Poulton v Ministry of Justice [2009] EWHC 2123 (Ch)

[2009] EWHC 2123 (Ch)Case No HQ08C03247IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONSitting at:Central London Civil Justice Centre26 Park CrescentLondon, W1B 1HTDate 2 nd September 2009
Before
Her Honour Judge Hazel Marshall QC(sitting as a Deputy Judge of the High Court)
Between
THE TRUSTEE IN BANKRUPTCYClaimantOF LOUISE ST JOHN POULTONClaimantMINISTRY OF JUSTICEDefendant
Mr James Dawson (instructed by DWF Llp) for ClaimantMr Jonathan Lopian (instructed by the Treasury Solicitor) for DefendantHearing Hearing dates: 1 st and 2 nd July and 2 nd September 2009
JUDGMENTBackground
[1]On 25 April 2008, the trustee in bankruptcy of Louise St John Poulton (“the Bankrupt”) brought these proceedings against the Ministry of Justice, claiming damages for breach of statutory duty and/or negligence by the Courts Service, for whom the Ministry of Justice is responsible. The Ministry contends that the proceedings disclose no reasonable cause of action.[2]The claim was issued in the High Court in the Queen’s Bench Division, transferred to the Chancery Division, and then transferred to the Central London Civil Justice Centre on the court’s own initiative by an order of 17th November 2008. On 20th March 2009, HH Judge Dight ordered the trial of a preliminary issue as to whether the claim disclosed any cause of action, before one of the specialist Chancery Judges at this court. The matter came before me for trial on 1st and 2nd July 2009. In view of the potential importance of the issue, I was requested to hear the matter under my authority to sit as Judge of the High Court pursuant to s. 9 of the Supreme Court Act 1981. I obtained such authorisation, re-transferred the case to the High Court, and heard the matter accordingly. It may be useful for parties to be aware that this procedure can be invoked in an appropriate case.

History and circumstances

[3]A bankruptcy petition was presented against the Bankrupt in the Guildford County Court by Brighton and Hove District Council on 21 January 2004. The presentation fee of £150 was paid.[4]Under the law of personal insolvency contained in the Insolvency Act 1986 (“the Act”) the commencement of a bankruptcy is no longer the presentation of the bankruptcy petition (or other act of bankruptcy) but is the making of the bankruptcy order. The bankrupt’s property then vests in his trustee in bankruptcy upon the latter’s appointment (s 306). Instead of the old “relation back” of the trustee in bankruptcy’s title, s. 284 of the Act provides that if a bankruptcy order is made, any disposition of the bankrupt’s property made after the date of presentation of a bankruptcy petition is void unless validated by the court, or excepted by the section itself. Section 284(4) makes such an exception for a disposition made to a bona fide purchaser for value of such property, without notice of the petition. Such a purchaser therefore obtains good title.[5]By statutory provisions operating since at least 1925, (and now the Land Charges Act 1972) a bankruptcy petition can be registered as a pending action. When it is registered, under s. 86(2) of the Land Registration Act 2002, (formerly s. 61 of the Land Registration Act 1925) the Chief Land Registrar must, as soon as practicable, enter a notice on the register of title of any estate or charge which appears to him to be affected. Such notice constitutes actual notice of the petition to anyone potentially dealing with the bankrupt. This registration will therefore either be a deterrent and stop any such transaction taking place, or will defeat any attempt to raise the defence of “bona fide purchaser for value” if it does and is subsequently challenged by the trustee in bankruptcy.[6]Rule 6.13 of the Insolvency Rules 1986 (which I shall call “IR 6.13”) provides:
“When the [bankruptcy] petition is filed, the court shall forthwith send to the Chief Land Registrar notice of the petition together with a request that it may be registered in the register of pending actions.”
This step thus puts in train the registration process mentioned above. In the present case, however, and as admitted by the Defendant, the Guildford County Court failed to send notice of this Petition to the Chief Land Registrar in accordance with IR 6.13.[7]In March 2004 the Bankrupt sold some land at 35 Woking Road, Guildford, Surrey in two transactions, releasing a net equity in the properties of £45,517.60 after discharging existing mortgages. Although not formally admitted as a fact by the Defendant, it is accepted for the purpose of this preliminary issue that this money was then dissipated. At any rate, it was not garnered for the benefit of the creditors, although I understand that unsuccessful attempts to trace the money were made. In fact, it seems that £40,000 of the sum may have been left unpaid by the purchaser as a set off against a debt allegedly owed by the Bankrupt.[8]The Claimant’s case, as trustee in bankruptcy of the Bankrupt, is that but for the failure of the Courts Service to comply with IR 6.13, the net equity in the properties would have been preserved for the bankrupt’s creditors. It is again conceded by the Defendant, but for present purposes only, that if notice of the bankruptcy petition had been sent to the Chief Land Registrar in accordance with IR 6.13, it would have been registered and the relevant sales would either not have taken place or would have been void against the Trustee.

The issues

[9]By Paragraph 18 of his Particulars of Claim, the Trustee alleges “that the obligation imposed upon the Court Service by Rule 6.13 Insolvency Rules 1986 does give rise to a statutory duty towards the Creditors of the bankrupt which duty enables the Trustee in bankruptcy of the bankrupt to bring a claim for damages against the Court Service, and further that the court service owed a duty of care to the bankrupt’s creditors to ensure that it complied with its obligations pursuant to Rule 6.13.”[10]It is this allegation which is challenged by the Defendant. In its defence, as expanded in the skeleton argument of Mr Lopian on its behalf, it denies that IR 6.13 imposes any statutory duty on the Defendant at all, or alternatively (although in practice it may amount to the same thing) any duty which is enforceable by an action for damages in private law. It denies, in any event, that the Insolvency Act 1986 empowered the Minister to make regulations or rules conferring private law rights of action on individuals. It further denies that HM Courts Service owed any duty of care to the creditors of the Bankrupt in respect of IR 6.13, so as to found any cause of action in common law negligence.[11]There are therefore two basic issues between the parties:(i) Does IR 6.13 create a statutory duty on HM Courts Service (under the Ministry of Justice) for breach of which a private law right of action for damages is available?(ii) Alternatively, will a common law right of action in negligence lie in respect of a failure of HM Courts Service to comply with IR 6.13?[12]This is not an easy matter, and I am grateful to both counsel, Mr Jonathan Lopian for the Defendant and Mr James Dawson for the Claimant, for their excellent and persuasive arguments. In the judgment which follows, I have not thought it necessary to deal with every authority to which they have referred me, but this is no disrespect to their very clear and helpful submissions, from which I trust I have fairly extracted the essential points.

The background law

[13]The Insolvency Rules 1986 were made pursuant to powers conferred by s. 412 of the Act. S. 412(1) authorises the Lord Chancellor, with the concurrence of the Secretary of State (since 2005, this is also with the concurrence of the Lord Chief Justice in the case of rules that affect court procedure) “to make rules for the purpose of giving effect to Parts VIII – XI of the Act or the EC Regulations” I am not concerned with the EC Regulations.[14]Section 412(2) elaborates as follows:
“(2) Without prejudice to the generality of subsection (1) or to any provision of those Parts by virtue of which rules under this section may be made with respect to any matter, rules under this section may contain (a) any such provision as is specified in Schedule 9 to this Act or corresponds to provision contained immediately before the appointed day in rules made under section 132 of the Bankruptcy Act 1914; and (b) such incidental, supplemental and transitional provisions as may appear to the Lord Chancellor to be necessary or expedient.” (a) any such provision as is specified in Schedule 9 to this Act or corresponds to provision contained immediately before the appointed day in rules made under section 132 of the Bankruptcy Act 1914; and (b) such incidental, supplemental and transitional provisions as may appear to the Lord Chancellor to be necessary or expedient.”
[15]Schedule 9 of the Act provides guidance as to what matters may be regarded as “capable of inclusion in individual Insolvency Rules”. It contemplates rules relating to such matters as the functioning of the courts, notices, registration of voluntary arrangements, the role of interim receivers and managers, the administration of individual insolvency, fees, the holding of moneys, information and records, bankruptcy restriction orders, and general matters including specific power to make non-compliance with any of the rules a criminal offence.[16]Part 6 of the Insolvency Rules 1986 deals with “Bankruptcy”. It gives effect to Parts IX - XI of the Act, and lays down wide ranging rules governing all stages of the bankruptcy process, starting with the statutory demand, and going through to the eventual distribution of the estate between creditors, according to their entitlements. IR 6.13 appears in the second Chapter, headed “Bankruptcy Petition (Creditor’s)”. An identical rule appears at IR 6.43 in relation to a debtor’s own petition.[17]IR 6.13 was not new, however. Its substance is in identical terms to the former Rule 147 of the then Bankruptcy Rules 1952, (which I will call “BR 147”), which read “On the filing of a petition the Registrar shall forthwith send to the Chief Land Registrar notice of the petition together with a request that it may be registered in the register of pending actions.”[18]The effects of s. 45 of the Bankruptcy Act 1914, and the relevant sections of the Land Charges Acts 1925 (ss. 2 and 3) and 1972 (s. 5), and the Land Registration Act 1925 (s. 61) created a similar scheme to the present, under which dispositions by a bankrupt made for valuable consideration before a receiving order was made were valid provided that the other party had no notice of any prior act of bankruptcy, and registration, as above, was the means of fixing a purchaser with notice of a bankruptcy petition, which was such an act of bankruptcy.[19]BR 147 was made under rule-making powers contained in the Bankruptcy Act 1914. Section 132 of that Act provided: “The Lord Chancellor may, with the concurrence of the President of the Board of Trade, make general rules for carrying into effect the objects of this Act: Provided that the general rules so made shall not extend the jurisdiction of the court.” “The court” was defined in s. 167 of the Act as meaning (unless the context otherwise required) “the court having jurisdiction in bankruptcy under this Act”.[20]BR 147 was not made in the original Bankruptcy Rules 1915, but was first introduced in the Bankruptcy Rules 1952. The 1952 Rules, although made under the same power as before, appear to have involved a general revision or updating of the previous rules, which were revoked except for transitional cases (BR 2 and 3). (1). Statutory duty[21]Against that background I turn to the first issue, namely whether IR 6.13 imposes any statutory duty on the Courts Service, actionable in damages for breach, at the suit of the Claimant. For convenience, I shall use the term “actionable duty” to mean a statutory duty for breach of which a private law right of action for damages is available, and the term “Courts Service” to refer to whichever government department was, at any particular time, charged with the function of court administration. At present, this is the Ministry of Justice.

Defendant’s arguments

[22]As indicated above, Mr Lopian made his argument on statutory duty under three headings. His first is that the terms of IR 6.13 are not apt to create any duty at all. His second is that the Lord Chancellor was not authorised by his rule-making power, to create any actionable duties, and his third is that even if he was, there was in fact no intention to create an actionable duty under IR 6.13.[23]Thus separated out, the issue of authority is logically first, the question being whether, on its true construction in context, s. 412 of the Insolvency Act 1986 conferred any power on the Lord Chancellor to create actionable duties at all. If it did not, the other questions do not arise. However, the issue of vires can also be put on a more specific basis, ie as an argument that s. 412 was not intended to confer power to create an actionable duty in this particular respect, or this limited field. Facts and circumstances which might support such an argument about the construction of s. 412 could also be material to the further argument that even if the Lord Chancellor had power to create an actionable duty, he did not intend to do so when making the rule itself, which would be an argument about the true construction of IR 6.13. I will therefore simply deal with these matters where they appeared in the development of Mr Lopian’s argument, whilst bearing in mind their materiality to any, or all, of the varous ways of considering vires or intention which may arise.

(a) No duty

[24]Mr Lopian’s first submission is the central one that there is no statutory duty - actionable or not - because upon its true construction IR 6.13 does not impose any duty on the Courts Service at all, but simply describes the procedure which is adopted by the court on the filing of a bankruptcy petition.[25]He submits that this is apparent from the general scope and purpose of the rules, which is the wide ranging one of giving effect to all the matters set out in Parts IX – XI of the Act, comprising all the various stages of a bankruptcy and its administration. The rules, therefore, simply provide the practical framework for the bankruptcy process, and they no more impose a duty than do other rules, such as IR 6.10 which lays down procedure which “shall” happen as part of the presentation and filing of a petition, including, for example, that the court “shall” fix a venue for a hearing IR 6.10(5). The language of IR 6.13 is therefore, he submits, not mandatory, but simply formal.[26]He also submits as a general proposition, that it is difficult to imagine that the legislature would ever have contemplated imposing on the Courts Service such a duty as is alleged, at all. This leads him naturally to his second submission, namely that the statute confers no power to create actionable duties under the rules.

(b) No authority generally

[27]The thrust of this submission is that it is apparent from the content and context of s. 412 that it was not intended to - and therefore did not - confer on the relevant Minister any power to impose any actionable duties at all, and therefore not on the Courts Service. He submitted that given the purpose of the Act, the rules were authorised for the general purpose of providing a procedural framework for bankruptcy administration, and therefore to be purely regulatory in character. The rule making power did not, therefore, extend far enough to enable the creation of private law rights, and any attempt by the Minister to do this would have been ultra vires and void.[28]To support this, he referred me to R v Deputy Governor of Parkhurst Prison ex p Hague [1992] 1 AC 58, and especially to the speech of Lord Jauncey, where he concluded that the context and objectives of the Prison Act 1952 suggested that the Secretary of State’s powers under s. 47(1) of that Act to make “rules for the regulation and management of prisons….. and for the classification, treatment employment discipline and the control of persons required to be detained therein” were not intended to confer private rights of action for damages upon prisoners. Lord Jauncey therefore held that no such power was conferred, because otherwise this would enable the Minister “to extend the general scope of the Act by rules”, and this would be ultra vires (p 171G). He contrasted this rule-making power with that of s. 76(2) of the Factories Act 1961, in the very different field of imposing standards of safety at work. There, by contrast, the Secretary of State was expressly authorised to make regulations which “impose duties on owners employed persons and other persons”. Such wording thus provided a clear indication of an express intention to create a duty, and of the implicit intention to make it actionable, in order to support its enforcement. However, the very different spheres and policy of the two Acts (he said) emphasised that only some such very clear indication would support the inference that the rule-maker was intended to be able to impose or create duties actionable in private law.[29]Mr Lopian also cited Olotu v Home Office [1997] 1 WLR 328. This concerned s. 22 of the Prosecution of Offences Act 1985 which provided for the making of regulations, and these laid down the length of permissible detention of remand prisoners. The Court of Appeal held that the rule-making power was intended to promote the speed and efficiency of the prosecution process, and that the duties thus created were public law duties only, conferring no private law rights on accused persons against the Crown Prosecution Service. Mr Lopian stressed how both Lord Bingham (p 336-7) and Mummery LJ (p 338-9) stated that the absence of any indication in the primary legislation that the rule-making power was intended to authorise the creation of private law rights was a strong sign that no such power was intended and was therefore not conferred.[30]Mr Lopian submitted that the objectives of the Insolvency Act 1986 were akin to the general regulatory purposes of the Prison Act 1952 and the Prosecution of Offences Act 1985, rather than to the safety standard-raising purposes of the Factories Act 1961. There was no express power mentioned in s. 412 to create duties and still less private rights of action, and no hint of it (he submitted) in the primary legislation viewed generally. There was therefore no such power - and even if the Rule might appear to create private rights, it could not do so.[31]Since the 1986 Act replaced earlier legislation in the same field, he took me to some of the history to show that the situation was no different under the Bankruptcy Act 1914. He submitted that the fact that the predecessor rule (BR 147) was not contained in the original 1915 Bankruptcy Rules only underlined this. There had been no possibility of any such duty before 1952, and there was no reason to think that the character of the rules was meant to change either then, or upon the revision in 1986.[32]I think that at one point Mr Lopian was minded to argue that since the rule-making power contained in the Bankruptcy Act 1914 under which BR 147 had been made, pre-dated the Land Charges and Land Registration Acts of 1925, it could not possibly have been intended to confer any rights arising from the operation of the machinery of those Acts. However, those Acts were not entirely new at the time, (see eg s. 2 of the Conveyancing Act 1882) and no such conclusion could safely be drawn without a far closer investigation of legislative history than would have been proportionate in this case. In the end, Mr Lopian simply submitted, therefore, that there was nothing to suggest any difference between the scope of the rule-making powers under both the 1986 and 1914 Acts; each was aimed at regulation only, and with no intention to empower the relevant Minister to create new private law rights. (c). No intention to create the particular actionable duty alleged.[33]Finally Mr Lopian argued that in any event, even if IR 6.13 apparently created a duty, such duty was not, on its true construction, actionable.[34]He submitted that the test here was first that the apparent duty must be found to be imposed for the benefit of a limited class of the public, rather than the public at large (see per Lord Diplock in Lonrho Limited v Shell Petroleum C Ltd (No 2) 1982 AC 173) but, in addition, that the legislature actually intended to afford a private law remedy for breach of that duty.[35]Mr Lopian appeared to accept that if there were a duty imposed by IR 6.13 at all, it was imposed for the benefit of the creditors of the prospective bankrupt. He did not seek to argue that the first limb of the above test was not met, but instead concentrated on the second, submitting that there was simply no indication, either in the rule itself or in the Act, of any intention that any duty created under the rule should confer a private right of action.[36]Again citing Lord Jauncey in ex p Hague [1992] 1 AC 58 at p 171A, he emphasised that merely finding a statutory duty which appeared to protect an identifiable limited class of the public was not enough to satisfy the second limb, there must be “something more” in order to demonstrate the intention that there should be a private law right of action for breach. Such an intention could not simply be presumed. He referred to the judgments of Lord Simmonds in Cutler v Wandsworth Stadium Limited [1949] AC 398 at 407 and of Salmon and Cross LJJ in Ministry of Housing & Local Government v Sharp 1970 2 QB 223 (at 274A -277D and 289A – 290D) to show that this was a long-established principle of legislative construction.[37]Mr Lopian submitted that the absence of provision for any remedy or sanction for breach of the relevant duty was also insufficient as the required extra ingredient. He pointed out that the submission in ex p Hague [1992] 1 AC 58 had been that “where there is a breach of a statutory duty unaccompanied by a statutory remedy or penalty, a right of action is afforded to a person who is injured by the breach where he is a member of the class intended to be protected and suffers loss of the kind against which such protection is intended to be afforded”, but that this argument had been rejected. It was no more than an indication. Mr Lopian submitted that that was the highest that the Claimant could put his argument in this case, but he also pointed out that as it was open to the Petitioning Creditor to give notice of the petition to the Chief Land Registrar, it was not even the case that there was no other means of protection for the relevant class of the public (ie the bankrupt’s creditors).[38]Mr Lopian invited comparison with the Land Registration Acts, where there is express provision for indemnity for a person who suffers loss because of a “mistake” in the register, thus creating a private law remedy – but there is also provision for a compensation fund to be maintained to meet liabilities (see LRA 1925 ss 61, 82, 83 and 85, and LRA 2002 ss 86, 103 and Schedule 8). This contrast, he submitted, suggested that there could be no intention to give a right to damages or indemnity against the Courts Service in the context of the Insolvency Rules, where no such indemnity fund is provided for.[39]He also submitted that the fact that the claim was for pure economic loss weighed against any intention to create a right to damages, because the law is less willing to confer rights of action for economic damage as contrasted to physical damage to person or property; citing Richardson v Pitt-Stanley 1995 QB 123 at 132 per Stuart Smith J, and KA v SBM Feakins Ltd v Dover Harbour Board (Turner J, unreported 31 July 1998).[40]Finally, Mr Lopian referred again to the unlikelihood that either Parliament or the Lord Chancellor would have intended to confer on creditors any right to damages against the Courts Service in making this rule. Taking this, and all the above indications into account, he submitted that the Claimant had no cause of action against the Defendant under IR 6.13.

Claimant’s arguments

[41]For the Claimant, Mr Dawson dealt together with the issues of whether a duty was imposed at all and if so whether it sounded in damages, and then with the point on authority.

(a) and (c) Duty and remedy in damages

[42]Dealing with the true construction of IR 6.13, he submitted that a responsibility equating to a duty had been imposed on the Courts Service, and that the circumstances compelled the conclusion that it was intended that those who suffered loss as a result of its breach should have a right of action.[43]In summary his argument was that where a legislative provision is framed in explicit, simple, mandatory terms, is plainly intended to protect a limited class of the public, and no other remedy is provided for its breach, then that is a very strong indicator that a private right to damages for breach of duty is intended, because otherwise the intended protection is entirely subverted, and becomes nothing but the “pious aspiration” deprecated by Lord Simmonds in Cutler v Wandsworth Stadium Ltd 1949 1 All ER 544 at 549B.[44]Insofar as “something more” is needed, then in this case it lies in the fact that the existence of the rule creates a trap for the very persons intended to be protected by it. By enacting IR 6.13, the Lord Chancellor had generally announced that the Courts Service would perform the task of sending notice of a bankruptcy petition to the Chief Land Registrar, and had invited reliance on that by those involved in the bankruptcy process. This in itself showed that redress must be intended to be available for those who suffered if that simple duty, publicly assumed under the Insolvency Rules, were not performed.[45]Mr Dawson relied on the general propositions of principle set out by Lord Browne-Wilkinson, in X (Minors) v Bedfordshire County Council[1995] 2AC 633, under the heading “Breach of Statutory Duty simpliciter” at pages 731 D - 732B, the gist of which is as follows.[46]A breach of statutory duty does not normally give rise to any private law cause of action, but it may do so if enacted for the benefit of a particular class of the public, and if it appears that Parliament intended to confer a private law right of action on members of that class. There is no general rule for identifying any such situation, but a number of indicators exist. If the statute discloses a legislative intention to benefit a limited class and no other remedy is provided, then that may well be an indication that a private right of action is intended, but it is not conclusive. If the statute provides some other means of enforcing the duty, then that is an indication that there is no intention to confer a private right of action, but, again, it is not conclusive. Significantly, legislation establishing a “regulatory system or a scheme of social welfare” had consistently been held not to confer private rights of action for breaches of statutory duties laid down within their provisions. The reason was that the regulation of such areas of activity was enacted, not for the benefit of individuals, even if “particularly affected by that activity”, but for the benefit of society in general. Prisons (ex p Hague above) and horse race track betting (Cutler above) were examples of this. Lord Browne Wilkinson concluded by saying that “The cases where a private right of action for breach of statutory duty have been held to arise are all cases in which the statutory duty has been very limited and specific as opposed to general administrative functions imposed on public bodies and involving the exercise of administrative decisions” (732B). Mr Dawson submitted that this case fell squarely within the first class, rather than the second (in contrast to the authorities mainly relied on by Mr Lopian).[47]Mr Dawson submitted that Re a Debtor (No 1 of 1987) [1987] 1 WLR 271 showed that the 1986 Insolvency Rules were a new bankruptcy code, and were to be “construed in accordance with the ordinary cannons of construction, unfettered by previous authorities” (p 276 G per Nicholls LJ). I think he was thus minded to dismiss the previous position under the Bankruptcy Act 1914 as not of any real assistance, but he pointed out that the fact that the predecessor rule was introduced only in 1952 was some indication that it must then have been thought necessary to introduce it, in order to make the bankruptcy regime properly effective, and this was rather more indicative of an intention to create an actionable duty, than not.[48]Mr Dawson submitted that the comparison with the Land Registration Acts showed the bizarre consequences of Mr Lopian’s argument. It would be extraordinary to the point of absurdity that the Trustee should have no remedy if the court forgot to send notice of the petition to the Chief Land Registrar, but should have one if the Registrar received the notice but forgot to register it. The absence of an insurance scheme was of no significance, because the extent of potential liability was far more limited than under the land registration system, and compliance was far simpler.[49]As to economic loss, he submitted, although rather unenthusiastically, that the protection was not really in respect of pure economic loss because it related to the trustee’s interest in land. In any event, though, he pointed out that where economic loss was the very loss against which protection was being given, the law was much readier to find that a right of action for breach was available. The continuation of the passage cited by Mr Lopian from Stuart Smith J in Richardson v Pitt-Stanley at 1995 QB 123 acknowledged this: see page 133A.

(b) Vires

[50]Dealing with the vires point, Mr Dawson submitted that s. 412 both could and did authorise the creation of duties actionable in private law, if appropriate.[51]First, he submitted that this followed from the express purpose of the rule-making power. This was to “give effect to” the relevant Parts of the Act, and the creation of duties and rights might well be requisite in order to do this. Such a power was also implicit from the express authorisation of rules relating to the matters set out in Schedule 9, since these included a number of aspects where private law rights and remedies would naturally be created. Paragraphs 15 – 18 regarding the rights of both creditors and bankrupts as to the due administration of the bankrupt’s estate, rights as to payment, and rights as to distribution plainly created rights for (for example) creditors against Trustees. Reading these together with s. 304 of the Act (“Liability of Trustee”), Parliament had clearly intended creditors to have a cause of action sounding in damages against the Trustee in the event of non-compliance with the Rules. Thus, said Mr Dawson, it was plainly wrong to suggest that s. 412 was not intended to enable the creation of private law rights to damages at all..[52]He then submitted that it was also wrong to approach the question of vires on a general basis, according to some classification of the rules as “regulatory” or not, as Mr Lopian invited the Court to do. This was contrary to Lord Browne Wilkinson’s warning in X v Bedfordshire [1995] 2 AC 633 that there was “no general rule” by which to determine which statute did, or did not, intend there to be private rights of action for breach of statutory duty. Any provision in question must be looked at individually to discern the actual intention, according to the principles set out in the authorities, and common sense impression.[53]In answer to Mr Lopian’s reliance on Lord Jauncey in ex p Hague[1992] 1 AC 58 Mr Dawson pointed to the speech of Lord Bridge in the same case, at 160B, where he rejected such a general proposition as being too rigid. Given the wide ambit of the rule-making power in the Prisons Act 1952, Lord Bridge said that it could not be inferred that a right of action could never be intended to be conferred upon a prisoner, in any situation. It might do so in an appropriate case, and the question was whether, in any particular case, this had been done. In practice, Lord Bridge came to the same eventual conclusion as Lord Jauncey, but by this different route. Mr Dawson submitted that Lord Bridge’s approach was to be preferred, noting that Lord Ackner had specifically agreed only with Lord Bridge on this aspect, although Lords Goff and Lowry had stated generally that they each agreed with both Lord Bridge and Lord Jauncey, but without adverting to their different reasoning.[54]Mr Dawson therefore submitted that the question whether an actionable duty had been created by IR 6.13 could not be decided on the basis of general propositions about vires. The proper approach was to consider whether a right of action was apparently conferred in the particular case, as to which the general character of the rules was simply context.[55]As to the matters to be weighed, Mr Dawson’s propositions were simple. First, IR 6.13 is framed (he said) in emphatic mandatory terms. This contrasted with the language of other authorities relied on by Mr Lopian, where words such as “may” or “may not” were used. In this case, given the context and purpose of this Rule, he submitted that “shall” means “shall”, and there is no basis for reading it to mean anything else.[56]Second, the Rule has no purpose or reason other than to impose a duty on the court to send out the notice to the Chief Land Registrar. If it does not do that, it does nothing – or at least nothing worthwhile.[57]Third, the duty was particularly simple to perform. It required only a simple administrative act. It required no complex or onerous work, nor any exercise of judgment or discretion. The responsibility of performance was neither difficult nor burdensome.[58]Fourth, it was not a duty owed to the world at large, but only to a particular, limited, and clearly identifiable class, namely the creditors of the bankrupt at the time. Even if individuals were not then identifiable, the class was, and authority showed that for a duty to be reasonably owed, it was not necessary that every member of the class should be identified, so long as the qualifications for membership of the class meant that they could readily be. The risk and extent of possible liability were neither imponderable, nor disproportionate, nor even particularly great.[59]Fifth, the risk of harm to the potential class if the duty were not complied with was plain and obvious. It was, moreover, one of the things which the scheme of the Act specifically leaned against, the protection for a “bona fide purchaser for value without notice” being an exception to the intended scheme for bankruptcy.[60]Sixth, the very existence of IR 6.13 created the reasonable expectation in creditors that they could rely on the court to perform this simple task in order to protect their interests.[61]Seventh, there was no statutory redress provided for breach of IR 6.13, so that anyone who lost as a result of this would be left without any remedy, and in all the circumstances that was grossly unfair and unreasonable. IR 6.13 invited reliance, and unless there was a remedy for its non-performance, it actually became a trap.

Discussion and conclusion

[62]I have found this a difficult issue, but in the end I have come to the conclusion that Mr Dawson is correct. I am satisfied that(a) there is a statutory duty imposed by IR 6.13,(b) it was within the scope of the Lord Chancellor’s rule-making power under s. 412 of the Insolvency Act 1986 (and s. 132 of the Bankruptcy Act 1914) to create actionable duties if necessary, and(c) it can and should be inferred that this particular duty was intended to be actionable, because it would be unfair, and in fact even contrary to the very purpose of the Rules, if it were not. I reach these conclusions as follows: (a). Vires – Can IR 6.13 create an actionable duty?[63]The general issue of vires, ie whether Rule 6.13 could create an actionable duty (whether generally, or in this particular case) is a question of the true construction of s. 412 of the Insolvency Act 1986 itself.[64]I reject Mr Lopian’s general proposition that it could not do so because it is a rule made under a power which is “regulatory” in nature and, as such, would not be intended to authorise the creation of rights sounding in damages. He relies on Lord Jauncey in ex p Hague[1992] 1 AC 58for this proposition, but I do not find this persuasive. That decision is not direct authority on the true construction of s. 412 of the Insolvency Act 1986, and I do not find it of assistance as an analogy. Ex p Hague, was dealing with a rather very different area of law, with a much more diffuse object which was in the nature of a management function, rather than an implementation function. The wording of the primary legislation was different. Also, Lord Jauncey’s opinion did not form the majority ratio of the case, and the more flexible approach of Lord Bridge (which I respectfully find more persuasive) has somewhat greater weight of judicial numbers.[65]I conclude that the issue whether a provision of primary legislation which confers a power to make subordinate legislation authorises the creation by that legislation of duties sounding in damages for breach depends on the true construction of the rule-making power and the particular subordinate provision, and not on whether the rule-making power is properly classified as “regulatory” or otherwise. That context may, of course, suggest that an intention to create private rights of action is less likely, but it is only an indicator and not determinative.[66]I also note, for example, that in Olotu v Home Office, [1997] 1 WLR 328, a case on which Mr Lopian relies as a similar example of “regulatory” powers being held not to create private duties, there were clearly other factors which influenced the decision apart from the absence of any indication of intention to confer any private rights. There, there were good alternative means available to an accused person to rectify the consequences of any alleged breach of duty in question, in the shape of either an application for bail or judicial review proceedings. This shows, to my mind, that each case is very much an individual one.[67]In my judgment, s. 412 of the Insolvency Act 1986 does confer on the Lord Chancellor (or other relevant Minister) power to create duties sounding in damages, if and where this should appear necessary or appropriate in order to achieve the stated objectives of the rule-making power, for the following reasons..[68]First, I am not in fact persuaded that it is right to classify the Insolvency Rules as being “regulatory” at all. They do not seem to me to have the same character as rules or regulations regarding the running and/or management of prison institutions, or factories, or the activity of horse racing. They are not mere “regulatory directions” (Becker v Home Office [1972] 2 QB 407 at 420) but are much more in the nature of rules of procedure, or a constitution, and indeed, aspects of them are even directly legislative in themselves: compare IR 4.90 regarding set off of mutual debts, which corresponds to s. 323 of the Insolvency Act 1986 in corporate insolvency. For all these reasons it does not appear to me to be appropriate to try to pigeon-hole the Insolvency Rules into a particular kind of statutory instrument, on any basis.[69]Second, even if the rules made under s. 412 could be properly described as “regulatory”, the specified purpose of s. 412(1) is to “give effect to” the various Parts of the Insolvency Act, etc, there set out. This phrase is very focussed, and carries clear connotations of doing what is necessary to bring about the practical efficacy of the primary legislation. It could not, in my judgment, be said that this objective could never reasonably require the creation of duties with remedies for non-performance to make the scheme of the primary legislation effective in some particular respect.[70]Third, I accept Mr Dawson’s point that the express authority to make rules as to the matters set out in Schedule 9 shows an intention to authorise the creation of private law rights, at least between those interested or involved in the bankruptcy process (ie creditors, debtor and trustee). Once that is accepted, it follows that the issue is not whether the rule-making power confers the authority to create actionable duties at all (it does), but whether it does so on any particular aspect, and if so whether that power has been exercised.[71]Fourth, I find support for this view in s. 412(2)(b) of the Act, which confers on the Lord Chancellor (etc) power to make such “incidental” or “supplemental” rules as may appear to him to be “necessary or expedient”. That is very wide, and the breadth of this express power, to my mind, underlines that it is intended that the Lord Chancellor shall be empowered to do whatever he thinks necessary to make the insolvency regime efficacious. This would include creating actionable duties if appropriate.[72]As against the above indications, there is, of course, no express reference to the creation of duties (or private law rights) in the enabling power itself. I am also mindful of Mr Lopian’s injunction to ask myself whether it is likely that Parliament could have intended to authorise the Lord Chancellor to impose a duty on the Courts Service sounding in damages which would be payable out of the public purse. I mention this latter point further below. It is sufficient here to say that, in my judgment, neither consideration, whether alone or in combination, outweighs the other indications which I find, that s. 412 is wide enough to confer a power to create actionable duties where such may be regarded as necessary to achieve the implementation of the Act. The real question is therefore whether IR 6.13 did so.[73]There is one further point here. Section 412 (2) (a) of the Act expressly authorises the Lord Chancellor to make any rule corresponding to a provision of the then existing Bankruptcy Rules. In my judgment, this express provision shows that Parliament was authorising the continued operation, by re-enactment, of any previous Bankruptcy Rule which the rule-maker considered it appropriate to retain. It follows by necessary implication that it was intended that any such re-enacted rule should operate to the same substantive effect as before, and the rule-maker thus had power to perpetuate the previous effect of the corresponding rule, whatever the scope of the remainder of his powers. IR 6.13 is such a corresponding provision. It corresponds to BR 147. On this basis, the question of the effect of IR 6.13 would depend on the effect of BR 147, ie whether that rule had been capable of creating, and had in fact created, an actionable duty.[74]I was not really addressed on this point by the parties, but it seems to me to be appropriate to review my decision in the light of it. I shall therefore consider, first, what I find to be the true construction and effect of IR 6.13 viewed as an independently enacted rule on its own merits, and then whether its historical origins would appear to suggest that the conclusion should be different, if it is viewed as an authorised re-enactment of BR 147. (b). Construction. Does IR 6.13 create an actionable duty?[75]This is a question of the true construction of IR 6.13 itself, (always of course in context). On this point, overall, I prefer Mr Dawson’s submissions to those of Mr Lopian.[76]As regards language, I accept that the word “shall” is ambiguous and can either be mandatory, or be simply a strong, or formal, expression of a future tense. The word must therefore take its meaning from its context, and in my judgment the strongest element of context here is its obvious purpose. This appears to me to be, as Mr Dawson submits, to impose (or to accept) a responsibility on the court to notify the Chief Land Registrar of a bankruptcy petition, in order to enable the statutory scheme for the due distribution of a bankrupt’s assets to be given proper effect.[77]I find Mr Dawson’s point compelling, that enacting IR 6.13 has no point at all unless it is intended to impose a duty with practical effect. I cannot see what its purpose could be, other than to lay down that the relevant notice is to be sent by the Court. If it were held to mean, in effect, “notice might be sent” or “notice will be sent unless the court chooses not to do so” that is both nonsensical and worthless in practical terms, apart from being so far from the meaning of the words used as to amount to a rewriting of the Rule.[78]As to relevant surrounding circumstances, I have already rejected the broad general argument that the Insolvency Rules are merely “regulatory”, and therefore not intended to create actionable duties in general, and I do not find this proposition to be of much force as an argument of context in relation to the narrower issue of the construction of IR 6.13 itself.[79]Considering the other points of principle set out by Lord Browne-Wilkinson in X v Bedfordhire Council [1995] 2 AC 633at 731D (see Paragraph 46 above), there is no alternative remedy or cause of action available in this case, to those who suffer as a result of the breach of duty, in contrast, for example, to Olotu v Home Office (above). There is no adequate public law remedy for any person who loses as a result of breach of the duty.[80]I was a little surprised, in this context, that neither party sought in their initial arguments to draw any analogy with complaints against the courts in respect of alleged breaches of duty under the Civil Procedure Rules or the previous Rules of the Supreme Court. That situation appeared to me to have an obvious similarity to the present case. There is, of course, a complaint handling procedure in the courts, which will, in appropriate cases, result in an ex gratia payment being offered by the courts if it is recognized that there has been “maladministration” causing financial loss such that an offer of compensation ought fairly to be made. However, it was not (for example) argued before me that this scheme, coupled perhaps with the possibility of judicial review proceedings to ensure its reasonable operation, provided an alternative remedy so as to affect the likelihood that IR 6.13 itself was intended to carry a right to damages for breach of statutory duty.. Equally no authority was produced to show that a cause of action for breach of statutory duty had ever been upheld or rejected in the context of the Rules of Court.[81]Because of the possible analogy, I gave the parties the opportunity to add written submissions on this topic after the close of argument, if so advised. These did not, however, take the matter much further. I received a copy of the courts’ complaint procedure Manual from the Defendant. This is essentially guidance to staff, and contains no information about the history, or the legal basis of the scheme. I drew from it simply the general conclusions that the Manual was a responsible effort to deal with public complaints in a proper way, but that it proceeded on the basis that the “maladministration” with which it was concerned went wider than simply potential breaches of duty under the court rules. It also gave no clear indication of being based on any assumptions, implicit or express, about the co-existence of any legal duties on the court service, whether statutory or at common law.[82]The Claimant submitted further factual material about his communications with the Courts Service in respect of this complaint, leading up to these proceedings. The Defendant disputed that this was the within the terms of the permission I had given, but did not seek to respond. That material did not in fact add much to the case except to show that in this case no ex gratia offer under the scheme was made. However, the correspondence also shows that there may well have been (and remain) issues about quantum and causation of the alleged loss here, which are matters with which I am not concerned in deciding this preliminary issue of principle, and which may have influenced that reaction.[83]I therefore draw no conclusions from this further material, and I find the existence of the courts’ complaints and compensation procedures to be entirely neutral on the question of the true construction of IR 6.13.[84]The other point made in this context was that the petitioning creditor could register the petition himself. I do not find that a point of any force. It does not provide an alternative remedy for breach of the apparent duty. Neither, in my judgment, does it provide a sufficiently realistic alternative means of avoiding the damage against which the duty would otherwise protect creditors in the first place, so as to justify drawing the inference that it was intended that this alone was a sufficient protection for them, and no further rights could be intended to arise under IR 6.13. This is emphasised by the fact that the Rule in question is clearly not designed as a form of additional back up to some other available means of protection, but actually undermines it, by encouraging the petitioning creditor to think it unnecessary. In the former situation it might be argued that a function which is taken on merely to improve a situation could not reasonably be held to involve a guarantee of performance: (cf - although from a completely different context - Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 at 930 per Lord Russell), but in the latter situation that could not apply. Furthermore, the argument that there is a realistic alternative can hardly be made in relation to a debtor’s own petition, but the selfsame apparent “duty” is created in identical terms by IR 6.43.[85]I find these considerations to show that IR 6.13 was intended to impose a duty for the benefit of creditors, in order to support their entitlement to have the scheme of the Insolvency Act put into proper effect. Indeed, the argument that IR 6.13 becomes a veritable trap unless it carries with it a duty to perform seems to me to be particularly powerful, because the creation of such a trap is actually contrary to the very purpose of s. 412 (and thus the objects of s 284) which IR 6.13 is supposed to be furthering.[86]I should add that I do not consider that the payment of the fee on issue of the petition is material. Even though fees are no longer nominal in these days when it is policy that court fees should aim to finance the court system, I do not think it can be argued that the fee payment generates some form of consideration for performance of the statutory duty which supports a finding that it must be intended to be actionable. I agree with Mr Lopian that this fee can properly be seen only as an ordinary issue fee.[87]Finally, though, a factor militating in favour of there being a duty rather than not, is that the duty in question is particularly clear, simple and easy to perform. It does not involve any intricate tasks where the risk of a mistake is great. Nor does it require the application of any value judgment, such as the prioritisation of scarce resources or competing demands. Nor does it require the exercise of any discretion, such as how best to achieve a result, and as to which there might be room for a difference of opinion and therefore argument as to what constituted performance of the duty. It merely requires normal office efficiency.[88]Dealing briefly with matters said to point away from the creation of an actionable duty, I do not find that the fact that the liability would be in respect of economic loss to be material for the reasons given by Mr Dawson. Financial loss is the very kind of loss against which the duty is intended to give protection.[89]Second, it was suggested that the possibly large or imponderable extent of potential liability must weigh against any intention to create an actionable duty. I do not find this persuasive, and it seems to me that if other factors weigh sufficiently strongly in favour of there being an actionable duty, then it would be for the Defendant to satisfy me that the force of this contention outweighed those considerations. Although this is a point about quantum or calculation, it was advanced by Mr Lopian more as a matter of assertion rather than on the basis of actual evidence, and I am unpersuaded of it. Although the consequences may be significant for creditors in some cases, such as (apparently) this one, I see no reason to think that such situations are likely to be common. As the Defendant has pointed out, even where want of registration prevents the trustee from treating a disposition by the bankrupt as void, it may have produced other assets or funds in the bankrupt’s hands which temper any consequent loss. Indeed, there may be other remedies for recovery provided by the Act (although I heard no submissions on this point). Whilst the issue of quantum or causation may need investigation and argument in any particular case, neither that, nor the potential size or frequency of liability risked seems to me to be sufficient to cast material doubt on whether liability could possibly have been intended. This is particularly so when this factor is balanced against the ease with which such liability can be avoided in the first place.[90]Third, and similarly, I therefore do not find the absence of any insurance scheme to be material. Comparison with the Land Registration Acts is not particularly helpful because the very purpose of land registration itself is to provide a guarantee of title. That being the object of the legislation, and the task of keeping an accurate register being quite intricate, with obvious potential for mistakes to occur (with whatever degree of culpability), it is not surprising that indemnity for mistake should be a part of the whole scheme, and a compensation fund established to meet the liabilities which will inevitably arise, even with the best will in the world. None of that seems to me to help in considering another situation where the central objective is of a very different nature.[91]Lastly, there is Mr Lopian’s general point that it really cannot, as a matter of overall impression, have been intended either by Parliament or the rule-maker that this subordinate legislation should impose the liabilities of an actionable duty on the Courts Service, at all.[92]At first sight, this feels like a forceful proposition. Indeed, I at first found it the most forceful point against what I found to be powerful arguments made by Mr Dawson in the other direction, and in particular those of IR 6.13 being both pointless and creating a trap, if Mr Lopian were correct.[93]However, on analysis I find the force of this proposition to be superficial only, because unless it is shown to be based on some further argument of public policy giving a decent reason to infer that no liability could actually have been intended to be incurred for that particular situation of breach of an apparent duty causing plainly foreseeable loss (eg that the duty in question would not be performed properly under threat of liability, that it involved matters of discretion or political value judgments which should be non-justiciable, or that the supposed “duty” was for the general public benefit and not in fact intended to confer advantage on the particular claimant, etc), then it is simply an invitation to cynicism. It amounts to no more than the assertion that Parliament (or the rule-maker) would never intend to incur a liability on the public purse where it was able to exclude it. In my judgment it is quite inappropriate to assume that Parliament, or the rule-maker, would be so unprincipled, and I decline to do so. For the reasons already given, I see no reasonable argument from principled policy to support the contention that the legislature just “would not” have intended any liability to attach to IR 6.13, and I therefore reject this as a consideration.[94]Before leaving this aspect, I must record two further matters which I have considered. The first is authority. As to this, I consider that the most helpful case in this matter is Ministry of Housing v Sharp [1970] 2 QB 223, but on the less prominent aspect of the decision, namely the approach to the issue of statutory duty with regard to the local land registrar. I find the factual situation in Sharp to be the most similar, in its general nature, to the situation with which I am concerned.[95]Sharp is a complicated case, and I set out only the points which I found helpful. First, Sharp emphasises a distinction between an absolute statutory duty and a statutory duty of care (see eg p266B per Lord Denning), as well as a common law duty of care. The relevant statutory duty in that case was imposed (by primary rather than subordinate legislation, but I do not think that matters) on the local land registrar, who happened to be the town clerk of the local council by virtue of that office. The duty was to maintain a register of local land charges and, when requested, to search it - at one time “diligently” - and to produce and provide a certificate of the currently existing charges to those requesting it. It was agreed that this scheme was intended to protect both the owners of the charges and purchasers and suchlike of property. The Minister of Housing, whose local land charge for repayment of compensation was not entered on a certificate given to a purchaser, claimed against the local land registrar for breach of statutory duty. Denning LJ would have held the local land registrar liable for failure to supply an accurate search certificate on the grounds that the duty to do so was absolute (p269D). Salmon LJ, held that the local land registrar was not liable on the case which had been pleaded, because the statutory duty was a duty to take due care in searching and providing a certificate, but the pleaded claim alleged an absolute duty (p.278). Had the claim been pleaded as a statutory duty of care, he would apparently also have held the registrar liable (p275 D-F), although without finally deciding the point. He added that in practice this difference hardly affected the degree of protection afforded to those who might suffer loss by relying on an inaccurate certificate, because the production of an inaccurate certificate was strong prima facie evidence of breach of duty of care in itself (p 275E), but nonetheless applied the pleading point. Cross LJ, whilst expressing doubts as to whether there was any personal liability on the registrar at all on a close analysis of the legislative history of registers kept by courts and registries since the early 19th century, ultimately agreed with Salmon LJ that on any basis the duty imposed on the registrar was not an absolute one, and that therefore the claim against the registrar failed on the pleading point (p290D).[96]It may be that on proper analysis the likely nature of a duty under IR 6.13 would be that of a statutory of care (as found by Salmon and Cross LJJ in Sharp) but the distinction is not critical in this case. The duty to “send” the relevant items simply requires their consignment properly directed, to one of the conventional media for such transmission (eg post, DX, courier). That is a far simpler and more clear-cut duty, requiring even less exercise of skill, than the duty in Sharp. The court is not even required to guarantee receipt, but to my mind that only indicates the reasonableness of the burden imposed. Where the duty is simply one to “send”, the difference between a duty of care and an absolute duty shrinks to near invisibility, but on any basis the pleaded claim (quoted at Paragraph 9 above) is framed in terms which would cover either form of duty. The decisive pleading point in Sharp therefore does not arise.[97]Next, both the tenor and content of the judgments in Sharp show a greater readiness than might be anticipated today to accept the possibility of an imposition of liability on public bodies and officers for failings. The court found it neither unthinkable nor unreasonable to consider that officials could be answerable for the consequences of any failure to perform duties laid upon them by legislation. I find this helpful, as it reminds me that I should resist any inclination to approach legislation with that pre-conception, whilst nonetheless, of course, recognizing that it is for the Claimant to establish the existence of any actionable duty, and not for the Defendant to establish its absence. I am also reminded that legislation is to be construed at the time it was made (see p 276A-B.)[98]The second further matter is that I briefly considered the question, to whom the statutory duty in question might be owed. I found this a point of concern because I found the argument that IR 6.13 becomes a trap unless its performance is underwritten to be very powerful, but it could obviously be said that any such trap only affected the petitioning creditor. The bankrupt’s other creditors would not, in all probability, be at all aware of the petition, at the time; it is not advertised. If the cause of action were confined to the petitioning creditor personally, then the quantum of damage could be much less, as it would be limited to the amount by which the petitioning creditor had received a reduced amount in the insolvency caused by the effect of the relevant dissipation.[99]However, Mr Lopian had not sought to argue this point, and on reflection I think he was plainly correct not to do so. The right to present a bankruptcy petition is a personal right to invoke a class remedy on behalf of the general body of creditors. It seems to me that any cause of action to enforce statutory protections relating to this class remedy and its process must therefore likewise be held and invoked on behalf of the general body of creditors as beneficiaries. In any event, however, it is not only the “trap” point which has led me to conclude that the duty imposed by IR 6.13 is intended to be actionable. Since that duty plainly benefits all the creditors – and indeed that is its very object – and since they are identifiable as a class even if not individually at the relevant time, I conclude that the fact that only the petitioning creditor has direct involvement at the relevant time does not prevent the Trustee from asserting a claim on behalf of all the creditors.[100]For the above reasons, therefore, I hold that IR 6.13 does confer a cause of action for breach of statutory duty on the Claimant against the Courts Service, as pleaded. I note Denning LJ’s comment in Sharp [1970] 2QB at p 266E, that in the circumstances there could be no implied exemption from personal liability for the registrar because “Otherwise the injured person would be left without a remedy – which would be unthinkable”. I have no doubt that if the present situation were explained to the ordinary intelligent man on the Clapham omnibus, his reaction would be exactly the same. I am pleased to find that the law accords with intuitive sentiments of fairness and common sense. (c). Historical considerations – Did BR 147 create an actionable duty?[101]I now turn to the interpretation of IR 6.13 having regard to its history. I have noted the passage cited to me by Mr Dawson, from In re a Debtor( No 1 of 1987) to the effect that the Insolvency Rules are a new code, not to be construed in the light of earlier authority but “in accordance with the ordinary canons of construction unfettered by previous authority” (see [1989] 1 WLR 276G). However, that passage was concerned with applying the new rules to the discretion to set aside a defective or “perplexing” statutory demand. Nicholls LJ says “I do not think that on this the new bankruptcy code simply incorporates and adopts the same approach as the old code” (emphasis added). He goes on to emphasise that the old authorities were concerned with a “different scheme, in that the operation of a bankruptcy notice was not, in all respects, the same as the effect of the new statutory demand”(276H). In this case, however, the scheme of the new Insolvency Rules regarding notice and registration of bankruptcy petitions is the same as the old scheme.[102]As already noted, IR 6.13 is a rule which plainly “corresponds” to a provision in the former Bankruptcy Rules, ie BR 147, and its re-enactment was thus expressly authorised by the primary legislation (see s. 412(2) of the Act) so that it is appropriate to consider the effect of the former BR 147 as to the creation of an actionable duty (see Paragraph 73 above).[103]Section 132 of the Bankruptcy Act 1914, under which BR 147 was made, empowered the Lord Chancellor to “make general rules for carrying into effect the objects of this Act”. In my judgment, this phrasing is no less strongly directed at practicality and efficacy than the wording of s. 412(1) of the 1986 Act. If anything, with its reference to “objects”, it is even more purposive than s 412, and thus even more apt to authorise a wide power to achieve the intended purpose by enabling whatever form of rules and regulations appeared necessary, including the imposition of actionable duties.[104]I do not consider that the word “general” dilutes that overall impression. Neither do I think that the proviso to s. 132 of the 1914 Act, namely that rules made thereunder “shall not extend the jurisdiction of the court” was apt to prevent the creation of an actionable duty, even if such duty created a novel private law right of action. The definition of “the court” as “the court having jurisdiction in bankruptcy under the Act” suggests that this qualification was aimed at jurisdictional matters, such as the limitations on certain courts having jurisdiction in bankruptcy. Also, and in any event, the enforcement of any such new right of action would be dealt with under the ordinary courts’ general jurisdiction, and not as part of the bankruptcy jurisdiction.[105]I therefore find that the rule-making power conferred by s. 132 of the Bankruptcy Act 1914 was no less capable of enabling the creation of actionable duties as the power contained in s. 412 of the Insolvency Act 1986. Considering the terms of BR 147 itself in the general context of the 1914 Act, it also appears to me to have been apt to create an actionable duty, for much the same reasons as support this as the true construction of IR 6.13, viewed independently.[106]The further fact that BR 147 was introduced only in 1952 when the rules were overhauled provides further small support for this, in my judgment, because it suggests that there was some reason to think then that such an additional provision was necessary to achieve the objects of the Act. This suggests that the Rule was intended to have substance, and not merely to be informative about procedure.[107]Two other circumstances, to my mind, also point in that direction. First, BR 147 applied to “the Registrar” and not to “the court”. The imposition of the duty on a natural person, ie an official, rather than on a depersonalised institution, reinforces the impression of an intention to impose a meaningful obligation. Second, the Rule originated in 1952 under a power created in 1914. I have already mentioned above that I infer, from the judgments in Ministry of Housing v Sharp in [1970] 2QB 223, and the history there described, that Parliament would at each of those times be far more naturally attuned than now to thinking it reasonable to impose actionable duties on public officials, if this was necessary or appropriate to achieve legislative objects.[108]These points therefore reinforce my conclusion previously based on a consideration of IR 6.13 on its own. I find that if IR 6.13 is in fact properly construed on the basis that it was intended to reproduce the position under BR 147, the argument that it imposes an actionable duty would appear to be if anything stronger. Certainly there is nothing to be derived from BR 147 to weaken the view that IR 6.13 was capable of, and intended to, impose such a duty. (2). No common law duty of care[109]In the light of my decision above, it is probably not strictly necessary for me to consider the further or alternative question of common law negligence, and whether the claim discloses any cause of action in that regard. I shall therefore do so only for completeness, and in summary.[110]Mr Lopian argued that it was well established that the existence of a statutory duty – whether simpliciter or itself a statutory duty of care - neither gives rise to, nor implies, the existence of a co-extensive common law duty of care. He cited Lord Scott in Gorringe v Calderdale MBC [2004] 2 All ER 326 as follows:
“If a statutory duty does not give rise to a private right to sue for breach, the duty cannot create a duty of care that would not have been owed at common law if the statute were not there. If the policy of the statue is not consistent with the creation of a statutory liability to pay compensation for damage caused by the breach of the statutory duty, the same policy would, in my opinion exclude the use of the statutory duty in order to create a common law duty of care that would be broken by a failure to perform the statutory duty.”
Even more recently, in HM Customs & Excise v Barclays Bank plc [2007] 1AC 181, Lord Hoffman considered the question whether a statutory duty can generate a common law duty and stated, bluntly:
“The answer is it cannot… The statute either creates a statutory duty or it does not. You cannot derive a common law duty of care directly from the statutory duty.”
[111]Lord Hoffman emphasised that he was dealing only with the question whether there can be a common law duty of care arising solely from the fact that a statutory duty has apparently been imposed (elsewhere described as a duty arising “parasitically” on a statutory duty) and not from any other factor. Where a statutory duty causes a person to do a particular act and he does that act carelessly, a common law duty of care can and often does arise, not out of the statutory duty, but because of the negligent manner of performing the acts required by the statutory duty. In those cases, of course, the existence of the statutory duty is usually being invoked to claim a defence, rather than, as here, to ground a cause of action.[112]Mr Lopian submitted that the former position identified by Lord Hoffman was the position here. Apart from IR 6.13 itself, there was no duty on the court to send a notice of the petition to the Chief Land Register, and consequently a failure to do so, or even doing so carelessly, could not give rise to any action in negligence at common law. There were no facts outside the existence of the Rule itself which could give rise to any duty of care in this respect. It is, of course, trite law that a failure to act can only give rise per se to the tort of negligence where circumstances have imposed a positive duty to act.[113]Mr Lopian also submitted that, in any event, the facts would not give rise to any of the recognised bases for finding a common law duty of care. He argued that there was no voluntary assumption of responsibility (whether to act, or to take care) because the responsibility had been imposed on the Courts Service by the Rule, and he again cited Customs &Excise v Barclays [2007] 1AC 181for the proposition that in such a case it would be found to be unreasonable to find any duty. He submitted that that case was also authority for the proposition that something more than mere foreseeability of economic loss was needed to impose any such duty. He also argued that the situation would fail the “proximity” test because of the fact that the particular creditors were not identified, and that it would also fail the test of it being “fair just and reasonable” to find a duty of care, in the light of the unknown and imponderable potential measure of liability. The payment of a fee on presentation of the petition did not affect this (he argued)as it was simply an issue fee.[114]In my judgment, Mr Lopian’s first point is correct and is a complete answer to the Claimant’s assertion of any cause of action in common law negligence in this case. It is not therefore necessary to consider Mr Lopian’s detailed arguments on the actual facts.[115]Mr Dawson sought to distinguish the situation by relying on X(Minors) v Bedfordshire County Council [1995] 2AC 923 (above) and Lord Browne Wilkinson’s speech at paragraph 735F-H, distinguishing between “(a) cases in which it is alleged that the authority owes a duty of care in the manner in which it exercises a statutory discretion and (b) cases in which a duty of care is alleged to arise from the manner in which a statutory duty has been implemented in practice” He submitted that since this is not a case of a discretion being exercised, the case fell within (b), and the Courts Service owed a duty to take care in the manner in which it complied with its obligation under IR 6.13. Since it did not send out the notice, it failed to exercise due care in this respect.[116]In my judgment, one cannot convert a statutory duty to do something into a common law duty of care, simply by describing the failure to perform the statutory duty itself as a careless manner of performing the duty. That is simply a misuse of language. It is also the very point which Lord Scott and Lord Hoffman both rejected in the citations above.[117]Mr Dawson’s further arguments based on such authorities as Lonrho v Tebitt [1991] 4 All ER 973, Lord Nicholls’ reasoning Stovin v Wise 1996 AC 923 (at page 931C), and Lord Hoffman’s dictum in that case at p 944D that “there may be a duty to act if one has undertaken to do so, or induced a person to rely on one doing so” were all, in my judgment, built on this one fallacious proposition. In the end, they boiled down to reciting the various considerations which were previously relied on to show that it was intended that the statutory duty itself was intended to confer a private law right of action. They therefore stand or fall with that issue, as Mr Lopian submits. They have no independent force.[118]The complaint here is simply that the Defendant did not do an act which was in fact what a statutory rule required. Without that provision, that omission would not give rise to a claim in negligence by the Claimant against the Defendant. Indeed, without that provision – or some other factual assumption of responsibility which is not this case – even if the Defendant had taken steps to send the relevant notice but had (say) carelessly misaddressed it so that it did not arrive, no cause of action would arise, because there would have been nothing giving rise to any duty to send the notice at all in the first place, and thus no damage caused by the particular carelessness. The defendant’s only obligation to do anything at all arose out of the statutory provision. There is therefore no basis for any cause of action apart from under that provision.

Conclusion

[119]For the above reasons, therefore, I decide this preliminary issue in favour of the Claimant in part. The Claimant has a cause of action as pleaded in Paragraph 18 of his Particulars of Claim, save that the words “and further that the court service owed a duty of care to the bankrupt’s creditors to ensure that it complied with its obligations pursuant to Rule 6.13.” should be excised. However, I will hear counsel as to the appropriate form of this or any further orders or directions which I am invited to make. HH Judge Hazel Marshall QC 23rd August 2009