News

Receivers avoid legal costs of Orb Estates creditor

News

Christian Metcalfe

04 June 2007

South West

The Chancellor of the High Court, Sir Andrew Morritt CVO, refused Peter Mills’ application for costs against the receivers after they failed in their damages claim arising from an uncompleted flat purchase within the mixed-use scheme at Poole Quay.

Last year, Deputy Judge Peter Leaver QC upheld Mills’ defence that the £650,000 flat had been intended to settle part of a £1.85m debt owed to him by Orb, from whom Dolphin Quays Developments (DQD) bought the scheme in 2002.

He said that the receivers, who were seeking £155,000 from Mills after reselling the flat for only £495,000 on the open market, were therefore not entitled to damages.

Orb incurred the debt when it purchased pottery business Poole Pottery, in which Mills had a 20% stake, in 1999.

It agreed to buy Mills the apartment and pay the remaining £1.2m in two tranches during 2002.

However, the purchase did not complete and Orb went into administration later that year.

In August 2002, when Orb transferred the complex to DQD for £12.2m, it assigned the benefits of lease agreements, one of which identified Mills as a purchaser.

The deputy judge said that the purchase of the flat and the part-settlement of the debt amounted to one transaction, not two separate and independently enforceable transactions as the receivers had argued.

In any event, he said that Mills was entitled to setoff the purchase price of the flat against Orb’s debt to him.

The deputy judge said that the court case could be seen as a “wasted effort” since the receivers had “recovered nothing for the creditor of Dolphin Quay” and Mills still had a substantial debt owed to him by Orb.

However, refusing to order the receivers to pay Mills’ legal costs the Chancellor said: “Given the absence of any exceptional features or of any impropriety or unreasonableness on the part of the receivers … I do not consider that justice requires that an order in his favour should now be made against the receivers”.

The receivers of Dolphin Quays, part of Orb Estates’ failed attempt to turn Poole into the St Tropez of England, have avoided paying the legal costs of a creditor against whom they lost a lawsuit in April 2006. The Chancellor of the High Court, Sir Andrew Morritt CVO, refused Peter Mills’ application for costs against the receivers after they failed in their damages claim arising from an uncompleted flat purchase within the mixed-use scheme at Poole Quay. Last year, Deputy Judge Peter Leaver QC upheld Mills’ defence that the £650,000 flat had been intended to settle part of a £1.85m debt owed to him by Orb, from whom Dolphin Quays Developments (DQD) bought the scheme in 2002. He said that the receivers, who were seeking £155,000 from Mills after reselling the flat for only £495,000 on the open market, were therefore not entitled to damages. Orb incurred the debt when it purchased pottery business Poole Pottery, in which Mills had a 20% stake, in 1999. It agreed to buy Mills the apartment and pay the remaining £1.2m in two tranches during 2002. However, the purchase did not complete and Orb went into administration later that year. In August 2002, when Orb transferred the complex to DQD for £12.2m, it assigned the benefits of lease agreements, one of which identified Mills as a purchaser. The deputy judge said that the purchase of the flat and the part-settlement of the debt amounted to one transaction, not two separate and independently enforceable transactions as the receivers had argued. In any event, he said that Mills was entitled to setoff the purchase price of the flat against Orb’s debt to him. The deputy judge said that the court case could be seen as a “wasted effort” since the receivers had “recovered nothing for the creditor of Dolphin Quay” and Mills still had a substantial debt owed to him by Orb. However, refusing to order the receivers to pay Mills’ legal costs the Chancellor said: “Given the absence of any exceptional features or of any impropriety or unreasonableness on the part of the receivers … I do not consider that justice requires that an order in his favour should now be made against the receivers”.