Appleyard v Wewelwala [Ch D]
| Jurisdiction | England & Wales |
| Judge | Mr Justice Briggs |
| Judgment Date | 23 November 2012 |
| Neutral Citation | [2012] EWHC 3302 (Ch) |
| Docket Number | Case No: 78 OF 2011 |
| Court | Chancery Division |
| Date | 23 November 2012 |
[2012] EWHC 3302 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Briggs
Case No: 78 OF 2011
CH/2012/0240
Miss Louise Bowmaker (instructed by Ward Hadaway Solicitors) for the Claimant
Mrs Chithra Melani Wewelwala appeared in person
Hearing dates: 15 November 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This application for directions by Andrew Appleyard, the trustee in bankruptcy of Chithra Melani Wewelwala, raises a curious and perhaps surprising lacuna in bankruptcy law. The question is: what can or should the court do to make provision for the payment of a trustee's expenses where, some considerable time after his appointment, the bankruptcy order from which he derives his title to the bankrupt's estate is successfully overturned on an appeal by the bankrupt, on an application of which he was not notified, at a hearing which he did not attend, and by an order which made no provision for his release from office?
The facts
Mrs Wewelwala was made bankrupt by an Order of District Judge Lambert in the Central London County Court on 20 April 2011, on the petition of Davenham Trust Limited, in respect of a statutory demand based upon a judgment debt of some £18,000 odd, the existence of which was not in dispute. Mrs Wewelwala (who has been self-represented throughout) told me that she resisted the bankruptcy proceedings on the ground that Davenham had unreasonably refused to accept her offer to make payment of the debt by instalments.
Mrs Wewelwala sought to appeal the bankruptcy order, initially by making a written application for permission to appeal. She notified the Official Receiver, and co-operated with his request for inspection of documents relevant to the nature and whereabouts of her estate. The Official Receiver appears to have decided to defer appointing a trustee pending the outcome of Mrs Wewelwala's application.
Mrs Wewelwala's written application for permission to appeal was refused on paper by Floyd J on 8 July, on the ground that it appeared to have no reasonable prospect of success. On learning of that refusal, the Official Receiver appointed Mr Appleyard as Mrs Wewelwala's trustee in bankruptcy by notice dated 15 July, with effect from 20 July. Thereafter Mr Appleyard began discharging his duties as trustee and incurring expense in that connection, initially (so far as I can see) in seeking to ascertain the nature and whereabouts of Mrs Wewelwala's estate, the identity of her creditors and the amounts claimed.
Mrs Wewelwala sought to pursue an oral application for permission to appeal. She notified Mr Appleyard through his solicitors of the appointed hearing date of 20 October and, in the meantime, co-operated fully with his requests for information about her affairs. Mr Appleyard was not required to attend on 20 October, nor would he probably have recovered his costs if he had done so. It was purely a renewed oral application for permission to appeal.
On 20 October Floyd J adjourned Mrs Wewelwala's application to a further hearing at which Davenham were directed to attend. The order did not state that, if she obtained permission at the adjourned hearing, the appeal would immediately follow, nor did it direct Mrs Wewelwala to notify Mr Appleyard of the adjourned hearing. In fact, it is now common ground that she did not do so.
The adjourned hearing took place on 14 December. Mrs Wewelwala appeared in person and Davenham appeared by counsel. Floyd J's order makes no reference to Mrs Wewelwala being granted permission to appeal, but provided simply that the appeal be allowed, that the bankruptcy order be set aside and removed from the Bankruptcy Register, that the hearing of the bankruptcy petition be adjourned for twelve months on Mrs Wewelwala's undertaking to make instalment payments to Davenham at the rate of £500 per month for six months, with the balance being paid by 14 December 2012, and gave permission (presumably to Davenham) to restore the bankruptcy petition in the event of non-payment. Mr Appleyard neither knew of nor, therefore, attended that hearing, nor learned about the setting aside of the Bankruptcy Order until Mrs Wewelwala telephoned to tell him so in January 2012. The order made no provision for Mr Appleyard's release from office, or for payment of his expenses. It is not even clear whether Floyd J was made aware that a trustee had been appointed, still less that he had incurred significant expense in discharging his duties.
By this time, or at least by 27 March 2012 (a date for which there is written evidence), Mr Appleyard claims to have incurred some £6,509.50 in the discharge of his duties as trustee. He had identified that Mrs Wewelwala had other creditors in the sum of some £70,000 odd, interests in three properties, one of which appeared to have some net equity in it, and a joint bank account with her husband with the sum of £10,000 in it. Although the beneficial interest in Mrs Wewelwala's share in all those assets had until December 2011 been vested in Mr Appleyard by virtue of the bankruptcy order and his appointment as trustee, he had taken no steps to secure actual control of them, beyond persuading Mr and Mrs Wewelwala's bankers to treat the account as frozen.
Mr Appleyard issued the present application for directions on 30 May 2012. He joined Mrs Wewelwala to it as the sole respondent. On 6 August 2012 Mann J gave case management directions on a review of the papers, requiring the application be dealt with by a judge, and giving directions and time limits for the exchange of evidence. In his written reasons, he said that by imposing a not before date of 14 October 2012 this would give time for a transcript of Floyd J's judgment allowing the appeal to be made available. Mr Appleyard was directed to notify both Mrs Wewelwala and Davenham of the application.
Most unfortunately Mrs Wewelwala was required shortly thereafter to undergo hospitalisation and serious surgery, which disabled her from complying with the time limits for evidence. Miss Bowmaker for Mr Appleyard said (on instructions) that the written reasons for Mann J's order were not communicated to Mr Appleyard or his solicitors. No transcript of Floyd J's judgment was obtained. Davenham was notified of the application but not joined as a party and has taken no active part in it. It was, by August 2012, in administration.
Mrs Wewelwala did manage to obtain the assistance of Mr Louis Doyle, experienced insolvency counsel, in preparing a skeleton argument on her behalf, although her resources did not permit her to brief him for the hearing. She sought to rely upon a statement served only one day before the hearing on Mr Appleyard. Having looked at it de bene esse, it appeared to me to consist of a mixture of submissions and assertions of fact. Miss Bowmaker submitted that, being wholly out of time, it should not be admitted. I took the view that it could not be admitted as evidence of fact without giving Mr Appleyard time to respond, with a consequential adjournment. I also offered Miss Bowmaker the opportunity, over an adjournment, of obtaining a transcript of Floyd J's 2011 judgment. Both sides, sensibly in my view in the light of the modest sum at stake and the risk of incurring costs in excess of it in protracted proceedings, declined any adjournment and invited me to decide the matter on the materials as they stood but, necessarily, (due to the absence of any opportunity to Mr Appleyard to reply) without recourse to evidential matters in Mrs Wewelwala's late statement.
The court is thus largely in the dark about why Mrs Wewelwala's appeal succeeded before Floyd J. The best I can do is to say that her debt to Davenham appears to have been admitted throughout and Floyd J concluded that her offer to repay it in instalments of £500 per month ought to have been accepted both by Davenham, and by the District Judge, as a good reason for declining to make her bankrupt in April 2011.
Release from office
It is, happily, common ground that Mr Appleyard should be released from office forthwith. This should have been provided for last December. It is most unfortunate, to say the least, that he has incurred further expenditure as trustee thereafter.
Expenses
Jurisdiction
The first question, in the light of Mr Doyle's helpful skeleton argument, is whether I have any jurisdiction to direct payment of Mr Appleyard's expenses by anyone. Miss Bowmaker relied upon jurisdiction under section 375(1) of the Insolvency Act 1986, and upon the court's inherent jurisdiction.
Section 375(1) provides that:
"Every court having jurisdiction for the purposes of the Parts in this Group may review, rescind or vary any order made by it in the exercise of that jurisdiction."
Sub-section (2) provides for an appeal from a decision made in the exercise of that jurisdiction to a single judge of the High Court.
Miss Bowmaker submitted that Floyd J's December 2011 Order was an exercise of jurisdiction under section 375(2), which was part of the jurisdiction existing for the purposes of the bankruptcy parts of the Insolvency Act, so that his order was liable to review under section 375(1). I disagree. In my judgment section 375(1) contemplates review, at first instance, of the exercise of jurisdiction at first instance. It would be...
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Anjam Amin v London Borough of Redbridge
...costs are to be dealt with, and that must be under the Court's inherent jurisdiction. A similar view was reached by Briggs J in Appleyard v Wewelwala [2012] EWHC 3302 (Ch) (“ Appleyard”) where an appeal against a bankruptcy order had been allowed by Floyd J without making any provision for......
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Sands v Layne
...seeks no relief in that regard, and the court could have dealt with that question without reinstating the bankruptcy order: see Appleyard v Wewelwala [2013] 1 WLR 7524. 11 On 7 November 2013 the district judge ruled that he had no jurisdiction to order rescission of an order made by the Hig......
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National Asset Loan Management Ltd v Cahillane; Re John Christopher Cahillane
...is bound to fail on jurisdiction grounds. 38 NALM invited me to apply the interpretation of s.375(1) favoured by Briggs J. in Appleyard v Wewelwala [2012] EWHC 3302 (Ch.). In that case, the trustee in bankruptcy had been appointed, and had incurred expenses, pursuant to a bankruptcy order w......
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Sands (as trustee in bankruptcy of the estate of Carlos Layne (a bankrupt)) v Layne and Anr
...on appeal, albeit by the High Court. The judge followed, with diffidence, a passage from the judgment of Briggs J (as he then was) in Appleyard v Wewelwa [2012] EWHC 3302 (Ch), [2013] 1 W.L.R. 752 holding that the language of section 375(1) only contemplated rescission by a court at first ......