Nardelli and Johnson v Desiman Limited: when delaying tactics meet the limits of judicial patience

The High Court has dismissed an appeal against bankruptcy orders made by ICC Judge Mullen in September 2024, with Sir Anthony Mann sitting as a judge of the Chancery Division finding that the orders were properly made in all the circumstances.

The appellants, Stephen Nardelli and Graham Johnson, had given a joint guarantee capped at £500,000 in favour of Desiman Limited, supporting lending to a property development company, P3Eco (Bicester) Himley Ltd, for land development at Bicester. When the principal debtor defaulted, Desiman made demand under the guarantee in May 2023. Statutory demands followed, and an application to set them aside was dismissed in March 2024 by ICC Judge Greenwood, who was dismissive of the challenges raised, describing them as "pure Micawberism."

The bankruptcy petitions presented in April 2024 came before ICC Judge Prentis in May 2024. Directions were given for a contested hearing the following April, but the judge made an unless order requiring the debtors to pay the outstanding £33,500 costs award by 5th July 2024 and to file their evidence by the same date. Neither condition was met. Instead, on the final day of the deadline, the debtors applied for extensions, then changed their position, indicating payment would have to await the outcome of a disclosure application in separate proceedings to remove the administrators of the principal debtor.

When the matter came before ICC Judge Mullen on Desiman's application to accelerate the hearing, the debtors were debarred from taking any further steps in the petition without the court's permission. The judge made bankruptcy orders, finding that the debtors' conduct bore "a strong flavour of an attempt to delay and obfuscate," that the application to extend time was bound to fail, and that it was "inevitable" a bankruptcy order would be made in any event at the April 2025 hearing.

The central ground of appeal was that the judge had failed to give sufficient weight to evidence that the principal debt would be fully repaid by February 2025 — before the adjourned petition hearing — and that his use of the word "inevitable" was unjustifiable in light of that prospect. Sir Anthony Mann acknowledged the word may have been "a little too strong" but concluded the judge had been entitled to regard that prospect with deep scepticism, given the manner in which the point had been raised: briefly and as an afterthought at the end of oral submissions, without any supporting evidence.

The appellants' prediction in any event proved false. The anticipated £10 million instalment of deferred consideration did come in, but became entangled in marshalling disputes with another secured creditor, Brooke Homes (Bicester) Ltd. Interim orders made in February 2025 required significant sums to be paid to Brooke and held pending resolution of the dispute. By December 2025 further payments of nearly £3.5 million had been made to Brooke, leaving Desiman's claim against Eco at over £3.3 million outstanding. The principal debt had not, as predicted, been discharged by April 2025.

Sir Anthony Mann held that, even assuming error on the inevitability point, the bankruptcy orders were correctly made. A guarantor seeking a five-month adjournment on the basis that the principal debt might be repaid would face difficulty even in straightforward circumstances. Set against a background of sustained delay, deliberate non-payment of a costs order, and evidence that was insufficiently clear and "half-hearted," no adjournment was warranted. The appeal was dismissed on all four grounds.

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