Neutral citation number: [2013] EWHC 3577 (Ch) IN THE HIGH COURT OF JUSTICE Claim No of 2009 CHANCERY DIVISION

Transcription

1 Neutral citation number: [2013] W 3577 (h) IN T I OURT O JUSTI laim No of 2009 ANRY IVISION Appeal Ref: M12201 MANSTR APPAL NTR Manchester ivil Justice entre 1 ridge Street West Manchester M60 9J efore: Tuesday, 1 st October 2013 etween: IS ONOUR JU O Q sitting as a Judge of the igh ourt MISS JNNY YAN -v- Appellant T OIIAL RIVR (1) -and- MANSTR ITY OUNIL (2) -and- JOANN SARA WRIT (3) (Trustee in ankruptcy of Jenny Yang) Respondents ounsel for the Appellant: ounsel for the Second Respondent: ounsel for the Third Respondent: MR ANRW LARK MISS LAIR JAKSON MISS KARN TROY APPROV JUMNT Transcribed from the Official Tape Recording by Apple Transcription Limited Suite 104, Kingfisher usiness entre, urnley Road, Rawtenstall, Lancashire 4 8S Telephone: ax: Number of olios: 115 Number of Words: 8,254 Apple Transcription Limited /sc v.3

2 APPROV JUMNT 1. JU O Q: This is my extemporary judgment on an appeal by Miss Jenny Yang, the former bankrupt, against orders of istrict Judge Khan made on 30 th October and 12 th November The respondents to the appeal are Manchester ity ouncil, the petitioning creditor, and Joanne Sara Wright, the former trustee in bankruptcy of Miss Yang. The Official Receiver, who was named as a respondent to the appeal, has taken no part in it. 2. istrict Judge Khan refused permission to appeal; but on 17 th April 2013 I gave permission to appeal in relation to nine out of ten grounds of appeal. In the event, although it is 10 to 4, I have heard argument on only the first five of the grounds of appeal. It is quite clear to me that the argument on the remaining grounds is going to have to go off to another day. istrict Judge Khan handed down, on 30 th October 2012, a detailed written judgment following a hearing which had taken place on 24 th September y an application (her third relevant application) issued on 28 th May 2012, Miss Yang had sought, in the alternative, to have her bankruptcy order, made on 30 th November 2009, either annulled under Section 282(1)(a) of the Insolvency Act or alternatively reviewed and rescinded under Section 375(1) of that Act. In the event, the district judge dismissed the annulment application; but he did order that the bankruptcy order should be rescinded, and the petition dismissed, subject to, and upon, the further terms of, his order. It is the district judge s decision to rescind, rather than annul, the bankruptcy order to which this present judgment is directed. 3. ssentially, the relevant grounds of appeal, although set out in five numbered grounds, fall under two heads. The first relates to the foundation of the bankruptcy order. The district judge set out the reasons for his decision in a written judgment which extends to some 96 separate paragraphs. That judgment contains a full and careful exposition of the material facts and the relevant statutory provisions. I therefore propose to address the background to this appeal extremely shortly, particularly in view of the lateness of the hour. The bankruptcy order was made against Miss Yang on 30 th November 2009, following a petition presented on 2 nd September 2009 by the second respondent, Manchester ity ouncil. y that petition, Manchester ity ouncil had sought payment from Miss Yang of a sum of 1, in respect of unpaid council tax for a property at 23 anff Road, Manchester, for the period 16 th March 2006 to 31 st March anff Road was a property owned by Miss Yang which had been classified by the city council as a house in multiple occupancy. On 5 th October and 23 rd November 2006, the city council had obtained liability orders against Miss Yang for the sums of and respectively. ollowing the making of the bankruptcy order, and on 16 th August 2011, the third respondent, Miss Wright, was appointed as Miss Yang s trustee in bankruptcy. 4. Miss Yang, in due course, and after the making of the bankruptcy order, discharged the liability orders which had formed the subject matter of the bankruptcy petition; but having done so, she also sought, in or about late April or early May of 2012, to challenge her liability to pay the relevant council tax on the basis that she claims the city council to have been incorrect in classifying 23 anff Road as a house in multiple occupation. er application to the valuation tribunal succeeded following a hearing on 25 th July The valuation tribunal s decision was made available to the parties on Apple Transcription Limited //sc

3 6 th August y that decision, the valuation tribunal ordered the city council to remove Miss Yang from liability for the period from 16 th March 2006 to 16 th May 2007, thereby encompassing the period in respect of which the liability orders had been made. It is following that decision of the valuation tribunal that Miss Yang contends that she is entitled to have the bankruptcy order annulled under Section 282(1)(a) of the Insolvency Act on the basis that, on the grounds existing at the time the bankruptcy order was made on 30 th November 2009, that order ought not to have been made. istrict Judge Khan held that he should not annul the bankruptcy order; but, having considered matters relevant to the exercise of his discretion, he decided that the bankruptcy order should be rescinded under Section 375(1). 5. istrict Judge Khan held that the bankruptcy order should not be annulled despite the fact that it had, by then, been proven that Miss Yang did not owe the amounts claimed in the two liability orders. e held that the subsequent setting aside of those liability orders afforded no ground for Miss Yang s contention that at the time the bankruptcy order had been made, it ought not to have been made. e held (at paragraph 51 of his judgment) that, at the time the bankruptcy order had been made, the house in multiple occupation assessment had been in place, and no steps or action had been taken by Miss Yang to challenge that, nor had she taken any steps to challenge the liability orders themselves. On that footing, he held that grounds had not existed at the time the bankruptcy order was made such that it should not have been made. e went on to say (at paragraph 52) that it followed that he did not need to consider answering the question whether the court should, in any event, exercise its discretion in favour of Miss Yang and annul the bankruptcy order; although he went on to say that the factors relevant to the exercise of his discretion on the application under Section 282(1)(a) were the same factors as those relevant to the application under Section 375, to which he did ultimately accede. 6. Mr Ian lark, who appears for the appellant, Miss Yang, under the direct public access scheme, submits that istrict Judge Khan was in error in finding that no grounds existed at the time the bankruptcy order was made which should have resulted in the order not having been made. It is to this issue that the first two of his grounds of appeal are directed. e submits that the district judge erred by declining to follow a decision of a three member ourt of Appeal in Royal ank of Scotland v arley [1996] PIR 638 and by applying instead the decision of a two member ourt on the determination of an application for permission to appeal in the later case of olsover istrict ouncil v ennis Rye Ltd [2009] WA iv 372; [2009] 4 All R e says that the district judge erred in finding that the olsover istrict ouncil v ennis Rye Ltd case was closer, if not identical, to the present case than Royal ank of Scotland v arley. e advances that contention on the basis that in the olsover istrict ouncil v ennis Rye Ltd case, the petition debt had been undisputed, and the real issue was whether a claim in restitution for the repayment of council tax was a sufficiently certain cross-claim on a winding up petition. 7. Mr lark develops his submissions on those two grounds of appeal at paragraphs 5 through to 15 of his most recent written skeleton argument, dated 27 th September e cites paragraph 51 of istrict Judge Khan s judgment. There the district judge said this: I am not satisfied that Miss Yang can persuade me that the bankruptcy order ought not to have been made. I am not inclined to follow arley Apple Transcription Limited //sc

4 simply because that was a case involving a judgment debt, and this is a case regarding non-payment of liability orders, but what was said in ennis Rye Ltd is closer, if not identical to this case. There are no compelling circumstances of this case and therefore no basis to go behind the liability orders. The liability orders have not been set aside, but have been discharged. No ground therefore existed at the time the bankruptcy order was made such that it ought not to have been made. Moreover, at the time the bankruptcy order had been made the MO assessment was in place, and no steps or action had been taken by Miss Yang to challenge it. rounds therefore did not exist at the time the order was made such that it should not have been made. Accordingly Miss Yang is not entitled to an order under Section 282(1)(a). 8. Mr lark submits that istrict Judge Khan was wrong to decline to follow the Royal ank of Scotland v arley case. e submits that the basis for his decision would appear to be (1) a distinction based on the difference between default judgments and liability orders; and (2) the perception that the case of olsover istrict ouncil v ennis Rye Ltd was closer, if not identical, to the present case. Mr lark submits that in both respects the district judge was in error. e submits that the liability orders upon which the bankruptcy petition was founded were not determinative of the question of whether council tax was properly payable by the appellant in respect of 23 anff Road for the relevant period. e submits that they should be regarded in the same way as a default judgment. As to that, he cites the observations of Lord Justice offmann, speaking with the agreement of the other two members of the ourt of Appeal (Lord Justice Ralph ibson and Lord Justice arquharson) in Royal ank of Scotland v arley at pages 639 to There Lord Justice offmann said that it seemed to him that if it could be demonstrated by evidence subsequent to the bankruptcy order that the debt on which the petition was founded did not exist, then it would be right to say that there was a ground existing at the time the order was made on which it should not have been made. That could be true, notwithstanding that, at the time of the order there was a default judgment in existence which had not yet been set aside. The bankruptcy court had always had a jurisdiction to go behind a default order and consider whether there really was a debt. Mr lark equates the position of default judgments with that of the liability order in the present case. e draws support for his proposition that the Royal ank of Scotland v arley principle is applicable to any judgment other than one obtained following a full trial on the merits of all the issues by citing two further authorities to me. They are the decision of Mr Justice therton in the case of awodu v. American xpress ank [2001] PIR 983, and the decision of Mr Robert am Q (sitting as a deputy judge of the hancery ivision) in the case of Oraki v ean & ean (a firm) [2012] W 2885 (h). The awodu v. American xpress ank case is authority for the proposition that the bankruptcy court would investigate a judgment debt if it is shown that the judgment was obtained by fraud or collusion, or represents a miscarriage of justice. That decision was followed and applied by Mr am in Oraki v ean & ean (a firm), where a bankruptcy order based on a summary judgment for solicitors costs was annulled because it later became apparent that the purported solicitor with conduct of the matter had not been properly qualified, even though at the time of the annulment the summary judgment had not then been set aside. Apple Transcription Limited //sc

5 10. Mr lark submits that the district judge was confronted with an apparent conflict between the decision in Royal ank of Scotland v arley and that in olsover istrict ouncil v ennis Rye Ltd. e points to the fact that the decision in Royal ank of Scotland v arley was a decision of a three member ourt of Appeal and the second case was a decision of a two member ourt of Appeal on an application for permission to appeal; although he does acknowledge that in the olsover istrict ouncil v ennis Rye Ltd case Lord Justice Mummery did state that is should be treated as an exception to the general rule that applications for permission to appeal should not be cited as authorities. Nevertheless, Mr lark submits that contrary to istrict Judge Khan s analysis, the issue in olsover istrict ouncil v ennis Rye Ltd was not identical or similar to that in the present case. e makes the point that in olsover istrict ouncil v ennis Rye Ltd the appellant company had not disputed the debt that formed the basis of the winding up petition, which had comprised a liability order for unpaid council tax. Rather, the appellant was relying on a cross-claim based on a claim in restitution in respect of other liability orders already paid. Thus, the issue before the ourt of Appeal had been whether the judge at first instance, who had found that there was insufficient evidence that the company could establish a genuine and serious cross-claim, had been entitled to come to such a decision on the evidence. 11. Mr lark submits that the position in olsover istrict ouncil v ennis Rye Ltd was fundamentally different to that in the present case because there the petition debt had been undisputed, and the issue was whether there had been sufficient evidence of the cross-claim. e invites the court to note that the uncertainty of the cross-claim had arisen in part from the fact that it was based on a particular exemption from council tax that required a determination of whether there was a causal link between the lack of occupation of the relevant property and the action taken by the relevant council in relation to statutory powers of compulsory purchase. On that basis, it is not surprising that the court considered that the extent of such a cross-claim was uncertain. Mr lark submits that in the circumstances, the district judge should have followed the decision of the ourt of Appeal in Royal ank of Scotland v arley, as opposed to declining to follow it because of the decision of the ourt of Appeal in olsover istrict ouncil v ennis Rye Ltd which, he says, was a dissimilar case, and also one in which the decision in Royal ank of Scotland v arley was not apparently cited. 12. In the course of his oral address, which proceeded for a little over two hours, either side of the luncheon adjournment, Mr lark developed his submissions. e emphasised that olsover istrict ouncil v ennis Rye Ltd had not been concerned with the validity of the petition debt, but rather the certainty and genuineness and status of the cross-claim. In the present case, by contrast, the question was whether the appellant was a person liable for council tax. In the olsover istrict ouncil v ennis Rye Ltd case the questions were very much more complicated. Mr lark acknowledges the decision of the hancellor of the igh ourt, Sir Andrew Morritt, in the case of Revenue and ustoms ommissioners v assells [2008] W 3180 (h), [2009] ST Mr lark acknowledges what was there said by the hancellor at paragraph 28 of his judgment. There the hancellor recorded that the tax payer could not have succeeded under Section 282(1)(a) of the Insolvency Act because there was said to be no doubt that the assessments made by the Revenue under the relevant sections of the Taxes Management Act had given rise to legally enforceable debts, so that the bankruptcy order had been rightly made when made. owever, Mr lark submits that that relates to a different regime, namely tax assessments. e submits Apple Transcription Limited //sc

6 that, to the extent that we are concerned with assessments to council tax, the hancellor s decision, which was made whilst sitting at first instance, cannot be preferred to the decision of the ourt of Appeal in the Royal ank of Scotland v arley case. 13. Mr lark submitted that contrary to the view of istrict Judge Khan, the instant case was analogous to the position of a default or summary judgment. The court should therefore exercise its jurisdiction to annul the bankruptcy order made in favour of the city council against the appellant because the underlying debt has now been shown not to have existed at the time of the bankruptcy order. That, Mr lark submits, is consistent with the position as explained by Lord Justice offmann in the Royal ank of Scotland v arley case at pages 639 to or the second respondent, the petitioning creditor, Miss laire Jackson of counsel has produced detailed written submissions. In the event, she addressed me for about 50 minutes. She relied upon all that was said at paragraphs 32 through to 35 of her written skeleton argument, dated 25 th July or the reasons that she sets out at paragraph 34, and develops there under various lettered subparagraphs, Miss Jackson submits that the district judge had been correct to refuse to annul the bankruptcy order under Section 282(1)(a) of the Insolvency Act as there was no ground to do so. She emphasises that, under the terms of the relevant council tax legislation, where a liability order has been made, the amount in question is deemed to be a debt for the purposes of Section 267 of the Insolvency Act. Therefore, as with the Revenue and ustoms v assells case, once the liability orders were made, there was no doubt that the appellant was indebted to the city council, for the purposes of the Insolvency Act, unless and until such liability orders were set aside. 15. iven that the liability orders existed at the time the bankruptcy order was made, the bankruptcy order was rightly made as grounds existed at the time it was made. The fact that the liability orders were subsequently set aside, following an appeal to the valuation tribunal, is an exceptional circumstance arising after the hearing of the petition and is, therefore, as Miss Jackson acknowledges, a ground for rescission of the bankruptcy order; but, as istrict Judge Khan concluded, it is not a ground for the annulment of that order under Section 282(1)(a) of the Act. Accordingly, the district judge was correct in refusing to annul the bankruptcy order as there was no ground to do so. The change of facts since the date of the order did not provide any ground for annulment; rather it provided a ground for rescission, so the district judge s decision was correct as a matter of law. 16. In her oral submissions, Miss Jackson emphasised that in none of the cases relied upon by Mr lark of Redbridge London orough ouncil v Mustafa [2010] W 1105 (h); [2010] PIR 893, Oraki v ean & ean (a firm) [2012] W 2885 (h), and awodu v. American xpress [2001] PIR 983 was the court considering, in terms, whether an application to set aside a bankruptcy order should be made under Section 282, rather than under Section 375, of the Insolvency Act. None of the decisions, according to Miss Jackson, showed that any consideration had been given by the court to whether the appropriate procedure was that under Section 282 rather than that under Section 375. She submitted that all of those cases had proceeded on the basis that Section 282 had been the right way to proceed. Indeed, in Redbridge London orough ouncil v Mustafa the petitioning creditor - there also a local council tax authority - had conceded that there should be an annulment of the bankruptcy order under Section Apple Transcription Limited //sc

7 282(1)(a). The only case in which the point had expressly been addressed was that of Revenue and ustoms v assells; and there an annulment under Section 282(1)(a) had been said to be inappropriate. 17. Miss Jackson submitted that once a liability order had been made, it gave rise to a legally enforceable debt; and the correct procedure to adopt, once the liability order had been set aside, was that of rescission under Section 375(1) of the 1986 Act. She emphasised that the awodu v. American xpress case had been concerned with the hearing of a bankruptcy petition, and not with an annulment or rescission application. Miss Jackson emphasised that at the time the bankruptcy order had been made there had been no grounds for saying that it should not have been made because there was an existing liability which had not, at that time, been removed. Miss Jackson emphasised that the liability for council tax exists independently of any liability order, but only crystalises into a debt when a liability order is made. She submitted that the valuation tribunal had removed the underlying liability as of 2012, but it had not found that there had been no liability at the time of the bankruptcy order in Miss Jackson also submitted that the district judge had found that the case was one for rescission rather than annulment. e had also made it clear, quite correctly, that he could not in any way interfere with an earlier order of is onour Judge Waksman Q, sitting as a judge of hancery ivision. Judge Waksman, according to Miss Jackson, had decided that the bankruptcy order should not be annulled; and istrict Judge Khan could not have ignored Judge Waksman s order. There had not even been any application which could properly be brought before this court to review Judge Waksman s decision. Therefore, this court was bound by Judge Waksman s decision not to annul the bankruptcy order. In his response, Mr lark took me to the terms of Judge Waksman s order. Paragraph 2 provided that the application to annul the bankruptcy order made on 22 nd May 2012 was struck out as an abuse of process and/or because there was no real prospect of success. owever, Mr lark emphasised the following words: that that was to be without prejudice to the right of the applicant (if so advised) to seek permission to appeal out of time from the decision dismissing the first annulment application and/or to apply to set that order aside on the basis that the applicant was not present and/or to apply to rescind the bankruptcy order. 19. Mr lark pointed out that the application that came before istrict Judge Khan included an application that istrict Judge Smith s order of 8 th ebruary 2012, by which he had dismissed the appellant s initial application to annul the bankruptcy order, should be set aside pursuant to PR by relisting and rehearing the application which had been decided in her absence owing to ill health. e submitted that if the appeal court should consider that the bankruptcy should be annulled, then istrict Judge Smith s order, which had been based on his view that even if the bankruptcy order was successfully appealed, this would not be a basis for annulment, should likewise be set aside. It seems to me that I should not decide this appeal on the basis of Miss Jackson s submission that istrict Judge Khan was bound by Judge Waksman s order, given that there was an application to set aside the earlier order of istrict Judge Smith, and that that had been predicated by paragraph 2 of Judge Waksman s order. It seems to me that I should address the appeal on its merits. I therefore accept Mr lark s submission that if the court considers that annulment rather than rescission is the appropriate course in the present case, then the court Apple Transcription Limited //sc

8 should not decline to interfere with istrict Judge Khan s order merely on the basis that he was fettered by the earlier decision of Judge Waksman. 20. I turn then to consider the merits of the first two grounds of appeal. I acknowledge that on the hearing of a bankruptcy petition it may be permissible to go behind a default judgment, or a judgment entered otherwise than after a full trial on the merits of the case. owever, merely because a bankruptcy petition is founded on orders for council tax liability which at a later date, and subsequent to the bankruptcy petition being heard, are set aside, that does not, in my judgment, mean that the case is one for annulment under Section 282(1)(a) rather than for rescission under Section 375(1) of the Insolvency Act It seems to me that one has to have regard to the statutory provisions governing the liability for council tax and the making of liability orders. Regulation 34 of the ouncil Tax (Administration and nforcement) Regulations 1992 provides that if an amount which has fallen due by way of council tax is wholly or partly unpaid, the billing authority may apply to a magistrates court for an order against the person by whom it is payable. y regulation 34(6), the court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid. 21. y regulation 57(1) any matter which can be the subject of an appeal under Section 16 of the primary legislation (the Local overnment inance Act 1992) may not be raised in proceedings in the magistrates court for a liability order. Section 16 of the 1992 Act provides that a person may appeal to a valuation tribunal if he is aggrieved by (a) any decision of a billing authority that a dwelling is a chargeable dwelling, or that he is liable to pay council tax in respect of such a dwelling; or (b) any calculation made by such an authority of an amount which he is liable to pay to the authority in respect of council tax. I therefore accept Mr lark s submission that on an application for a liability order by the billing authority, the magistrates cannot look into the questions (1) whether the property is chargeable; or (2) whether the respondent to the summons is liable to pay the council tax; or (3) whether the calculation of the alleged liability is correct. ut I would not accept Mr lark s further submission that that means that a liability order is the equivalent of a default judgment. The primary and secondary legislation governing the liability for, and assessment to, council tax provides for challenges to a decision of a billing authority to be made through the valuation tribunal appeal mechanism. The making of a liability order by the magistrate s court has the effect of converting that liability into a judgment; but it does not mean that it is the equivalent of a default judgment. y regulation 49(1) it is expressly provided that where a liability order has been made, and the debtor against whom it is made is an individual, the amount due shall be deemed to be a debt for the purposes of Section 267 of the Insolvency Act, grounding a creditor s petition. 22. It seems to me that the fact that a liability order is later set aside does afford grounds for saying that, at the time the bankruptcy order was made, there was no liability properly founding the relevant bankruptcy petition within the meaning of Section 282(1)(a) of the 1986 Act. ut that does not mean that a bankruptcy order made on a petition founded upon such a liability order ought not to have been made. It seems to me that in the Royal ank of Scotland v arley case, Lord Justice offmann expressly addressed what should be done at page 641. There he acknowledged that the bankruptcy procedure had ample safeguards built into it for enabling the bankrupt to challenge the existence of the debt. e might do so on an application to set aside the Apple Transcription Limited //sc

9 statutory demand (although I note that the scope for that is considerably restricted by the terms of paragraph of the current (2012) Insolvency Practice irection, which provides that where the debt claimed in the statutory demand is based on a liability order (amongst other things), a court will not at that stage inquire into the validity of the debt nor, as a general rule, will it adjourn the application to await the result of an application to set aside the order). 23. owever, Lord Justice offmann went on to say that if a debtor had a bona fide appeal, or an application to set aside the judgment, in existence at the time when the petition came on to be heard, it was the invariable practice to adjourn the hearing of the petition until that application or appeal had been decided. In my judgment, that is the appropriate way of dealing with a challenge to a liability order in respect of unpaid council tax on the hearing of the petition. If there is pending an appeal to the valuation tribunal, then the debtor can ask for the hearing of the petition to be adjourned pending the final determination of that appeal. It seems to me that if there is a liability order in existence at the time of the bankruptcy petition and upon which that petition is founded, if the liability order is subsequently set aside then the appropriate course is to apply to rescind the bankruptcy order under Section 375(1) rather than to apply to annul it under Section 282(1)(a) of the Act. That seems to me the appropriate course to take. 24. I should add that it seems to me that the observations of Lord Justice offmann in the Royal ank of Scotland v arley case were, in any event, obiter because the actual decision of the ourt of Appeal was to dismiss the appeal from Mr Justice arman, who at first instance had refused to annul the bankruptcy order. I would not accept Mr lark s submission that the status of the olsover istrict ouncil v ennis Rye Ltd decision is in any way inferior to that of the Royal ank of Scotland v arley decision because it was a decision of a two judge ourt of Appeal on an application for permission to appeal. owever, I would accept Mr lark s submission that the olsover istrict ouncil v ennis Rye Ltd case is not in any way determinative of the issue that this court has to decide on the hearing of this appeal. I entirely accept Mr lark s submission that the petition debt in the olsover istrict ouncil v ennis Rye Ltd case had been undisputed, and that the issue was the very different one of whether a claim in restitution for the repayment of council tax was a sufficiently certain crossclaim on a winding up petition. To the extent that istrict Judge Khan placed reliance upon the olsover istrict ouncil v ennis Rye Ltd case in preference to the Royal ank of Scotland v arley case, then it does seem to me that he fell into error because I do not consider the olsover istrict ouncil v ennis Rye Ltd case to be determinative of the issue that falls to be considered under the first two grounds of appeal. or the reasons that I have given, however, I am satisfied that the decision of istrict Judge Khan on the annulment issue was correct, and was not wrong. 25. The third to fifth grounds of appeal raise the issue of service, both of the statutory demand and later of the petition. round three asserts that istrict Judge Khan erred in failing to consider and apply Insolvency Rule 6.3(2) in determining whether the statutory demand had been properly served. Mr lark asserts in ground of appeal number four that the district judge erred in failing to consider whether the second respondent should have disclosed the information it had received from the appellant, and in particular a correspondence and address and telephone number; and how, if such disclosure had been made, it would have affected the court s exercise of its Apple Transcription Limited //sc

10 power to order substituted service of the petition. The fifth ground of appeal asserts that the district judge s conclusion that the appellant would not have responded to service of the petition at such address was against the weight of the evidence regarding her contact with the second respondent in July Mr lark addresses these issues at paragraphs 16 through to 22 of his written skeleton argument. e says that the alternative basis for annulment relied on by the appellant was the defective service of either the statutory demand and/or the bankruptcy petition. e develops those submissions in his written skeleton argument. 26. e places particular emphasis upon Insolvency Rule 6.3(2), which was reproduced at paragraph 36 of the district judge s judgment. That states that the creditor is, by virtue of the Rules, under an obligation to do all that is reasonable for the purpose of bringing the statutory demand to the debtor s attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected. Mr lark relies in particular upon the decision of the ourt of Appeal, delivered by Lord Justice Nourse, and with supplemental observations by Lord Justice Mantell and Mr Justice olman, in the case of Regional ollection Services Ltd v eald [2000] PIR 661. There the ourt of Appeal considered the relevant provision of the Insolvency Rules and upheld the decision of the judge at first instance, Judge ehrens, that there had not been valid service because although eight attempts had been made to effect service at the debtor s home, the creditor had not visited his place of business. Lord Justice Nourse, delivering the leading judgment, said that, shortly stated, the question on the appeal was whether Judge ehrens had been entitled to hold that the petitioner had not done all that was reasonable for the purpose of bringing a statutory demand to the respondent debtor s notice. The judge had dismissed a bankruptcy petition based on the respondent s failure to comply with the demand, and the petitioner was appealing, in the event unsuccessfully, to the ourt of Appeal. At page 664, Lord Justice Nourse formulated the test, in substance, as being that the creditor must take all such steps as are reasonable in the circumstances for the purpose of bringing the statutory demand to the creditor s attention. 27. Mr lark submits that it would have been reasonable for the city council to have sent a copy of the demand, or notification thereof, to the correspondence address supplied to it by the appellant, even though that was not her residence. Indeed, he says that it would have been reasonable for the city council to have informed the appellant of the statutory demand when she attended at its offices for an interview on 6 th August e says that the district judge failed to consider that question. e submits that if considered, it would have led to the conclusion that the city council had breached Insolvency Rule 6.3(2) so that service of the demand had not been properly effected. Mr lark acknowledges that the bankruptcy petition was served in accordance with an order for substituted service; but he submits that the city council had failed to disclose to the district judge, in its application for the order for substituted service, that it had been informed by the appellant that she by then no longer resided at 15 anff Road, and that it had been provided by her with both a correspondence address and also an address. It is for that reason that the application of 28 th May that came before istrict Judge Khan included an application to set aside the order for substituted service. 28. Mr lark submits that the district judge s conclusion that the city council could not be criticised for seeking an order for substituted service of the petition by post at 15 anff Apple Transcription Limited //sc

11 Road was erroneous because if the city council had given the court, as it ought to have done on a without notice application, full and frank disclosure of its recent contacts with the appellant, and of the contact addresses supplied by her, then almost inevitably the court would have required that substituted service should include sending a copy of the petition to the new correspondence and addresses. urther, it is said that istrict Judge Khan s conclusion that Miss Yang would not have responded to, or presumably acted upon, communication was against the weight of the evidence regarding the contact between the appellant and the city council s offices at that time, as set out in a witness statement of Mr Umerji, and in particular the fact that she had attended at the city council s offices for interview on 6 th August In any event, Mr lark submits, the issue before the district judge was not the likely consequence of alternative service by these additional methods but whether the order for substituted service was properly obtained, and the petition was properly served, given the city council s failure to disclose such information. 29. In his oral submissions, Mr lark submitted that the district judge had fallen into error in focusing upon the identity of the appellant s last known residence. That might have been appropriate if the court had been considering the validity of the service of a claim form, but it was not appropriate to the real question which had been before the court which was one of the effective service of a statutory demand and, later, a bankruptcy petition. The question there is whether sufficient had been done to bring those documents to the debtor s attention. Mr lark submitted that the district judge had really missed the point, which was that the council had been obliged to do all that was reasonable to bring the proceedings to the appellant s attention, and, on a without notice application to the court, to give full knowledge to that court of her addresses. In answer to a question posed by the bench as to whether it was implicit in what istrict Judge Khan had said at paragraph 44.6 of his written judgment that it would have made no difference if the court had been supplied with the missing information, Mr lark submitted that the appropriate question had been whether the city council, as petitioning creditor, had complied with its obligations under the rules as to service. If it had not, then there was no proper service even if that would have made no difference. Mr lark submitted that the district judge s conclusions had been against the weight of the evidence. The appellant had not been ignoring all attempts by the council to contact her during the period in question. 30. Miss Jackson s submissions on the issue of service, which she elaborated at subparagraphs 34(g) through to (l) of her written skeleton argument, were to the effect that the demand and the petition had been correctly served in accordance with both the Insolvency and the ivil Procedure Rules. Again, there was no valid ground for annulment. Miss Jackson supplied the court with the Insolvency Practice irection which had been current in She emphasised that the rules for substituted service of a statutory demand mirrored those for substituted service of a bankruptcy petition. She emphasised that paragraph 11.4 of the 2007 Insolvency Practice irection made no reference to or correspondence addresses; rather, it focused upon the residential and business addresses of the debtor. She referred me to a note in the latest edition of Sealy & Milman s Annotated uide to the Insolvency Legislation 2013, in the notes to Insolvency Rule 6.3 at page 1019, to the effect that failure to comply with requirements as to the service of a statutory demand is not necessarily fatal to the bankruptcy procedure. She submitted that the statutory demand had been validly served; and even if it had not been, that was not, of itself, sufficient to justify an Apple Transcription Limited //sc

12 annulment of the bankruptcy order, as distinct from its rescission. Miss Jackson took me to Insolvency Rule 6.14, relating to service of a bankruptcy petition. She emphasised that the appellant had persisted in giving the petitioning creditor correspondence addresses rather than residential or business addresses. The Practice irection had not required service at correspondence or addresses. She submitted that the city council should not have sent any letter requesting an appointment to the debtor at anything other than her residential or business address. She submitted that the appellant had demonstrated throughout that she addressed matters only as and when it seemed fit to her. 31. I have borne all of those submissions firmly in mind. I have also borne in mind what both the Insolvency Rules and the Practice irection say with regard to service of both statutory demands and bankruptcy petitions; and also what was said by the ourt of Appeal in the case of Regional ollection Services Ltd v eald. It should be borne in mind that that was an appeal from a decision at first instance of a judge who had had to decide as to the sufficiency of the steps taken to effect service of a statutory demand. All three members of the ourt of Appeal emphasised that the case had been one for the judge at first instance. At page 665, Lord Justice Nourse, delivering the leading judgment, said that the case was a perfectly simple one where the judge had had to make a decision which it was for him to make on the evidence that was before him. It was not, strictly speaking, a question within his discretion; but it was one which the ourt of Appeal habitually regarded as being essentially for the decision of the judge. Judge ehrens not having misdirected himself in any way, or taken into account anything which he ought not to have taken into account, or left out of account anything which he ought to have taken into account, Lord Justice Nourse was quite satisfied that it would be wrong for his court, in that case the ourt of Appeal, to interfere with his decision. 32. Lord Justice Mantell, at page 665, echoed that. e described the question as one of fact, and that the lower court s conclusion that the petitioning creditor had failed to meet the test of whether it had done everything it could reasonably have been expected to do to bring the statutory demand to the debtor s attention was not one with which he, Lord Justice Mantell, would be prepared to interfere. Mr Justice olman, the third member of the court, agreed. At page 666, he said that he was satisfied that the judge had correctly approached the case by reference to the appropriate test. e concluded: It was for him, as the judge of first instance, to exercise his own judgment as to whether all such steps as were reasonable in the circumstances of the case had been taken. In my judgment, his conclusion that they had not cannot be faulted. That decision emphasises that the case is ultimately a decision to be taken by the judge at first instance. The district judges of this district registry, particularly the nominated hancery district judges, including istrict Judge Khan, have considerable experience of dealing with the service of statutory demands and bankruptcy petitions. An appeal court should not lightly interfere with the assessment of the evidence of such a tribunal. It should only do so where the district judge has either misdirected himself in some way, or taken into account something which he ought not to have taken into account, or has left out of account anything which he ought to have taken into account, or where his decision is just plainly wrong. It is not sufficient that the appeal court might have taken a different view. The appeal court should only allow an appeal where the decision of the lower court was wrong. Apple Transcription Limited //sc

13 33. One only has to read the decision of istrict Judge Khan, as handed down by him in his approved written judgment on 30 th October, to see the care with which he analysed the considerable volume of evidence that had been placed before him. At paragraph 44, he expressed himself satisfied that both the statutory demand and the bankruptcy petition had been properly served upon Miss Yang at her last known residence. There was no question of service at a business address because there was no business address. e then proceeded to set out his reasons. At paragraph 44.6, he concluded by saying that he did not criticise the city council for not seeking an order for substituted service by as well as by post. aving formed a view having regard to the manner in which the correspondence and documents had been analysed by Mr Metcalfe, the district judge said that he was not confident that the appellant would have responded to any I do not consider that the district judge erred in any way in his approach to the matter or his analysis of the evidence. ssentially, the matter was one for his determination, and it is not one with which the appeal court should properly interfere. The district judge had expressly referred to the provisions of Insolvency Rule 6.3(2), and also to Insolvency Rule 6.14 and the provisions thereby incorporated governing the service of process. It cannot be said that the district judge failed to consider and apply Insolvency Rule 6.3(2) in determining whether the statutory demand had been properly served. At the time of service of the statutory demand it was not apparently known by the city council that the appellant had moved from Manchester to Oxford. It cannot be said that the district judge erred in failing to consider whether the city council should have disclosed the information it had received from the appellant, and how, if such disclosure had been made, it would have affected the court s exercise of its power to order substituted service of the petition. It is implicit, in what is said by the district judge at paragraph 44.6, that disclosure of this further information would not have affected the order that this district judge had made for substituted service of the petition. It cannot be said, in my judgment, that the district judge s conclusion that the appellant would not have responded to service of the petition at such address was against the weight of the evidence regarding her contact with the city council from July er contact from that date has to be viewed against the whole of her contact with the city council, and her reluctance to provide residential addresses to the city council and even to her tenants. 35. It seems to me that the court cannot properly interfere with the assessment of the evidence by the district judge. or those reasons, therefore, I conclude that the district judge did not err in refusing to annul the bankruptcy order under Section 282(1)(a). The city council accepts that he was right to rescind the bankruptcy order under Section 375(1). That means that ground of appeal number six automatically falls away. That does, however, leave me with grounds of appeal numbers seven through to nine; but at almost 10 past 5 in the afternoon, and in view of the length of the submissions I have already received, it does not seem to me that I can deal with those grounds today, regrettable though that may be. 36. Therefore that is my decision. The appeal is dismissed in relation to grounds of appeal numbers one through to six. [Judgment ends] Apple Transcription Limited //sc