England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Justice Lloyd)

		Royal Courts of Justice Strand London WC2A 2LL Tuesday, 19th March 2002

Tuesday, 19th March 2002

1. LORD JUSTICE PETER GIBSON: Michael McGuire applies for permission to appeal from the order of Lloyd J on 2nd October 2001. By that order the judge refused an application by Mr McGuire that time be extended for appealing from the order by which Mr McGuire was made bankrupt. That bankruptcy order was made as long ago as 14th November 1996 by District Judge Watkins in the Norwich County Court. The judge also varied part of an order made by Mr Registrar Simmonds on 28th February 2001, whereby the Registrar had ordered Mr McGuire to pay £599.25, the costs of the respondents, Hayes & Storr, who were the petitioning creditors. The judge substituted a figure of £500 instead. The judge also ordered Mr McGuire to pay £800 costs.
2. The material facts can be stated very shortly. Mr McGuire retained Hayes & Storr as his solicitors on a number of property matters in 1995 and 1996. They sent him certain bills of costs in respect of work done for him. Mr McGuire was dissatisfied with the quality of that work and the reasonableness of their charges. There are statutory procedures for challenging the charges made by solicitors. Unhappily Mr McGuire does not appear to have availed himself of those procedures.
3. Hayes & Storr in March 1996 issued proceedings in the County Court, and on 4th July 1996 they obtained a default judgment for just over £3,000. Mr McGuire did not appeal that judgment or apply to set it aside. On 25th July 1996 a statutory demand was served on him personally, demanding payment of the judgment debt. (The applicant withdrew) Again he did not apply to set it aside. Not surprisingly, a bankruptcy petition against him was presented on 27th September 1996. Because Mr McGuire was going to be abroad on the original hearing date, the hearing was adjourned until 14th November 1996. Mr McGuire attended the hearing that day before the District Judge, but he was adjudged bankrupt. He had 28 days in which to appeal. He did not appeal.
4. By the end of December 1996 he had applied for an annulment of the bankruptcy order, but he was told by the County Court by letter dated 14th January 1997 that annulment would be inappropriate and that his remedy, if any, was to appeal. He sought advice from two firms of solicitors, but still there was no appeal or application to the court to enable him to appeal because he would have needed an extension of time. An application for such extension was not made for several years. It was only in about February 2001 that he did apply for an extension of time. That was refused by Mr Registrar Simmonds. It was against that background that the judge considered Mr McGuire's application.
5. Mr McGuire, who has appeared before me in person today, is deeply upset about a number of matters. He is scathing in his criticisms of Hayes & Storr, whose invoices, he says, were greatly inflated. He complains of the District Judge's conduct of the hearing at which the bankruptcy order was made. He submits that there was no hearing because he was not allowed, he says, to say anything and no valid order in consequence. He is also condemnatory of the trustee in bankruptcy and of the Insolvency Service. He has suffered a personal tragedy, his sister having died of cancer on 8th August 1999, and he blames that also on what has occurred in relation to his bankruptcy.
6. The judge, as his judgment shows, was fully conscious of these matters. He said that there were two questions for him to consider:

(1) Mr McGuire's prospects of successfully appealing the bankruptcy order; and

(2)the nature and circumstances of the delay.

7. The judge pointed out how difficult Mr McGuire's position was on 14th November 1996 because of the unappealed judgment against him and because of the statutory demand which had not been set aside. The judge said that it might be thought that the District Judge had little alternative but to make the bankruptcy order in those circumstances. As for delay, the judge pointed out how grossly Mr McGuire had exceeded the 28-day period allowed by the rules for filing a notice of appeal. The judge said that it was unheard of that a bankruptcy order should be appealed four to five years after it was made and when most of the bankruptcy process had been completed. He also pointed out that so far as Mr McGuire was complaining about what went on at the hearing before the District Judge, there was no contemporaneous note of what occurred, nor even a witness statement from Mr McGuire that had been put before the judge. The judge said that it was unthinkable that an appeal so late on this ground should be allowed. The judge therefore refused to extend time.
8. Mr McGuire has put before me two bundles. They contain some hundreds of pages in which he raises many matters which he believes are relevant to the application before me. But I am afraid that he has not grappled with the fundamental difficulty which he faces.
9. This court cannot interfere with the exercise of discretion by a lower court unless the lower court erred in principle or was plainly wrong. So far from being satisfied of that, it seems to me clear that the judge was entirely correct for the reasons which he gave. It is now far too late to say, as Mr McGuire does, that he was overcharged by the solicitors. He had ample opportunity to challenge the bills on the basis of which they claim their debt, but he did not take that opportunity at the appropriate time. Because the judgment against Mr McGuire was unappealed and the statutory demand was not set aside, the District Judge's decision to make the bankruptcy order in the circumstances would seem to me to have been inevitable. Until the order is successfully appealed, it must be treated as valid, whatever Mr McGuire's views of its invalidity. Whilst it may well be that if there had been evidence that the District Judge conducted the hearing unfairly, as Mr McGuire is adamant did occur, it would then have been properly arguable, on a prompt appeal, that the order should be set aside. But a delay of this magnitude in appealing, even allowing for Mr McGuire's personal difficulties, is simply unacceptable. As the judge pointed out, how can there be a fair trial of the issue of whether the hearing was fair so long after the event? In my judgment, the judge cannot be criticised for refusing to extend time in the circumstances.
10. Before me the hearing has been interrupted several times because of the manner in which Mr McGuire has conducted his application. He appeared to think that he had the right to ask the court whatever questions he wanted and that it was the duty of the court to respond and provide him with answers. He left me with a document containing no less than 25 questions. They contain such matters as:

"1. Have you read and understood the 224 page report [that being the first bundle before me]? Yes or No?

2. I was born a white Englishman and therefore am not a negro with black skin.

Is it fair to say the colour of my skin is white?

Yes or No?"

11. Other questions go on in that vein. I hasten to add that some questions are rather more pertinent to the application before me, but they are all premised on what Mr McGuire is convinced to be the righteousness of his cause. He has interrupted my judgment, claiming that I have been guilty of reciting what is not the truth. I can only go on the material that is put before me. He appeared to be indignant that I should have said that there was no attempt to set aside the statutory demand. So far as I am aware, there was no such attempt. Certainly no application to the court, which would have been necessary for a setting aside of the statutory demand, has been put in the papers before me.
12. Mr McGuire is convinced that he should never have been made bankrupt because, he said, he was not insolvent. I am afraid he has misunderstood the grounds on which a petition can be presented by a creditor and the grounds on which a court may make a bankruptcy order. In particular, he has not taken account of the fact that where a statutory demand has been served in the prescribed form and with the correct formalities, the failure by the debtor to pay the debt or to secure or compound for it to the satisfaction of the creditor will mean that the debtor will be treated as unable to pay his debt once the time allowed - that is to say at least three weeks - has elapsed since the demand was served, when the demand has neither been complied with nor set aside in accordance with the rules (sections 267(2)(c) and 268(1) and (2) Insolvency Act 1986). In my judgment there plainly was power to make the bankruptcy order, and the fact that a debtor claims that he has other assets which make him solvent do not detract from that fact.
13. Similarly, Mr McGuire in complaining about the county court's refusal of his application for an annulment, does not take proper account of the limits on the court's power to annul a bankruptcy order. In section 282(1) Insolvency Act 1986 the court may annul a bankruptcy order on only one of two grounds. One is that, on any grounds existing at the time the order was made, the order ought not to have been made. I have already dealt with that in pointing out that the statutory demand based on the judgment debt had not been complied with or set aside. The alternative basis for annulment is that to the extent required by the rules the bankruptcy debt and the expenses of the bankruptcy have all since the making of the order been either paid or secured for to the satisfaction of the court. Plainly, that too was not satisfied in the present case. Thus I disagree with the premise of much of his submissions to the effect that the county court was wrong to suggest to him that an application for annulment was inappropriate and that an appeal was the way he should attempt to set aside the bankruptcy order.
14. In these circumstances, I am left in no doubt that an appeal would have no prospect of success, and no other reason has been shown why the appeal should be allowed to go ahead. I must therefore dismiss this application.
Order: Application dismissed.