Smith (A Bankrupt), Re, ex parte Braintree District Council
| Jurisdiction | UK Non-devolved |
| Judge | Lord Keith of Kinkel,Lord Griffiths,Lord Ackner,Lord Jauncey of Tullichettle,Lord Lowry |
| Judgment Date | 30 November 1989 |
| Judgment citation (vLex) | [1989] UKHL J1130-1 |
| Date | 30 November 1989 |
| Court | House of Lords |
[1989] UKHL J1130-1
Lord Keith of Kinkel
Lord Griffiths
Lord Ackner
Lord Jauncey of Tullichettle
Lord Lowry
House of Lords
My Lords,
I have had the opportunity of considering in draft the speech to be delivered by my noble and learned friend Lord Jauncey of Tullichettle. I agree with it, and for the reasons he gives would allow this appeal.
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Jauncey of Tullichettle, and for the reasons which he gives I, too, would allow this appeal.
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Jauncey of Tullichettle. I agree with it and for the reasons given therein I, too, would allow the appeal against the judgment of Warner J. and restore the order of the registrar.
My Lords,
The issue in this appeal is whether the bankruptcy court has jurisdiction under section 285(1) of the Insolvency Act 1986 to stay the issue by a magistrates' court under section 102 of the General Rate Act 1967 of a warrant of commitment against a person who has failed to pay rates. The county court registrar held that he had such jurisdiction but on appeal Warner J. [1988] Ch. 457 held that he had not.
In order to understand the factual background to this appeal it is necessary to look first at the relevant provisions of the two above mentioned statutes. Section 285 of the Act of 1986 is in inter alia the following terms;
"(1) At any time when proceedings on a bankruptcy petition are pending or an individual has been adjudged bankrupt the court may stay any action, execution or other legal process against the property or person of the debtor or, as the case may be, of the bankrupt.
(2) Any court in which proceedings are pending against any individual may, on proof that a bankruptcy petition has been presented in respect of that individual or that he is an undischarged bankrupt, either stay the proceedings or allow them to continue on such terms as it thinks fit.
(3) After the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall -
( a) have any remedy against the property or person of the bankrupt in respect of that debt, or
( b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose.
This is subject to sections 346 (enforcement procedures) and 347 (limited right to distress)."
Section 285 appears in Part IX of the Act under Chapter II which is headed "Protection of Bankrupt's Estate and Investigation of His Affairs." Section 102 of the Act of 1967 appears in Part VI thereof which is headed "Distress for Rates." Section 96 provides that payment of rates may be enforced by distress and sale of the ratepayer's goods and chattels under a warrant issued by the magistrates' court and that if this is insufficient distress the ratepayer may be liable to imprisonment. Section 102, as amended by section 39 of the Local Government, Planning and Land Act 1980, provides, inter alia:
"(1) If the person charged with the execution of a warrant of distress for levying a sum to which some other person has been rated makes a return to the magistrates' court that he could find no goods or chattels (or no sufficient goods or chattels) on which to levy the sums directed to be levied under the warrant on that other person's goods and chattels, a magistrates' court may, if it thinks fit, and subject to the provisions of section 103 of this Act,
( a) issue a warrant of commitment against that other person or
( b) fix a term of imprisonment and postpone the issue of the warrant until such time and on such conditions (if any) as the court thinks just.
…
(5) The order in the warrant of commitment shall be that the said person be imprisoned for a time therein specified but not exceeding three months, unless the sums mentioned in the warrant shall be sooner paid; but
( a) where the warrant is issued after a postponement under subsection (1)( b) of this section and, since the term of imprisonment was fixed, the total of the sums referred to in subsection (3) of this section other than the costs of commitment has been reduced by part payment, the period of imprisonment imposed shall be the term fixed under subsection (1)( b) of this section reduced by such number of days as bears to the total number of days in that term less one day the same proportion as the part paid bears to that total; and
( b) if payment is made in accordance with rules under section 15 of the Justices of the Peace Act 1949 of part of the said sums mentioned in the warrant, the period of imprisonment shall be reduced by such number of days as bears to the total number of days in the period specified in the warrant less one day the same proportion as the amount so paid bears to so much of the said sums as was due at the time when the period of imprisonment was imposed;
and in calculating a reduction required under paragraph (a) of ( b) of this subsection any fraction of a day shall be left out of account."
A warrant of commitment cannot, however, be issued until the magistrates have made inquiry under section 103 which provides, inter alia:-
"(1) Section 102 of this Act shall have effect subject to and in accordance with the following provisions:-
( a) on the application for the issue of a warrant for the commitment of any person, the magistrates court shall make inquiry in his presence as to whether his failure to pay the sum to which he was rated and in respect of which the warrant of distress was issued was due either to his wilful refusal or to his culpable neglect:
( b) if the magistrates' court is of opinion that the failure of the said person to pay the said sum was not due either to his wilful refusal or to his culpable neglect, it shall not issue the warrant or fix a term of imprisonment.
(2) Where on the application no warrant of commitment is issued, or term of imprisonment fixed, the magistrates' court may remit the payment of any sum to which the application relates, or of any part of that sum."
Section 105(1) provides, inter alia:
"If after proceedings have been taken under this Part of this Act against a person to compel payment of any sum for rates, but not after he has been imprisoned in default of a sufficiency of distress …"
Rates cannot be recovered by action ( Liverpool Corporation v. Hope [1938] 1 K.B. 751) but only by way of the procedure set out in Part VI of the Act of 1967.
On 17 February 1987 the magistrates' court at Castle Hedingham heard an application by the respondents, the Braintree District Council, for the issue of a committal warrant against the appellant deptor in respect of non-payment of rates. The minute of adjudication of the court was in the following terms: "60 days' imprisonment suspended on payment of £20 per month for two months thereafter at £20 per week."
The deptor, who was at all material times on supplementary benefit, made only one payment of £20. In consequence of a petition presented by a creditor on 21 April 1987 a bankruptcy order was made against the deptor on 3 June 1987. After further proceedings in the magistrates' court, the registrar of the bankruptcy court on 17 August 1987, upon the application of the deptor under section 285(1) of the Act of 1986, stayed the proceedings in the former court. The council appealed against the registrar's order and on 12 December 1987 Warner J. allowed the appeal holding that the registrar had no jurisdiction under section 285(1) to make it. In reaching this conclusion, the judge considered that he was bound by the decision of the Court of Appeal in In re Edgcome, Ex parte Edgcome [1902] 2 K.B. 403 to the effect that a commitment under the Distress for Rates Act 1849 was a punitive measure and not a "legal process against the property or person of the debtor" within the meaning of section 10(2) of the Bankruptcy Act 1883, one of a number of predecessors of section 285(1).
The deptor advanced two main arguments, namely (1) that, since the Act of 1986 involved certain approaches to bankruptcy such as the rehabilitation of the bankrupt which were fundamentally different to the approach in prior Bankruptcy Acts it would be improper to construe it in the light of decisions relating to those prior Acts, and that the words in question were wide enough to cover all proceedings directed towards the recovery of rates, and (2) that, in any event, the ratio of the decision in In re Edgcome, even if correct at the time, which was not conceded, could no longer be sustained in modern circumstances. The council maintained (1) that the words "legal process" in section 285(1) should be construed eiusdem generis with action and execution which were appropriate only to civil proceedings and which did not comprehend processes whose purpose was punitive, (2) that committal proceedings for non-payment of rates were not civil but were criminal or quasi-criminal, and (3) that section 285 should be construed in the same manner as its predecessors in prior Bankruptcy Acts.
I start by considering as a pure question of construction, untrammelled by prior legislation or authority, whether the words "or other legal process" in section 285(1) of the Act of 1986 are capable of applying to the procedure for obtaining a warrant of commitment under sections 102 and 103 of the Act of 1967. If they are not capable, the appeal must fail. If they are capable, the question will arise whether prior authority requires that they be construed so as to exclude such procedure. The purpose of section 285 is to protect...
To continue reading
Request your trial
-
Quinn & Others v Irish Bank Resolution Corporation Ltd
...law has of course changed a great deal since the time of Lord Eldon and In re Smith (A Bankrupt), Ex parte Braintree District Council [1990] 2 A.C. 215 is authority for taking afresh look at the construction of the Insolvency Act 1986 in modern conditions. Nevertheless, the principle that t......
-
Ram v Ram and Others
...to follow, since the procedure by way of judgment summons would then be barred by s 285(3) of the 1986 Act (see Smith v Braintree DC [1990] 2 AC 215). In the present case, the wife could have proved in the husband's bankruptcy and no doubt would have sought to encourage the trustee to take ......
-
Woodland-Ferrari v UCL Group Retirement Benefits Scheme
...that the Insolvency Act 1986 is an entirely new code in relation to the Bankruptcy Act 1914. In Smith -v- Braintree District Council [1990] 2 AC 215 a question was raised as to the power of the court to restrain proceedings against a bankrupt under section 285(1) of the 1986 Act. The decis......
-
R v Lord Chancellor, ex parte Lightfoot
...those wishing to petition for bankruptcy do not in fact do so. To them, therefore, is denied what Lord Jauncey in Re Smith (A Bankrupt) [1990] 2 AC 215 at 237 called "the importance of the rehabilitation of the individual insolvent." They face instead a lifetime of unrelieved indebtednes. T......