Re Bird v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HARMAN,LORD JUSTICE UPJOHN,LORD JUSTICE DIPLOCK |
| Judgment Date | 16 March 1962 |
| Judgment citation (vLex) | [1962] EWCA Civ J0316-2 |
| Date | 16 March 1962 |
| Court | Court of Appeal |
[1962] EWCA Civ J0316-2
Lord Justice Harman
Lord Justice Upjohn and
Lord Justice Diplock
In The Supreme Court of Judicature
Court of Appeal
From Mr. Registrar Cunliffe
MR LEONARD CAPLAN, Q. C. and MR MUIR HUNTER (instructed by Messrs T. D. Jones & Co., Agents for Messrs Lyon Clark & Co. West Bronwich) appeared as Counsel for the Appellant.
MR W. A. BAGNALL, Q. C. MR. E. BLANSHARD STAMP and MR L. J. BROMLEY (instructed by the Solicitor of Inland Revenue) appeared as Counsel for the Respondents.
This is an appeal by the bankrupt against the dismissal by Mr. Registrar Cunliffe on the 11th July last of the bankrupt's application by motion dated the 4th May, 1961, for relief under various heads, of which the main one was for an annulment of the order of the Bankruptcy Court dated the 24th February, 1961, whereby he was adjudicated bankrupt. The motion also sought to set aside the bankruptcy notice and receiving order and for either the dismissal or rehearing of the petition in bankruptcy on which the subsequent orders were founded.
The case involves some unusual circumstances and its history goes back as far as the year 1954 when the Inspector of Taxes at West Bronwich in Staffordshire became suspicious that the bankrupt, who had rendered various income tax returns since the year 1932, had in making them failed to disclose to the Revenue certain sources of income and, in particular, the fact that he was during all those years carrying on in his native town the business of a street bookmaker. An inquiry was launched in which certain chartered accountants acted on the bankrupt's behalf and, in particular, prepared certain statements of his capital assets designed to show what his true income had been, there being no proper income accounts in existence, over the years in question. In August 1956 the bankrupt through his solicitor agreed that he had in fast been carrying on a bookmaker's business, as the Crown alleged, and that the tax loss to the Revenue amounted to over £4,000. In November of 1956 the accountants put forward an offer to settle the indebtedness at a figure which the Inspector was not willing to accept. This was refused in January 1957, and in the next month, no doubt as a result, the bankrupt did a "moonlight flitting" to Jersey where he was subsequently rejoined by his wife and where he lived, no doubt thinking himself beyond the arm of the law, until last year.
In January 1960 the Crown obtained judgment against the bankrupt in England for a sum of £3,622 due for income taxbetween 1935 and 1954. This Judgment was pronounced in default, but was regularly obtained by means of the proper leave to serve process out of the jurisdiction, and no question arises in that respect. In September 1960 the Crown issued a bankruptcy notice on their judgment, and this is the first document said to be out of order, though no objection was made to it at the time when it was by leave served on the bankrupt out of the jurisdiction. The affidavit in support of the application for leave to serve was sworn on the 2nd September 1960. It deposed that the bankrupt was a domiciled Englishman ordinarily residing and carrying on business in England until February 1957. Leave to serve was granted on the same day by the Registrar and service was duly effected. Similarly the petition which was dated the 24th October 1960 was served out of the jurisdiction by leave. The receiving order was made on the 9th December 1960 and adjudication followed on the 24th February 1961, During the whole of this period the bankrupt ignored the proceedings, being advised that he could safely do so.
An order was made in due course for the attendance of the bankrupt for public examination. With this he did not comply and on the 20th April 1961 he was arrested in Jersey for contempt of court in failing to attend. There has been a certain coyness about the origin of this rather surprising events out the bankrupt does not now make complaint of it and it may be better to pass' it over with no more than a raised eyebrow. The bankrupt was released on bail in April and at once moved the Court by the proceedings which are now the subject matter of this appeal.
The basis of the appeal as originally launched was twofold: first, that under Section 1(2) of the Bankruptcy Act the bankrupt was not, within the definition supplied by that section, a debtor; secondly, that under Section 4(1)(d) of the statute no bankruptcy notice could be served to enforce a debt against him. The Section 1 point is no longer relied on and 19 therefore, mayconfine myself to Section 4. Section 4 is headed in this way: "Conditions on which creditor may petition. 4(1): A creditor shall not be entitled to present a bankruptcy petition against a debtor unless", and then there are (a), (b) and (c) which do not apply to the circumstances of this case, "(d) the debtor is domiciled in England" – that is one of the issues in the case – "or within a year before the date of the presentation of the petition has ordinarily resided" – he had not ordinarily resided, as far as the evidence in this case goes, for more than a year, so that does not apply – "or had a dwelling house or place of business, in England" – the facts seem to show that he has not had a place of business in England since February 1957, and as for his dwelling house, I should think the middle of 1957 would be about the time that was shut up when his wife left to join him. Then it goes on: "…or" (I leave out the words in brackets) "has carried on business in England, personally or by means of an agent or manager". The point taken is that he has not within a year before the date of the presentation of the petition carried on business in England. It is not suggested that there was any agent or manager involved, so it is carrying on himself. The presentation of the petition was the 19th October, 1960.
As to the question of domicile, the bankrupt asserted that in 1957 he left this country permanently with the intention of residing thereafter in Jersey and that thus he abandoned his domicile of origin, which was admittedly English, and acquired a domicile of choice in Jersey. There was no application to cross-examine the bankrupt on his affidavit and in the upshot the learned Registrar has not dealt with this matter. In the circumstances it appears to me that this is not a matter on which the Court can adjudicate, although as the matter stands it seems difficult to see how the contention of a Jersey domicile could be rejected. The bankrupt had every motive for leaving this country, and though he had less for choosing a new domiciles in Jersey, he has in fact lived there for the last five years andhas done various acts which indicate an intention to make his residence Permanent. However, having regard to other views which I hold on a different part of this case, It is not essential that I should come to a conclusion on that matter, even if we could do so' and I say no more about it.
Before us, as I say, no argument was addressed under Section 1(2) of this Act, and the appeal, so far as we have heard it, centres entirely round the question whether within a year of the presentation of the petition the bankrupt carried on business in England. As to this, it is, I think, settled law that for bankruptcy purposes a bankrupt has been looked at as continuing to carry on a business in this country, even though he had in fact ceased trading, so long as any debts of the business remained outstanding. There is a long line of authority which establishes that proposition, and, oddly enough, they all seem to be cases about married women trading. Married women, as it will be remembered, were first brought within the bankruptcy law in 1882 under the Married Women's Property Act, but of course only if they were traders. The matter came before the Court in the case of In re Dagnall in 1896, 2 Queen's Bench at p. 407, and the section is there set out in the headnote: "Every married woman carrying on a trade separately from her husband shall, in respect of her separate property, be subject to the bankruptcy laws in the same way as if she were a feme sole". The facts were, as the headnote states? "A married woman having carried on a trade separately from her husband sold the business. Shortly afterwards she gave notice to her creditors that she was about to suspend payment of her debts, and thereupon a bankruptcy petition was presented against her by two creditors in respect of trade debts incurred by her prior to the sale: Held, that a receiving order might be made against her. By Mr. Justice Vaughan Williams on the ground that the fact of her having trade debts undischarged at the date of the petition was evidence from which it ought to be inferred that she was still carrying on the tradeat that date; by Mr. Justice Wright on the ground that having once carried on a trade she continued, even after she had ceased to carry it on, to be subject to the bankruptcy laws in respect of the debts incurred by her during the period of her trading". Mr. Justice Vaughan Williams said this: "But whether a person is carrying on a trade or not is a question of fact; and if it were not for the decision in Ex parte McGeorge, I should have said without any hesitation that as long as a woman trading separately from her husband had not paid the trade debts which she had incurred, so long she was continuing to trade. It seems to me that trading is not completed until you have performed all the obligations that the fact of trading imposed upon you. And that was the view that was taken in the older cases". Mr. Justice Wright said this: "I agree that this appeal must be allowed, upon the short ground that in my view the natural meaning of the section is that a married woman who trades...
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