Debtor (No. 1 of 1987), Re A
| Jurisdiction | England & Wales |
| Judge | THE PRESIDENT,LORD JUSTICE NICHOLLS,LORD JUSTICE GLIDEWELL |
| Judgment Date | 16 January 1989 |
| Judgment citation (vLex) | [1989] EWCA Civ J0116-4 |
| Docket Number | 89/0021 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 January 1989 |
Re: Anthony Cedric Wilkinson (A Debtor)
[1989] EWCA Civ J0116-4
The President
Lord Justice Glidewell
Lord Justice Nicholls
89/0021
No. 00025 of 1988
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (IN BANKRUPTCY)
LANCASTER COUNTY COURT
(MR JUSTICE WARNER)
Royal Courts of Justice,
MR N. LEY (instructed by Messrs. J.S. Sierzant & Co., Solicitors, Chorley, Lancs) appeared on behalf of the Appellant.
MR P. GRIFFITHS (instructed by Messrs. Cobbett, Leak, Almond, Solicitors, Manchester) appeared on behalf of the Respondent.
I will ask Lord Justice Nicholls to give the first judgment.
The Insolvency Act 1986 contains the new insolvency code. Section 264 provides that one of the classes of persons who may present a petition for a Bankruptcy Order to be made against an individual comprises his creditors.
Section 267 (2) sets out four conditions which must be satisfied in the case of a creditors' petition presented in respect of a debt. One of these conditions contained in paragraph (c), is that the debt is one which the debtor appears either to be unable to pay, or to have no reasonable prospect of being able to pay.
The tests to be applied in determining whether, for this purpose, a debtor appears to be unable to pay a debt which is immediately payable, are stated in Section 268 (1) Two tests are prescribed, fulfilment of either of which is sufficient for a creditor's purpose. The first, stated in paragraph (a), is:
"the petitioning creditor to whom the debt is owed has served on the debtor a demand (known as 'the statutory demand') in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least 3 weeks have elapsed since the demand was served and the demand has been neither complied with nor set aside in accordance with the rules;"
The second test, stated in paragraph (b), is of an unsatisfied return to "execution or other process issued in respect of the debt on a judgment or order of any court
….."
The prescribed form for a statutory demand is set out, so far as applicable in the present case, in the Insolvency Rules 1986. We were told that certain amendments have been made in respect of the prescribed forms under amending regulations—namely the Insolvency (Amendment) Rules 1987—but they are not applicable in this case having regard to the relevant dates. Rule 6.1 (1) of the Insolvency Rules 1986 provides that the demand must be dated and appropriately signed. Under paragraph (2):
"The statutory demand must specify whether it is made under section 268 (1) (debt payable immediately) or section section 268 (2) (debt not so payable)."
The material part of rule 6.1 (3) reads as follows:
"The demand must state the amount of the debt, and the consideration for it (or, if there is no consideration, the way in which it arises) and—
"(a) if made under section 268 (1) and founded on a judgment or order of a court, it must give details of the judgment or order."
Rule 6.1 (4) provides:
"If the amount claimed in the demand includes—
"(a) any charge by way of interest not previously notified to the debtor as a liability of his…………the amount or rate of the charge must be separately identified, and the grounds on which payment of it is claimed must be stated."
Rule 6.2 (1) provides that the statutory demand must include an explanation to the debtor of, amongst other matters,
"(a) the purpose of the demand, and the fact that, if the debtor does not comply with the demand, bankruptcy proceedings may be commenced against him; and
"(b) the time within which the demand must be complied with, if that consequence is to be avoided".
Rule 12.7 provides that the forms contained in Schedule 4 to the Rules shall be used in, and in connection with, insolvency proceedings, and that the forms shall be used with such variations, if any, as the circumstances may require. The two forms material for the purposes of this appeal are Form 6.1 and Form 6.2 (not to be confused with Rule 6.1 and Rule 6.2.). Both forms are headed "Statutory Demand under Section 268 (1) (a) of the Insolvency Act 1986". In the case of Form 6.1 the heading continues:"Debt for liquidated sum payable immediately". In the case of Form 6.2 the equivalent part of the heading reads:"Debt for liquidated sum payable immediately following a judgment or order of the court".
The body of the two forms is substantially identical save that Form 6.2 contains spaces which, when completed appropriately, will identify the judgment or order of the court and the amount ordered to be paid thereby to the creditor. There are Notes on the forms telling the debtor that if he wishes to avoid a bankruptcy petition being presented against him, he must pay the debt demanded within 21 days and that if he disputes the demand, in whole or in part, he should contact the creditor or his representative whose name, address and telephone number are stated on the form.
One difference between the two forms is that the Notes to Form 6.2 provide that, in the case of a judgment or order of a County Court, payment must be made to that court. That is not a difference material in the present case.
Inevitably, of course, mistakes will be made from time to time by creditors, or their advisers, in selecting the correct form to be used, or in completing the form. That is what happened in the present case. On 1st May 1987 Mr Anthony Cedric Wilkinson was served with a statutory demand dated 14th April 1987. The form used was the printed Form 6.1. In the body of the form, in the space intended to be completed with details of when the debt was incurred, the description of the debt and the amount due, were typed these words:"6/ 1/1982 judgment debt plus interest at the statutory rate less monies paid by Anthony Cedric Wilkinson and interest accrued thereon. See copy affidavit annexed hereto". The amount of the debt was specified as the sum of £7,286.04p.
The copy annexed affidavit was not a happily drawn document. It harked back to the old bankruptcy procedures. The affidavit purported to be made in support of an application to the Lancaster County Court to issue a bankruptcy notice against Mr Wilkinson. Paragraph (2) of the affidavit stated that on 7th January 1982 the bank obtained judgment in the Manchester District Registry of the Queen's Bench Division of the High Court against Mr Wilkinson, and his wife June, in the sum of £7,857, £155 interest and £110 costs". (In stating those sums, I have ignored pence, and for convenience I shall continue to do so throughout this judgment.)
The affidavit continued by stating that a Bankruptcy Notice had subsequently been issued by the Blackpool County Court against Mr Wilkinson. At that time Mr Wilkinson was living in the Fylde. The Bankruptcy Notice was issued on 26th October 1982, and was served a few days later. Mr Wilkinson made proposals for payment by instalments, and he then made regular and satisfactory payments to the bank until 17th January 1985. Thereafter nothing further was paid. Paragraph 5 exhibited a bundle of bank statements which purported to show that the amount outstanding under the judgment, including interest at the statutory rate up to 3rd march 1987, was £15,184. Paragraph 6 exhibited a further bundle of bank statements showing the amounts paid by Mr Wilkinson since the judgment. With interest credited thereon at the statutory rate, the amount to be credited to 3rd March 1987 totalled. £7,898. Hence, arithmetically, the balance due, according to the affidavit, was £7,286.
On 12th May 1987 Mr Wilkinson applied for an order setting aside the statutory demand. The ground specified in the supporting affidavit made by him was that in four respects the demand did not comply with the provisions of the Insolvency Rules 1986. The four respects were these:
(1)The Notice was defective in that it was not in the form presecibed for a judgment debt;
(2) That neither the demand nor the accompanying affidavit identified the judgment relied on;
(3) That the Royal Bank of Scotland had never obtained a judgment against Mr Wilkinson in the sum claimed in the demand, and
(4) That the form did not give, in part C, details of any assignment of the debt to the Royal Bank of Scotland even though on the face of the form the creditor serving the demand was described as "the Royal Bank of Scotland plc (formerly Williams and Glyn's Bank Limited)".
The Deputy Registrar declined to set aside the demand. In particular, he took the view that, although strictly Form 6.2 was the appropriate form, the form used (Form 6.1) as completed gave Mr Wilkinson the further information which Form 6.2 envisages will be supplied in the case of a judgment debt. The necessary information concerning the judgment debt was set out in the copy affidavit annexed to the demand.
Mr Wilkinson appealed, and his appeal was dismissed by Warner J. on 12th October 1987. The learned Judge found the demand to be perplexing. He said this:
"There is no doubt in my mind that, if this statutory demand had been a bankruptcy notice under the old legislation, I would have had to set it aside because it is perplexing—so perplexing indeed that Mr Griffiths, who appeared for the creditor, had to ask for an adjournment before he could understand it himself, or rather understand what lay behind it.
"There are any number of defects in this demand, the gravest of...
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