England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
(His Honour Judge Behrens)

		Royal Courts of Justice Strand London WC2 Monday, 19th February 2001

1. LORD JUSTICE CHADWICK: This is an application for permission to appeal against an order made by His Honour Judge Behrens, sitting as a judge of the High Court in Bankruptcy, on an appeal from an order made by Deputy District Judge Molyneux on 24th June 1999.
2. The applicant, Mr. George Davidson, was adjudicated bankrupt in the Carlisle County Court on 28th August 1998. The petition for bankruptcy was presented following an unsatisfied statutory demand served by substituted service on 16th May 1998. The petition is founded on a judgment debt of £29,523 together with costs and interest, making a total of £104,210. The judgment debt arises under a judgment obtained on 14th March 1994 in proceedings brought against the applicant and one other, Mr. Fox, in the Manchester District Registry of the High Court, by the petitioning creditor, Mr. Harry Johnson. The reference allocated to those proceedings (1989 J 9704) indicates that they were commenced as long ago as 1989.
3. On 26th February 1999 the applicant applied in the Carlisle County Court for an order under section 282(1) of the Insolvency Act 1986 for the annulment of the bankruptcy order which had been made on 28th August 1998. The power of the court to annul a bankruptcy order under section 282(1) arises if, but only if it appears to the court (i) that, on the grounds existing at the time that the bankruptcy order was made, the order ought not to have been made, or (ii) that, since the making of the bankruptcy order, the bankruptcy debts and expenses have been paid or secured. The application of 26th February 1999 has not been included in the papers lodged in support of this application, but it seems clear - not least from the judgment of His Honour Judge Behrens - that the application was put on the first of those grounds; namely that, at the time that the bankruptcy order was made, it should not have been made. The application to annul was dismissed by Deputy District Judge Molyneux at a hearing on 24th June 1999.
4. Mr. Davidson sought to appeal that order. He had two attempts to appeal to the wrong court; in that, first, he sought to come direct to this court, and subsequently he sought to go in front of a circuit judge at Carlisle, His Honour Judge Phillips. Eventually, however, the appeal was directed to the appropriate destination under section 375(2) of the Insolvency Act 1986 and rule 7.48(2) of the Insolvency Rules 1986. The appeal from a district judge sitting in bankruptcy in the county court lies to a judge of the High Court.
5. The appeal came before His Honour Judge Behrens sitting at Leeds as a judge of the High Court on 17th August 2000. He dismissed that appeal; for the reasons set out in the judgment which he delivered on that day. He was satisfied that the bankruptcy order was properly made on the material that had been before the court on 28th August 1998; and that there was nothing in the further material which had been put before him at the hearing in August 2000 which persuaded him that the order ought not to have been made. It is from that order of 17th August 2000 that Mr. Davidson seeks permission to appeal to this court.
6. It will be clear from the history which I have set out that an appeal from the order of His Honour Judge Behrens, made on 17th August 2000, would be an appeal to which section 55(1) of the Access to Justice Act 1999 and CPR 52.13 would apply. The appeal would be against an order of the judge of the High Court which was itself made on an appeal from the county court. An appeal to this court in those circumstances cannot be brought without the permission of this court; and this court is not to grant permission unless satisfied that the appeal would raise an important point of principle or practice, or that there is some other compelling reason why the Court of Appeal should entertain it. That is a statutory hurdle which Parliament has thought right to erect. That is the hurdle which this application has to surmount.
7. I have been unable, even with the assistance of Mr. Davidson, to identify any point of principle or practice in this case, let alone a point which could be described as important. The unchallengeable fact is that Mr Davidson was made bankrupt on a judgment debt which had been obtained in the High Court some four years earlier. Further, it appears from Judge Behren's judgment (and it is not contested by Mr. Davidson) that the judgment debt obtained in the Manchester action was never appealed. Mr. Davidson sought permission to appeal it from this court but that permission was refused. The question whether he was indebted to Mr. Johnson has been decided at a trial lasting, he tells me, some 17 days, and the Court of Appeal has not thought it appropriate to review that matter. For practical purposes, in this court, the judgment must be taken to be unchallengeable. In those circumstances, there was no basis upon which the court hearing the petition for bankruptcy could hold that it had no jurisdiction to make a bankruptcy order.
8. The court had before it a notice of intention to oppose the bankruptcy petition sent by Mr. Davidson on form 6.19. He asked the court to grant an adjournment by virtue of the fact that he had only had notice of the petition on 14th July. That was some weeks before the hearing. He did not get back to England until 13th August (that itself was a week before the hearing) and he had been in hospital the previous Christmas. He asserts that he was a bare trustee with Mr. Fox as per the terms of a partnership agreement dated 30th September, and he prays in aid confirmation of that said to have been given by leading counsel in a discussion on 10th May 1989. That was a matter which (if it had any substance) could have been raised as a defence in Mr Johnson's action. The notice of opposition goes on to assert that Mr. Johnson was asked to serve a writ on the partnership - which includes someone else, a Mr. Mowlem - and that Mr. Davidson had no assets. Further, that Barclays Bank were to investigate some serious far-reaching allegations which might be prejudiced by the bankruptcy.
9. It was for the District Judge to decide whether, in the light of the opposition put forward, there was any purpose in granting an adjournment. The grounds of opposition put forward in the form 6.19 do not contain anything which could properly have persuaded a court of bankruptcy to refuse to make a bankruptcy order on the petition of a judgment creditor.
10. Mr. Davidson asserts that the judgment creditor, Mr. Johnson, was never made aware of the form 6.19. It would have been open to Mr. Davidson to send the form to him if he had thought that that was useful. Further, it would have been open to Mr. Johnson to seek a rescision of the bankruptcy order under section 275 of the Insolvency Act if he had thought that it was no longer in his interests. That has not happened. Mr. Johnson has not sought to obtain a rescision of the order made in 1998. What has happened is that Mr. Davidson has sought to obtain an order annulling that bankruptcy order. Annulment is a different process from rescision.
11. There are no grounds upon which it could be said that there is any point of principle or practice in this case. Nor is there any other compelling reason why the Court of Appeal should entertain this appeal. The judgment of His Honour Judge Behrens makes it clear that he considered all relevant matters; further, that he addressed the question whether, if Mr. Davidson was, as he asserts in the notice in form 6.19, no more than a bare trustee for the partnership, that would afford a defence. He came to the conclusion that it would not; on the basis that a trustee who allows his name to be used as a partner becomes personally liable on contracts made by the partnership, subject to any right in indemnity over against the beneficiary for whom he is trustee.
12. I have no doubt that an appeal would fail. In those circumstances, there is no compelling reason why it should be entertained. I dismiss the application.
Order: Application refused.