London Borough of Redbridge v Mustafa
| Jurisdiction | England & Wales |
| Judge | THE CHANCELLOR |
| Judgment Date | 19 March 2010 |
| Neutral Citation | [2010] EWHC 1105 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No: CH/2010/PTA/0021 |
| Date | 19 March 2010 |
[2010] EWHC 1105 (Ch)
Before: The Chancellor of the High Court
Claim No: CH/2010/PTA/0021
IN THE HIGH COURTS OF JUSTICE
CHANCERY DIVISION
MR KARAN GUNA-RATRIA appeared on behalf of the Appellant
MR PHILIP RAINEY appeared on behalf of the Respondent
As approval by the Chancellor
This is an appeal of the London Borough of Redbridge brought with the permission of Sales J from the order for costs made against it by District Judge Bowles, sitting in the Romford County Court on 23 rd December 2009. On that occasion the District Judge ordered the annulment of the bankruptcy order made in respect of Guldal Mustafa, also known now under her married of Basturk. The order required the London Borough of Redbridge to pay the costs and expenses of the Trustee in Bankruptcy and provided that the annulment order should remain on file until the Trustee in Bankruptcy confirmed in writing that such costs had been paid.
The argument on this appeal has disclosed three points of principle requiring my decision before arriving at any conclusion as to whether I can and should interfere with the exercise by the District Judge of his discretion as to the costs of both the proceedings before him and the costs and expenses of the Trustee in Bankruptcy. They are (1) what are the basic principles to be applied in determining who should pay these costs? (2) whether a local authority which ascertains that the debt on which it has obtained a bankruptcy order should be reduced to nothing is under a duty to do anything and if so, what? and (3) whether when a bankruptcy order is annulled under s.282(1)(a) of the Insolvency Act 1986 there is any presumption that the Petitioner should pay the costs of the petition, annulment and of the Official Receiver and Trustee in Bankruptcy.
Before dealing with those points it is necessary to describe in some detail the facts of this case, which have given rise to them. On 9 th January 2007, the London Borough of Redbridge issued a statutory demand to Ms Mustafa in respect of the sum of £2,761.64 due under three liability orders in respect of council tax for number 14 Inverclyde Gardens, Chadwell Heath, Romford, Essex, made by the Redbridge Magistrates’ Court on 30 th September 2004, 26 th May 2005 and 1 st June 2006. Part B of the statutory demand in the normal form, set out the names, address and telephone numbers of the responsible individuals in the London Borough of Redbridge with whom Ms Mustafa should communicate if she wished.
On 24 th January 2007, the process server, Ms Lyon, deposed to having effected substituted service of the statutory demand by putting it in a sealed envelope through the letterbox addressed to Ms Mustafa at the address of the property in question. He deposed to two visits to the property on 15 th and 20 th January, when a man and a woman separately, told him that Ms Mustafa continued to reside there and to receive mail addressed to her there. This was put in somewhat different terms in his report to his client. There she wrote:
“We did actually make contact with the subject and she stated that she did not live at the address and that she rents it out. However, a woman resident had already confirmed that she did live there and was even specific stating that she was away at that time, but would be returning home “tomorrow evening”. The subject refused to give us her current address and when we went back on the appointment time we met a male, who claimed that she lived in Cyprus. We did not believe this for a second and we do believe that the reason why she would not give us another current address is that she was in fact living at the address.
However, needless to say she did not keep the appointment time and would not meet with us. We therefore sub-served the documents.”
No steps were taken to set aside the statutory demand and on 6 th March 2007, a bankruptcy petition based on it was issued by the London Borough of Redbridge in the Romford County Court. The petition indicated that the date of the first hearing was 31 st May 2007, and gave the telephone number of the Borough's solicitors, with whom Ms Mustafa could get in touch if she so wished.
On 27 th March 2007, the same process server swore an affidavit in support of the application for an order for substituted service of the petition. This affidavit is at variance with the affidavit sworn on 24 th January. On this occasion he stated in effect what he had reported to his client in his note dated 24 th January, from which I have already quoted.
The order for substituted service was duly made on 18 th April 2007, and required service by means of a sealed copy of the petition and of the order for substituted service being inserted through the letterbox at number 14 Inverclyde Gardens. The petition was duly served in accordance with that order on 25 th April 2007, indicating that the hearing was due on 31 st May. The bankruptcy order was made on 31 st May by Deputy District Judge Sterlini, no one having appeared for Ms Mustafa.
On 6 th June 2007, Ms Mustafa—having spoken to Ms Walker, the debt recovery officer of the London Borough of Redbridge—faxed through a letter to the Borough dated 30 th May 2007, explaining that she, Ms Mustafa, had attended at the offices on 30 th May, but no one could see her on that day. She said that the property had been let to tenants throughout the relevant period and produced copies of the various shorthold tenancies concerned. She gave her current address as being that of her house, somewhere other than the address at which the documents had been served.
On 8 th June 2007, the London Borough of Redbridge wrote to Ms Mustafa at the address she had given saying this:
“As a result of the receipt of paperwork received on 6 th June 2007, by fax from you I would advise that the council tax records have been amended to make various tenants liable.
These amendments have resulted in the amount of debt that you were made bankrupt for being reduced to a nil balance.
It would be in your interests to approach the Insolvency Service with a view to making an appeal to have the bankruptcy annulled.
I would suggest that you seek independent advice as to the options available to you.”
That letter was not signed, but there is in evidence a signed version of the letter, this time dated 12 th June, in identical terms save that the penultimate sentence from the passage I have quoted reads as follows:
“It would be in your interests to approach the Insolvency Service with a view to making an application to have the bankruptcy annulled.
On 24 th July 2007, Mrs Susan Maund, was appointed the Trustee in Bankruptcy with effect from that date. On 9 th August, Ms Mustafa telephoned her office having received the normal notification of her appointment. She spoke to the Trustee in Bankruptcy's assistant, Dawn Watkins, who advised her to go along to her local Citizen's Advice Bureau and seek advice. Ms Mustafa told Dawn Watkins that she had given the Official Receiver a copy of the letter from the London Borough of Redbridge acknowledging that the debt was nil, but that he seemed only interested in getting her to complete the usual questionnaire.
On 13 th August 2007, the Trustee in Bankruptcy's representative, Miss Dawn Watkins, wrote to Ms Mustafa in these terms:
“I refer to our recent telephone conversation and note that you are going to write to me to provide a history in relation to the making of the bankruptcy order against you together with copy documentation received from the Council. As previously advised no immediate action is going to be taken in relation to your property.
In the meantime, you will appreciate that I have to continue to administer the bankruptcy estate and am obliged to send out the standard letters relating to your administration.”
I omit the next two sentences which refer to various rules relevant to the bankruptcy. The letter then continues:
“If you are uncertain as to any aspect of your bankruptcy estate may I suggest that you seek legal advice or visit your local Citizen's Advice Bureau who may be able to assist?”
The following day, 14 th August, Ms Mustafa sent a copy of the London Borough of Redbridge's letter dated 12 th June, from which I quoted the penultimate sentence, to the Trustee in Bankruptcy, but seemingly made no attempt to describe the history of the matter as the Trustee had requested. On 23 rd August the Trustee in Bankruptcy wrote again. She reiterated the advice to obtain legal advice. She set out details of the other creditors and the various items of cost involved and concluded in these terms:
“I appreciate that you find yourself in a very difficult position at the present time and I would once again urge you to seek legal advice either from a Solicitor or alternatively, your local Citizen's Advice Bureau. Although the debt of the Council appears to have been reduced to nil there are other liabilities and costs of the bankrupt estate which need to be addressed.”
On the same day there was a further telephone call by Ms Mustafa to the Trustee's office. She again spoke to Dawn Watkins, who again urged her to seek legal advice, if from no one else, from the Citizen's Advice Bureau as a matter of urgency. On 11 th October 2007, the Trustee in Bankruptcy wrote to Ms Mustafa asking if she had obtained legal advice and whether she had any proposals for payment of the debt and costs. There was, seemingly, no reply.
On 30 th January 2008, the Trustee in Bankruptcy...
To continue reading
Request your trial
-
Anjam Amin v London Borough of Redbridge
...items of costs to be dealt with (assuming a trustee in bankruptcy has been appointed). These were itemised by Morritt C in London Borough of Redbridge v Mustafa [2010] EWHC 1105 (Ch) (“ Mustafa”) (an annulment case) at [25] as follows: “(1) the cost of the original petition; (2) the costs ......
-
Appleyard v Wewelwala [Ch D]
...per Lloyd J (sitting as an additional judge of the Court of Appeal) at paragraph 39. The same conclusion is to be found in London Borough of Redbridge v Mustafa [2010] EWHC 1105 (Ch) per the Chancellor at paragraph 27. 19 I consider that the jurisdiction confers a discretion on the court as......
-
Mekarska v Ruiz and another
...961. Evans v Evans [1990] FCR 498, [1990] 2 All ER 147, [1990] 1 WLR 575n, [1990] 1 FLR 319. London Borough of Redbridge v Mustafa [2010] EWHC 1105 (Ch), [2010] BPIR 893. Mellor v Mellor [1992] 4 All ER 10, [1992] 1 WLR 517. Mullard v Mullard (1981) 3 FLR 330, CA. Owo-Samson v Barclays Bank......
-
Brian Herbert Cooke v Dunbar Assets Plc
...annulment applications were treated as expenses of the bankruptcy. The decision of Sir Andrew Morritt, the Chancellor, in London Borough of Redbridge v Mustafa [2010] BPIR 893, Mr Curl submitted was authority directly to the contrary. That was a case in which an annulment application succee......