Milltom Builders Limited v Waterfield Developments Blackburn Limited & Anor

HHJ CAWSON KC: Introduction

1. This judgment concerns two applications relating to the administration of Waterfield Developments Blackburn Limited (“ the Company ”), namely: i) An application dated 12 June 2025 (“ the Milltom Application ”) brought by Milltom Builders Ltd (“ Milltom ”) against the Company, and its administrator, Engin Faik (“ Mr Faik ”). By this application, Milltom seeks an order pursuant to paragraph 43 of Schedule B1 to the Insolvency Act 1986 (“ ”) that it be permitted to proceed with enforcing a charging order over, and seeking an order for sale (and all consequential and ancillary orders) in respect of the property known as and situated at Waterfield Mill, Waterfield Avenue, Darwen registered at HM Land Registry under Title No. LAN106879 (“ IA 1986 the Property ”). ii) An application dated 18 July 2025 (“ the Faik Application ”) brought by Mr Faik, as administrator of the Company, against Milltom whereby he seeks an order pursuant to paragraph 71 of Schedule B1 IA 1986 that it “be recorded that he has power to sell [the Property]”, together with orders that upon sale, and after payment of reasonable costs, the sale proceeds be remitted to his solicitors’ deposit account, and that thereafter he be “permitted to adjudicate on the sums still claimed to be owed to [Milltom].”

2. It is common ground between the parties that the Property should be sold. However, Milltom maintains that it should be permitted to continue existing proceedings, presently subject to the moratorium provided for by paragraph 43 of Schedule B1 IA 1986 , seeking an order for sale of the Property (“ the Order for Sale Proceedings ”), with conduct of the sale being given to Milltom, to enable it to obtain payment of the sums due to it under the charging order. On the other hand, Mr Faik contends that he should have conduct of the sale as part of the administration process, which could be achieved by the court making an order under paragraph 71 of Schedule B1 IA 1986 . Further, Mr Faik raises issues as to the amount (if any) due to Milltom, issues that he maintains are most appropriately resolved within the administration of the Company.

3. The Milltom Application was first before me on 11 July 2025, when I gave directions, including in relation to the bringing of the Faik Application. The Milltom Application was supported by the first witness statement of its director, Gary William Flitcroft (“ Mr Flitcroft ”), dated 12 June 2025 (“ Flitcroft 1 ”). Pursuant to the directions given on 11 July 2025, the following witness statements have been filed and served: i) Mr Faik’s witness statement dated 18 July 2025 (“ Faik 1 ”); ii) Mr Flitcroft’s witness statement dated 25 July 2025 (“ Flitcroft 2 ”); and iii) Mr Faik’s witness statement dated 1 August 2025 (“ Faik 2 ”).

4. Somewhat unusually in respect of an application of the present kind, both Milltom and Mr Faik agreed, and I permitted, that Mr Flitcroft and Mr Faik might each be cross examined on their witness statements, and they were both cross-examined at the hearing.

5. Mr Douglas Cochran appeared on behalf of Milltom, and Mr James Couser appeared on behalf of Mr Faik. I am grateful to them for their written and oral submissions. Background

6. The Company was incorporated on 5 September 2015 as a special purpose vehicle for the purpose of developing a brownfield site at Waterfield Mill, Waterfield Avenue, Darwen. The Property is the last unsold unit developed thereat, and is otherwise known as 21 Balmoral Gardens, Darwen.

7. The Company’s shareholders have, historically, been Darren John Fallows (“ Mr Fallows ”), Darren Paul Martin (“ Mr Martin ”), and Fred Bridge (“ Mr Bridge ”). The latter have also been its directors, although Mr Bridge resigned as a director in June 2023, and Neil Middleton (“ Mr Middleton ”) was appointed as a director of the Company in May 2023.

8. On 11 May 2018, the Company entered into an agreement with Milltom in relation to the development of Waterfield Mill, whereunder various development fees became due and payable to Milltom.

9. As collateral security for the liabilities of the Company to Milltom, Mr Martin granted charges to Milltom dated 24 July 2020 and 11 September 2020 over two properties, namely 5 and 6 Gezzerts Rise, Poulton-le-Fylde, FY6 7XE (“ 5 Gezzerts Rise” and “ 6 Gezzerts Rise ”).

10. A dispute arose between the Company and Milltom with regard to the amounts owed to the latter in respect of development fees, which became the subject matter of arbitration proceedings that resulted in arbitration awards dated 25 August 2022, 16 October 2022 to and 11 November 2022 made in favour of Milltom against the Company. By an order made by HHJ Pearce in the Business and Property Courts in Manchester, Circuit Commercial Court, on 30 November 2022, HHJ Pearce granted liberty to Milltom to enforce the arbitration awards, and on 18 January 2023, HHJ Pearce entered judgment in favour of Milltom in the amount of the arbitration awards.

11. Milltom applied for a charging order in the amount of £577,896.72. The final charging order (“ the FCO ”), made on 21 March 2023, refers to an interim charging order (“ the ICO ”) having been made on 26 January 2023, although other documentation refers to this having been made on 31 January 2023. The FCO also refers to Milltom having applied to vary the ICO to account for a payment of £75,163.66 made by the Company on 2 September 2022. Thus, the FCO ordered that the interest of the Company in the Property stood charged with the payment of £510,225.34, comprising a judgment debt of £502,732.56 and interest on that debt of £7,492.78. The FCO further recorded that interest on the Judgment debt secured by the FCO continued to accrue at a daily rate of £110.19.

12. The ICO was registered as against the Property on 17 February 2023, and the FCO was registered as against the Property on 6 April 2023.

13. On 22 February 2023, the Company granted a charge over the Property to Property Funding 2 Limited (“ PF2L ”). This charge was registered on 27 February 2023.

14. On 23 February 2023, Milltom, as holder of the charges referred to in paragraph 9 above, appointed Gordon Craig (“ Mr Craig ”) as LPA receiver over 5 and 6 Gezzerts Rise.

15. On 25 July 2023, the Company granted a charge over the Property to Supahome by Maple Limited (“ Supahome ”). Mr Middleton has, at all relevant times, been a director of Supahome. Subsequently, on 11 April 2024, Supahome purported to take an assignment of PF2L’s charge over the Property dated 22 February 2023.

16. On 10 August 2023, Milltom commenced the Order for Sale Proceedings (PT-2023-MAN-000109) against the Company in the Business and Property Courts in Manchester, Property Trusts and Probate List, seeking an order for sale in respect of the Property. The Company served a Defence dated 12 September 2023. This Defence, amongst other things, referred to Milltom’s collateral security over 5 and 6 Gezzerts Rise and the appointment of Mr Craig as LPA receiver, and contended that these properties would be expected to realise £560,000, which it was contended would be sufficient to discharge Milltom’s indebtedness. Directions were given in the Order for Sale Proceedings on 29 September 2023. An issue arose between the parties to these proceedings as to the value of the Property, but prior to the imposition of the moratorium on the entry of the Company into administration, the parties agreed upon a valuation of £205,000.

17. Mr Flitcroft made a witness statement in the Order for Sale Proceedings dated 26 September 2023 that dealt with the position in respect of 5 and 6 Gezzerts Rise. This referred to the fact that 6 Gezzerts Rise was occupied by a Mr Stephen and Mrs Joyce Mellor under a 10 year fixed term assured short hold tenancy at a low rent. It was contended that this severely diminished the value of 6 Gezzerts Rise on the open market. Mr Flitcroft alleged that Mr Fallows and Mr Martin had unsuccessfully attempted to evict the tenants through proceedings in the Blackpool County Court, by seeking to rely upon a subsequent one-year term tenancy, that Mr Flitcroft alleged was a sham.

18. In his witness statement, Mr Flitcroft further referred to the fact that he had been informed by Mr Craig that he had received professional valuations, valuing 5 Gezzerts Rise at £240,000, or £215,000 if subject to a restricted marketing period of 3 months, and 6 Gezzerts at £180,000, or £160,000 if subject to a restricted marketing period of three months, amounts which would be insufficient to discharge the liability of the Company to Milltom.

19. Further, on 26 September 2023, Joyce Mellor, one of the tenants of 6 Gezzerts Drive, made a witness statement stating that she and her husband had signed a tenancy agreement dated September 2017 granting a 10 year term at a rent of £495 per month. She further referred to having been taken to court in a failed attempt to have her and her husband removed from their home and said: “It was claimed there was a one year tenancy agreement. This is simply not correct, we have never signed anything other than the 10 year tenancy agreement, thankfully the Court ruled in our favour”.

20. During the course of the hearing, I was taken to a number of orders made by the Blackpool County Court in proceedings brought by Mr Martin against Stephen and Joyce Mellor. It would appear therefrom that the proceedings in question were struck out on 18 January 2023 because Mr Martin had failed to comply with an order dated 2 December 2022, and that attempts to have the order dated 18 January 2023 set aside were unsuccessful, as recorded in an order dated 21 March 2023, because the court determined that as Mr Craig had been validly appointed as LPA receiver, then “the Claimant has no standing to conduct the Claim.” There does not, therefore, appear to have been any determination as to the question of the validity of a subsequent tenancy for a term of one year on the merits.

21. 5 Gezzerts Rise was sold by Mr Craig as LPA receiver to a third party on 17 November 2023 at a price of £279,950. 6 Gezzerts Rise was sold by Mr Craig as LPA receiver to Milltom on 1 December 2023 at a price of £185,000. Whilst 5 Gezzerts Rise was exposed to the market by being offered for sale, 6 Gezzerts Rise was not. Rather, reliance was placed by Mr Craig on a valuation dated 17 March 2023 provided to him by Lamb & Swift that had valued 6 Gezzerts Rise as referred to in paragraph 18 above at £180,000 (or £160,000 if marketing was limited to 3 months), and a notional £5,000 was added thereto.

22. Mr Flitcroft was asked under cross-examination as to whose idea it was that 6 Gezzerts Rise be sold to Milltom. Mr Flitcroft said that it was Mr Craig’s idea, and that Mr Craig had said that if Milltom took that property, then that would lessen the debt due to it.

23. The Order for Sale Proceedings were progressing towards a final hearing when, on 15 April 2024, Supahome, as the holder of a qualifying floating charge, appointed Mr Faik as administrator of the Company. The effect thereof was to impose the moratorium provided for by paragraph 43 of Schedule B1 IA 1986 upon the Order for Sale Proceedings.

24. On 1 May 2024, Milltom sought permission from Mr Faik to enforce the FCO, i.e. through the Order for Sale Proceedings. Mr Faik has consistently declined to give such permission, taking the position that he, as administrator of the Company should conduct the sale of the Property, and do so on the basis that entitlement to the proceeds of sale would be determined thereafter. I was referred to a number of letters from Mr Faik’s Solicitors, RHF Solicitors (“ RHF ”), in which Mr Faik’s position was set out. Thus, in a letter dated 16 July 2024, reference was made to the net proceeds of sale being held “until the position in respect of the priority and quantum of secured creditors’ claims is determined.” In an email dated 10 March 2025, reference was made to the net proceeds of sale of the Property being placed in an escrow account to be held pending the outcome of “our client’s determination of your client’s claim.” This latter wording is consistent with the wording used in the Faik Application where reference is made to the net proceeds being held so as to permit Mr Faik to “adjudicate on the sums still claimed to be owed to [Milltom].” However, potentially at least, it contrasts with wording used in paragraph 9 of Mr Faik’s witness statement dated 1 August 2025, where he makes the point that if he had been intending to disregard Milltom’s claim, then: “I would not have agreed to hold the proceeds of sale of the Property on trust pending resolution of the dispute (by agreement or by court order) as I offered in my solicitor’s letters of 16 June 2024 and 18 October 2024”. Mr Cochran, on behalf of Milltom, suggests that that is not how the position was expressed on behalf of Mr Faik in these letters.

25. Prior to the Company entering into administration, RHF had acted on behalf of the Company, including in defence of the Order for Sale Proceedings. Following his appointment, Mr Faik has continued to instruct RHF taking the view, he said, that there was benefit in continuing to instruct RHF given their knowledge of the background to the issues arising in the administration of the Company including the position vis-à-vis Milltom. In the course of his evidence, Mr Flitcroft expressed particular concern that RHF continued to act for Mr Faik. He said that he was worried that there was “something untoward” between RHF and Mr Faik, such that he did not trust them to deal fairly or objectively with the issue of the sale of the Property, and the application of the proceeds of sale thereof.

26. Having been appointed as administrator of the Company, Mr Faik produced proposals dated 6 June 2024. Included therein was a Statement of Affairs to which Mr Middleton, as a director of the Company, signed a Statement of Truth dated 28 May 2024. This Statement of Affairs referred to the Property as estimated to realise £205,000 but then referred to the proceeds being applied first in favour of Supahome in an amount of £64,544.06, with Milltom ranking thereafter in an amount of only £1. The Proposals also included an estimated outcome statement as of 6 June 2024 produced by Mr Faik which shows Supahome ranking first in an amount of £64,544.06, and the liability to Milltom as “uncertain”.

27. The question of the Company’s secured liabilities is further dealt with in Mr Faik’s Progress Report dated 1 May 2025 where Milltom’s security is referred to as being the FCO created on 21 March 2023. This is shown as ranking behind the charge granted to PF2L (subsequently assigned to Supahome). At paragraph 5.6 off this Progress Report, reference is made to Supahome claiming priority in respect of the whole of the amounts due to it, i.e. the amount secured by the charge initially granted to PF2L on 27 February 2023, and the amount secured by its own charge dated 26 July 2023, on the basis of an “all monies” provision in the charge dated 27 February 2023. Paragraph 5.7 of the Progress Report refers to Milltom registering the FCO dated 21 March 2023 against the title to the Property but makes no mention of the ICO. Paragraph 5.7 further states that the value of Milltom’s claim: “is disputed and was therefore ascribed a nominal value of £1.00 by the Director in the Statement of Affairs.”

28. Under cross examination Mr Flitcroft was critical of the way that Mr Faik had dealt with Milltom’s security and outstanding indebtedness in his Proposals and his Progress Reports, in particular in ascribing a value of only £1 thereto. Further, Mr Flitcroft pointed to Mr Faik not having taken into account Milltom’s ICO, to the fact that it was Mr Middleton’s company that had brought in Mr Faik as administrator through the appointment made by Supahome, and to the fact that Milltom had had a long-running dispute with RHF, who Mr Faik was now instructing. This formed the basis of his complaint that Mr Faik could not be trusted to act fairly or objectively.

29. In approximately July 2024, Mr Faik received an offer to purchase the Property from a third party, he says at a price of £205,000, the value agreed upon between the parties. Mr Faik complains that Mr Flitcroft thwarted the proposed sale of the property by actions that led to the proposed purchaser withdrawing their offer. The matters complained of are that Mr Flitcroft was unwilling to engage in the sales process and/or consent to the sale, declined to cause Milltom, as the developer of the Property, to provide documentation and/or certification required in order to conclude the sale, and engaged in concerted efforts to disrupt the sale by threatening the estate agent engaged by Mr Faik, and the prospective purchaser.

30. As evidence for the latter, reliance is placed by Mr Faik on a note provided by Susan Wolstenholme of Entwistle Green, Estate Agents, where she refers to her firm having been contacted some months ago by Mr Flitcroft “or associate builder” to say that “we didn’t have authority to sell”. Mr Flitcroft was cross-examined about this. He denied that it was him who had approached Entwistle Green in this way, but he did suggest that it could have been Milltom’s “lettings department” who phoned Entwistle Green.

31. By way of background, it is necessary to say something further about Mr Craig, the LPA receiver appointed by Milltom over 5 and 6 Gezzerts Rise on 23 February 2023. On 25 October 2018, Mr Craig’s licence to act as an insolvency practitioner was withdrawn by ICAEW. On 20 December 2022, the Pensions Ombudsman made a finding that Mr Craig was guilty of breach of trust and fraud in respect of a particular pension scheme, and he was ordered to contribute more than £10.7 million into the relevant pension scheme. On 7 July 2023, in the course of proceedings brought against Mr Craig by the ICAEW, his membership of the latter was suspended indefinitely.

32. None of the above prevented Mr Craig from lawfully acting as an LPA receiver. However, these matters are relied upon by Mr Faik as showing that Mr Craig is a man whose professional integrity cannot be trusted, or is at least seriously in doubt, and which adds to his concern in relation to the circumstances behind the sale of 6 Gezzerts Rise, and any involvement by Mr Craig in any future sale of the Property.

33. Under cross examination, Mr Flitcroft was asked about his relationship with Mr Craig in the light of Mr Craig’s past professional difficulties that I have identified. His response was that he had had no personal difficulties with Mr Craig in the past. As he put it: “Gordon has never done any harm to me.”

34. In the context of Mr Flitcroft having said in evidence that he was “well-placed” to conduct a sale of the Property, the question was raised in the course of submissions as to whether Mr Craig would have any involvement in the sale of the Property if conduct thereof were to be given to Milltom. In response, it was indicated that no decision had been made with regard to Mr Craig’s involvement in the sale process should Milltom be given conduct of it. However, it is fair to say that, in course of his cross-examination, Mr Flitcroft referred to his own experience of selling properties (some 27) in the Darwen area, and to the engagement of estate agents.

35. Milltom has, for the purposes of the Milltom Application, produced a “Statement of judgment debt” showing the amount said to be outstanding and due to Milltom as at 12 June 2025, taking into account the realisation of its security over 5 and 6 Gezzerts Rise, but after having made provision for legal costs and receivers fees, rent received prior to 6 December 2023, and further interest at a rate of 8% per annum on the outstanding balance. This statement shows £146,314.65 as due as of 12 June 2025, which is the amount that Milltom says is due to it subject to further accrued interest from and after 12 June 2025, when the Milltom Application was brought.

36. In response, Mr Faik initially produced a document headed “Adjudication Account”, which purported to show that Milltom had been overpaid. This was on the basis of giving credit to the Company against Milltom of an amount of £31,950 said to represent the sale of 5 Gezzerts Rise at an undervalue of that amount, and an amount of £100,000 said to represent a sale of 6 Gezzerts Rise at an undervalue of that amount. Further, this calculation gave no credit for continuing interest, or for the costs of sale including legal fees and LPA receiver’s remuneration. Mr Faik was asked about this under cross examination, and in particular the alleged undervalue of £31,950 in respect of 5 Gezzerts Rise which has not otherwise been advanced. He suggested that this may have related to a higher valuation that had been obtained at some point, but without being able to be specific.

37. As to the deduction of £100,000 from the sum due to Milltom on account of a sale of 6 Gezzerts Rise to Milltom at an undervalue, Mr Faik appeared to accept at one point under cross examination that he had no standing, as administrator of the Company, in respect of any challenge in respect of this sale, although ultimately, after an intervention from Mr Couser, he adopted the position that this was a matter upon which he was continuing to receive legal advice, and therefore could make no concession to this effect, at least at this stage.

38. More recently, Mr Faik has produced a revised version of his calculation as to the balance due to Milltom, effectively responding to Milltom’s own statement. This makes adjustments in relation to rate of interest on the debt outstanding from 8% to 5.75% per annum, caps LPA receiver’s fees at 5%, and reduces the legal costs of sale and enforcement that are sought to be brought into account by Milltom. It does not, however, make any provision for the sale of either 5 or 6 Gezzerts Rise at an undervalue. It shows a balance due to Milltom as of 25 July 2025 of £88,613.78. The parties’ submissions Milltom’s case

39. Mr Cochran makes the point that there is authority to the effect that secured creditors should not be disadvantaged by the administration procedure. He refers to what was said by Sir Nicholas Browne Wilkinson V.-C. in Bristol Airport Plc v Powdrill (C.A) [1990] Ch 744, at 767E: “In my judgment, whilst the administration procedure should not be used so far as possible to prejudice those who were secured creditors at the time when the administration order was made in lieu of a winding up order, nor should it be used so as to give the unsecured creditors at that time security which they would not have enjoyed had it not been for the administration.”

40. Mr Cochran identifies that these remarks were echoed by the Court of Appeal in Re Atlantic Computer Systems [1992] Ch 505 (see per Nicholls LJ at 542G), and he refers to Re UK Housing Alliance (North West) Limited [2013] EWHC 2553 (Ch) , [2013] BCC 752 , where the court allowed enforcement of security over properties which were not being used for the purposes of the administration and in which the applicant creditor was the only party likely to receive any advantage from the sale of the properties.

41. As Mr Cochran further pointed out, the Court possesses an inherent power to regulate the conduct of administrations, and there is authority that a secured creditor may apply for directions in that respect Re Mirror Group Holdings Ltd [1993] B.C.L.C. 538.

42. Mr Cochran submits that giving effect to the principles concerning the effect of administration on secured creditors is best achieved by giving Milltom permission, pursuant to paragraph 43 of Schedule B1 IA 1986 , to further proceed with the Order for Sale Proceedings already on foot. This would require a further hearing in order to determine whether an order for sale should be made, and whether conduct of the sale should be given to Milltom, but Mr Cochran says that that is the proper venue for determining the method of sale. Further, Mr Cochran submits that this is the proper venue to determine any outstanding issues that arise with regard to the indebtedness of the Company to Milltom.

43. As to the question of Milltom’s priority, Mr Cochran submits that the position is clear and determined by the fact that Milltom’s security was first in time on the making of the ICO on 26 or 31 January 2023, and its subsequent registration, which was all before the grant on 22 February 2023 of the charge to PF2L. As I understand it, Milltom is asking the court to determine this question of priority now.

44. So far as outstanding indebtedness is concerned, Milltom’s position in respect thereof is as follows: i) As to the allegation that 6 Gezzerts Rise was sold at an undervalue, it is denied that there was a sale at an undervalue, or anything else untoward with regard to the sale thereof to Milltom. Reliance is placed on the fact that Mr Craig sold to Milltom based on the valuation that he had obtained, that properly took into account the fact that this property was subject to the 10 year lease at a low rent. In any event, Milltom submits that as LPA receiver, Mr Craig sold the Property as agent for the mortgagor, i.e. the Company, and not the mortgagee, Milltom – see s. 109(2) of the Law of Property Act 1925 (“ ”). Consequently, Milltom cannot be responsible for his actions. Further, LPA 1925 Devon Commercial Property Ltd v Barrett [2019] EWHC 700 (Ch) provides authority for the proposition that a sale by an LPA receiver to the mortgagee is not, unlike a sale by a mortgagee to itself, open to challenge as such as involving self-dealing. Further, it is Milltom’s case that even if the sale to Milltom were open to challenge, which would be a matter as between Milltom, as mortgagee, and Mr Martin, as mortgagor, but would not affect the state of account as between the Company and Milltom. Mr Cochran points to the fact that no reasoned case has been advanced as to how or why the Company might have some claim as against Milltom in respect of the sale of 6 Gezzerts Rise, and that all Mr Couser was able to say on behalf of Mr Faik was that there may be some unjust enrichment claim, without developing any submissions or reasoned argument in that respect. The point is made that all that Mr Faik has done is to say that the sale “may be open to challenge”, but has yet to challenge the same, or set out any proper basis for doing so. ii) As to the remuneration charged by Mr Craig as LPA receiver, and the suggestion that this is subject to a cap of 5% of realisations imposed by s.109(6) LPA 1925 , the point is taken on behalf of Milltom that this is a new point not advanced until very recently, and it is challenged that this provision applies in the circumstances of the present case. iii) As to the rate of interest charged on the outstanding balance of 8%, Milltom contends that it is entitled to recover interest at this rate as it has the benefit of a judgment and is therefore entitled to continuing interest at the judgment rate and to add it to its security. iv) As to Mr Faik’s challenge to legal fees charged as against realisations, it is submitted on behalf of Milltom that these are all reasonable, and perfectly justified, and that there has been no proper challenge thereto.

45. In short, therefore, it is contended that the issues between the parties in respect of the above matters could and should be dealt with at the final hearing of the Order for Sale Proceedings, when the court could determine what Milltom was entitled to out of the proceeds of sale, if it were given conduct of the sale.

46. A number of objections are advanced on behalf of Milltom in relation to the relief sought by Mr Faik, which would necessarily involve Mr Faik having conduct of the sale, and, according at least to the terms of the relief sought by the Faik Application, would involve Mr Faik then determining the entitlement, if any, of Milltom to be paid out of the proceeds of sale.

47. The particular objections are the following: i) Firstly, insofar as Mr Faik is seeking to unilaterally determine, following the sale of the Property, the priority of Milltom as against Supahome, and how much might be due to Milltom, it is submitted that this cannot be the correct approach. This is because, so it is said, there needs to be a proper process for determining these issues involving, not least, independent adjudication by the court should Milltom have good grounds for not agreeing with a determination as to priorities or amount due to Milltom by Mr Faik. ii) Secondly, it is Milltom’s case that Mr Faik is not a disinterested office holder trying to weigh competing claims, but, rather, a partisan with an axe to grind. As I have already mentioned, complaint is made that RHF act for Mr Faik, and also for the directors of the Company, which is said to give rise to a conflict of interest. In support of this contention, reliance is placed upon the fact that Mr Faik’s Proposals, relying upon what Mr Faik was told by the directors, only placed a value of £1 on Milltom’s security, and failed to accord Milltom priority based upon the date of the ICO, reference only being made to the FCO made after the charge in favour of PF2L. Indeed, complaint is made that Mr Faik still does not recognise the priority conferred by the ICO despite, so it is contended, the position being absolutely clear in respect thereof. An additional point that is made is that there is no apparent evidential basis for the suggestion made by the “Adjudication Account” produced by Mr Faik referred to in paragraph 36 above that had suggested that 5 Gezzerts Rise had been sold at an undervalue.

48. In the circumstances, it is submitted that it would be quite wrong to accede to the Faik Application, not least out of a concern that Mr Faik would not act fairly, independently and objectively in relation to the sale of the Property, and the subsequent distribution of the proceeds of sale in accordance with the security held by Milltom and Supahome thereover.

49. In these circumstances, so it is submitted on behalf of Milltom, the proper course should be to accede to Milltom’s application under paragraph 43 of Schedule B1 to IA 1986 and permit it to continue to pursue the Order for Sale Proceedings. Mr Faik’s case

50. Mr Faik disputes that he lacks objectivity, is partisan or has an axe to grind. Indeed, it was submitted on his behalf that it is quite improper for such allegations to be made as against him, and that there is not the evidential basis for them to be asserted.

51. So far as instructing RHF is concerned, it is submitted that there is nothing unusual or inherently wrong in an office holder instructing solicitors who had previously acted for the company prior to insolvency, and that there was often, as in the present case, good reason for doing so given the knowledge that those solicitors were likely to have regarding matters relevant to the conduct of the administration.

52. Mr Faik points to the fact that he is an Insolvency Practitioner and a Solicitor of many years standing with very considerable experience, including of managing conflicts of interest as an office holder.

53. As to the fact that Mr Faik’s Proposals and subsequent Progress Reports show the indebtedness of Milltom as being disputed, and as being valued at only £1, it is said that this is because, as office holder, Mr Faik was reliant upon information provided by the directors of the Company. However, that does not mean that he will not properly investigate relevant matters, and properly consider, when it is the appropriate time to do so, any proofs of debt that may be submitted by both secured and unsecured creditors. Mr Faik certainly disputes that he has, in any sense, predetermined the relevant issues as against Milltom. Rather, on the information available to him, he has simply raised issues and concerns, primarily on the basis of what he has been told.

54. Despite the way matters were expressed in correspondence, Mr Faik denies that it was ever his intention to simply unilaterally determine the priority and entitlement of Milltom as against the proceeds of sale of the Property. Rather, he envisaged, following any sale of the Property, seeking to reach agreement in relation thereto, and failing agreement, determining outstanding issues through the process of requiring proofs to be submitted, which would either be admitted (either in whole or in part) or rejected, in the latter case subject to appeal to the court.

55. On behalf of Mr Faik, it is submitted that there are real issues with regard to legal expenses deducted from the proceeds of sale of 5 and 6 Gezzerts Rise, the rate of interest charged by Milltom at 8% per annum and Mr Craig’s remuneration exceeding the 5% provided for by s.109(6) LPA 1925 . It is Mr Faik’s case that these are issues best determined through the proof process, rather than by the court on the final hearing of the Order for Sale Proceedings, were Milltom to be given permission to continue the same.

56. So far as the sale of 6 Gezzerts Rise is concerned, it is Mr Faik’s case that there are very real issues and concerns raised thereby. The particular concern is that Mr Craig sold the same to Milltom without testing the market at all through a marketing process and simply based the price upon a valuation. Further, the point is made that an LPA receiver such as Mr Craig, given advice that the effect of the 10 year tenancy was to deflate the value of 6 Gezzerts Rise by some £100,000, ought at least to have investigated the possibility of the tenants surrendering their tenancy in return for a more limited payoff and, further, to have more fully investigated whether a new one-year lease had been entered into that might have effected a surrender of the 10 year term, thus improving the prospects of obtaining vacant possession. However, none of this appears to have been done. I was asked to draw adverse inferences against Milltom from the fact that there was no evidence from Mr Craig himself before the court, upon which Mr Craig could have been cross examined.

57. The sale of 6 Gezzerts Rise is relied upon by Mr Faik, essentially for two purposes: i) Firstly, to show that if there is any prospect of Mr Craig being involved, on behalf of Milltom, in the sale of the Property if Milltom were to be given the conduct thereof, then that is a matter of extreme concern given the way that he handled the sale of 6 Gezzerts Rise. This is said to provide good reason in itself not to countenance any circumstances in which conduct of the sale was given to Milltom. ii) Secondly, in order to maintain that there is at least the possibility that the circumstances behind the sale of 6 Gezzerts Rise might give rise to some claim or argument open to the Company that would serve to reduce the liability of the Company to Milltom to reflect a sale of 6 Gezzerts Rise to Milltom at an effective undervalue. However, Mr Couser recognised in submissions that any such claim or argument was only likely to arise if Milltom was, itself, guilty of conduct that amounted to lack of good faith. As already mentioned, Mr Couser was unable to articulate what sort of argument or claim might lie apart from suggesting one based upon unjust enrichment. Mr Faik, himself, said that this was a matter in respect of which he wished to seek further legal advice.

58. The principal arguments advanced on behalf of Mr Faik as to why relief should be granted pursuant to paragraph 71 of Schedule B1 IA 1986 , allowing for him to sell the Property, and have conduct of the sale thereof free of the security thereover, were the following: i) In ordinary course, it would be the administrator who sold property belonging to a company in the course of an administration. The position might be different where property was not required for the purposes of the administration, and where one secured creditor had the only security interest therein and wished to have conduct of the sale itself. However, this was not such a case. ii) The possible involvement of Mr Craig in any sale entrusted to Milltom provided good reason in itself for not permitting Milltom to proceed with the Order for Sale Proceedings, where it was seeking an order for sale under which it had conduct of the sale of the Property. iii) Permitting Milltom to proceed with the Order for Sale Proceedings would require a further, final hearing thereof. Whilst it might be possible to get such a further hearing on relatively quickly, it would still lead to delay in grappling with the issues and further directions might well be required before the final hearing. iv) The final hearing of the Order for Sale Proceedings would not provide a suitable mechanism for resolving outstanding issues as to priorities (if any), and the quantum of the entitlement (if any) of Milltom as against the proceeds of sale of the Property. To the contrary, through the mechanism of paragraph 71 of Schedule B1, the Property would require to be sold at market value, and the proceeds applied in accordance with priorities. The mechanism for determining the latter would be provided for, if required, through the process of secured creditors submitting proofs, the proofs being considered by Mr Faik as administrator and either accepted or rejected, and with Milltom having a right of appeal to the court in respect of any rejection.

59. In the circumstances, it is Mr Faik’s case that is appropriate to grant relief essentially along the lines sought by the Faik Application, rather than that sought by the Milltom Application. The Witnesses

60. Mr Flitcroft was clearly, and with some justification, extremely annoyed by the fact that Milltom had had to chase the Company through arbitration, and to judgment, in respect of monies that were properly due to Milltom, and frustrated by the fact that the attempts to enforce the judgment through the ICO and the FCO had been frustrated, seemingly deliberately, by Supahome appointing Mr Faik as administrator thereby subjecting the Order for Sale Proceedings to the moratorium under paragraph 43 of Schedule B1 IA 1986 .

61. Mr Flitcroft was clearly distrustful of Mr Faik’s handling of the administration of the Company, considering that Mr Faik could not bring objectivity to it, primarily because he continued to instruct RHF, which had acted on behalf of the Company and its directors prior to it entering into administration in resisting Milltom’s attempts to recover the monies due to it. Further, from Mr Flitcroft’s perspective Mr Faik appeared to be siding with the directors of the Company and Supahome in the way that he had dealt with Milltom’s security in his Proposals and Progress Reports, showing the same as ranking after Supahome’s security and valued at only £1. I have no doubt that these concerns are genuinely held concerns, which is not to say that there is substance therein.

62. It is fair to say that Mr Flitcroft was not cross examined at any length with regard to the circumstances behind the sale of 6 Gezzerts Rise. As I have already mentioned, his evidence was that the idea of 6 Gezzerts Rise being transferred to Milltom in a reduction of the amount owed to it by the Company came from Mr Craig. I noted that Mr Flitcroft responded somewhat dismissively to what was put to him by Mr Couser in cross examination with regard to Mr Craig’s professional difficulties, including his suspension as an insolvency practitioner, and the findings of fraud made against him by the Pensions Ombudsman. Confirmation was not provided, in the light thereof, that Mr Craig would not be involved in the future sale of the Property, and the gist of Mr Flitcroft’s response was, as I have already said, that Mr Craig was not someone who had done him any harm.

63. I did not find convincing Mr Flitcroft’s evidence regarding the suggestion that he had sought to thwart the sale of the Property by putting pressure upon Entwistle Green, the estate agents instructed by Mr Faik in respect thereof. Mr Flitcroft suggested that any such approach would have made by somebody involved in Milltom’s letting department, rather than by himself. However, I regard this as an unrealistic suggestion absent some reason why somebody in the letting department would have sought to put pressure on Entwistle Green not to sell the Property.

64. So far as Mr Faik is concerned, he came across to me as a diligent insolvency practitioner with many years experience, and with the additional qualification of being a solicitor. He explained that the information contained in his Proposals and Progress Reports has been based on the statement of affairs to which Mr Middleton provided a statement of truth, and other information provided by the directors of the Company. However, he was at pains to make clear that when it came to a consideration of creditor claims, he would fully investigate the same and take into account all that he was told by Milltom. Mr Flitcroft made a fair point that Mr Faik had picked up upon the FCO, but not the ICO, which conferred priority on Milltom, and did not provide any real explanation for not doing so. However, I did not detect anything deliberate in this.

65. As Mr Couser pointed out, it is not unusual for an administrator to instruct the solicitors who previously acted for the relevant company pre-administration given that the latter may well have useful knowledge regarding the company’s affairs. Further, it is fair to say that where an administrator is appointed by the company or its board, or by a particular floating charge creditor, then often a relatively close relationship might develop between the administrator and the appointing party, and it is quite possible that this is the position in the present case, a point supported by Mr Faik’s engagement of RHF. However, Mr Faik came across to me as being sufficiently robust and independent not to be unduly influenced by any such relationship in relation to the key decisions that require to be made by him in the course of the administration of the Company. The sale of 6 Gezzerts Rise

66. I share the concerns that have been expressed by Mr Faik with regard to the circumstances behind the sale of 6 Gezzerts Rise. Of particular concern, it seems to me, is that 6 Gezzerts Rise was sold by the LPA receiver, on the basis of a valuation, to the appointing chargee, without being exposed to the market at all. So far as Lamb & Swift’s valuation is concerned, I note that it was dated 17 March 2023, and it was therefore some nine months old at the time of sale of 6 Gezzerts Rise in December 2023. Further, I note that only a month or so beforehand, 5 Gezzerts Rise had been sold for £279,950 as against Lamb & Swift’s valuation of £240,000, a difference of some £40,000. To my mind, this ought to have called into question the value of 6 Gezzerts Rise as of December 2023, and whether reliance could be placed on Lamb & Swift’s valuation, in particular where the property was not to be exposed to the market.

67. A further consideration is, I consider, that having been advised by Lamb & Swift that the effect of the tenancy for a term of 10 years, with some four years still left to run, reduced the value of 6 Gezzerts Rise by some £100,000, somewhat surprisingly no attempt was made to explore with the tenants the possibility of a surrender for a sum of significantly less than £100,000, or to investigate further the purported one year tenancy.

68. Devon Commercial Property Ltd v Barrett [2019] EWHC 70 (Ch) at [28] is authority for the proposition that the sale by an LPA receiver to the mortgagee is not, in itself, objectionable on the grounds of self-dealing. Further, prima facie, Mr Craig, as LPA receiver, acted as agent on behalf of the mortgagor, Mr Martin in respect of the sale, and thus any remedy in respect of a sale at an undervalue would, prima facie, be that of Mr Martin as against Mr Craig. As to the duties of an LPA receiver to obtain a proper price, see Silven Properties Ltd v Royal Bank of Scotland plc [2004] 1 WLR 997 .

69. A claim as against Milltom in respect of a sale at an undervalue is only likely to lie if the latter acted in bad faith in relation to the sale and/or if the circumstances were such that Mr Craig was, in fact, acting as agent of Milltom. Thus, again, prima facie, the claim would be that of Mr Martin, and not the Company – see e.g. Fisher and Lightwood’s Law of Mortgage,15 th Edn at [30.34]. The ability of Mr Faik, as administrator of the Company, to rely upon any sale at an undervalue as providing a basis for reducing the outstanding liability of the Company to Milltom is thus limited.

70. As I have already mentioned, no cogently articulated argument has been put forward on behalf of Mr Faik identifying a legal basis for saying that any sale at an undervalue of 6 Gezzerts Rise should be taken into account as between the Company and Milltom, albeit that Mr Couser did suggest the possibility of a claim in unjust enrichment, and Mr Faik said that he was taking further advice as to the position. Given that the question has not been explored as fully as it might have been in the evidence or submissions, I do not consider that the possibility that a sale at an undervalue might be of relevance as between the Company and Milltom can be wholly ignored at this stage. Other issues raised by Mr Faik

71. It is appropriate that I say something about the other issues raised by Mr Faik with regard to the state of account as between the Company and Milltom.

72. In the schedule that he has prepared, showing the balance due to Milltom of £88,613.78 referred to in paragraph 38 above, Mr Faik has only allowed for interest at a rate of 5.75% per annum as against 8% per annum as claimed by Milltom. I consider that Milltom must be entitled to an interest at a rate of 8% per annum on the outstanding balance due to it as secured by the ICO/FCO. As contended by Milltom, its debt is a judgment debt, and I note that the FCO dated 21 March 2023 provides for interest to accrue at a daily rate of £110.19 on a judgment debt of £502,732.56, which is indeed interest at a rate of 8% per annum (£110.19 per day amounts to £40,219.35 per annum which equals 8% of £502,732.56). Thus, interest at a rate of 8% per annum is, as I see it, expressly provided for by the FCO.

73. So far as the complaint that Mr Craig’s remuneration ought to be capped at 5% of realisations by application of section 109 (6) LPA is concerned, I note that the latter provision is of application where the receiver is appointed under the statutory power, where no remuneration is specified, or the remuneration is provided for by the appointment. However, the terms of a mortgage or charge can provide for remuneration at a higher rate than 5% - see section 101(3) LPA 1925 . Further, the remuneration allowed to a receiver appointed under an express power of appointment should be specified in the mortgage or charge, or on their appointment, and in the absence of such an express provision, the receiver will be entitled to a proper remuneration as a quantum merit – see Fisher and Lightwood (supra) at [28.14].

74. In the circumstances, I do not consider that it can be simply stated that Mr Craig’s remuneration is limited to 5%, and that it will be necessary to look at the terms of the relevant charges granted over 5 and 6 Gezzerts Rise, which are not before the court, in order to determine what remuneration Mr Craig might be entitled to. If the proper basis is a quantum merit, then Mr Faik may be entitled to insist upon further information as to the amount of work carried out by Mr Craig as LPA receiver before reaching a view as to the reasonableness thereof.

75. So far as Mr Faik’s objection in respect of legal fees is concerned, again Mr Faik may be entitled to insist upon further information in support of the same and evidencing the fact that they were actually and reasonably incurred. Priority

76. Mr Faik indicated that he had not reached a final view so far as priority as between secured creditors was concerned, a possible complication having been caused by the taking by Supahome of an assignment of PF2L’s charge dated 22 February 2023. However, the ICO was made and registered against the title to the Property prior to the grant of the latter charge, and so must, I consider, take priority thereto.

77. In the circumstances, and in order to seek to narrow issues, I consider that it would be appropriate for me to declare as part of any order that I make that Milltom’s security under the ICO and FCO takes priority to that now enjoyed by Supahome. However, bearing in mind that Supahome is not presently formally before the court, I consider that Supahome ought to have the opportunity to apply to vary or set aside the relevant declaration should it wish to seek to argue to the contrary. Who ought to sell the Property?

78. As I have identified, the principal issue between the parties is as to whether the Property should be sold with conduct being given to Milltom following the making of an order for sale on the final hearing of the Order for Sale Proceedings that Milltom seeks permission pursuant to paragraph 43 of Schedule B1 IA 1986 to continue, or whether the Property should be sold by Mr Faik as administrator after the court has made an order pursuant to paragraph 71 of Schedule B1 IA 1986.

79. Clearly, I must pay due regard to the principle that the administration procedure should not, so far as possible, be used to prejudice those who were secured creditors at the commencement of the administration order. In this respect, one can see why, in a case such as Re UK Housing Alliance (North West) Limited (supra), the court should allow the secured creditor to get on with enforcing security itself.

80. However, a significant feature of the latter case was that the relevant secured creditor seeking to enforce its security was the only party likely to receive any gain from the sale of the relevant properties. In the present case, if the Property is worth in the region of £205,000, then both Milltom and Supahome stand to benefit from the proceeds of sale thereof, and there might conceivably be a return for unsecured creditors if the indebtedness to Milltom is less than it contends. Consequently, there is a wider interest for the purposes of the administration in the realisation of the Property other than that of the interests solely of Milltom.

81. Although Supahome was not represented before me, I was informed in the course of submissions that it supports the position of Mr Faik so far as the appropriate relief for the court to grant is concerned.

82. The application for relief pursuant to paragraph 71 of Schedule B1 IA 1986 made by the Faik Application is somewhat oddly worded in seeking a direction that Mr Faik has “power to sell”. Nevertheless, I consider that I can be satisfied that the requirements for granting relief pursuant to paragraph 71 are made out.

83. So far as relevant, paragraph 71 of Schedule B1 IA 1986 provides as follows: "71(1) The court may by order enable the administrator of a company to dispose of property which is subject to a security (other than a floating charge) as if it were not subject to the security. (2) An order under sub-paragraph (1) may be made only— (a) on the application of the administrator, and (b) where the court thinks that disposal of the property would be likely to promote the purpose of administration in respect of the company. (3) An order under this paragraph is subject to the condition that there be applied towards discharging the sums secured by the security— (a) the net proceeds of disposal of the property, and (b) any additional money required to be added to the net proceeds so as to produce the amount determined by the court as the net amount which would be realised on a sale of the property at market value. (4) If an order under this paragraph relates to more than one security, application of money under sub-paragraph (3) shall be in the order of the priorities of the securities.”

84. An order made under paragraph 71 would therefore enable Mr Faik, as administrator, to sell the Property as if it were not subject to the either Milltom’s ICO/FCO, or the charges held by Supahome. However, the effect of paragraph 71(3) is that the Property would need to be sold for market value, which I do not understand to be an issue, and the effect of paragraph 71(4) is that Mr Faik would be obliged to ensure the net proceeds of sale (i.e. after deducting the costs of sale) were in the order of priority of securities relating to the Property. Subject to any subsequent challenge by Supahome in respect of the order of priorities and the declaration that I propose to make in respect thereof, this will require Millom to be paid first out of the net proceeds of sale whatever sum is due to it.

85. So far as the conditions in paragraph 71(2) are concerned, the application is being made by Mr Faik as administrator of the Company. Further, I consider that I can be satisfied that the disposal of the Property would be likely to promote the purpose of administration in respect of the Company. As to the latter, notwithstanding how matters were initially expressed in Mr Faik’s Proposals, we are now concerned with the third of the hierarchies of purposes specified in paragraph 3(1) of Schedule B1 IA 1986 , namely “realising property in order to make a distribution to one or more secured or preferential creditors.” The making of an order under paragraph 71 would, as I see it, assist in achieving this purpose, albeit that the purpose could be achieved in an alternative way through an order for sale made in the Order for Sale Proceedings.

86. In the circumstances, I am satisfied that the appropriate course is to make an order under paragraph 71 of Schedule B1 IA 1986 as sought by the Faik Application, rather than acceding to Milltom’s request to grant permission pursuant to paragraph 43 of Schedule B1 IA 1986 to continue the Order for Sale Proceedings.

87. I reach this conclusion for, essentially, the following reasons: i) Given the circumstances behind the sale of 6 Gezzerts Rise, the lack of assurance that Mr Craig would not be involved in the sale if it were entrusted to Milltom, and the circumstances behind the attempts to thwart the sale of the Property made by or on behalf of Mr Flitcroft, I consider that there would be at least significant risks in entrusting the conduct of any sale to Milltom, and that those risks significantly outweigh the risks of entrusting the sale of the Property to Mr Faik notwithstanding Milltom’s concerns as to his lack of independence and objectivity. There must, I consider, be at least a significant risk that a repeat might occur of that which occurred in relation to the sale of 6 Gezzerts Rise, with the property being disposed of without a proper marketing process at what might well be an undervalue. ii) An important consideration is, I consider, that if the sale of the Property were entrusted to Mr Faik, Mr Faik is an officer of the court who owes duties to creditors, and who can therefore be held to account as such, e.g. by way of application pursuant to paragraph 74 of Schedule B1 IA 1986 . The position would be far less regulated and open to scrutiny if an order for sale were made giving conduct of the sale to Milltom. iii) Although it might be possible to restore the Order for Sale Proceedings for hearing relatively quickly, there would be some not insignificant delay in getting the matter listed for a final hearing, particularly if further directions were required in order to identify the issues to be determined at any final hearing.

88. I consider that these reasons alone suffice for the purposes of deciding that the appropriate course is to make an order pursuant to paragraph 71 of Schedule B1, thereby enabling Mr Faik, as administrator of the Company, to proceed with the sale of the Property.

89. This conclusion is, I consider, reinforced by the fact that such a process would, as I see it, provide a more effective and speedy way of resolving outstanding issues as to Milltom’s priority (if such remains an issue) and entitlement in respect of the net proceeds of sale.

90. As to resolving issues and the true state of account as between Milltom and the Company, whilst it might be possible to resolve the same at the final hearing of the Order for Sale Proceedings, there would be no clear framework for doing so thereat, and I consider that it would be undesirable for a sale of the Property to proceed up with Milltom having conduct unless and until it has been determined how it ought to apply the proceeds of sale. The court could order that the whole or part of the proceeds of sale be paid into court pending resolution of any disputes in relation thereto, but that would lead to further delay.

91. On the other hand, a sale following the making of an order pursuant to paragraph 71 of Schedule B1 IA 1986 would maintain priorities in the net proceeds of sale, and the court could, in the order made pursuant to paragraph 71, give directions as to how outstanding issues in respect of the entitlement of Milltom to the net proceeds of sale might be resolved, whether they relate to the specific points taken by Mr Faik regarding Mr Craig’s remuneration etc., or following on from any sale of 6 Gezzerts Rise at an undervalue. Order to be made

92. In the above circumstances, I propose to refuse the Milltom Application for permission pursuant to paragraph 43 of Schedule B1 to continue the Order for Sale Proceedings, and to make an order pursuant to paragraph 71 of Schedule B1 IA 1986 on the Mr Faik’s Application enabling Mr Faik to sell the Property free of Milltom’s ICO/FCO and Supahome’s charges, but on the basis that priorities in the net proceeds of sale would be preserved pursuant to paragraph 71(4).

93. I propose to direct net proceeds of sale following the sale of the Property by Mr Faik be held by him pending agreement, or alternatively determination by the court as to how the same ought to be paid and applied if there is no agreement relating thereto.

94. However, on the basis that the court has an inherent jurisdiction to regulate the conduct of administrations (see Re Atlantic Computer Systems plc (supra) at 527, 529 and 543 and Re Mirror Group (Holdings) Limited [1993] BCLC 538 at 543), I propose to give directions now to enable the resolution of outstanding issues. I will leave it to Counsel to seek to agree the precise terms of the order to be made, but in essence I propose to direct that: i) Milltom’s schedule referred to paragraph 35 above, taken together with the evidence contained in Mr Flitcroft’s two witness statements stand as Milltom’s proof for the purposes of rr. 14.3 and 14.4 IR 2016. ii) Within a limited period of time, say 28 days, Mr Faik is to call for Milltom to produce any document or other evidence which, pursuant to r. 14.4(3) IR 2016, he reasonably considers is necessary to substantiate the whole or any part of Milltom’s claim. iii) Within a limited period of time, say 28 days, of Milltom providing the further documentation or evidence (if any) requested by Mr Faik, or within 42 days from the date of the order if no such further documentation is requested, Mr Faik is to either admit or reject Milltom’s proof pursuant to r. 14.7 IR 2016. iv) It would then be open to Milltom to appeal any adverse decision in respect of its proof pursuant to r. 14.8 IR 2016. v) To the extent that the proof is admitted (in whole or in part), then payment should be made to Milltom out of the net proceeds of sale within, say, 14 days of admission to proof, or within 14 days of sale, whichever is the later.

95. As indicated above, I consider it appropriate that I should declare that any indebtedness of the Company to Milltom conferred by the ICO and the FCO has priority over the indebtedness of the Company to Supahome conferred by its charges, subject to Supahome having permission to apply to vary or discharge this declaration bearing in mind that it is not presently before the court. As I understand it there is no issue as to the amount owed by the Company to Supahome, which has been stated to be £64,544.06. However, if there is an issue as to this, then an equivalent proof process as I propose to direct should apply to Milltom should apply thereto.

96. No attendance will be required on the hand down of this judgment, and I will direct that all consequential issues that cannot be agreed between the parties, including as to the form of order and costs, be adjourned to be dealt with at a consequentials hearing to be listed as soon as possible. I will extend the time for lodging an appellant’s notice with the Court of Appeal until 21 days after this adjourned hearing.