England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO REINSTATE

		Royal Courts of Justice Strand London WC2 Monday, 23rd July 2001

1. LORD JUSTICE MUMMERY: On this application Miss Lilian Rayne appears in person. The application before the court is No 2001/0324 and relates to Miss Rayne's bankruptcy. I should state at the outset that this is different from the application B2/1999/5389, which came before Lord Justice Keene and myself on 14th December 2000 and was, on Miss Rayne's application, adjourned.
2. The cases have a common background which I should briefly outline. There is a dispute between the AIB Group (UK) PLC and Miss Rayne. The AIB Group say that Miss Rayne owes them money and that they have obtained a judgment which has not been satisfied. Miss Rayne obtained a judgment against AIB in Newcastle upon Tyne County Court in March 1999 when His Honour Judge Faulks gave judgment in favour of Miss Rayne for £10,000 in respect of her claim against AIB for damages for conversion of goods remaining on her property when it was repossessed by AIB, the property being The Hollies, Linton, Morpeth. Possession had been obtained by AIB on 30th April 1992 pursuant to an order of 4th July 1991. Following the adjournment of that application for permission to appeal, it was re-fixed and it was due to be heard today. It was taken out of today's list on my direction in the light of the events to which I shall now refer.
3. On 4th May 2000 an order was made adjudicating Miss Rayne bankrupt. The order was made on the application of the AIB Group following Miss Rayne's failure to comply with a statutory demand made upon her, claiming that there was owed to AIB Group the sum of £68,573.95 in respect of damages assessed on 4th March 1998 at £40,000 plus interest. The statutory demand stated that the debt had been reduced by the sum of £10,000, that being the amount of the judgment in Miss Rayne's favour on 9th March 1999. The bankruptcy order was made initially on 9th December 1999. That order was later annulled. A fresh order was made on 4th May 2000. The order was made by District Judge Bullock in the Newcastle County Court, having heard counsel for the AIB Group as creditor and having heard a representative for Miss Rayne. The order was that she be adjudged bankrupt, that the advertisement of the bankruptcy order be stayed pending appeal and that leave be given to appeal.
4. The appeal was heard by His Honour Judge Behrens on 25th January
5. 2001. Judge Behrens, sitting as a Judge of the High Court in Newcastle, heard representations from Miss Rayne in person and from the Official Receiver's representative. It was ordered that her appeal be dismissed. The application for a stay of the advertisement of the bankruptcy order was refused.
6. Miss Rayne then applied for permission to appeal. The date of her application was 6th February 2001. An order in respect of that application was made by Master Venne on 25th April 2001. The matter came before him for Miss Rayne to show just cause why her application for permission should not be dismissed for failure to comply with the court's directions. He heard her in person and made an order that unless within 14 days of the sealing of that order, that is at 4.30 on 9th May 1991, she had provided a proper index to be included in the bundles, her application would stand dismissed without further order. It appears that the Civil Appeals Office took the view that Miss Rayne had not complied with the order of 25th April 2001. So her application stood dismissed.
7. A letter to Miss Rayne dated 16th May 2001 explains that the index Miss Rayne faxed through to the Civil Appeals Office on 9th May 2001, that being the last date for complying, did not relate to the bundle she lodged on her application on 8th March 2001. The letter goes on to say:

"I have now referred your application for permission to appeal the order of His Honour Judge Faulks, made on the 9th March 1999 to the listing office. You will be notified in due course of the date fixed for the hearing of this application, with the appeal to follow if granted."

8. Miss Rayne was notified that today would be the adjourned hearing of the application for permission against Judge Faulks' order.
9. She then issued on 17th July - that is last week - an application to reinstate her application for permission to appeal in the case of B2/2001/0324, stating she had fully complied with the order of 25th April 2001. She states that she relied on the documents that had been supplied as complying with the order and that the errors seemed to be in the administration office of the Court of Appeal. She also says that to deny her a hearing would be a breach of Articles 6 and 14 of the European Convention on Human Rights and on Article 1 of the First Protocol.
10. I received written submissions from the solicitors acting in this matter for the AIB Group that there was really no point in this matter being pursued for this reason: following the adjudication of bankruptcy Miss Rayne no longer has the standing in which to appeal. The general principle is laid down by this court in a number of cases - the best known being the case of Heath v Tang [1993] 1 WLR 1421 where it was held that an applicant who had been adjudicated bankrupt did not have the standing to appeal the judgment on which the bankruptcy petition had been brought. The general principle is stated in the judgment of Lord Justice Hoffmann where he says at page 1425, after a review of the authorities:

"These authorities in my judgment demonstrate that in principle a bankrupt cannot in his own name appeal from a judgment against him which is enforceable only against the estate vested in his trustee."

11. He then asks:

"Is there anything different about the judgment upon which the bankruptcy petition is founded? It is submitted that in such a case the bankrupt does have an interest, because if he can get rid of the judgment, he may be able to have the bankruptcy order annulled on the ground that it should never have been made. Whether it is set aside or not will depend upon whether apart from the judgment the bankrupt would have been solvent or whether an order would in any event have been made on the application of supporting creditors: see In re Noble (A Bankrupt) [1965] Ch 129. On the other hand, it may equally be said that if only the bankrupt could pursue a claim for a large sum which he claims to be owing to him, he would be able to pay all his creditors and have the bankruptcy annulled on that ground. It is clear, however, that this is not a ground upon which he may bring proceedings. Furthermore, an exception for the petitioner's judgment would give rise to anomalies in cases in which the defence was a claim of set off ..... "

12. So the judgment of Lord Justice Hoffmann concluded that the law was that the bankrupt was divested of an interest in his property. This remained fundamental under the new insolvency code. The result was that an appeal could not be brought by the bankrupt after adjudication, even in respect of the judgment on which the bankruptcy was based.
13. Miss Rayne complains that she should not have been made bankrupt until all the proceedings had been completed. All the proceedings have not been completed because she still has her outstanding appeal from the judgment of Judge Faulks. She says that, as already indicated, she was not in default of the matter of the order of Master Venne. She had supplied the correct index before 9th May. It was as a result of confusion in the Civil Appeals Office or mislaying of documents that the view was taken in the letter of 16th May that her appeal stood dismissed.
14. In my judgment, this matter needs to be fully aired at an inter partes hearing. I have explained to Miss Rayne - although she does not accept the importance of the general point - that her bankruptcy has deprived her of standing to pursue these appeals. It is a matter for the trustee in bankruptcy. She says that she has not got a trustee in bankruptcy. When I put it to her that she failed to attend the meeting with the Official Receiver, she denied there had been a meeting arranged. This matter can only be efficiently and satisfactorily dealt with by a further hearing at which AIB Group is represented.
15. I propose to make these directions. First, that the application for permission to appeal against the decision of Judge Faulks, which was adjourned by Lord Justice Keene and myself on 14th December 2000, should be re-listed as a hearing on notice to AIB Group. This application for reinstatement also needs some further investigation. The most convenient course to take is to adjourn this application to be heard at the same time as the application No 1999/5839. I would also ask that a representative of the Official Receiver be present at the adjourned hearing to inform the court of the up-to-date position concerning Miss Rayne's bankruptcy. Thus re-list No 5839, adjourn No 0324 to come on at the same time. The hearing of both applications is on notice to AIB Group. The Official Receiver is to attend the hearing to inform the court of the up-to-date position of Miss Rayne's bankruptcy.
Order: Application adjourned. A copy of this judgment to be supplied to Miss Rayne at public expense.