Engel v Peri
| Jurisdiction | England & Wales |
| Judge | Mr Justice Ferris |
| Judgment Date | 29 April 2002 |
| Neutral Citation | [2002] EWHC 799 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 278 of 1998 |
| Date | 29 April 2002 |
[2002] EWHC 799 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(On appeal from Oxford County Court
sitting in bankruptcy)
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Ferris
Case No: 278 of 1998
In the Matter of Christopher Janos Peri (a Bankrupt)
And
In the Matter of the Insolvency Act 1986
Miss Raquel Agnello (instructed by Veale Wasbrough of Orchard Court, Orchard Lane, Bristol BS1 5DS) for the Appellant
Mr. Steven Thompson (instructed by Mark Johnson-Watts, solicitor, of 31 Beaumont Street, Oxford OX1 2NP) for the Respondent
Hearing date: 13th February 2002
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.
The Hon. Mr. Justice Ferris
Mr Justice Ferris
This is an appeal by the trustee in bankruptcy from an order made by District Judge Bowman in the Oxford County Court on 20th August 2001 whereby a bankruptcy order made against Mr. Christopher Janos Peri on 11th January 1999 was annulled subject to certain conditions. Notwithstanding the annulment it is convenient to continue to refer to Mr. Peri as "the bankrupt".
On 19 th November 1998 a bankruptcy petition was presented to Oxford County Court by a creditor, Mr. V. A. Raspopin. A bankruptcy order was made on that petition on 11 th January 1999. The appellant, Mr. Peter William Engel, was appointed the bankrupt's trustee in bankruptcy on 1 st April 1999.
During the course of the bankruptcy a number of applications to the court were made and various transactions were carried out, none of which it is necessary to mention further.
On 4th May 2001 the bankrupt initiated an application to the court seeking, so far as material to this appeal, the following relief:
"1. An order that the bankruptcy of the above-named bankrupt be annulled.
2. That the Court do enquire as whether one creditor, namely Mr. V.A. Raspopina, should be properly admitted to proof and, if appropriate, give directions to establish the correct amount to be admitted to proof.
3. That the Court do enquire as whether one creditor, namely Oxford Carpet & Flooring Studio, should be properly admitted to proof and, if appropriate, give directions to establish the correct amount to be admitted to proof.
As appears from paragraphs 2 and 3 of the relief sought by the bankrupt's application, not all the bankruptcy debts had been paid or secured at the time of the application. Whether, on an application of this kind, the court could do what was asked by paragraph 2 of the application was resolved by order of District Judge Payne made on 18 th June which provided that this part of the application should be treated as an application under Rule 6.105 of the Insolvency Rules. At that stage it seems to have been contemplated that it would be determined in advance of the application to annul. Paragraph 3, relating to the indebtedness to Oxford Carpet & Flooring Studio, appears to have been left on one side. It may indeed have been resolved prior to the hearing before District Judge Payne. If it was still alive, it would have been dealt with in the same way as paragraph 2.
Annulment of bankruptcy orders is governed by Section 282(1) of the Insolvency Act 1986, which provides:
"(1) The court may annul a bankruptcy order if it at any time appears to the court—
(a) that, on any grounds existing at the time the order was made, the order ought not to have been made, or
(b) that, to the extent required by the rules, the bankruptcy debts 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."
In a witness statement made by the bankrupt's solicitor on 9th August 2001 it was stated that the bankrupt had decided that the Raspopin debt would be paid in full. Accordingly the court was asked to approach the annulment application on the footing that all debts were ascertained and had been or would be paid in full from third party funds, any debts which had not actually been so paid being secured by means of a payment into court.
In the meantime, however, another point had arisen. The trustee produced information as to the expenses of the bankruptcy which the bankrupt considered to be excessive and desired to challenge. The trustee was informed of this in a letter to his solicitors dated 14th July 2001 and on 9th August 2001 the bankrupt initiated an application to the court ("the section 303 application") for
"An order under s.303 of the Insolvency Act 1986 or under the Court's inherent jurisdiction in bankruptcy reversing or modifying the decision of the Trustee … to fix his remuneration at or about £25,515.43 and to incur legal fees at or about £15,944.16 or refixing his remuneration and legal fees incurred at a reasonable level or such other order or direction as the Court thinks fit on the grounds that the remuneration of the said Trustee and the legal fees incurred by the trustee are excessive."
The application to annul and the section 303 application came before District Judge Bowman on 20th August when he made the order appealed from. So far as material this order provided
"1. That the Bankruptcy order of 11 January 1999 be annulled pursuant to [section 282(1)(b)] and the Petition herein filed on 19 November 1998 be dismissed with costs in the Bankruptcy conditional upon:
a. [The trustee's solicitors] confirming in writing to [the bankrupt's solicitor] that they have received payment in full for the creditors' claims outstanding at the date hereof and for the petitioning creditor's costs of the Petition;
b. [The bankrupt's solicitor] making payment to the trustee in the sum of £18,000 on account of the Bankrupt's liability for the costs and expenses of the Bankruptcy (such liability as hereinafter ordered);
c. [The bankrupt's solicitor] making payment into court in the sum of £21,000 as security for the costs and expenses of the bankruptcy to abide the determination of the bankrupt's pending application dated 9 August 2001 under section 303 of the Act (or under the court's inherent jurisdiction);
d. The trustee's costs of the bankrupt's said application dated 9 August 2001 being secured for by payment into court in the sum of £2000.
2. ….
3. That upon the annulment taking effect, the bankrupt's application under rule 6.105(2) of the Insolvency Rules [i.e. the applications concerning the amount due to Mr. Raspopin] be dismissed with costs in the bankruptcy.
4. ….
5. The costs and expenses of the bankruptcy be paid by the former bankrupt.
6. The level of the costs and expenses of the bankruptcy (including the fees of the trustee) be determined by the court pursuant to the former bankrupt's said application dated 9 August 2001 (unless agreed).".
At the hearing of this appeal I was told, and there was no dispute about this, that the third party who was providing the funds needed to secure the annulment of the bankruptcy order was the bankrupt's wife. At the hearing on 20th August 2001 the bankrupt's solicitors came to court with cheques provided by the wife for the amounts which, under the order that was eventually made, were to be paid into court. It seems that it had been envisaged that these sums would be paid into court forthwith. It was found, however, that the Oxford court office was unable to accept payment by this means in an insolvency case and that payment in would have to be effected in London, with the result that payment would be delayed for a number of days. I understand that it was the District Judge himself who suggested that the administrative difficulties be overcome by expressing the order for annulment as being conditional upon the payments into court being made.
The arguments presented on this appeal fall generally under two heads namely (i) an attack on the section 303 application, which, it is said, the District Judge should have dismissed and (ii) an attack on the concept that a conditional order for annulment can be made.
THE SECTION 303 APPLICATION
On behalf of the trustee in bankruptcy Miss Agnello argued (a) that the bankrupt had no standing to make an application under section 303; (b) that section 303 does not enable the court to fix the trustee's remuneration; and (c) that in any event an application under section 303 could not be heard after the bankruptcy has been annulled.
(a) Want of standing
The relevant part of section 303 is subsection (1) which provides
"(1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act omission or decision of a trustee of the bankrupt's estate, he may apply to the court and on such an application the court may confirm, reverse or modify any act or decision of the trustee, may give him directions or may make such other order as it thinks fit."
Although the section specifically mentions the bankrupt as a possible applicant it was argued that having the status of being the bankrupt is not by itself sufficient. An applicant under section 303, whether he be the bankrupt, a creditor, or other person, must also be dissatisfied with the act, omission or decision complained of. I think that this view of the matter accords with the wording of the section. The argument was then taken a stage further by saying that a person can only be 'dissatisfied' if he can show that he has some substantial interest which has been adversely affected by whatever is complained of. This accords with the view expressed by Jeremiah Harman J in Port v Auger [1994] 1 WLR 862 at pages 873–4.
It is at the next step in the argument that I part company with Miss Agnello. She...
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