Mark Emmanuel v The Commissioners for HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | Judge Walden-Smith |
| Judgment Date | 26 May 2017 |
| Neutral Citation | [2017] EWHC 1253 (Ch) |
| Docket Number | Order of Mr Registrar Jones dated 11 May 2016 (No. 2903 of 2014) |
| Court | Chancery Division |
| Date | 26 May 2017 |
[2017] EWHC 1253 (Ch)
IN THE HIGH COURT OF JUSTICE
IN BANKRUPTCY
IN THE MATTER OF MARK EMMANUEL
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Her Honour Judge Karen Walden-Smith
Order of Mr Registrar Jones dated 11 May 2016 (No. 2903 of 2014)
This is an appeal brought by Mark Emmanuel ("the Appellant") against the decision of Mr Registrar Jones made on 11 May 2016, by which he
(i) dismissed the Appellant's application dated 28 September 2015 to annul the bankruptcy order dated 8 December 2014 pursuant to s.282(l)(a), Insolvency Act 1986;
(ii) dismissed the Appellant's application dated 23 March 2016 to "strike out" a witness statement filed on behalf of HMRC on 5 April 2016; and
(iii) ordered that the Appellant's Trustee in Bankruptcy's costs of the annulment application be treated as an expense of the bankruptcy, and ordered that the Appellant shall personally pay HMRC's costs of the annulment application and the 'strike out' application.
The Appellant's Notice was lodged on 30 August 2016. The Appellant sought permission to appeal out of time on the grounds that he had made an application on 18 May 2016 instead of issuing an application for permission to appeal and that he has been suffering from depression caused by the bankruptcy order, for which the GP confirmed that he was receiving treatment and was on medication. On 7 October 2016, Asplin J granted the Appellant an extension of time to file the Appellant's Notice and appeal bundle to 19 October 2016. The Appellant was subsequently granted until 10 November 2016 to lodge the appeal bundle. Permission to appeal was granted by Asplin J on 17 November 2016
The Appellant seeks an order setting aside the Registrar's order in its entirety. As an alternative, the Appellant seeks the permission of this Court to hear oral evidence from the process server and the Appellant. Alternatively, the Appellant seeks an order remitting the Application back to the Registrar for the purpose of hearing oral evidence from the same witnesses.
HMRC is formally taking a neutral stance on this Appeal but at the same time, contends that the decision of the Registrar cannot properly be impugned. The Trustees' concern is with the costs order which directly impacts upon the Trustees and opposes the Appellant's appeal with respect to costs.
The Factual Background
In May 2014, HMRC prepared a statutory demand against the Appellant based on assessments for self-assessment tax, interest and penalties for the years 2004 to 2011 in the sum of £176,257.13. HMRC previously raised, on 11 November 2013, tax assessments in accordance with section 29 of the Taxes Management Act 1970. HMRC instructed Mr Kenneth Donovan, a process server, to serve the statutory demand at Flat 4, 59 Astbury Road, London, SE15 2NL ("the property") by way of personal service. The address of the property had been provided to HMRC by the Metropolitan Police.
In his witness statement dated 28 May 2014, Mr Donovan sets out that he visited the property but did not receive an answer when he knocked on the door. He says that he was told by a female occupant of Flat 2 that the Appellant lived at Flat 4. He sent an appointment letter by first class post on 20 May 2014, which letter was not returned, and Mr Donovan returned to the property at the specified appointment time on 28 May 2014 at 8am but again did not get a response. The statutory demand was eventually served by posting through the letter box at the property. The Appellant disputes that Mr Donovan could have knocked on the door to number 4 as it is a buzzer.
On 21 July 2014 HMRC issued a bankruptcy petition against the Appellant in the sum of £176,257.13. Again, it proved impossible to personally serve on the Appellant and on 15 August 2014, HMRC applied to the Court for an order for substituted service of the bankruptcy petition, which application was granted by Registrar Barber on 19 August 2014. She ordered that service had to be effected by first class recorded delivery and first class ordinary post to the property. According to the witness statement of Tina Pringle dated 3 September 2014, both steps were effected on 3 September 2014. The recorded delivery was returned as "not called for" but the first class post was not returned.
A bankruptcy order was made on 8 December 2014. David Standish and Wendy Wardell were appointed as joint trustees in bankruptcy on 10 February 2015.
A public examination of the Appellant was listed to take place on 15 April 2015. He did not attend and a warrant was issued for his arrest. The Appellant was arrested on 21 April 2016 and he was released on an undertaking to provide information to the Official Receiver. This was when the Appellant says he first found out that he had been made bankrupt on 8 December 2014.
On 17 June 2015 a second public examination was listed. The Appellant attended but was unable to provide all the information and he was ordered to complete the Bankruptcy Preliminary Information Questionnaire and to attend an interview prior to the third public examination which was listed for 12 August 2015. The Trustees in Bankruptcy wrote to the Appellant requesting a confirmed date for interview and for the delivery up of documents and information relating to two properties.
The Appellant signed the Bankruptcy Preliminary Information Questionnaire on 14 July 2015 and on 12 August 2015 the third public examination was adjourned as a consequence of medical evidence received with respect to the Appellant.
An application to annul the bankruptcy order was made by the Appellant on 28 September 2015 on two grounds:
(i) that the Appellant had never been served with the Statutory Demand nor the Petition; and
(ii) that the assessments for tax were significantly overstated, that he is not "hopelessly insolvent" and his liabilities to the Respondent amount to £14,570.
That application to annul the bankruptcy order was being made some 10 months after the order was made and, while the Appellant contends that he did not know he had been made bankrupt until he was arrested for his non-attendance at the public examinations, the application to annul was still 5 months after the arrest.
Between November 2015 and January 2016 the Appellant prepared self-assessments for the years ending 5 April 2005 through to 5 April 2011. On 22 January 2016, Registrar Barber gave directions in the application to annul which included a direction for HMRC to file evidence in reply to the Appellant by 21 March 2016.
The Appellant filed evidence exhibiting his assured shorthold tenancy of the property at 93 Croydon Road, Anerley, London SE20 7SX. HMRC sought to obtain the Appellant's agreement to an extension of time for the service of their evidence in response, which was refused by the Appellant and on 23 March 2016 he issued a strike out application.
HMRC wrote to the Appellant on 1 April 2016 indicating that it did not oppose the annulment application he had brought. In total the Appellant filed five witness statements in support of his application, these were dated 28 September 2015, 21 January 2016, 25 February 2016, 3 April 2016 and 28 April 2016. The evidence on behalf of HMRC is contained in the statement of Debbie Syphas dated 4 April 2016. David Standish, one of the Trustees in Bankruptcy, also filed evidence in support of the Trustees' position in statements dated 13 January 2016 and 4 March 2016.
The Contentions on behalf of the Appellant
The Appellant's evidence in support of his first ground before the Registrar was that he no longer resided at the Property at the time of attempted service. It is, of course, important that the possibility of a bankruptcy petition is brought to the attention of the debtor by way of the service of the statutory demand and the Appellant contends that HMRC failed in serving the statutory demand and petition so that the bankruptcy order ought not to have been made. The Appellant provided evidence of an assured shorthold tenancy for an initial period of 12 months which he had entered into for the property at 93 Croydon Road, Anerley, London SE20 7SX ("93 Croydon Road") commencing on 4 November 2013. In his witness statement dated 25 February 2016, the Appellant set out that apart from a temporary move to 27 Bromley Road, Catford SE26 2TS, while repairs were undertaken to 93 Croydon Road he did not move out of 93 Croydon Road until March.
The Appellant also produced a letter from the Probation Service dated 18 February 2016 which confirmed that between 26 February 2014 and 16 February 2015 the Appellant resided at 93 Croydon Road.
The Appellant also sought to challenge the evidence of Mr Donovan. In his witness statement dated 21 January 2016, the Appellant set out that Flats 1 and 2, 59 Astbury Road are situated at opposite ends of the building to Flats 3 to 6 and that they have different entrances. This was supported by photographs which were explained to me during the course of oral submissions. It is asserted by the Appellant that either contrary to what Mr Donovan deposed to or contrary to what he was told, it would be impossible for the occupants of Flats 1 and 2 to know the occupants of Flats 3 to 6. The Appellant further relies upon there being a communal door to Flats 3–6 with separate doors to Flats 1 and 2 in support of that contention and that there was no individual letterbox to Flat 4, just the communal one. Further, the Appellant relies upon Mr Donovan not having obtained a description of the Appellant such that it was not possible for him to verify that the Appellant had been correctly identified.
The Appellant therefore contends that HMRC were not in a position to establish service of either the...
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