Mark Robin Sands (as Joint Trustee in Bankruptcy of Richard Raymond Rufus) v Bruce Antonio Dyer
| Jurisdiction | England & Wales |
| Judge | Jones |
| Judgment Date | 30 July 2021 |
| Neutral Citation | [2021] EWHC 2124 (Ch) |
| Court | Chancery Division |
| Docket Number | BR-2014-003039 |
[2021] EWHC 2124 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF RICHARD RAYMOND RUFUS
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
INSOLVENCY AND COMPANIES COURT JUDGE Jones
BR-2014-003039
Ms Faith Julian (instructed by Wedlake Bell LLP) for the Applicants
Mr Jamie Holmes (instructed by Gateley Legal) for the Third Respondent
Hearing dates: 24 May 2021 with further written submissions
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.
CHJ 30/7/21
INSOLVENCY AND COMPANIESCOURT JUDGE Jones
I.C.C. Judge
A) The Applications
On 21 October 2019 an insolvency application (“the Substantive Application”) was filed on behalf of the joint trustees in bankruptcy (“the Trustees”) of Mr Richard Rufus. It seeks relief pursuant to sections 339 and/or 423 of the Insolvency Act 1986 (“ IA”) (transactions at an undervalue and debt avoidance provisions). The Substantive Application was listed for its first hearing on 11 March 2020. Rule 12.9 of the Insolvency Rules 2016 (“ Rule 12.9” and “ IR 2016” respectively) concerning its service provides as follows (my underlining):
“ 12.9.—(1) The applicant must serve a sealed copy of the application, endorsed with the venue for the hearing, on the respondent named in the application unless the court directs or these Rules provide otherwise.
…
(3) A sealed copy of the application must be served, or notice of the application and venue must be delivered, at least 14 days before the date fixed for its hearing unless—
(a) the provision of the Act or these Rules under which the application is made makes different provision;
(b) the case is urgent and the court acts under rule 12.10; or
(c) the court extends or abridges the time limit.”
In this case the Substantive Application was not served before the 11 March 2020 hearing. This breach of Rule 12.9 was raised by counsel on behalf of the Trustees at that hearing within the context of their application to adjourn, issued on 9 March 2020 (“the 9 March Application”). That application includes an alternative request for an extension of time or other order as may be appropriate (although in parenthesis). My recollection, albeit without the assistance of a transcript, is that there was full and fair disclosure of the facts and of the applicable law concerning the breach. An arguable case having been identified during those submissions for the proceedings to continue, I adjourned the application to a date to be fixed for a between-parties hearing. It was listed for 18 May 2020 and heard by I.C.C. Judge Mullen. There is no transcript of that hearing.
On 24 May 2021 I heard the Third Respondent's application for an order striking out the claim against him (“ the Strike Out Application”) made on the following bases:
3.1 The Trustees failed to serve the Substantive Application in accordance with the IR 2016 and the limitation period has since expired.
3.2 There are no exceptional circumstances to justify an extension of time for service.
3.3 There is no power to grant a retrospective extension of time in which to serve in any event.
3.4 The Trustees breached the duty of full and frank disclosure at the hearing on 11 March 2020 of the 9 March Application — although this is no longer pursued.
3.5 The order of 11 March 2020 failed to include a statement of the Respondents' right to make an application to set aside or vary the order, in contravention of r.23.9(3) of the Civil Procedure Rules 1998 (“ the CPR”).
The Strike Out Application was not issued until 23 November 2020, the day before the Substantive Application's CCMC. By that time a number of matters had occurred:
4.1 At the 18 May 2020 hearing, at which the Third Respondent was represented: Directions were given for pleadings: amended Points of Claim were due by 1 June 2020, Points of Defence by 25 September 2020, and any Points of Reply by 30 October 2020. A CCMC was listed for 24 November 2020, and costs budgets were ordered to be filed 21 days in advance. No point appears to have been taken concerning service.
4.2 The Third Respondent subsequently requested an extension of time in which to file Points of Defence. That was agreed.
4.3 The Third Respondent's Points of Defence were served shortly after the agreed deadline, and were deemed filed and served on Monday 12 October 2020. They do not include a limitation period defence.
4.4 The Trustees filed Points of Reply on 16 November 2020, a mutual extension of 14 days having been agreed between the parties. The Points of Reply were on time if the 14 days ran from Monday 12 October 2020, but late if time ran from Friday 9 October 2020. No specific point turns on that.
4.5 On 2 November 2020, the Applicant and the Third Respondent filed costs budgets.
4.6 The further case and costs management was listed for 24 November 2020.
At the CCMC hearing on 24 November 2020, directions were given for a contested hearing of the Strike Out Application, issued the day before, and the Substantive Application was otherwise stayed. On 11 January 2021 (and in accordance with the terms of the November Order), the Trustees cross-applied (“the Cross Application”) for an order waiving any defect as regards service and/or extending time for service, insofar as either order is necessary.
On 24 May 2021, the time allocated proving deficient, the hearing was adjourned to today and I asked counsel for further written submissions. These were received by the end of June in accordance with the time limits directed.
B) Summary of the Submissions
It is not in dispute that the 6 year limitation period for both statutory causes of action pursuant to section 9 of the Limitation Act 1980 expired on or before 25 February 2020 and, therefore, before the first hearing on 11 March 2020. Mr Holmes submits on behalf of the Third Respondent that the Substantive Application should be struck out because: (i) the Applicant having failed to serve the Application in time under Rule 12.9 must obtain an extension of time if the proceedings are to continue and to do so must show “ exceptional circumstances” under Rule 12.9.(3), which cannot be done; alternatively (ii) there has been a formal defect or irregularity which has caused irremediable, substantial injustice and the court should invalidate the proceedings applying r.12.64 IR 2016; alternatively (iii) the court's power to strike out a statement of case under CPR 3.4(2)(b) for failure to comply with a rule should be exercised.
Both counsel have referred me in support of their submissions to the Court of Appeal's decision in Bell and another v Ide and another [2020] EWCA Civ 1469, [2021] 1 W.L.R. 1076. Ms Julian submits on behalf of the Trustees that it was far too late by 23 November 2020 for the Third Respondent to be able to issue the Strike Out Application. From 18 May 2020 significant steps were taken in the proceedings and by 23 November 2020 he had through his conduct submitted to the jurisdiction of the court, a term which is not limited to territorial jurisdiction (see Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, [2008] 1 WLR 806). She submits that the fact that an application notice is not served in accordance with Rule 12.9 does not render it a nullity (applying Aktas v Adepta [2010] EWCA Civ 1170, [2011] QB 894 at [18], Jerrard v Blyth [2014] EWHC 647 (QB) at [9] with support from r.12.64 IR 2016). Therefore, the common law principles of submission to the jurisdiction apply, as expressed by Robert Goff LJ in Astro Exito Navegacion SA v Hsu [1984] 1 Lloyds Rep 266 at p. 270:
‘Now a person voluntarily submits to the jurisdiction of the court if he voluntarily recognises, or has voluntarily recognised, that the court has jurisdiction to hear and determine the claim which is the subject matter of the relevant proceedings. In particular, he makes a voluntary submission to the jurisdiction if he takes a step in proceedings which in all the circumstances amounts to a recognition of the court's jurisdiction in respect of the claim which is the subject matter of those proceedings. The effect of a party's submission to the jurisdiction is that he is precluded thereafter from objecting to the court exercising its jurisdiction in respect of such claim.’ [Emphasis added by counsel.]
Ms Julian's alternative submission is that the Strike Out Application ought to be considered in accordance with r.12.64 IR 2016 because service has been effected, albeit, defectively. This is not an abuse case. Accordingly, the issue is whether there would be irremediable substantial injustice if the Substantive Application continues. The question of injustice must be assessed at today's date and cannot arise because of the submission to the jurisdiction. There can be no injustice when the Third Respondent has not previously objected to the breach of Rule 12.9. In the further alternative, if an extension of time is required notwithstanding the steps taken in the proceedings, she submits that the actions resulting in submission to the jurisdiction are exceptional circumstances justifying an extension of time.
Mr Holmes's submissions on behalf of the Third Respondent include the proposition that whilst the application is not a nullity, it remained incumbent upon the Trustees to apply for an extension of time for service and, this being a case where the limitation period has expired, to establish exceptional circumstances for that purpose. That...
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