the trust shall be all relevant terms of this Proposal. If required to do so the Supervisor shall execute a written declaration of trust on the above terms."
Although there is an ambiguity in that paragraph -- in that it is not clear whether it is Mr Fogg or the Supervisor who is to be trustee -- it is plain that assets which are vested in the debtor are held by him as trustee for the creditors as and from the commencement date unless and until he transfers those assets into the name of the Supervisor. If he does transfer those assets into the name of the Supervisor, then the Supervisor will hold them upon the same trusts. In the present case there is nothing to suggest that any assignment or transfer of any given assets was ever made. While those assets remained in the hands of Mr Fogg, he was the trustee.[9]The meeting of creditors was summoned for and held on 13th August 1996. The nominee Mr Peter Bucknell of Messrs Stephen Conn and Co reported to the court, as Chairman of the meeting, on 13th August that the debtors' proposal, as modified and amended, had been approved by the requisite majority of the creditors present in person or by proxy. He set out the amendments which had been proposed as modifications and agreed at Annex 1 to that report.[10]Paragraph 3 of Annex 1 provides that the domestic dwelling, 24 Hunters Field, be sold by auction if not sold within the first 18 months of the arrangement. Paragraph 8 provides:
"24 Hunters Field is to be professionally valued. Debtors' share of equity to be realised and paid to the Supervisor for the benefit of creditors (net of cost of realisation)."
Paragraph 10 reinforces those provisions by requiring the Supervisor to register a legal charge on 24 Hunters Field. The voluntary contributions to be made were increased from the rate originally suggested ,£950 per month, to £1,250 per month in the first year and £1,500 per month thereafter. Paragraph 5 provided that, in the event that the voluntary contributions of £1,250 per month were two months in arrears, the Arrangement was deemed to have failed.[11]The effect of those amendments was this. First, paragraph 6.1 of the original proposal no longer had the effect of excluding the domestic dwelling 24 Hunters Field. It is plain from paragraphs 3, 8 and 10 in the modifications annexed to the report of 13th August 1996 that the creditors were to have recourse to Mr Fogg's share in that property. The value of that share, of course, as paragraph 8 recognises was to be ascertained after discharge of the secured creditor -- stated in the proposals to be Brittania Mortgage Company -- and after giving effect to Mrs Fogg's half interest in the property. Second, there was to be no immediate realisation of that share -- as would have been required under the terms of the original proposals. Paragraph 3 of the modifications clearly contemplated that the property was to be sold either by private treaty or (if not sold by private treaty within the first 18 months) then by auction. That, no doubt, was a sale in which it was expected Mr and Mrs Fogg would cooperate. But paragraph 8 provides that, if not sold, then the debtors' interest in that property was to be quantified by professional valuation and then itself sold. In the meantime the Supervisor was to register a legal charge. At that stage it seems -- although the evidence is incomplete -- that the property was registered in the sole name of Mr Fogg.[12]The approval to the Arrangement with its modification was unanimous. The schedule of creditors voting again shows National Westminster Bank with a debt of £35,000. But Mr Timmins is shown with a debt of £108,368.38. The difference from the earlier schedule is, I think, to be explained by the fact that Mr Timmins' original loan had been made on the terms that interest would accrue at a compound rate of 25 per cent. No doubt that explained the rather sharp jump from the original figure to the amount for which Mr Timmins claimed to be a creditor.[13]At the time of the approval of the proposals it was thought that the National Westminster Bank was not a secured creditor. It was on that basis that there appeared to be some value in the property, 24 Hunters Field, after discharge of the mortgage identified in the proposals (in favour of Brittania) and after allowing for Mrs Fogg's share.[14]About a year later, on 19th August 1997, Stephen Conn and Co. wrote to all creditors an annual letter of report. That contained the following paragraph:
"It has subsequently transpired that National Westminster Bank have claimed to have a charge on the domestic dwelling, which under the terms of the arrangement was to be sold, with the debtors' share of the equity being for the benefit of the creditors. Mr Fogg disputes that the bank have a charge and the matter has been placed in the hands of solicitors for advice. In the event that the charge is valid there will be no equity in the property."
Strictly, of course, that is not a correct statement of the position. There will be an equity of redemption in the property; but if the property is not of sufficient value to satisfy the claims of the secured creditors the value of the mortgagor's interest will be nil.[15]Stephen Conn and Co returned to the point in a letter a year later. They wrote to all creditors on 25th August 1998:
"Further to my last report dated 19th August 1997, the second charge advised by the National Westminster Bank Plc has been validated and therefore there will be no equity available for the unsecured creditors."
[16]The annual report for the following year, sent on 8th September 1999, made no reference to the position of the bank or the property; but disclosed that the debtor was in arrears with the agreed voluntary contributions. It contained the comment that "the debtor has now agreed to bring the arrears up-to-date in the next few months". It will be recalled that arrears of two months gave rise to an event of default; and that the provisions in the Voluntary Arrangement required that, on an event of default, the Supervisor should consider bankruptcy proceedings.[17]The next report on 15th August 2000 again indicated that the debtor was in arrears with the agreed voluntary contributions, but noted:
"I have written to Mr Fogg requesting that he bring his contributions up to date as a matter of urgency."
[18]On 9th October 2002 solicitors acting on behalf of the Supervisor, Mr Conn, wrote to solicitors acting for Mr Timmins (and I think other creditors) in these terms:
"We respond on behalf of our client in respect of the property 24 Hunters Field. As previously advised to you this property was valued shortly after the approval of the Voluntary Arrangement and it became apparent to the Supervisor that the property had, as a result of the second charge claimed on the property, achieved a negative equity position. Our client exercised his power pursuant to clause 6.2.3 of the proposal to exclude the property from the Arrangement at that point which had the result of a net benefit to creditors."
'At that point' must, I think, be taken to be a reference back to the earlier letter of 25th August 1998 in which the Supervisor had written:
"there will be no equity available for the unsecured creditors"
. The letter of 9th October 2002 was the first indication to creditors that the Supervisor had purported to exercise the power conferred by clause 6.2.3 of the Voluntary Arrangement to treat 24 Hunters Field as excluded assets.[19]Some six months later, on 25th April 2003, the Supervisor gave notice, in accordance with rule 5.29 of the Insolvency Rules 1986, that the Supervisor had completed the administration of the Voluntary Arrangement; that, in his opinion, the Voluntary Arrangement did achieve its objectives in accordance with the proposal agreed with creditors on 13th August 1996; and that the arrangement was therefore deemed to have been successful. If that notice were a valid notice in the circumstances (which I doubt), the effect under the Arrangement would have been that Mr Fogg was thereby discharged from his liability to his creditors. That was a term of the Arrangement. The supervisor's final report, attached to the notice of 25th April 2003, referred to the realisation of assets and contributions. At paragraph 2 it stated:
"There was no surplus equity in the matrimonial home to be brought into the arrangement."
Nothing was said in that final report to explain why Mr Fogg's share in 24 Hunters Field was being treated as excluded property.[20]Mr Timmins was plainly concerned about the position in relation to the property at 24 Hunters Field. The judge thought -- probably rightly -- that his concern was prompted by his knowledge that the property had been placed on the market for some £315,000. That led to the commencement of these proceedings on 30th May 2003 by the issue and service of an originating application under the rules.[21]The relief sought against Mr Conn, who alone was respondent to the application as issued, was a declaration that the individual Voluntary Arrangement of Mr Fogg (the debtor) had not been completed; in that his share in the residential property at 24 Hunters Field had not been realised for the benefit of the creditors of the IVA. The relief included a prayer that all acts done subsequent to 25th April 2003 be reversed and that the purported exclusion of the debtors' share in 24 Hunters Field on the grounds that it was onerous or otherwise itself be reversed.[22]On 9th September 2003, on the application of Mr Conn, the debtor was added as a respondent to those proceedings. That, if I may say so, was obviously sensible; in that the court was being asked to declare that the individual Voluntary Arrangement had not come to an end successfully and that there was still property subject to its terms. Mr Fogg was a person directly affected by the relief sought. It would be difficult, if not impossible, for the court to make declarations in those terms without hearing what the debtor had to say. It was plainly desirable that declarations, if made, should bind the debtor.[23]On 3rd October 2003, some four weeks later, the judge, on the application of the applicant Mr Timmins, ordered that the originating application be amended so as to remove any claim for relief against the debtor; and directed that in consequence of those amendments "no relief being claimed against the second respondent, Mr Fogg, the originating application be dismissed as against the second respondent and the applicant shall pay the second respondent's costs".[24]As I have said, the amendment for which leave was sought and obtained were amendments to the originating application so as to remove any relief, or possibility of relief, against Mr Fogg. The amendments had the effect that the declarations (if made) would have effect only as between Mr Timmins and Mr Conn. Mr Timmins sought against Mr Conn all necessary accounts and enquiries; "so as to determine the loss caused to the creditors of the IVA by the supervisor's wrongful declaration on the completion of the IVA and all the purported exclusion of the property 24 Hunters Field". Paragraph 4 of the prayer in the originating application sought an order that the Supervisor should personally pay to the creditors of the IVA the sum determined on the taking of the accounts and enquiries.[25]The matter came before His Honour Judge Maddocks. He held that the Supervisor had been entitled to exclude, and had excluded, the share of Mr Fogg from the assets subject to the Arrangement. The only document which was relied upon as having had that effect was a letter dated 19th August 1998 -- that is a letter written very shortly before the second of the supervisor's reports to creditors -- from the Supervisor to the solicitors then acting for Mr Fogg:
"I would confirm that in view of the National Westminster Bank's PLC second charge in respect of the above debtor's domestic dwelling, there would appear to be no equity for the benefit of the creditors in the IVA and as such I shall not be seeking a sale of the said property."
[26]When read in conjunction with the modified proposals to the IVA, that indicates (at the least) that the Supervisor was not pressing for the property 24 Hunters Field to be sold by auction -- 18 months having by then passed since the date of the commencement of the IVA. It may perhaps also indicate that he would not press for the debtors' share of the equity to be realised and paid to the Supervisor. But, to my mind, that letter contains nothing to suggest that the Supervisor was excluding that property from the assets subject to the arrangements; or releasing the beneficial interest in that property to which the creditors were entitled under paragraph 6.3 of the proposals. That view is consistent with the answers which were given by the Supervisor in evidence. He explained that he had never directed his mind to clause 6.2.3 at all. He did not know that it was in the Arrangement; although he thought some provision of that nature probably was. He had said what he had said in his witness statement because someone else had drafted it for him. His understanding that the property was onerous, was that he thought it had had no value in 1998.

The judge asked him:

"You did not look at the section [that is paragraph 6.2.3] at any time?"
To which the answer was:
"No, of course not."
I do not see how it can be said that the Supervisor intended to exercise, or did exercise, the powers under that provision.[27]The events following the letter of 19th August 1998 appear from the judgment of His Honour Judge Maddocks, at paragraphs 13 and 14. The bank, having been included as a creditor in the supervisor's report sent to creditors in September 1999, confirmed that it was not seeking a dividend under the arrangements. The Supervisor wrote in reply to the bank that he was taking no action regarding the domestic dwelling in the Voluntary Arrangement. Paragraph 14 of the judgment is in these terms:
"Some time later Mr and Mrs Fogg arranged to re-mortgage the Property. Mr Conn was first advised of this by a letter dated 31st May 2001 from the proposed lender TML and then by a telephone call from Mrs Fogg on 1st June 2001. The file note shows that she asked for a caution on the Register to be removed."
I should mention that Mrs Fogg was mistaken if she thought any caution had been entered on the register. There was no caution and no charge. The Supervisor's file note of the conversation recorded that:
"'Ann has asked if we have a letter on file that says we had no interest in the property under the Voluntary Arrangement and can she have a copy of that letter?' This would appear to refer to the letter of 19th August 1998."
So there is no suggestion, at that stage, that there was any document other than the letter of 19th August 1998 which had the effect of releasing the creditors' interests under the trust created by paragraph 6.3.

The judge went on:

"The Bank at this point agreed to accept £23,000 in settlement. A balance of £15,970.30 from the re-mortgage operation was sent to Mr and Mrs Fogg. Mr Conn was kept informed. The funds released were used by Mr Fogg to bring his payments under the Arrangement up to date. His contributions were ultimately paid in full, enabling Mr Conn to pay off the preferential creditors in full and to pay a dividend of 30p to unsecured creditors."
[28]On the basis that that is what happened, Mr Fogg was allowed to use an asset which ought to have been subject ot his voluntary arrangement to meet his own obligation to make contributions under that arrangement. The judge held that Mr Conn was empowered by paragraph 6.2.3 to exclude Mr Fogg's one-half interest in 24 Hunters Field. He thought that that was the effect of paragraph 6.2.3. He said that that onerous property, to which reference is made in that paragraph, meant or extended to property which was "unsaleable or not readily saleable." In the circumstances, the judge was satisfied that the amount of the charges, including the bank's second charge, were such as to extinguish any value in Mr Fogg's interest; so that Mr Conn was entitled to consider that the interest was not saleable. The judge recognised, of course, that Mr Conn had not obtained any further valuation of the property in 1998. Accordingly, the judge dismissed the originating application with costs. He refused permission to appeal. Permission to appeal was granted at an oral hearing by Sedley LJ and Neuberger LJ.[29]The first question, as it seems to me, is whether paragraph 6.2.3 of the proposals does give power to release property from the trusts to which it had become subject by paragraph 6.3. On a proper construction of the proposal, the paragraph does not have that effect. The purpose of paragraph 6.2.3 is to control the entry into the Arrangement of property offered by the debtor or which would otherwise fall in by virtue of the provisions in paragraph 3.[30]It is important to have in mind that paragraph 3.4 provides for windfalls during the Arrangement period to be included within the Arrangement and to be dealt with in the same manner as other assets. Windfalls are defined as any sum received by the debtor during the Arrangement period of a windfall nature including inheritances, gifts, commissions, bonuses, prizes, awards or any similar payments. So, as is not unusual in an Arrangement of this nature, there is the possibility of after acquired property being added to the assets. In those circumstances it is sensible to have a provision which enables the Supervisor to exclude property which would otherwise come in as after acquired property. But there is no point in having a provision which enables the Supervisor to exclude property which is originally the subject of the Arrangement. The Arrangement is approved by creditors on the basis that the inclusion of that property will be beneficial. That is the purpose and effect of putting the proposals before the creditors' meeting. Nor is it necessary to have such a power. Paragraph 17.1 of the proposals provide that, if the Supervisor considers that the interests of creditors are best served by any variation to the Arrangement being incorporated after the commencement date, then he can circulate creditors with the details of the variation and such variation is incorporated if they receive the approval of in excess of three quarters in value of the creditors voting on the proposed variation in person or by proxy. No variation is permitted unless the debtor consents. In circumstances, therefore, in which the Supervisor comes to the view that it is no longer in the interests of the creditors that property originally accepted into the arrangements should be taken out of it, there is power in paragraph 17.1 to exclude it; but with the consent of the debtor and the creditors. It would be surprising if the Supervisor could unilaterally choose to exclude from the benefit of the arrangements property which had been offered and accepted under the original proposals as approved by creditors. In any event it seems to me impossible to describe property which has no value for the time being (because subject to charges) as onerous property for the purposes of paragraph 6.2.3.[31]For those reasons, I take the view that the judge was wrong to hold that there was power to exclude the debtors' half share in the dwelling house under paragraph 6.2.3. If that interest were to be taken out of the arrangement, it was necessary, as it seems to me, to proceed under paragraph 17.1. But, even if the judge were right in his conclusion as to the existence of the power, it is plain that, in this case, the power under 6.2.3 was never exercised. There is no document which purports to exercise the power. The Supervisor accepts that he never gave thought to exercising the power. He did not know that the power existed. The only letter relied upon -- that is the letter of 19th August 1998 -- does not itself purport to exercise a power of exclusion. It merely indicates that the Supervisor does not intend to do what the Arrangement requires him to do, namely to seek a sale of the property.[32]In those circumstances, I find it impossible to see how it can be said that Mr Fogg's one-half share in 24 Hunters Field was ever released from the trust which was imposed upon it by the proposals. If that is right, then this was an arrangement which never came to a successful conclusion. At the end of the five year period prescribed by the Individual Voluntary Arrangement there was still property subject to the terms and trusts which had not been realised for the benefit of the creditors.[33]In proceedings in which Mr Fogg as well as Mr Conn were parties it would, I think, have been right to declare that the Arrangement had not been completed in accordance with its terms and that the notice of 25th April was invalid. But I would not make that declaration in proceedings to which Mr Fogg is not a party. I would not do so because a declaration in those terms would have no purpose. A declaration as to the status in the IVA will serve no purpose if it does not bind the debtor. The debtor needs to be bound because one of the effects of such a declaration (if he were bound) would be to expose him to liability on all the original debts in so far as they are neither released nor statute bound or satisfied. Further, it would have the effect that any property in his hands which was subject to the trust would continue to be subject to the trust. But, in proceedings in which he is not a party -- and which have been dismissed as against him -- there is no point in making such a declaration.[34]If no declaration is made, then, as it seems to me, there is no foundation upon which to proceed to make any order against Mr Conn for the payment of compensation. I leave on one side the question whether there would be power to make an order for compensation in a case of this nature under section 263(3)(c). That is a question which has been the subject of some consideration in this court in the appeal in King v Anthony [1998] 2 BCLC 517. But before the court would make a compensation order, it would be necessary to consider, under section 263(3)(a), whether the act or decision of the Supervisor should be confirmed, reversed or modified; and to consider whether the act complained of had given rise to any loss and, if so, the extent of that loss.[35]In circumstances in which there are grounds for thinking that property which was the subject of a trust under the Voluntary Arrangement may be traceable in the hands of Mr or Mrs Fogg -- and where it is impossible to know, at this stage, whether that property is irrecoverable for the benefit of the creditors (and, if so, to what extent) it seems to me impossible to quantify any loss which could be the subject of an order for compensation.[36]For those reasons, I would dismiss this appeal. Once the decision had been taken to exclude Mr Fogg from these proceedings and to agree to the claim against him being dismissed, it seems to me that further proceedings under section 263 of the Insolvency Act 1986, against Mr Conn alone, for the relief claimed were misconceived.

LORD JUSTICE LATHAM: I agree.

SIR SWINTON THOMAS: I also agree.

ORDER

Appeal dismissed, no order for costs; order below varied to the extent of including a paragraph which dismisses the application below and paragraphs 1, 2 and 3 requiring the applicant to pay the respondent's costs below are set aside.