Julie Ann Mowbray v Michael Colin John Sanders (Trustee in Bankruptcy of the Estate of Julie Ann Mowbray) and Another
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Hildyard,The Hon. Mr Justice Hildyard |
| Judgment Date | 13 February 2015 |
| Neutral Citation | [2015] EWHC 296 (Ch) |
| Docket Number | Case No: CH/2013/0667 |
| Court | Chancery Division |
| Date | 13 February 2015 |
[2015] EWHC 296 (Ch)
The Honourable Mr Justice Hildyard
Case No: CH/2013/0667
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN BANKRUPTCY
ON APPEAL FROM CHELMSFORD COUNTY COURT
IN THE MATTER OF JULIE ANN MOWBRAY (A BANKRUPT)
BANKRUPTCY NO. 188 OF 2011
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
Strand, London, WC2A 2LL
The Appellant in person
Adam Chichester-Clark (instructed by Moorhead James LLP) for the First Respondent
Richard Roberts (instructed by Lester Aldridge LLP) for the Second Respondent
Hearing date: 10 June 2014
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.
Nature of this appeal
This is an appeal against the order made by Deputy District Judge Smith ("the Deputy District Judge"), sitting at Chelmsford County Court, on 19 November 2013, dismissing the Appellant's application for the annulment of her bankruptcy pursuant to section 282(1)(a) of the Insolvency Act 1986 ("section 282(1)(a)") on the grounds that the debt on which it was founded was disputed, and the bankruptcy order should never have been made.
The appeal is brought with the permission of Mann J given after an oral hearing on 24 January 2014. Mann J had initially refused the application for permission to appeal. In giving permission he described his decision as a marginal one.
The Appellant was represented by solicitors before the Deputy District Judge, but she has appeared in person before me. The First Respondent, Mr Michael Colin John Sanders, is acting as the Trustee in Bankruptcy of the estate of the Appellant. The Second Respondent is or was the petitioning creditor, relying on an alleged debt in the sum of £3,919.39. The Second Respondent is an assignee from Lloyds Bank Plc of the alleged debt. The Respondents were each represented by Counsel, both before the learned Deputy District Judge and before me.
The debt upon which the bankruptcy order was made arose in 2004. It has been, and continues to be, disputed by the Appellant on two principal grounds.
The first ground is that the debt should never have come into existence because the original creditor, Lloyds Bank Plc, was advancing monies by way of overdraft which the Appellant, as the account holder, did not wish to have advanced to her. It is her case that, having closed her bank account with Lloyds Bank Plc, she instructed Lloyds Bank Plc not to honour various cheques which she had prior to closing the account already written, but which so far as she was aware had not been presented for payment; yet the bank honoured the cheques and increased the overdraft which represents the debt in question, in effect without authority.
The second ground is that the recovery of any such debt was already statute-barred by the time that the Second Respondent, as assignee from Lloyds Bank Plc, first brought proceedings for its recovery (in April 2011).
The central curiosity of this unusual case is that although this second ground of defence was put forward by the Appellant (on the advice of the Citizens Advice Bureau) in response to the proceedings and was plainly a good one unless something had happened to extend the limitation period, the Second Respondent nevertheless obtained not only a default judgment but (after service of a statutory demand) a bankruptcy order against the Appellant without ever putting forward any (or any cogent) answer to that limitation defence. It was not until the Appellant applied to annul the bankruptcy order that the Second Respondent advanced its contention that the Appellant had, on 21 September 2007, repaid a small part (just £20) of the debt, which acted as an acknowledgment of the debt so as to re-set the Limitation Act clock.
The Deputy District Judge, in dismissing the Appellant's application for an annulment, rejected both of the grounds she relied on. As to the first ground, the Deputy District Judge found it "hard to believe that the [Appellant] genuinely believed at the time that the bank had received and acted on her letter of instruction to close the account". As to the second ground, the Deputy District Judge considered to be authentic and dispositive a copy ledger entry which recorded receipt from the Appellant of a payment of £20, and rejected the contrary evidence of the Appellant that she would hardly have made such a random and small payment of £20 after three years inactivity, and indeed had certainly not done so.
In Mann J's judgment briefly explaining his reasons for giving permission (after an oral hearing), he stated at the outset that he had found this a troubling matter. In the end, he was persuaded chiefly because of his concern that it was sufficiently inherently unlikely that the Appellant should have chosen to repay £20 to warrant further investigation. He considered further investigation was justified, and that if it revealed that the Limitation Act defence was a good one, that might radically alter the perspective of the court.
Mann J warned the Appellant, however, to think very carefully before proceeding. The costs of the bankruptcy process have been considerable, and exacerbated by delays of the Appellant's own making. Those costs must be met somehow, even if the appeal is successful. Whoever they are visited upon will feel ill served. If they are visited upon the Appellant, her victory would be pyrrhic, and if she loses, that would be disastrous. But she has persevered.
Like Mann J, I have found this a troubling case. After considerable hesitation, I have eventually concluded that, subject to certain conditions, I should allow this appeal. Put shortly, that is because it does not seem to me that there has ever been any such unequivocal and plain and obvious answer to the Appellant's limitation defence to warrant a bankruptcy petition and the bankruptcy order which followed. I appreciate that this involves, exceptionally, permitting an annulment by reference to a defence that was raised, and prima facie at least considered, before the bankruptcy order was made. But it seems to me that the debt on which the petition was at all times disputed on sufficiently substantial grounds to preclude summary adjudication, and that the error in proceeding otherwise should, in all justice, be corrected, so far as is at this late stage now possible fairly to do so.
Factual background
The factual background to the matter can briefly be summarised as follows.
As is common ground, the Appellant instructed Lloyds Bank Plc to close her account number 02355046, sort code 30–97–13, on 25 August 2004. At that date her account was overdrawn by £387.06; but the Appellant contends that that amount was cleared by the combined effect of a payment by the Appellant's father in the sum of £200 into that account and a credit covering the rest agreed by the then manager of the relevant branch of the bank.
The Appellant's case is that the payment of £200 was credited to her account on 6 October 2004 and that so far as she was concerned that concluded her dealings with Lloyds Bank Plc. Her evidence was that she did not hear again from either the bank or the Second Respondent between August 2004 and some time in May or August 2011.
However, and as indicated above, various cheques that she had previously written in favour of creditors, but which she had instructed Lloyds Bank Plc not to honour, were honoured by the bank, resulting in an alleged overdraft on the account in the sum of £387.08.
In the summer of 2006, Lloyds Bank Plc sold the benefit of the debt (which the overdraft in law represented) to the Second Respondent. Notice of that assignment was sent to the Appellant at the address held by the bank for her at 120 Rivermeads, Stansted Abbotts, Ware, Hertfordshire, SG12 8EL.
In November 2006 the Second Respondent instructed a debt recovery agent, Connaught Collections UK Limited ("CCUK"), to recover the debt. There is what is described as a "user note" dated 12 December 2006 on the electronic file relating to the Appellant's debt maintained on the Second Respondent's in-house computer case management called Creditsolve ("Creditsolve"). That reads (so far as legible from the print out of the electronic record) as follows:
"Dtr cld…tried to make out that I haven't got a clue what I was on about – said she was dealing with Lloyds herself – told me to get on to Connaught Collections – informed her that we are Connaught Collections. Told her to send proof that shes dealing with Lloyds."
As the Deputy District Judge pointed out in paragraph 17 of her judgment, there is no reason to question the authenticity of that note, and it belies the Appellant's contention that she had heard nothing from Lloyds Bank Plc or anyone else in relation to the debt until 2011. As the Deputy District Judge observed, the Appellant "would not have contacted the debt collecting agents in December 2006 if she had not heard from them".
CCUK was unsuccessful in its efforts to recover the debt, and the account was returned to the Second Respondent in May 2007. Then, in July 2007, the Second Respondent engaged another debt recovery agent, Scotcall Limited ("Scotcall"), to recover the debt.
It was not until 26 April 2011, nearly seven years after the debt was established, that the Second Respondent issued a claim against the Appellant. It seems that the Claim Form was purportedly served on the Appellant at the address held by the Second Respondent for her which she had by then...
To continue reading
Request your trial
-
Mr Mohammad Razi Khan v Ms Arvinder Singh-Sall (the Trustee in Bankruptcy of Mr Mohammad Razi Khan)
...i) Re Davenport [1963] 2 All ER 850, [1963] 1 WLR 817; ii) Re Noble (a bankrupt) [1965] Ch 129 at 145–146; iii) Mowbray v Sanders [2015] EWHC 296 (Ch); iv) Raiffeisenlandesbank Oberösterrich AG v Meyden [2016] BPIR 697; v) Deutsche Apotheker-Und Artzebank EG v Leitzbach & The Official R......
-
Ramesh Philippe Dusoruth v Orca Finance UK Ltd ((in Liquidation))
...had to be shown in order to decline to annul, he referred to Guinan and the decision of Hildyard J in Mowbray v Sanders [2015] EWHC 296 (Ch) in which he said: “[81] In my view, and although the discretion to do so is broadly stated, it is only in exceptional circumstances that it is right ......
-
Mohammad Razi Khan v Arvinder Singh-Sall (Trustee in Bankruptcy of Mohammad Razi Khan)
...those whose debts were always outside the bankruptcy. iv) This is consistent with what Hildyard J said at [82] in [ Mowbray v Sanders [2015] EWHC 296 (Ch)], considered above. v) It is also consistent with the approach taken where a company is restored to the register where time runs during......
-
Murray Richards v Vivendi SA
...was also considered in Crammer v West Bromwich Building Society [2012] EWCA Civ 517 at [5] per Patten LJ and in Mowbray v Sanders [2015] EWHC 296 (Ch) per Hildyard J at [40]–[47], in a way which is entirely consistent with that which I have described above. Further, I consider that there is......