April_1999_Summons_Against_Revenue

THE COURT OF SESSION

Martin Frost, businessman,
With a residence at Edenside
Kelso Roxburghshire
Pursuer

Against

The Lord Advocate for and on
Behalf of the Commissioners of
Inland Revenue per Solicitors
Office, Clarendon House, 114-116
George Street, Edinburgh
                                                                                      
Defender

1.For production and reduction of Charge for Payment of money dated 14th April 1999 by The Lord Advocate for and on behalf of the Commissioners of Inland Revenue against Martin Frost.

2.To suspend a pretended charge served by the defender on the pursuer on the 14th April 1999 given on an extract decree of this court for payment on 25th May 1993 and extracted on the 22nd September 1993 and restricted by a Minute of Restriction dated the 13th November 1996 and diligence following thereon.

3.For interdict against the defenders from applying for, obtaining or executing any further action upon this charge: and for interdict ad interim.

4.To find the defender liable in the expenses of the action.

1.The pursuer has place of residence at Edenside, Kelso, Roxburghshire. He has had this place of residence for at least three months immediately proceeding the raising of this action. He is domiciled in England and is currently subject to English insolvency proceedings commenced December 18th 1996 in the Bradford County Court and then transferred to the High Court in Leeds. This court has jurisdiction over him in relation to a pretended charge served by the defender on the pursuer dated 14th April 1999 given on an Extract Decree dated 25th May 1993 and extracted on the 22nd September 1993 and restricted by a Minute of Restriction dated the 13 day of November 1996: for payment of various sums totalling £42,072.16 as per charge herein incorporated brevitatis causa, to the defender who has a place of business and head Scottish Office at Clarenon House, 114-116 George Street, Edinburgh.

2.On 14th April 1999 a pretended charge for payment of said sum was served by the defender on the pursuer given on the said decree. However, on the 18th December 1996 the pursuer applied to the Bradford County Court for an Individual Voluntary Arrangement(IVA). The defender choose to bind himself in terms of the IVA in regard to the above sum. Said IVA was upheld by the Bradford County Court as 75% of the pursuers non associated creditors supported same.(list of creditors herewith produced and incorporated brevitatis causa). Said determination was then challenged by way of a 262 Application under the 1986 Insolvency Act by the Unity Trust Bank Plc and the Inland Revenue in terms of jurisdiction: material disadvantage and bogus creditors. Said 262 Application was transferred to Leeds High Court where subsequent to an 8 day Proof the pursuer’s position was upheld in January 1998; costs were awarded against the Unity Trust Bank Plc and leave to appeal was refused. A full court transcript of the proceedings is available where Insolvency Judge Behrens directed that should there be further matters in terms of the pursuers IVA such matters should be first directed to him. Furthermore Judge Behrens noted that since he had upheld the supporting creditors as challenged by Unity Trust Bank Plc and the Inland Revenue he found it difficult to see how the pursuers insolvent estate was liable to the Revenue given the crystallisation of liabilities previously refused by the Revenue. The debts as per pretended charge dated 14th April 1999 are incorporated within the Revenues claim in above IVA.

3. In 1997 the Scottish Courts held that the IVA was binding upon the pursuers creditors in Scotland as pursuant to Section 426 of the 1986 Insolvency Act.(February 21st First Division under Lord Roger in Frost against Unity) The Revenue is bound by the English proceedings and should therefore use the English forum should they wish to pursue further action in terms of a debt incorporated into the IVA as occurred via their earlier 262 Application.

4. On the 20th January 1999 the Pursuers Supervisor issued a default notice to the IVA. The pursuer states that his letter dated 21st April 99 to Mr Pate of the Inland Revenue, herewith incorporated brevitatis causa, is a true narrative of the circumstances surrounding this event. On the 22nd April 1999 Mr Conn wrote to the IVA creditors to seek their guidance as to his next action. On the 26th April 1999 Mr Conn had received over 75% support for the continuation of the IVA as amended. As per English Insolvency Law following a recent English Court of Appeal decision said amended IVA binds all original creditors to the IVA.

5.On the 26th April 1999 the pursuer contacted Mr Pate of the Revenue who accepted knowledge of the above facts. That said Mr Pate explained that he was unable to undertake that the Revenue would not Petition for the pursuer’s sequestration in Scotland following the expiry of the purported charge. This in despite of an English jurisdiction having been already upheld for the same debt and there being existing English insolvency proceedings. Such petition is contrary to Section 426 of the Insolvency Act 1986 and Section 12 of the Bankruptcy (Scotland) Act 1993.

6.The Pursuer is involved in other proceedings before this honourable court; namely a continued Procedure Roll in Unity against Frost at the end of June 1999. The pursuer wishes this Procedure Roll to continue. He is mindful that should the Revenues proposed Scottish sequestration commence then competing English insolvency proceedings would probably prompt a blocking English protection order. The same was earlier upheld by Lord Cameron in Unity against Frost in January 1997 when this cause was obliged to be sisted to await the outcome of the English order. Furthermore during the 262 Application Proof before Judge Behrens in January 1998 it did emerge that there did appear to be some collusion between the defender and Unity Trust Bank Plc. (reference is made to correspondence between Mr Franks for Unity and Mr Anderson for the Revenue which can be produced).

7.The pursuer believes that the purported debt on the purported charge should not be the subject of further Scottish proceedings. Such proceedings if implemented would prove fruitlessness in themselves but may prompt a sist of the Procedural Roll in Unity against Frost. This may be the true motive and would not be in the interests of justice. Therefore in all of the above circumstances this action is necessary and interdict, interim interdict and or suspension or reduction should be granted as concluded for.

1.The charger’s claim being part of an English Individual Voluntary Arrangement, the said charge and diligence following thereon should be reduced as concluded for.

2.The charger’s claim being part of an English Individual Voluntary Arrangement, the said charge and diligence following thereon should be suspended as concluded for.

3.The use by the defender of the said purported charge constituting a breach of the 1986 Insolvency Act, interdict should be granted as concluded for.

4.Having regard to the balance of convenience, interdict ad interim should be granted.

5.Lis alibi pendens.

MARTIN FROST
(Party)
Edenside
Kelso
TD5 6BS