A Liverpool property investor has failed in a legal bid to stop US “vulture fund” Promontoria from demanding a payment of more than £4m for unpaid debt.
The Court of Appeal ruled this week that Promontoria can use “heavily redacted” Deeds of Assignment to prove it owns the titles to businessman Anthony Hancock’s 21-property portfolio.
Hancock had argued the redactions obscured a disagreement over the ownership of the properties.
Hancock had built up his portfolio through debt from Yorkshire Bank. But in 2014, after the bank feared he was having difficulties servicing the loans, it sold the debt, secured by titles to the properties, to Promontoria, a business owned by US private investment firm Cerberus Capital Management.
Promontoria makes its money by buying non-performing loans to help banks de-risk their balance sheets. It has been in ligation with Hancock for a number of years to recover the debt.
According to a ruling this week, Hancock has made a number of different arguments in the High Court and below, but Hancock’s current argument raises an issue that hasn’t been raised in the Court of Appeal before: can a court rely on a document that has redactions in it if a solicitor states that those relations are irrelevant?
While Hancock, who wasn’t a party to the sale so wasn’t shown the document, argues the redactions on the deeds obscure a dispute, Promontoria’s independent solicitor, a parter at Addleshaw Goddard, who has read the deeds, has given evidence that they don’t.
And in a ruling handed down this week, the Court of Appeal backed Promontoria, finding that, in this situation, Hancock was unable to prove that there was a dispute.
However, the judge who wrote the ruling, Lord Justice Henderson, said that, as a general principal, redactions should be avoided.
“Since the process of construction requires the document as a whole to be considered, the starting point must always be that the entire document should be made available to the court, and any redactions to it on grounds of irrelevance should either be forbidden or, if permitted at all, convincingly justified and kept to an absolute minimum” he wrote.
“Except in the clearest of cases, the question of relevance to the process of construction is one that the court should be left to decide for itself. Certification by a solicitor provides an important safeguard, but where the question is one of the correct interpretation of a written document, it is not normally appropriate for a solicitor, however experienced, to pre-judge which parts of the document the court may find useful in performing its task,” he said.
“In many contexts, application of the criteria which I have outlined above might well (I say no more) lead to the conclusion that redactions similar to those in the present case were so extensive, and of such a nature, that the court could not safely resolve an issue of construction of the document in question,” he said.
However, “In the particular context of the present case… I have concluded… that the redactions cannot, without more, enable Mr Hancock to make good his challenge to the Statutory Demand. As so often, context is everything, and sweeping generalisations are to be avoided.”
Lord Justice Floyd Lord Justice Henderson and Lord Justice Flaux
Anthony Leslie Hancock v Promontoria (Chestnut) Limited
Court of Appeal (Floyd LJ, Henderson LJ, Flaux LJ) 14 July 2020 (Handed down under the COVD protocol and released after)
Mr Hugh Sims QC and Mr Graham Sellers (instructed by Joanna Connolly Solicitors) for the Appellant
Mr Jamie Riley QC and Mr James McWilliams (instructed by Addleshaw Goddard LLP) for the Respondent
