A3/2000/6084, A3/2000/6087
Neutral Citation Number: [2000] EWCA Civ 381
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Companies Court)
                          The Royal Courts of Justice
                          The Strand
                          London WC2A
 
                               Thursday 5 October 2000
 
Before:

LADY JUSTICE ARDEN
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IN THE MATTER OF K VINTNERS LIMITED and
IN THE MATTER OF THE INSOLVENCY ACT 1986

Between:
NEIL FRANCIS HICKLING
Appellant/Respondent
and:
DOSHI FINANCIAL SERVICES LIMITED
Respondent/Applicant

Between:
NEIL FRANCIS HICKLING
Appellant/Respondent
and:
REVTI VADILAL KARSHANJI DOSHI
Respondent/Applicant

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Computer Aided Transcript of the Stenograph Notes of
Smith Bernal Reporting Limited
190 Fleet Street, London EC4A 2HD
Tel:  020 7421 4040
Official Shorthandwriters to the Court
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MISS A HARRINGTON (instructed by Balsara & Co, 2 Tavistock Place, London WC11H) appeared on behalf of the Applicant
MR C BOARDMAN (instructed by Taylor Joynson Garrett, Carmelite, 50 Victoria Embankment, Blackfriars, London EC4Y) appeared on behalf of the Respondent

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JUDGMENT
Thursday 5 October 2000
1.	LADY JUSTICE ARDEN: This is an application for permission to appeal against the order of Evans‑Lombe J, dated 13 March 2000. On this application, Miss Amanda Harrington has appeared for the proposed appellants, Mrs Revti Doshi and Doshi Financial Services Ltd (to whom I shall refer as “Revti” and “DFS”), and Mr Christopher Boardman has appeared for the liquidator. Chadwick LJ directed that the liquidator should be joined to this application.
2.	The proceedings concern the liquidator's claims against, among others, Revti and DFS, that certain payments had been voidable preferences and that there had been transactions in breach of section 127 of the Insolvency Act 1986. The matter was appealed to the learned judge by the liquidator, and the learned judge made orders on that appeal. Accordingly, an appeal to this court would be a second appeal lodged prior to 2 May 2000, so this is a case which is not under the new current Part 52, but under the earlier practice direction. The court has to be satisfied that there is a reasonable prospect of success and a point of principle.
3.	In the usual way an application would have been made to Evans‑Lombe J and the court would have been assisted by his determination of any application for permission. If he had refused it, in particular, the court would have the benefit of his reasons for not doing so. The position is that it was considered impracticable to make an application to the learned judge, because the application was left until the end of the requisite period of 28 days. Mr Doshi had been acting without legal representation on behalf of DFS and Revti, and by the time Revti and DFS were ready to make their application the learned judge was on leave. I am not satisfied that that prevented an application to the learned judge in the usual way, but I have proceeded with this application since both parties have consented to my hearing it and there appears to be no dispute as to what occurred before the learned judge, in particular as to his reasons for not allowing an appeal to be withdrawn by Mr Doshi on behalf of Mrs Revti Doshi. Another reason for proceeding is that the matter has already been before the Court of Appeal, since Chadwick LJ has given directions.
4.	There is no issue as the company's insolvency or as the fact that the relevant payments were voidable preferences; alternatively, in one case, void under section 127 of the Insolvency Act 1986. The relevant sections are 127, 239 and 241, to which I will now refer. The material part of 127 is as follows:
“In a winding up by the court, any disposition of the company's property, and any transfer of shares, or alterations in the status of the company's members, made after the commencement of the winding up is, unless the court otherwise orders, void.” 
5.	239:
“(2) Where the company has at a relevant time (defined in the next section) given a preference to any person, the office‑holder may apply to the court for an order under this section.
(3) Subject as follows the court shall, on such an application make such order as it thinks fit for restoring the position to what it would have been if the company had not given that preference. 
241:
“(1) Without prejudice to the generality of sections 238(3) and 239(3), an order under either of those sections with respect to a transaction or preference entered into or given by a company may (subject to the next subsection) ‑
	(a) require any property transferred as part of the transaction, or 	in connection with the giving of the preference to be vested in 	the company . . .
	(d) require any person to pay, in respect of benefits received by 	him from the company, such sums to the office‑holder as the 	court may direct.” 
6.	There are a number of other sub‑paragraphs which I need not read, but which demonstrate the range of orders which the court may make for the purpose of restoring the company to its prior position. Sub‑section (2) then provides that:
“An order under section 238 or 239 may affect the property of, or impose any obligation, on any person whether or not he is the person with whom the company in question entered into the transaction or (as the case may be) the person to whom the preference was given; but such an order. . .
	(b) shall not require a person who received a benefit from the 	transaction or preference in good faith, for value and without 	notice of the relevant circumstances, to pay a sum to the 	office‑holder, except where that person was a party to the 	transaction or the payment is to be in respect of a preference 	given to that person at a time when he was a creditor of the 	company.” 
7.	So it is clear under section 241 that the court may make an order in reference to a person other than the preferred creditor, and that in that case there is an exception for a purchaser in good faith; but that that does not apply where he is a party to the transaction.
8.	The facts in very brief outline are that the company in liquidation was owned and controlled by Mr Dhiren Doshi. He also controlled another company, namely DFS. His mother was Mrs Revti Doshi. She lent £81,217 to the company. In November 1994 Dhiren Doshi transferred vehicles and computer equipment to Mrs Doshi in reduction of her debt. This was done by a letter which, as I am informed, placed the book value on the computer equipment and also the vehicles as per Glass' guide to valuation. I am told it was in the higher range of Glass' guide. The letter also gave, as I understand it, permission to a third newly formed company, called Cliftonrise, to use the computers and vehicles.
9.	On 20 January 1995 Customs and Excise presented a petition for winding up the company and an order was subsequently made for the company's winding‑up. So the commencement of the liquidation was 20 January 1995. The liquidator has claimed, firstly, that the transfer of the vehicles and computer equipment was a voidable preference of Mrs Doshi; secondly, that a payment of £9,000 by the company to DFS on behalf of Mrs Doshi in further reduction of her loan was also voidable preference; and, thirdly, the payments made out of the company's bank account after 20 January 1995 to DFS for the account of Revti were void by section 127 of the Insolvency Act 1986. In fact the liquidator has limited his claim here to £5,720‑odd, because he was able to recover the other payments from the company's bankers.
10.	The legal consequence of the various payments to Mrs Doshi were that (subject of course to sections 239 and 127) the debt owed to her was reduced and/or discharged. However, simultaneously she became a creditor of the new company or licensor of the assets to it. The new company was Cliftonrise, which began trading under the company's name without, so far as I have been told, permission of the court under section 216. The company has been described by Miss Harrington as a phoenix company.
11.	Revti, I am told, took no part in the company's affairs. She is described by Miss Harrington as an elderly, non‑English speaking lady and who spends half her year in India. She lent the £81,000 to the company. What she was repaid was passed to Cliftonrise and used by it and so ‑ this is a crucial point in Miss Harrington's submissions ‑ Revti obtained no benefit. The reality, submits Miss Harrington, is that Cliftonrise has also discharged as many liabilities as it took over assets; for instance, in relation to wages of the company's employees and the amount which the company owed to warehouses in respect of its business activities. Therefore, submits Miss Harrington, it is unclear whether as a result of the various transactions Cliftonrise really received anything of value.
12.	I will now go to the proposed grounds of appeal. The first is what I would term the value point. It is not sought to be contended that the transfer of vehicles and computer equipment to Mrs Doshi was not a voidable preference, but it is said that the district judge was right when he fixed a valuation for those assets based on their forced sale value, and that the learned judge was wrong to increase that valuation to the value which the parties had placed on assets for the purposes of the transaction.
13.	The learned district judge held that he had a wide discretion. He noted that he did, in fact, have discretion wide enough to make no order at all. He thought, in effect, that the appropriate benchmark what was what the liquidator would have obtained in the liquidation; that is, on a forced sale basis. He thought that the liquidator had conceded in his evidence that he would recover only 25 per cent of book value in the event of a forced sale. I have been taken to the liquidator's evidence and I am satisfied that the liquidator did not concede that point. He accepted that it was possible that only 25 per cent of book value would have been obtained, but he did not accept that that was necessarily the case in this case. He said:
“I do not know how new this equipment is. I suppose you could argue it has an enhanced value [he is talking here about computers] because it has a lot of information within the hardware itself. It is very hard to say without looking at it. The whole problem is, as liquidator, I was not given an opportunity to look at it or sell it.” 
14.	In fact the learned judge held that he had had that opportunity, but the position remained that the learned judge relied on what he termed to be “a concession” made by the applicant that on forced sale a figure of about 25 per cent of book value would have been received. He was also influenced in determining the value by what it was that a liquidator would have received.
15.	As I have pointed out, the order that the court will be making, if the court decides to make an order under section 239, is for the purpose of restoring the company to the position it was in before. In point of fact there is a material difference between the company and the liquidator in this circumstance, because obviously the liquidator's appointment was some time after the transaction in question. So the district judge had really set his sights on what the liquidator would obtain and, as I see it in the light of the section, the learned judge was entitled to interfere. At page 93 of the bundle the learned judge deals with the question of valuation. He refers to the district judge having based his judgment on the concession, and the ground of appeal being that the value the district judge had reached was unsupported by evidence and that the district judge ought to have attributed the values to the assets which were given by the company and the first respondent at time of the transaction.
16.	The learned judge was also satisfied that the liquidator had not made a concession. He records that the value of the vehicles was that shown in Glass' guide and that the vehicles and computer equipment were sold and ultimately came into the possession of Cliftonrise to be used in the course of its business. When I say “sold”, that is, they were applied in reduction of Revti's debt. He concluded that there was no basis for the exercise of the district judge's discretion. There was affidavit evidence by Revti that the book value probably exceeded the true value, but the learned judge rejected that as there was no evidence to support that one brief statement. Revti had not called evidence as to what the true value of the assets were. So the learned judge held that the only evidence of value was that given by the parties in respect of the transaction and, moreover, it was unfair to creditors to attribute a value to the assets after they had been used by Cliftonrise. He rejected the argument that the liquidator should have taken steps to recover the assets as this was not relevant to their value.
17.	In her draft notice of appeal, Revti seeks to contend that the assets could never have been sold at more than their forced value but, again, it seems to me that there is no evidence to support this. The indications on value are really to the contrary, because Cliftonrise needed the assets in question for the purpose of its business; and, indeed, to use the assets, as I understand it, for the purpose of its business, though it has since ceased to trade.
18.	Miss Harrington also submits that the liquidator did not take any steps to sell the assets, but the learned judge had already dealt with this point. Miss Harrington also submitted, as I have indicated, that Revti obtained no benefit, but I will deal with this point in general terms separately.
19.	So the first question is whether there is any real prospect of success on an appeal against the decision of the learned judge. As I see it, there really is no prospect of his order being set aside on appeal. There was a conspicuous failure by Revti to put in any evidence on value, apart from the statement I have read. The court had to do the best it could. The points that Revti was innocent of the fact that it was a voidable preference, innocent of any wrong‑doing and also that she personally obtained no benefit are, as I see it, irrelevant. But I will deal in more detail with the benefit point later on.
20.	The second point is as follows. At the start of the appeal, as I understand it, Mr Dhiren Doshi appeared for Revti and DFS. Indeed, he made his submissions on their behalf throughout the hearing. But at an earlier point in the hearing he withdrew an appeal by Revti against the order of the district judge against her, and also an appeal by DFS. On the second, or possibly the third, day he came back and said that he now wished to pursue those appeals on behalf of Revti and DFS. The position was, as I understand it, that at the first stage he had produced a written document showing that Revti did not wish to pursue her appeal.
21.	The learned judge says this in his judgment:
“Until this morning, these matters had concerned the court for a day an half. This morning, Dhiren Doshi informed me that he wished to re‑open the appeals by Shilpa Doshi [she is another appellant before the learned judge, with whom I am not concerned today] and Revti Doshi in respect of orders made by the District Judge against them. Because the case had proceeded until this point on the basis that those appeals would not be pursued and because to pursue those appeals at this moment would require an adjournment so the appeals could be prepared on [the] liquidator's case on those appeals, I took the view that if Shilpa Doshi and Revti Doshi wished to re‑open those appeals, notwithstanding that they had told me through Dhiren Doshi that they were not to be pursued, then I would require them to appear in this court to inform me that was the case, that it was indeed their decision to re‑open those appeals. I was not prepared to be told that they wished to re‑open those by Dhiren Doshi in their absence. Accordingly, I declined Dhiren Doshi permission to appear on their behalf for the purpose of pursuing those two appeals. I therefore deal in this judgment only with the appeals of the respondents which have been argued in this court, namely those of DFS and to the extent it was argued, the appeal of Mahesh.” 
22.	Mr Boardman appeared before the learned judge. He informed me that in effect the appeal before the learned judge, which had already lasted a day and a half, would have to be opened again, but that it was open to Dhiren Doshi to produce the consent; indeed, open to Revti to appear before the court to explain that she did herself want to proceed with her appeals. One can understand that she may have wished to do so, given that the appeals of the liquidator would result, if successful, in an increased liability on her part.
23.	Obviously, this is a matter which has given me some concern because Mr Dhiren Doshi was appearing for Revti and for DFS. He is not, as I understand it, a lawyer but, having considered what the learned judge said, it seems to me that it would have been clear to Dhiren Doshi that it was open to him to produce the consent of Revti or to have her appear before the court. He gave no reason why that could not be done, and it seems to me that the attitude taken by the learned judge in the exercise of his discretion could not be set aside on appeal. It would have to be shown that the decision was unreasonable or unprincipled or failed to take into account relevant considerations. Therefore it seems to me that there is no prospect of success on appeal on this point.
24.	There is a further point which I have taken into account in reaching that conclusion. It is this. Neither Revti nor DFS seek to argue that the relevant payments were not voidable preferences. What they want to argue is that this is a case in which no order should be made. Miss Harrington refers me to Re Paramount Airways Ltd (In Administration) [1993] CH 223, in which the Court of Appeal held that, despite the wording of section 239(3), the court has a discretion as to whether to make an order for compensation at all. As I read it, this case is authority on the question of whether there should be an order at all, not as to the amount of any order. Once the court has determined to make an order, as it seems to me, then the court must follow the directions in section 239(3). It is not a completely open discretion, but rather a controlled discretion to be exercised for the statutory purpose. But the court does a have a discretion, on the basis of Paramount Airways, as to whether to make any order at all. So Miss Harrington informs me that what the proposed appellant would wish to do is to argue that there should have been no order at all.
25.	Miss Harrington further submits that there was, in fact, no difficulty in the judge hearing this appeal. Mr Boardman has pointed out that his client does not accept that, because it would have involved the liquidator preparing the case on the appeals, which he had not come prepared to open. As he said, they had been withdrawn. That had been the intention at the start of the hearing and accordingly, as I see it, it is not easy to say to conclude there would have been no difficulty in the judge hearing the appeal.
26.	But, leaving that point aside, Miss Harrington's main point which she wishes to raise on appeal is that the Court of Appeal should consider how its discretion to refuse to make any order should be exercised. She would wish to argue that the relevant considerations in this case included Revti's own innocence of any wrongdoing; the fact that she passed assets to Cliftonrise and therefore obtained no benefit; the fact that the liquidator should have pursued Dhiren Doshi and Cliftonrise; and the fact that the liquidator could have looked at the assets which were transferred. Those were points, in fact, with which the learned judge dealt. Miss Harrington referred me to section 241, which I have read. It does refer to benefits, but merely in reference to one form of order that the court could make. So, in essence, Miss Harrington wishes to argue that this is a case in which the court could have refused to make any order at all, and that the court should consider as a point of principle the circumstances in which it would make no order, further to the ruling in Paramount.
27.	The learned judge dealt with this particular point at 87 in the bundle. He said:
“It was argued that what happened to the money after Revti received it was in some way material to this conclusion. In my judgment, it is not. The fact that Revti Doshi may have permitted the money held on her behalf by DFS, as a result of the payment by the Company to DFS on her behalf, to be passed to Clifton Rise which may have used it for the purpose of taking over aspects of the Company's business by paying the Company's creditors and by acquiring its assets, is, it seems to me, irrelevant to the question.” 
28.	So far as this point is concerned, it seems to me likewise that there is no real prospect of success in arguing that the liability of the recipient of voidable preferences should be affected by the circumstance that Revti passed over assets to Cliftonrise. The fact is, as I have explained, that she was party to these transactions. She received assets and money in reduction of debt. She ceased to that extent to be a creditor of the old company. She become a creditor of the new company. Those were transactions to which legal consequences attached, and those were transactions into which she entered: it is not suggested that they were done without her consent. In those circumstances it seems to me that there is no prospect of her showing on appeal that the learned judge was wrong to conclude that the fact that she passed assets to Cliftonrise was irrelevant. Likewise, as I have explained, from section 241 it is clear that where a person is party to a transaction it is not an objection to an order being made against them that they are a purchaser in good faith for value. An order can still be made against them. Likewise, so far as the point that the liquidator should have pursued Doshi and Cliftonrise is concerned, as I see it, if the liquidator has claims against those parties, it is a matter for him to decide whether or not to pursue them, and that is not a matter which should be taken into account in the circumstances of this case to reduce Revti's liability. The learned judge dealt with the question that the liquidator should have looked at assets. As I see it, that cannot affect the question of whether any order should have been made at all.
29.	So it comes to this. If I gave permission to appeal on the basis that the learned judge should have permitted Dhiren Doshi to withdraw the withdrawal of Revti's appeal so that she could argue that no order at all should have been made against her, notwithstanding that she accepted there was a voidable preference, as I see it that argument would not have a reasonable prospect of success. For that reason also it seems to me that I should not give permission to appeal on the basis that the learned judge should have permitted a late withdrawal of a withdrawal of an appeal.
30.	Similar points are made by Miss Harrington on behalf of DFS; that it obtained no benefit from the payment of £9,000 paid to it. Firstly, I should deal with Revti's position here. As I have already explained, £9,000 was paid in early January 1995 to Doshi on behalf of Revti and, as I understand it, the money was then used by Cliftonrise, not Revti. So Miss Harrington says that Revti obtained no benefit and therefore she ought not to have been ordered to repay it. But the fact is, as I have already explained, that she ceased to be creditor of the company to that extent and became a creditor of Cliftonrise instead. Legal consequences attached. She agreed to this. The learned judge, as I already explained, rejected the submission that what she did with the money was relevant. In my judgment there is no real prospect of success on appeal of showing that the learned judge was wrong on this point.
31.	The same issues arise in relation to the sum of £5,730. In fact this was a claim under section 127. Again, the section says the payment is void, and that means the recipient must repay it. The innocence of Revti, the fact that she obtained no material benefit, is not a point: the transaction was in her favour. Before I go further, I should deal with DFS's contention about the £9,000. The position is that DFS was ordered to repay the £9,000. It is said by Miss Harrington that she wishes to contend on appeal that it derived no benefit; it simply received the sum for the benefit of Revti. But the basis on which liability attaches to DFS is that it was the recipient. As I have already explained, under section 241 the court's jurisdiction is not confined to the actual recipient, and the court can therefore make an order against DFS. DFS was a company controlled by Dhiren Doshi and therefore would have known the facts constituting the preference. In those circumstances, as I see it, there is no real prospect of success or of showing on appeal that no order should have been made against DFS in the amount of £9,000.
32.	I should observe in relation to the earlier transaction of the transfer of the computer equipment, that Evans‑Lombe J had observed that the price of £30,000 for the computer equipment was a reduction on its book value of £38,000. This appears at page 94 of the bundle. The judge says:
“The valuation of £30,000 for the office equipment, shown in the letter of the 14th November, was based on the book value of the equipment in the company's most recent accounts, although it was a discount from their book value which was £38,000.” 
33.	Miss Harrington focuses in her submissions on that. She says that the learned judge was wrong; it was not a discount from book value. But as I see it, nothing turns on this point made by the learned judge. The learned judge was taking their valuation based on the transactions by the parties as the only evidence of value. In fact the reduction from book value was a point which was, in effect, a throwaway line, as I see it, and not a plank in the learned judge's reasoning.
34.	I now turn to the question of the repayment of £5,700, the sum ordered to be paid to the liquidator by Revti pursuant to section 127. The learned district judge held that DFS was liable, but not Revti, because she did not control DFS. The learned judge held that the payment was void by virtue of section 127 and that Revti as well as DFS should repay it. This appears at page 96 of the bundle. The judge says:
“Where a liquidator is making such a claim, questions of who controlled the company, subsequently liquidated, which made the payments sought to be recovered are, in my judgment, quite irrelevant. Subject to the court's discretion to validate ex post facto those payments, a void payment is recoverable from its recipient as of course. I would allow the liquidator's appeal on this ground and order that Revti Doshi repay the sum of £5,720.92 to the liquidator, jointly and severally with DFS.” 
35.	As I see it, the position is that DFS received this sum on behalf of Revti. It was in reduction of debt and therefore the benefit of the payment in that regard was received by her. In law she obtained the benefit and therefore there would be no real prospect of success on appeal on this point. In fact the payment was subsequently made by DFS to Cliftonrise, so Miss Harrington's submission is that Revti never obtained the benefit. Therefore she submits that, where a transaction be void, there should be no order to repay because the transaction had no legal effect. But that argument lacks logic because, with respect to Miss Harrington, no one could ever be asked to repay any sum under section 17 if that argument were carried to its logical conclusion. The position is that Revti did obtain the money. She obtained it through DFS. The fact that she agreed to pass it on to Cliftonrise, that she acquiesced in those arrangements, is not something that can be taken into account to reduce the claimant's creditors. Therefore on this point likewise it seems to me that there is no real prospect of success on appeal and also no point of principle.
36.	I must deal with a further submission which Miss Harrington has made, which is that the liquidator either had or could have recovered other sums, and therefore that would have reimbursed the company, as it were, for any loss they had suffered under the transactions in question in these proceedings. The learned judge dealt with this point at page 12C‑F of his judgment. It was submitted by Dhiren Doshi on behalf of DFS that since the liquidator either had or recovered other sums which meant that he could have recovered more than £51,000 held by the company at winding‑up, that would disentitle the liquidator to claim this sum from DFS and presumably from Revti. The learned judge said:
“I cannot accept this submission. The liquidator has simply limited his claim to £5,730.92 for reasons best known to himself. It follows that it seems to me the district judge's order that DFS pay to the liquidator the sum of £5,730.92 should stand. The reasons why it should stand differ somewhat from those advanced by the District Judge. I would nonetheless dismiss the appeal from that order also.” 
37.	In the draft notices of appeal it is said that the liquidator's stance in this action has been to assert only that any payments out of the company's bank account between 20 January 1995 and the date of the liquidation reducing it from a balance of £51,000 to nil are void; that the applicant's evidence was that he has recovered approximately £46,000 of those void payments from third parties, including Barclay's Bank, leaving a balance of just in excess of £5,000; that the ultimate recipient (via the respondent and DFS) of the void payments was a company called Cliftonrise, a phoenix company; that Cliftonrise purported to acquire and succeeded to the company's business during the period between commencement of the winding up and liquidation, acquiring assets and discharging liabilities from the void payments; that the applicant has not sought to unravel the acquisition of assets and goodwill by Cliftonrise, but rather has simply elected to recover from whatever source he can sums paid out of the company's bank account after commencement of winding‑up, the immediate recipients of which were the respondents; but in fact it transpires that the official receiver received in excess of £10,000 from debtors of Cliftonrise, being debts owed to Cliftonrise; that on the hearing of the appeal before Evans‑Lombe J, Dhiren Doshi relied on a bundle of invoices and correspondence showing that the company in liquidation had been paid debts owed to Cliftonrise in excess of £10,000 ‑ the learned judge wrongly failed to give these any weight; that in the absence of any other basis on which Cliftonrise owed the company money, the said debts should have been counted towards recovery of void payments out of the company's bank account; and that on 7 April 2000 the official receiver provided a schedule of trade debts collected by the official receiver between 21 March and 31 December 1995, which the respondent intends to adduce in evidence on this appeal as proof that the applicant has made sufficient additional recoveries from Cliftonrise to render unnecessary and inappropriate any recovery against her. Much the same is said on behalf of DFS.
38.	I would point out that there has been no application to me to adduce further evidence on the appeal. The position is that the fact that Cliftonrise may have made payments on behalf of the company may possibly give rise to some claim on its behalf against the company, or it may possibly be that Revti and DFS have some claim against Cliftonrise, but the consequences under section 127 are clear and, as I see it, there is no prospect of contending on appeal that the pavements ordered to be repaid under section 127 should be reduced by reference to those matters. It would make the task of the liquidator considerably more complicated in any application under section 127 if he had to do the type of unravelling exercise which is contended for by the proposed appellant.
39.	The final point is the question of interest. The district judge ordered interest at a rate of 8 per cent on the amount awarded since the proceedings started. He held that the liquidator had indicated that that was the amount which he would seek. Reference has been made to that letter, which is at 213 of the bundle. I should point out that there is no note of the reasons of the district judge, but I am informed by Mr Boardman that the district judge, in effect, considered that the liquidator was bound by this letter. It is a letter dated 24th September 1999 in which, in calculating his claims, the liquidator through his solicitors says that interest is claimed at 8 per cent from the date of issue, 1 October 1998, to 7 October 1999.
40.	The learned judge held that the district judge's interpretation of the letter was incorrect and, further, that there was no logical basis for the district judge's conclusion, and he ordered interest from the commencement of the winding‑up. The learned judge, in my judgment, was entitled to interfere on the basis that that letter could not bind the liquidator not to seek a further amount on account of interest before the district judge. I should point out that Revti and DFS were at that stage represented by counsel, and of course it would be open to counsel to make a contention about the necessity to have claimed it in the proceedings and so on. But the question of fixing interest was a matter for the court's discretion and, as I see it, the learned judge was correct to conclude that the liquidator was not bound by the terms of that letter. It was therefore for the learned judge to decide how to exercise his discretion. He considered that voidable preferences were avoided only from the date of court's orders, but he took as the appropriate date the commencement of the winding‑up.
41.	Miss Harrington submitted that the judge should not have interfered with the district judge's exercise of his discretion but, as I see it, the learned judge was entitled to do so. Alternatively, Miss Harrington submits that the district judge's exercise of discretion was justified by reason of the liquidator's delay. The liquidation started in 1995, the proceedings were only begun in 1998, and the liquidator then wrote the letter to which I have referred, on 24th September 1999. She also pointed out that Revti and DFS had never had the benefit of the payments. This is the same argument as I have already referred to, that the use of the money and the assets was passed over to Cliftonrise. But there is one point which I must mention, which is that there has been no appeal by the liquidator against the district judge's orders as against DFS in respect of this interest. So DFS is only under a liability as per the district judge's order; whereas, as I understand it, the learned judge's order affects only Revti.
42.	In relation to the interest payments, the question is whether or not the learned judge's exercise of his discretion would be one with which the Court of Appeal would interfere, and whether there is a reasonable prospect of success on that point. So far as that is concerned, it would have to be shown that the judge's exercise of his discretion was one which was contrary to principle or which was unreasonable, or in which he made some mistake of law or failed to take account of some relevant consideration.
43.	So far as the conclusion of the learned judge is concerned, it is of course indeed the case that once the winding‑up order has been made, then the facts necessary to constitute the voidable preference are complete. That means that from that point the recipient's voidable preferences, and indeed the recipients of payments under section 127, are in possession of money and property which should be transferred to the liquidator for the benefit of creditors. Therefore there is logic in choosing a date earlier than that chosen by the district judge. The learned judge took the date of the commencement of the winding‑up because that is the date which is the last date necessary to crystallise the completeness of the claim for voidable preference.
44.	A further question is whether or not the learned judge was right to do that, when DFS had been ordered to pay interest on a different basis and the liquidator had not appealed and sought to upset that order. In the normal way that point is not relevant because it is simply an accident, so far as the Revti is concerned, as to whether or not the liquidator proceeds against both applicants. In so far as an order was made against both of the respondents, it seems to me that there must be a prospect of success on appeal that the learned judge should have not disturbed the order, given that it was not sought to be disturbed against one of the parties. That would raise the question of whether there should be permission to appeal in respect the interest on the sums of £9,000 and £5,730. As I see it, there must be a prospect of success on that appeal. The question is whether or not the court should also give permission to appeal in those circumstances in respect of the further amount of interest that was ordered to be paid in respect of the voidable preference constituted by the letter of November 1994, in which DFS was not involved. It seems to me that it is possible that the court may take a view of the letter which would mean that that letter ought also to be in front of it. Accordingly, in those circumstances it seems to me that the permission would have to extend to the latter point as well.
45.	This would be a second appeal on the question of interest, and I would have to be satisfied that there is a point of principle. The point of principle is whether the court should interfere with the interest awarded against one respondent when the liquidator is not seeking to upset it against the other. On that basis I would give permission to appeal, limited to the interest point alone.
46.	Finally, I would say that Mrs Revti Doshi's real complaint is that her son Doshi induced her to part with what she received from the company in favour of Clifton Rise. That is really a matter for her and her son, and it is not a matter as a result of which there is any prospect of arguing that the claims of unsecured creditors should be reduced as a result.
47.	I make the following orders. For the reasons already given I grant permission to appeal, limited to the interest point, and dismiss the rest of the application. So far as the costs of the appeal are concerned, I award the liquidator 90 per cent of his costs, summarily assessed upon examination of the statement at £2,500, to be paid within 14 days. I stay execution of the amount of interest. That represents the difference between the district judge's order and the learned judge's order. I will also stay the appeal proceedings for 21 days to allow the parties an opportunity to see whether there need be an appeal in respect of the interest point or whether they can come to some other arrangement. That, of course, is a matter to be negotiated by the liquidator obviously has obligations to creditors. I also direct that no appeal should be proceeded with until the applicant has provided security for the costs of payment to the satisfaction of the court. That can be done by application to the registrar.
48.	The further point is whether I should attach some form of condition to the appeal. Mrs Revti Doshi has said in the course of her private examination in Croydon County Court that, in summary, she has no assets other than assets which are charged for the costs of the appeal, and that she has no income. She says that her two sons, Dhiren and Mahesh, are willing to do their best to try and pay any liabilities in order that she be not made bankrupt; but I have no information as to the assets of those two individuals. She says that if she loses in the Court of Appeal she has no assets.
49.	So far as this appeal is concerned, an appeal on the interest point will be a second appeal and therefore I am bound to take into account the resources of this court. Mrs Revti Doshi has had the opportunity of arguing her case on interest on two occasions already, including one appeal. I therefore do not think this is a case in which I cannot attach a condition. If she had never had the opportunity to bring the matter before a court, or possibly even an appeal court, I would not have wished to expose her as a condition of bringing the appeal, but this is a second appeal and I propose to attach the following condition; that she pay not less than £10,000 in discharge of the amount ordered to be paid to the liquidators in these proceedings before this appeal takes place; and that the appeal is stayed until a certificate is filed by her or her solicitors, showing that she has done so. Of course that must be served on the liquidator. I further provide that if the stay is not lifted within six months, the appeal should be dismissed. Obviously I will make an order that all this is subject to further order of the court, because if there is further evidence that she wishes to place before the court which is material, she should have that opportunity.
ORDER: Permission to appeal granted on the interest point only. The respondent to have 90 per cent of his costs, summarily assessed at £2,500, to be paid within 14 days. The appeal proceedings to be stayed for 21 days, not to be proceeded with unless a certificate is filed by her or her solicitors showing that she has paid not less than £10,000 in discharge of the amount ordered to be paid to the liquidators in these proceedings. If the stay is not lifted within six months, the appeal to be dismissed. All these directions to be subject to the further order of the court.
(Order not part of approved judgment)