Gary Kenneth Morby v (1) Gate Gourmet Luxembourg Iv Sarl (2) Specialist Airport Services Limited [2016] EWHC 74 (Ch)

[2016] EWHC 74 (Ch)Case No CH/2015/0320
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 20 January 2016
Before
EDWARD MURRAY(sitting as a Deputy Judge of the Chancery Division)
Between
GARY KENNETH MORBYAppellant(1) GATE GOURMET LUXEMBOURG IV SARLRespondents(2) SPECIALIST AIRPORT SERVICES LIMITED
Ms Shuvra Deb (instructed by Mundays LLP) for AppellantSteven Thompson QC (instructed by Fladgate LLP) for RespondentsHearing Hearing date: 8 December 2015
JudgmentEdward Murray (sitting as a Deputy Judge of the Chancery Division):
[1]This is the appeal of the order of Mr Registrar Briggs dated 7 May 2015 adjudging the Appellant, Mr Gary Morby, bankrupt on the petition of the Respondents, Gate Gourmet Luxembourg IV SARL (“Gate Gourmet”) and Specialist Airport Services Limited (“SASL”). The Appellant seeks to have the bankruptcy order set aside and the bankruptcy petition dismissed.[2]The principal issue is whether the Appellant was personally served with the petition as required by Rule 6.14 of the Insolvency Rules 1986. The Appellant contends that(i) he was not so served,(ii) in finding otherwise, the learned Registrar was wrong in law, and(iii) this may have been due, at least in part, to his making one or more erroneous findings of fact. Also, to the extent that his decision rests in the alternative on his exercise of discretion under Rule 7.55 of the Insolvency Rules 1986, he was wrong in law that Rule 7.55 may be applied to cure a failure to effect personal service of a bankruptcy petition and/or he was wrong in his exercise of discretion under Rule 7.55 in the circumstances of this case.

Background

[3]The relevant background is set out in some detail in paras 2 to 12 of the judgment of Mr Registrar Briggs ([2015] EWHC 1203 (Ch)). For present purposes I will set out the background as briefly as I can. In September 2007 the Gate Gourmet and SASL, as purchasers, entered into a share purchase agreement with Mr Morby, as vendor, relating to a group of 13 companies known as the Fernley Group. In July 2009 Gate Gourmet issued proceedings against Mr Morby and the Fernley Group for breach of warranty and breach of a tax covenant in the share purchase agreement. On 24 June 2011 Mr Morby (together with others, not relevant for present purposes) entered into a settlement agreement with Gate Gourmet and SASL under which Mr Morby agreed to make a payment of £1,100,000 to Gate Gourmet and SASL in two tranches of £550,000 each. He paid the first tranche on 24 June 2011, but failed to pay the second tranche, which fell due on 30 March 2012.[4]Mr Morby’s payment obligation under the settlement agreement was said to be secured by a second charge dated 20 July 2011 on a property in Juan Les Pins in France owned by Mr Morby. The prior charge was in favour of Credit Foncier de Monaco.[5]The Respondents served a statutory demand on Mr Morby on 15 August 2013. Mr Morby applied in the Kingston County Court to set it aside on the basis that the debt was secured and that the statutory demand was not properly served. The Respondents contended that the security was effectively worth zero, given that the value of the French property was only just sufficient, if that, to discharge the debt secured by the prior charge in favour of Credit Foncier de Monaco. On 7 February 2014 Kingston County Court gave a direction that there be a single joint expert to value the French property, however in breach of that direction Mr Morby failed or refused to allow the expert access to the property.[6]Mr Morby’s application to set aside the statutory demand was heard by Deputy District Judge McConnell at Kingston County Court on 21 July 2014, where it was dismissed and permission was given to the Respondents to present a bankruptcy petition on or before 11 August 2014.[7]What happened next is disputed in some important details by the parties, and so I will revert to this in more detail below. Broadly, however, it appears to be common ground that the Appellant arranged to meet Mr Gary Beecham, a process server employed by Tremark Associates, who had been instructed by Memery Crystal LLP, the firm of solicitors then acting for the Respondents, at the Arrivals meeting area of Terminal 3 at Heathrow Airport on 7 August 2014. The Appellant was accompanied to the meeting by a Mr Bezhad Malik. The Respondents say that Mr Beecham effected personal service of the bankruptcy petition on Mr Morby on that occasion. Mr Morby disputes this, for reasons I will consider in a moment.

The order and judgment of Mr Registrar Briggs and permission to appeal

[8]At the final hearing of the bankruptcy petition before the Registrar on 13 April 2015 Mr Morby challenged the petition on the basis of lack of jurisdiction, lack of effective service and the fact that the petitioning creditors were secured. The Registrar rejected Mr Morby’s challenges as to jurisdiction and security and found that personal service had been effected on him. He also found, in the alternative, that if he was wrong as to personal service, he had the power, exercising his discretion, to waive any defect or irregularity in that personal service under Rule 7.55 of the Insolvency Rules 1986. Accordingly, having found the petition to be true and the debt not paid, secured or compounded for, the Registrar made the bankruptcy order on 7 May 2015, the date of his handing down of his judgment.[9]Mr Morby sought permission to appeal in relation to service of the petition and not as to jurisdiction or security. Mrs Justice Proudman granted permission by order dated 9 July 2015, other than in relation to the Registrar’s alleged (by Mr Morby) finding of fact that the petition had touched Mr Morby. Proudman J concluded that the Registrar had made no such finding. I respectfully agree, for reasons to which I will revert.

The disputed facts

[10]In his Grounds of Appeal, the Appellant argues that the Registrar was faced with a conflict of evidence in relation to the meeting at Heathrow on 7 August 2014, which he failed to resolve. In particular, he made erroneous findings of fact in para 34 of his judgment (in oral argument this was extended to para 33 of his judgment as well), which, by implication, led him to his erroneous conclusion regarding the effecting of personal service on the Appellant.[11]As to the events of 7 August 2014, the Registrar appears to have had before him the following evidence (which is also before me): i) a witness statement dated 11 September 2014 of Peter Reynolds, a solicitor at the firm Memery Crystal LLP, then acting for the Respondents; ii) a witness statement dated 11 September 2014 of the process server, Mr Beecham, to which was exhibited a copy of the bankruptcy petition, Mr Beecham’s Certificate of Personal Service of a Bankruptcy Petition dated 8 August 2014 and an e-mail sent by Mr Beecham to a colleague, Mr Ben Mansell, dated 7 August 2014 setting out his account of the meeting with Mr Morby and another person at Heathrow Terminal 3; and iii) a witness statement dated 5 September 2014 of Mr Morby (which apparently included an exhibit designated “GKM1”, which I do not have and, in any event, do not need for present purposes).[12]Mr Beecham said in his evidence that he personally handed the bankruptcy petition to Mr Morby, which, it is not disputed, would have constituted effective personal service. Mr Morby contends that Mr Beecham gave the bankruptcy petition to Mr Malik, who then, after some discussion with Mr Beecham regarding alleged errors in the bankruptcy petition, put it in the bin after Mr Beecham refused to take it back. There was an obvious conflict of evidence. No order for cross-examination had been made, and the Registrar was asked by both parties to resolve the conflict on the basis of the witness statements. He refused to do so on the basis that it would be unsafe to do so on witness statements alone, citing Wilkinson v Commissioners of Inland Revenue [1998] BPIR 418, a decision of His Honour Judge Colyer QC, sitting as a High Court judge in the Chancery Division (para 31 of his judgment).[13]Ms Shuvra Deb on behalf of the Appellant submitted that the Registrar made a number of findings of fact without having resolved the conflict as to the evidence relating to the meeting at Heathrow on 7 August 2014. She pointed in particular to certain findings of fact in paras 33 and 34 of the Registrar’s judgment.[14]Mr Steven Thompson QC on behalf of the Respondents submitted that, although the Registrar did not say so expressly in his judgment, it was clear that he was proceeding on the basis of assumed facts, namely, the assumption that the Appellant’s account was true. First, as I have already noted, he expressly declined in para 31 of his judgment to make any factual determinations on the basis of the witness statements. Secondly, each reference in the judgment to a matter of fact relevant to the meeting at Heathrow is either drawn directly from Mr Morby’s evidence oris a common sense inference drawn from that evidence.[15]On this question, it is clear to me that Mr Thompson’s submissions arc correct. The Registrar set out in para 9 of his judgment relevant extracts from Mr Morby’s witness statement dated 5 September 2014. For present purposes it may be helpful if I set out a slightly fuller excerpt from the relevant section of the witness statement: “9. Upon being notified by the Petitioner’s solicitor, Memery Crystal, that the Petitioner had issued the Petition against me and following discussions regarding service of the Petition, I arranged to meet with Memery Crystal’s agent, Mr Gary Beecham, at Terminal 3 of Heathrow Airport on 7 August 2014 so that the Petition could be personally served upon me. This arrangement was necessary as I do not reside in England…[10]As notified to the agent in advance, I was accompanied to Heathrow by a witness, Mr Bezhad Malik, so that he could check the Petition was correct before I accepted service. I wanted to ensure that I was not accepting service of incorrect court proceedings.[11]The agent arrived at Terminal 3 and handed the Petition to Mr Malik. Mr Malik reviewed the Petition and noted that it provided that I was 'lately residing' at the address stated to be Brook Place, Bagshot, Cobham, Surrey GU24 8SJ (my emphasis). Not only is that address incorrectly stated but I have also never resided there. …[14]As the information contained within the Petition is incorrect, Mr Malik requested that this information be amended by the agent so that I could accept service. The agent telephoned Memory [sic] Crystal and, I assume, was instructed not to amend the Petition as the agent confirmed to Mr Malik that he could not do so. Consequently, Mr Malik attempted to hand the Petition back to the agent, who refused to accept it, despite repeated requests to do so from Mr Malik. As the agent would not accept the incorrect Petition back, Mr Malik put the Petition in the bin.[15]I emailed Memery Crystal on 7 August 2014 at 11.18 ... to confirm these events so Memory [sic] Crystal were fully aware that personal service had not been effected upon me.[16]Following my email, instead of making the necessary arrangements to amend the inaccuracies in the Petition and effect personal service upon me as required to do under Insolvency Rule 6.14(1), Memery Crystal emailed a copy of the Petition to me at 12.11 on 8 August 2014 …” … In paras 12 and 13 of the witness statement Mr Morby expands upon the final sentence of para 11 of the witness statement. I have also omitted from the extracts above the references to supporting documentation in the attached exhibit “GKM1”. I note in passing that in para 12 Mr Morby asserts that the correct address is “Brook Place, Chobham, Surrey, GU24 8SJ”, the differences being the omission of “Bagshot Road” and the correction of “Cobham” to “Chobham”.[17]It may be instructive to compare this with paras 33 and 34 of the Registrar’s judgment, which appear to be the only parts of the judgment in which, according to the Appellant, the Registrar makes material and disputed findings of fact in relation to the meeting at Heathrow on 7 August 2014: “33. Dealing with personal service, I find that [sic] the following matters material(1) Mr. Morby flew into Heathrow for the purpose of receiving the petition(2) he knew that he would be met at Terminal 3 by a process server(3) he knew that the process server would serve the Petition(4) he directed, on his own evidence[,] that the Petition be handed to his friend(5) Mr Morby was present when the Petition was handed to his friend(6) his friend received and read the petition and spoke to Mr Morby about its contents which were seemingly read out to him or partly read out to him enabling him to comment on it and(7) the process server engaged Mr. Morby about its content.[34]The issue between the parties is, if I may term it this way, one of touch. If Mr. Morby had been touched by the Petition he would have been personally served. These are unusual circumstances. Mr. Morby had knowledge: knowledge that what was contained in the sealed envelope was the Petition. He could hear from the process server and from Mr. Malik that it was the Petition. He could see that it was the Petition. His mind was engaged with the process of service and the detail of the Petition. He had notice of the Petition. He was given the opportunity to deal with the subject of the Petition. The distinction, in my view, of the Petition touching his lap or arm followed by a refusal to grasp the Petition, or followed by the debtor throwing it in the bin himself, and the circumstances of this case is a thin one, in reality. I find in these unusual circumstances where a Petition is handed to a specified agent at the request of the debtor, in the presence of the debtor in the manner described, personal service was effected. I recognise that there may be more than one view regarding my finding and therefore go on to consider substituted service and the cure provision contained within the IR 1986.”[18]With regard to the last sentence of para 34 of his judgment, the Registrar went on in paras 35 to 41 to consider the possibility of ordering substituted service and concluded that he did not have jurisdiction to do so. He then turned in paras 42 to 65 to consider the curative provision of Rule 7.55.[19]As far as para 33 is concerned, the various factual matters summarised by the Registrar may be drawn directly from the evidence of Mr Morby, from which I have quoted above, apart from the following:
“his friend ... spoke to Mr Morby about its [the petition’s] contents which were seemingly read out to him or partly read out to him enabling him to comment on it and ... the process server engaged Mr. Morby about its content.”
[20]It is true that Mr. Morby’s evidence does not expressly say that Mr Malik read out the petition or any portion of the petition to Mr Morby, but it is a common sense inference, on a balance of probabilities, that Mr Malik did so in order to verify, for example, that the residential address shown on the face of the petition was correct. It is possible that Mr Malik knew, in advance of the meeting, the precise details of the relevant address, notwithstanding that it was not, in fact, a residential address of Mr Morby. It is, however, much more likely that Mr Morby and Mr Malik conferred on the spot. This is particularly so given the minor, almost trivial (and certainly not misleading), differences, which I have mentioned in para 16 above, between the correct address, according to Mr Morby, and the address on the petition. It is also possible that Mr Malik knew prior to the meeting, with a high degree of confidence, that Mr Morby had never resided at that address, but much more likely that Mr Morby pointed that out to Mr Malik at the time of the meeting.[21]The Appellant also objects to the Registrar’s conclusion in para 33 of his judgment that “the process server engaged Mr. Morby about its [the petition’s] content”. It seems to me that, on a balance of probabilities, Mr Beecham engaged with, in the sense of “addressed” or “spoke to”, both of the men about the petition. By Mr Morby’s own evidence in para 10 of his witness statement, he had arranged with Mr Beecham that he would attend at Heathrow Terminal 3 with a friend, so that the friend “could check the Petition was correct before I accepted service”. This was clearly a three party meeting, and it was intended by Mr Morby to be so.[22]Ms Deb submitted that it was not open to the Registrar to make the findings of fact that I have quoted in para 19 above “without the evidence being tested”. But, as I have said, these findings were common sense inferences from the Appellant’s own evidence.[23]While the normal principle on an appeal is that tactual findings of the court below are accorded considerable deference for a variety of very good reasons, that principle is less compelling in a case, such as this, that proceeds on the basis of assumed facts supported by written evidence that is equally available to the court below and to the appellate court. In such a case, the appellate court should be in just as good a position to assess the evidence and draw its own conclusions. In this case, I would draw the same conclusions as those of the Registrar set out in para 33 of his judgment given Mr Morby’s evidence.[24]Turning to para 34, as I have already noted, Proudman J refused permission to appeal in relation to the alleged finding of fact that the petition had touched Mr Morby. I respectfully agree. There is no finding in that paragraph of the Registrar’s judgment that the petition “touched” any part of Mr Morby. The sentence beginning “The distinction, in my view, ...” contrasts a hypothetical situation where the petition actually touched the lap or arm of Mr Morby with the present case where, on the assumed facts, it did not. The Registrar is merely saying, in my view, that for the various other reasons he gives in that paragraph the distinction between the hypothetical case and the current one is “a thin one, in reality”.[25]The Registrar’s findings of fact in para 34 are set out in the section beginning with the words “Mr Morby had knowledge and concluding with the words “He was given the opportunity to deal with the subject of the Petition.” Ms Deb objected, in particular, to the finding that “His mind engaged with the process of service and the detail of the Petition.” AH of that passage, including the sentence I have just quoted, is a common sense inference from Mr Morby's own evidence. That his mind “engaged with the process of service” need mean nothing more than that he was aware that the purpose of the meeting, which he had arranged, was the service of the document that Mr Beecham had put, at Mr Morby’s request, into the hands of his friend, Mr Malik. That Mr Morby’s mind “engaged with ... the detail of the Petition” is a reference back to the Registrar’s justified inference that there must have been some discussion at the airport between Mr Morby and Mr Malik regarding the residential address appearing on the face of the petition.[26]Accordingly, there is in my view no merit in the argument that the Registrar made his order on the basis of one or more erroneous or unjustified findings of fact.

The law applicable to personal service of a bankruptcy petition

[27]Chapter 2 of Part 6 of the Insolvency Rules 1986 sets out rules applicable to a creditor’s bankruptcy petition. Within that chapter, Rule 6.14 governs service of the petition. For present purposes, we need only consider the first clause of that rule. Rule 6.14(1) of the Insolvency Rules 1986 provides as follows:
“6.14.- Service of petition (1) Subject as follows, the petition shall be served personally on the debtor by an officer of the court, or by the petitioning creditor or his solicitor, or by a person instructed by the creditor or his solicitor for that purpose; and service shall be effected by delivering to him a sealed copy of the petition.”
[28]The Insolvency Rules 1986 do not, however, provide further guidance on what constitutes personal service. My attention was drawn to a recent decision of Mr Justice Phillips in the Commercial Court, Tseitline v Mikhelson [2015] EWHC 3065 (Comm), in which Phillips I considers personal service of a claim form under CPR 6.5(3). That case was decided after the Registrar had handed down his decision in this case, but it usefully summarises the law relating to personal service of court documents.[29]CPR 6.5(3) provides that “a claim form is served personally on ... an individual by leaving it with that individual”. The Civil Procedure Rules provide no further guidance on what that means. Phillips J noted in para 14 ofthe Tseitline case that the House of Lords in Kenneth Allison Ltd v AE Limehouse & Co [1992] 2 AC 105 considered what was meant by “leaving a document with the person to be served”. Their Lordships were called upon to consider personal service under a provision of the former Rules of the Supreme Court that was substantially the same as CPR 6.5(3). Lord Bridge of Harwich set out the following two-limbed test (at p 113E):
“There is abundant authority for the proposition that personal service requires that the document be handed to the person to be served or, if he will not accept it, that he be told what the document contains and the document be left with or near him.”
[30]Similarly, Lord Goff of Chieveley said the following (at p 124C):
“Prima facie, the process server must hand the relevant document to the person upon whom it has to be served. The only concession to practicality is that, if that person will not accept the document, the process server may tell him what the document contains and leave it with him or near him.”
[31]There is no reason to doubt that this two-limbed test also applies to CPR 6.5(3), as was accepted by the parties and held by Phillips J in the Tseitline case. It is a sensible, common sense test that resolves an important practical difficulty of effecting personal service arising in many cases, namely, the refusal of an astute potential recipient of personal service to accept the proffered document, in the hope of avoiding the personal jurisdiction of the court. It is clearly not in the interest of the effective administration of civil justice that a person should simply be able to refuse to accept personal service of a claim form and thus defeat the jurisdiction of the court, absent the availability of another lawful form of service.[32]An important part of the Kenneth Allison test is that the person being served should be told what the document contains. In paras 18 and 19 of his judgment in the Tseitline case, Phillips J referred to and quoted from the case of Re a Debtor [1939] Ch 251, in which the Court of Appeal held that delivery of a bankruptcy petition in an envelope to the debtor without any indication of its contents was not valid service. In that case Sir Wilfred Green MR at p 256 emphasised the importance of compliance with the “strict requirements which are to be found in the case of the service of writs and other documents under the Rules of the Supreme Court”. In the passages quoted by Phillips J, Sir Wilfred Green MR was concerned with importance of the requirement that the nature of the documents being served be “brought to [the] mind” of the person be served. Otherwise, the “gravest injustice” could occur.[33]Phillips Jconcluded (in paras 22 to 24 of his judgment) that this remains good law, and that the Kenneth Allison test must be read in that light. Regarding the second limb of the Kenneth Allison test, where the person being served must be told what the document contains, Phillips J referred (in para 24 of his judgment) to the judgment of Lord Justice Hoffmann in the unreported case of Walters v Whitelock (19 August 1994), relating to the service of papers in connection with a committal application, to explain the purpose of that requirement:
“The purpose of the requirement that he be told is that he should not be able to say that he ignored the document on the grounds that it was simply junk mail or something which did not necessarily require his attention at all.”
[34]Phillips J set out, in para 31 of his judgment, Hoffmann LJ’s further explanation in the Walters case of what this requirement entails:
“With what degree of particularity does the rule require that the person served be told what the documents contain? In my judgment, one must look at this in a practical way. I think it is sufficient if it is brought to his attention that it is a legal document which requires his attention in connection with proceedings. The purpose of the requirement that he be told is that he should not be able to say that he ignored the document on the grounds that it was simply junk mail or something which did not necessarily require his attention at all.”
[35]The Kenneth Allison case concerned the personal service of a claim form. Is the test articulated in that case applicable to the personal service of a bankruptcy petition under Rule 6.14(1) of the Insolvency Rules 1986? Ms Deb on behalf of the Appellant several times made the point, although principally in the context of the application of Rule 7.55, that the test for personal service of a bankruptcy petition must be particularly strictly applied given the very serious consequences of an adjudication of personal bankruptcy for an individual. She suggested, therefore, that a stricter standard should apply than, for example, would be the case in relation to the service of a statutory demand or the service of a winding up petition on a company. Nonetheless, she quite rightly did not suggest that the Kenneth Allison test does not apply in the case of the personal service of a bankruptcy petition. I can see no basis in authority or general principle to support such a suggestion. Accordingly, the question I must answer is whether the Registrar was correct to conclude that personal service of the bankruptcy petition had been effected upon Mr Morby in accordance with the Kenneth Allison test as clarified by the decision of the Court of Appeal in the Walters case.[36]On the basis of the assumed facts, the Appellant did not touch the bankruptcy petition. Instead, Mr Beecham handed it to Mr Malik. So, the first limb of the Kenneth Allison test does not apply. The Appellant clearly indicated, by his actions and through Mr Malik, that he did not accept the document. I say "through Mr Malik” because it is clear from Mr Morby’s evidence that Mr Malik attending this meeting to assist Mr Morby and not to protect or advance some personal interest. Absent other evidence, it is must be assumed that Mr Malik acted as he did (for example, insisting that Mr Beecham take back the petition and then subsequently throwing the petition into a waste paper bin) withMr Morby’s express or tacit approval. This is the most natural inference from Mr Morby’s own account of the meeting.[37]Accordingly, is the second limb of the Kenneth Allison test satisfied in this case? The second limb requires that(i) the person being served “be told what the document contains” and(ii) the document be left with or near him.[38]By his own account, Mr Morby arranged the meeting with Mr Beecham “at Terminal 3 of Heathrow Airport on 7 August 2014 so that the Petition could be personally served upon me.” He described the meeting and the interaction of Mr Malik and Mr Beecham, ending with Mr Malik putting the petition in a bin. There can be no doubt based on his evidence that he was aware that the document was a petition seeking a bankruptcy order against him. This is comfortably above the standard articulated by Hoffmann LJ in the Walters case that the person being served have “brought to his attention that it is a legal document which requires his attention in connection with proceedings”. Mr Morby was in no doubt about the nature of the document that Mr Beecham brought to the meeting at Heathrow.[39]Phillips J helpfully further clarifies this requirement in para 34 of his judgment:
“In my judgment it is plain from these authorities [in particular, the Kenneth Allison case, the Wallers case and an Australian case referred to in para 32 of his judgment] (and from the special nature and role of personal service discussed above) that the processof leaving a document with the intended recipient must result in them acquiring knowledge that it is a legal document which requires their attention in connection with proceedings. Whilst this is expressed as requiring that the intended recipient be ‘told’ the nature of the document, the focus is on the knowledge of the recipient, notthe process by which it is required. While in most cases knowledge of the nature of thedocument will be found to have been imparted by a simple explanation, it is clear that it can be also readily be [sic] inferred from pre-existing knowledge, prior dealings or from conduct at the time of or after service, including conduct in evading service: sec Barclays Bank of Swaziland Ltd v Hahn [1989] 1 WLR 506 at 512A.”
[40]The only remaining question, therefore, is whether the document was left “with or near” the Appellant at the meeting at Heathrow on 7 August 2014.[41]In Nottingham Building Society v Peter Bennett & Co (a firm) (The Times, 26 February 1997), a process server attended at the office of a former partner of the defendant firm to serve a writ in a professional negligence action. The former partner examined the writ but purported not to accept it, and the process server took the writ with him when he left. Lord Justice Waite for the Court of Appeal nonetheless held that personal service had been effected. Waite LJ said:
“Once the intended recipient, assuming him to have knowledge of its nature, had been given a sufficient opportunity of possession of the document to enable him to exercise dominion over it for any period of time, however brief, the document had been left with him within the sense intended by the rule.”
[42]Similarly, in the Tseitline case, Phillips J found (in paras 44-45 of his judgment) that personal service had been effected on Mr Mikhelson in the circumstances of that case even though Mr Mikhelson did not accept the document, the document had been placed on Mr Mikhelson’s upper body and had then fallen or was thrown by him to the ground by his feet, so that “there is no doubt that it was left near him”. It did not matter that the document was later retrieved by the process server and taken away, given the holding in the Nottingham Building Society case to which I have already alluded.[43]In this case, Mr Morby attended with his friend, Mr Malik. When the document was in the hands of Mr Malik, Mr Morby clearly had “a sufficient opportunity of possession of the document to enable him to exercise dominion over it for any period of time, however brief’. Mr Morby could, in fact, have had the document at any time by simply asking Mr Malik to hand it to him. There is no reason to suppose otherwise. Mr Morby, knowing that the document was a bankruptcy petition naming him (albeit with an allegedly inaccurate residential address shown on the face of it), could have retrieved the petition from the bin or stopped Mr Malik from putting the document there in the first place.[44]It is a reasonable conclusion, and the most natural one, based on Mr Morby’s evidence, that the petition was left “near” Mr Morby. It could even be said to have been left “with” him, for the reason I have given in para 43 above.[45]It is uncontroversial that personal service cannot be effected by serving an agent, in the absence of the principal. Does the fact that the petition was left by Mr Beecham in the hands of a person, Mr Malik, rather than, say, on a table next to Mr Morby mean that the petition was not left “with or near” Mr Morby? In the particular circumstances of this case, the answer is clearly no.[46]Ms Deb has suggested that a decision against the Appellant on this appeal will potentially “open the floodgates” to a relaxation of the hitherto strict rules on personal service of a bankruptcy petition. In my view, however, this case resolves simply to determination, on the basis of the assumed facts, whether in the peculiar circumstances of this case the current test for personal service, as articulated in the Kenneth Allison case, in light of other relevant authority to which I have referred, has been satisfied so that it can be said that personal service of the bankruptcy petition has been validly effected on Mr Morby by Mr Beecham at Heathrow on 7 August 2014. In my view, the Registrar clearly reached the correct decision on this point, and accordingly the appeal must be dismissed.

The relevance of Rule 7.55

[47]Having reached his decision on personal service, the Registrar in para 34 of his judgment went on to say “I recognise that there may be more than oneview regarding my finding and thereforego on to consider substituted service [which, as I have already noted, the Registrar rejected as a possibility in this case in para 40 of his judgment] and the cure provision contained within theIR 1986 [meaning Rule 7.55].” A considerable part of the Registrar’s judgment (paras 42 to 68) deals with the question of whether, if his conclusion regarding personal service is wrong, Rule 7.55 can be used in this case to cure any defect or irregularity of service by exercising his jurisdiction under Rule 7.55, including a careful review of file authorities on Rule 7.55, most, if not all, of which are cited in the General Note to Rule 7.55 in Sealy & Milman: Annotated Guide to the Insolvency Legislation 2015 (18th edition) at pp 1193-U94.[48]A significant proportion of file skeleton arguments ofcounsel and of the hearing before me was therefore also concerned with this issue, and a discussion of the relevant authorities, most of which concern formal defects or irregularities other than one affecting personal service of a bankruptcy petition.[49]With respect to the Registrar, I would not have made the concession he made. I think it is sufficiently clear that the primary ground of his decision is correct. I do not think it would be a proportionate use of time to deal in detail with the Rule 7.55 arguments. However, in case this goes further, it may be helpful tooutline, as briefly as I can, my thoughts on tin's issue.[50]Rule 7.55 provides as follows:
“No insolvency proceedings shall be invalidated by any formal, defect or by any irregularity, unless the court before which objection is made considers that substantial injustice has been caused by the defect or irregularity, and that the injustice cannot be remedied by any order of the court.”
[51]This is the current version of a longstanding rule. It applies only if there is a formal defect or irregularity. In this case there is no formal defect affecting personal service. Was there an irregularity? In para 61 of his judgment the Registrar described the irregularity as being one of “serving a nominated person personally in the presence of and at the direction of the debtor”. I would quibble with the use of the word “serving”, which may have muddied the waters slightly. What happened in this case is that the process server, Mr Beecham, handed the bankruptcy petition to a third person at the request of Mr Morby.[52]In order to determine that some action is “irregular”, it needs to be clear what action is “regular” (i.e., within the applicable rule). In the case of personal service, delivery of the relevant document into the hands of its intended recipient would clearly be regular. But satisfaction of the second limb of the Kenneth Allison test would also be regular. Satisfaction of the second limb comes down to a factual determination as to whether(i) the recipient was “told” what the document contains (in the sense elucidated by subsequent authority, as discussed above) and(ii) the document has been “left with or near” the intended recipient.[53]In our case, on the assumed facts, there is no reasonable doubt that the first limb of the Kenneth Allison test was satisfied. As to second limb, I doubt whether there is a “regular” way to leave a document “with or near” its addressee as opposed to an “irregular” way of doing so. Either the process server has left the document with or near the intended recipient, or he has not. It is a straight factual determination. The question is simply whether giving the document to a third person (as opposed, for example, to putting it on the floor by his feet or on a shelf or table near him or into a flap of a bag at his feet or into a pocket of his coat that is slung across the back of a chair) is capable, as a matter of fact, of falling within the second part of the second limb of the Kenneth Allison test. This is a fact-specific determination. In my view, the Registrar correctly concluded that in the particular circumstances of this case the second part of the second limb of the Kenneth Allison test was satisfied.[54]The only alternative to that conclusion, in my view, is that the second limb of the Kenneth Allison test was not satisfied. But that would have to be because it was not satisfied as a matter of fact, not because it was “irregular”. In such a case, therefore, there would have been a failure to effect personal service on Mr Morby. There would, however, be no formal defect or irregularity capable of cure by Rule 7.55.[55]If I am wrong, however, and Mr Beecham’s giving the petition to Mr Malik (rather than, say, attempting to stuff it into Mr Morby’s coat pocket) is conceptually capable of being characterised as an “irregularity”, then there has not been a “complete failure to abide by the normal service provisions in the [Insolvency] Rules” of the type found to be the case by Mr Justice Mann in Andrews v Bohm [2005] EWHC 3520 (Ch). I would, of course, agree that a complete failure to effect personal service, when no other form of service is available, is a fundamental error that cannot be cured under Rule 7.55. But that is far from this case.[56]In Re Anderson Owen Ltd, Merrygold v Bates [2010] BPIR 37, Mr

Justice Norris states at para 24:

“The essential purpose of rules as to service is to ensure that a party has proper notice of proceedings brought and a fair opportunity to deal with them.”
[57]Although Norris J was concerned in that case with service of proceedings under section 212 of the Insolvency Act 1986, it is a concise statement of the essential purpose (although, as Norris J notes, there may also be other purposes) of rules as to service, including personal service, regardless of the nature of the proceedings. What varies according to the nature of theproceedings, and the precise circumstances, is the needfor a more or less strict compliance with the rules of service. There is, however, no question that, in the circumstances of this case, the essential purpose of service has been achieved notwithstanding the putative “irregularity” of handing the document to Mr Malik rather than putting at Mr Morby’s feet or somewhere else near him. Accordingly, there is no barrier as a policy matter to the application of Rule 7.55 in these circumstances.[58]In summary, I have serious doubt that it is conceptually correct to characterise Mr Beecham’s handing the petition to Mr Malik as an “irregularity” as opposed to simply a particular pattern of fact that needs to be assessed against the second limb of the Kenneth Allison test. But if it is capable of being so characterised, it is not an irregularity that has caused Mr Morby any injustice, much less substantial injustice. He was not, as a result of it, deprived of the opportunity to deal with the bankruptcy petition, misled into ignoring it or unable to deal with the subsequent proceedings including the hearing before Registrar Briggs.[59]Under Rule 7.55, the Registrar was exercising a discretion. On an appeal, I am not able to disturb his conclusion on this point unless I find that he erred in the exercise of his discretion to an extent exceeding the generous ambit within which reasonable disagreement is possible. Although, for the reasons I have given, I do not consider that there is an “irregularity” in this case, if I am wrong, then it is my view that the Registrar’s exercise of discretion to cure the irregularity was appropriate.

Conclusion

[60]The appeal is dismissed.

Cited in 5 later judgments