Miss Jenny Yang v The Official Receiver and Others
| Jurisdiction | England & Wales |
| Judge | Judge Hodge QC |
| Judgment Date | 01 October 2013 |
| Neutral Citation | [2013] EWHC 3577 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. 2574 of 2009 |
| Date | 01 October 2013 |
[2013] EWHC 3577 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER APPEAL CENTRE
Manchester Civil Justice Center
1 Bridge Street West
Manchester
M60 9DJ
His Honour Judge Hodge QC
sitting as a Judge of the High Court
Claim No. 2574 of 2009
Appeal Ref: M12C201
Counsel for the Appellant: Mr Andrew Clark
Counsel for the Second Respondent: Miss Claire Jackson
Counsel for the Third Respondent: Miss Karen Troy
APPROVED JUDGMENT
This is my extemporary judgment on an appeal by Miss Jenny Yang, the former bankrupt, against orders of District Judge Khan made on 30 th October and 12 th November 2012. The respondents to the appeal are Manchester City Council, the petitioning creditor, and Joanne Sara Wright, the former trustee in bankruptcy of Miss Yang. The Official Receiver, who was named as a respondent to the appeal, has taken no part in it.
District Judge Khan refused permission to appeal; but on 17 th April 2013 I gave permission to appeal in relation to nine out of ten grounds of appeal. In the event, although it is 10 to 4, I have heard argument on only the first five of the grounds of appeal. It is quite clear to me that the argument on the remaining grounds is going to have to go off to another day. District Judge Khan handed down, on 30 th October 2012, a detailed written judgment following a hearing which had taken place on 24 th September 2012. By an application (her third relevant application) issued on 28 th May 2012, Miss Yang had sought, in the alternative, to have her bankruptcy order, made on 30 th November 2009, either annulled under Section 282(1)(a) of the Insolvency Act or alternatively reviewed and rescinded under Section 375(1) of that Act. In the event, the district judge dismissed the annulment application; but he did order that the bankruptcy order should be rescinded, and the petition dismissed, subject to, and upon, the further terms of, his order. It is the district judge's decision to rescind, rather than annul, the bankruptcy order to which this present judgment is directed.
Essentially, the relevant grounds of appeal, although set out in five numbered grounds, fall under two heads. The first relates to the foundation of the bankruptcy order. The district judge set out the reasons for his decision in a written judgment which extends to some 96 separate paragraphs. That judgment contains a full and careful exposition of the material facts and the relevant statutory provisions. I therefore propose to address the background to this appeal extremely shortly, particularly in view of the lateness of the hour. The bankruptcy order was made against Miss Yang on 30 th November 2009, following a petition presented on 2 nd September 2009 by the second respondent, Manchester City Council. By that petition, Manchester City Council had sought payment from Miss Yang of a sum of £1,102.54 in respect of unpaid council tax for a property at 23 Banff Road, Manchester, for the period 16 th March 2006 to 31 st March 2007. 23 Banff Road was a property owned by Miss Yang which had been classified by the city council as a house in multiple occupancy. On 5 th October and 23 rd November 2006, the city council had obtained liability orders against Miss Yang for the sums of £997.75 and £104.79 respectively. Following the making of the bankruptcy order, and on 16 th August 2011, the third respondent, Miss Wright, was appointed as Miss Yang's trustee in bankruptcy.
Miss Yang, in due course, and after the making of the bankruptcy order, discharged the liability orders which had formed the subject matter of the bankruptcy petition; but having done so, she also sought, in or about late April or early May of 2012, to challenge her liability to pay the relevant council tax on the basis that she claims the city council to have been incorrect in classifying 23 Banff Road as a house in multiple occupation. Her application to the valuation tribunal succeeded following a hearing on 25 th July 2012. The valuation tribunal's decision was made available to the parties on 6 th August 2012. By that decision, the valuation tribunal ordered the city council to remove Miss Yang from liability for the period from 16 th March 2006 to 16 th May 2007, thereby encompassing the period in respect of which the liability orders had been made. It is following that decision of the valuation tribunal that Miss Yang contends that she is entitled to have the bankruptcy order annulled under Section 282(1)(a) of the Insolvency Act on the basis that, on the grounds existing at the time the bankruptcy order was made on 30 th November 2009, that order ought not to have been made. District Judge Khan held that he should not annul the bankruptcy order; but, having considered matters relevant to the exercise of his discretion, he decided that the bankruptcy order should be rescinded under Section 375(1).
District Judge Khan held that the bankruptcy order should not be annulled despite the fact that it had, by then, been proven that Miss Yang did not owe the amounts claimed in the two liability orders. He held that the subsequent setting aside of those liability orders afforded no ground for Miss Yang's contention that at the time the bankruptcy order had been made, it ought not to have been made. He held (at paragraph 51 of his judgment) that, at the time the bankruptcy order had been made, the house in multiple occupation assessment had been in place, and no steps or action had been taken by Miss Yang to challenge that, nor had she taken any steps to challenge the liability orders themselves. On that footing, he held that grounds had not existed at the time the bankruptcy order was made such that it should not have been made. He went on to say (at paragraph 52) that it followed that he did not need to consider answering the question whether the court should, in any event, exercise its discretion in favour of Miss Yang and annul the bankruptcy order; although he went on to say that the factors relevant to the exercise of his discretion on the application under Section 282(1)(a) were the same factors as those relevant to the application under Section 375, to which he did ultimately accede.
Mr Ian Clark, who appears for the appellant, Miss Yang, under the direct public access scheme, submits that District Judge Khan was in error in finding that no grounds existed at the time the bankruptcy order was made which should have resulted in the order not having been made. It is to this issue that the first two of his grounds of appeal are directed. He submits that the district judge erred by declining to follow a decision of a three member Court of Appeal in Royal Bank of Scotland v Farley [1996] BPIR 638 and by applying instead the decision of a two member Court on the determination of an application for permission to appeal in the later case of Bolsover District Council v Dennis Rye Ltd [2009] EWCA Civ 372; [2009] 4 All ER 1140. He says that the district judge erred in finding that the Bolsover District Council v Dennis Rye Ltd case was closer, if not identical, to the present case than Royal Bank of Scotland v Farley. He advances that contention on the basis that in the Bolsover District Council v Dennis Rye Ltd case, the petition debt had been undisputed, and the real issue was whether a claim in restitution for the repayment of council tax was a sufficiently certain cross-claim on a winding up petition.
Mr Clark develops his submissions on those two grounds of appeal at paragraphs 5 through to 15 of his most recent written skeleton argument, dated 27 th September 2013. He cites paragraph 51 of District Judge Khan's judgment. There the district judge said this:
"I am not satisfied that Miss Yang can persuade me that the bankruptcy order ought not to have been made. I am not inclined to follow Farley simply because that was a case involving a judgment debt, and this is a case regarding non-payment of liability orders, but what was said in Dennis Rye Ltd is closer, if not identical to this case. There are no compelling circumstances of this case and therefore no basis to go behind the liability orders. The liability orders have not been set aside, but have been discharged. No ground therefore existed at the time the bankruptcy order was made such that it ought not to have been made. Moreover, at the time the bankruptcy order had been made the HMO assessment was in place, and no steps or action had been taken by Miss Yang to challenge it. Grounds therefore did not exist at the time the order was made such that it should not have been made. Accordingly Miss Yang is not entitled to an order under Section 282(1)(a)."
Mr Clark submits that District Judge Khan was wrong to decline to follow the Royal Bank of Scotland v Farley case. He submits that the basis for his decision would appear to be (1) a distinction based on the difference between default judgments and liability orders; and (2) the perception that the case of Bolsover District Council v Dennis Rye Ltd was closer, if not identical, to the present case. Mr Clark submits that in both respects the district judge was in error. He submits that the liability orders upon which the bankruptcy petition was founded were not determinative of the question of whether council tax was properly payable by the appellant in respect of 23 Banff Road for the relevant period. He submits that they should be regarded in the same way as a default judgment. As to that, he cites the observations of Lord Justice Hoffmann,...
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