Richards v Vivendi SA [2017] EWHC 1581 (Ch)

APPEAL REF: CH-2016-000309[2017] EWHC 1581 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 27/06/2017
Before
MR JUSTICE MORGAN
Between
MURRAY RICHARDSAppellantVIVENDI SARespondent
The Appellant appeared in person, by video link for in personMs Blair Leahy (instructed by Pinsent Masons LLP) for RespondentHearing Hearing date: 15 June 2017
Judgment

Introduction

[1]This is an appeal from the order dated 29 November 2016, of District Judge Hay, sitting in the Croydon County Court, by which she dismissed Mr Richards’ application for the annulment of a bankruptcy order dated 19 December 2014 made in relation to him, on a creditor’s petition, by Registrar Derrett. I gave Mr Richards permission to appeal on 17 March 2017 although I refused permission to appeal on one ground on which he had relied in his Appellant’s Notice.[2]The ground on which Mr Richards had applied for the annulment of the bankruptcy order was that the court did not have jurisdiction to make such an order and so it ought not to have been made.

Jurisdiction

[3]The questions which Mr Richards raises as to the jurisdiction of the court to make a bankruptcy order against him arise under section 265 of the Insolvency Act 1986. At the time of the presentation of the petition and the bankruptcy order in this case, section 265 was in the following terms (it has since been amended):
“265.— Conditions to be satisfied in respect of debtor. (1) A bankruptcy petition shall not be presented to the court under section 264(1)(a) or (b) unless the debtor— (a) is domiciled in England and Wales, (b) is personally present in England and Wales on the day on which the petition is presented, or (c) at any time in the period of 3 years ending with that day— (i) has been ordinarily resident, or has had a place of residence, in England and Wales, or (ii) has carried on business in England and Wales. (2) The reference in subsection (1)(c) to an individual carrying on business includes— (a) the carrying on of business by a firm or partnership of which the individual is a member, and (b) the carrying on of business by an agent or manager for the individual or for such a firm or partnership. (3) This section is subject to Article 3 of the EC Regulation.”
[4]Article 3 of the EC Regulation (Council Regulation (EC) No 1346/2000), so far as material, provided:
“1. The courts of the Member State within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction to open insolvency proceedings. … ”
[5]In this case, the creditor, Vivendi SA (“Vivendi”) has contended that the court had jurisdiction to make a bankruptcy order in relation to Mr Richards, on its petition presented on 4 March 2014, on one or more of the following grounds:(1) Mr Richards was present in England and Wales on 4 March 2014;(2) Mr Richards was ordinarily resident in England and Wales in the period of three years ending with 4 March 2014;(3) Mr Richards had a place of residence in England and Wales in the period of three years ending with 4 March 2014;(4) Mr Richards’ centre of main interests (“COMI”) was in England and Wales at the relevant time.

The procedural history

[6]The bankruptcy order in this case arose out of earlier litigation which Vivendi and another company had brought against Mr Richards and another defendant. That litigation resulted in a judgment handed down by Newey J on 9 October 2013: see Vivendi SA v Richards [2013] EWHC 3006 (Ch). On 24 October 2013, in accordance with the findings in that judgment, Mr Richards was ordered to pay Vivendi sums in excess of £10 million. Mr Richards has not paid any part of those sums.[7]On 2 December 2013, Vivendi served on Mr Richards a statutory demand for the amount of the judgment debt. The statutory demand was served on Mr Richards personally at Vivendi’s solicitors’ offices in London. On 20 December 2013, Mr Richards applied to set aside the statutory demand. I have not seen a copy of this application but the witness statement of Ms Kaplan of 23 September 2014 (referred to below) states that Mr Richards gave his address for service as 45 Amity Grove, London, SW20 0LQ although his application went on to say that he did not live or reside in the United Kingdom and made other comments as to how he wished to be served. On or about 27 February 2014, Mr Richards withdrew the application to set aside the statutory demand.[8]On 4 March 2014, Vivendi presented a petition in the Kingston upon Thames County Court seeking a bankruptcy order against Mr Richards. The petition stated that the amount due from Mr Richards exceeded £14 million. The petition, as originally presented to the court, asserted that Mr Richards’ COMI was in England and Wales. The petition gave Mr Richards’ address as 45 Amity Grove, London, SW20 0LQ and stated that he was resident in England and Wales.[9]On 17 April 2014, Vivendi applied for an order for substituted service of the petition. On 13 May 2014, the court made an order for substituted service. I have not seen the precise terms of that order but I was told that service was effected in accordance with that order on three firms of solicitors who must have been considered to have been connected with Mr Richards.[10]On 17 June 2014, solicitors acting for Mr Richards gave notice of his intention to oppose the petition. In paragraph 1 of his notice of intention to oppose, Mr Richards stated that the court had no jurisdiction to open insolvency proceedings in reliance on section 265(3) of the Insolvency Act 1986 because his COMI was not in England and Wales. He further stated:
“The Debtor is a non-EU citizen, holds only a temporary permit to visit the UK without the right to reside or work in the UK and there is no place in England and Wales where he conducts the administration of his interests on a regular basis and which is ascertainable by third parties.”
[11]Paragraph 2 of the notice of intention to oppose stated that Mr Richards was not resident in England and Wales and not habitually resident in England and Wales. It stated that the 45 Amity Grove address was a “care of” address for receipt of correspondence in this jurisdiction and it further stated:
“… insofar as the Debtor has stayed at that address in the past it is as a casual visitor for very limited periods of time and principally for the purpose of defending the proceedings brought against him by [Vivendi] culminating in the judgment in October 2013.”
[12]Paragraph 3 of the notice of intention to oppose stated that Vivendi was well aware that Mr Richards was not resident in England and Wales and a number of contentions were put forward in support of that statement. The notice of intention to oppose ended with a statement of truth signed by Mr Richards’ solicitors.[13]Also on 17 June 2014, Mr Richards’ solicitors applied for the petition to be transferred to the High Court. The application referred to there being factual and legal issues involved as to the court’s bankruptcy jurisdiction under section 265 of the 1986 Act and the EC Regulation. This application was not opposed and, in early July 2014, the petition was transferred to the High Court.[14]Following Mr Richards’ notice of intention to oppose, Vivendi’s solicitors asked him on a number of occasions to identify his position as to where he said his COMI was. His solicitors stated that the matter should not be dealt with in correspondence but instead Vivendi should serve a witness statement setting out the evidence it relied upon as to Mr Richards’ COMI and he would then serve his witness statement in response.[15]On 23 September 2014, Vivendi applied to amend the petition to put forward further contentions as to jurisdiction under section 265 of the 1986, in addition to its continued reliance on the contention that Mr Richards’ COMI was in England and Wales. In the draft amended petition, Vivendi contended that Mr Richards was personally present in England and Wales on the day on which the petition was presented (4 March 2014) and also contended that he had been ordinarily resident and/or had a place of residence in England and Wales in the period of three years ending with 4 March 2014.[16]Also on 23 September 2014, Vivendi’s solicitor (Ms Kaplan) signed a witness statement in support of the petition and of the application to amend the petition. This witness statement set out Vivendi’s case that:(1) Mr Richards’ COMI was in England and Wales;(2) Mr Richards was present in England and Wales on 4 March 2014;(3) Mr Richards was ordinarily resident in England and Wales in the period of three years ending with 4 March 2014; and(4) Mr Richards had a place of residence in England and Wales in the period of three years ending with 4 March 2014.[17]On 30 September 2014, the solicitors for Mr Richards applied for:(1) an order striking out paragraph 1 of the petition (which relied on the contention that Mr Richards’ COMI was in England and Wales) as an abuse of the process of the court;(2) in the alternative to (1), an order refusing Vivendi permission to amend the petition;(3) an order setting aside the earlier order for substituted service or service out of the jurisdiction.[18]On 30 September 2014, Registrar Derrett directed that Mr Richards should serve his evidence in support of his application of 30 September 2014 and should, if so advised, serve any evidence in answer to Vivendi’s application to amend the petition. She also directed that the petition and the two outstanding applications be listed for hearing on 19 December 2014 with a time estimate of half a day.[19]Mr Richards did not serve any evidence following the directions given on 30 September 2014. The solicitors who had been acting for him in the bankruptcy proceedings came off the record and Mr Richards did not attend the hearing on 19 December 2014. Mr Richards accepts that he was aware of the date of this hearing. In his submissions in support of his application to annul the bankruptcy order he put forward certain reasons as to why he had not attended the hearing; I will refer to those submissions later in this judgment. At that hearing, Registrar Derrett dismissed Mr Richards’ application of 30 September 2014 as he had not attended the hearing to present that application. She also gave Vivendi permission to amend the petition, as requested.[20]Prior to the hearing on 19 December 2014, Registrar Derrett had been provided with a skeleton argument prepared by Ms Leahy, counsel for Vivendi. That skeleton argument summarised the relevant law as to COMI and as to the other heads of jurisdiction referred to in section 265 of the 1986 Act, so far as relevant, and submitted that the court had jurisdiction in each of the ways which had been put forward by Vivendi. At the hearing, the Registrar stated that she was satisfied on the balance of probabilities that Mr Richards was present in England and Wales on 4 March 2014 and that he was ordinarily resident in England and Wales in the period of three years ending with 4 March 2014 and that he had a place of residence, at 45 Amity Grove, in England and Wales in that three year period. She also held on the balance of probabilities that Mr Richards’ COMI was in England and Wales and in reaching that conclusion she relied on the fact that Mr Richards had not put in any evidence on the point, beyond a bare assertion to the contrary. The Registrar then made a bankruptcy order in relation to Mr Richards. That order declared that the proceedings were main proceedings as defined in Article 3 of the EC Regulation.[21]On 5 February 2015, Mr Leeds and Mr Wood, of Grant Thornton UK LLP, were appointed to be the joint trustees in this bankruptcy. On 26 January 2016, the County Court at Croydon ordered that Mr Richards’ discharge from his bankruptcy be suspended on the ground that he had not complied with his statutory duties to cooperate with the Official Receiver and the trustees in bankruptcy. I infer that the bankruptcy proceedings were transferred to the County Court at Croydon prior to this date.[22]On or about 19 September 2016, Mr Richards applied in the County Court at Croydon for an annulment of the bankruptcy order. He told me that, originally, he had not intended to apply to annul the bankruptcy order but instead he intended to wait until he was discharged at the end of one year following the making of the order. However, the suspension of the discharge changed his mind and he considered that he then needed to apply to annul the bankruptcy order. In his application notice, he set out the grounds on which annulment should be ordered. His principal ground was that section 265 of the 1986 Act required the creditor to show that he had been domiciled in England and Wales at the relevant time. He referred to section 265(1)(a) and submitted that this paragraph had to be satisfied in every case and it was not open to the creditor to rely on the grounds stated in paragraphs (b) or (c) of section 265 or on Article 3 of the EC Regulation, unless the requirement as to the debtor’s domicile was also satisfied. He then submitted that he had never been domiciled in England and Wales as his domicile of birth had been New Zealand and his domicile of choice was Australia. Mr Richards told me that he had relied upon the point that he had not been domiciled in England and Wales because he had consulted the Insolvency Service website to inform himself as to the court’s jurisdiction to make a bankruptcy order and that website had led him to believe that the court only had jurisdiction where the debtor was domiciled in England and Wales. Although Mr Richards intended, when he issued his annulment application, that his lack of domicile in England and Wales should be his only ground for annulment, his application did state that paragraphs (b) and (c) of section 265(1) did not apply to him. He also reserved the right to amend or to add to the grounds of the application.[23]The annulment application was supported by Mr Richards’ affidavit sworn on 19 September 2016. The affidavit dealt, first, with the question of Mr Richards’ domicile and then stated:(1) He had never been ordinarily resident in England and Wales;(2) He did not undertake business in England and Wales in his own right in the three years prior to 4 March 2014;(3) He did not have his COMI in England and Wales at any time;(4) His visits to England were always as a “Business Visitor” and he had strictly complied with the conditions in his Entry Permit which had given him leave to enter for six months on terms that employment was prohibited;(5) These terms of entry prohibited him from becoming a resident and from being domiciled in England and Wales;(6) As a non-EU citizen, in order to become ordinarily resident or domiciled, he would have had to apply for a Resident’s Permit which he had never done;(7) He reserved the right to amend the affidavit because he was acting in person.[24]In due course, Mr Richards and Vivendi were notified that the annulment application would be heard in the County Court at Croydon on 29 November 2016. Mr Richards was apparently told that the time allotted to the hearing would be 30 minutes. He told me that he contacted the county court and inquired as to the nature of the hearing. He asked if the hearing would be for directions only or would be the substantive hearing. He was told that the hearing would deal with the application. He thought to himself that 30 minutes might suffice because his ground for seeking an annulment was that he had not been domiciled in England and Wales and that seemed to him to be a short point on which he was right.[25]On or about 14 November 2016, Vivendi served a further witness statement from Ms Kaplan. She submitted that Mr Richards had failed to provide sufficient evidence to support his claim that a bankruptcy order ought not to have been made and, in any event, the court should not exercise its discretion to annul the bankruptcy. She contended that the sole ground put forward for the annulment was that Mr Richards was not domiciled in England and Wales and she pointed out that the court had jurisdiction to make a bankruptcy order in relation to a person who was not domiciled in England and Wales. She stated that insofar as Mr Richards contended that the other grounds for jurisdiction were not established, his evidence did not go beyond mere assertion and did not even deny what she described as “the indisputable fact” that he was present in the jurisdiction on 4 March 2014. Finally, she stated that Mr Richards should not be permitted to re-run arguments that he could and should have presented to the court at the hearing of the bankruptcy petition. She summarised the position by saying that Mr Richards’ application was misconceived and should be dismissed but if it turned out that there was insufficient time to consider the substantive merits of the annulment application, then the court should order Mr Richards to provide an address for service within the jurisdiction.[26]On 23 November 2016, the trustees in bankruptcy wrote to the county court to report on the state of progress, or rather lack of progress, in the bankruptcy.[27]On 28 November 2016, Mr Hamilton of counsel prepared a skeleton argument for use at the hearing on 29 November 2016. This skeleton argument was prepared before Mr Hamilton had been provided with the further material (to which I refer below) which Mr Richards gave to the District Judge at the hearing on 29 November 2016. This skeleton argument was provided to Mr Richards at some point and he included it in the documents before the court for the purposes of this appeal. I was told that Mr Hamilton prepared a revised skeleton argument after being provided with Mr Richards’ further documents but I was not shown the revised skeleton argument. Neither of these skeleton arguments was shown to the District Judge at the hearing on 29 November 2016.[28]Some days before the hearing scheduled for 29 November 2016, Mr Richards travelled from Australia to England and began to prepare for that hearing. He seems to have received some advice at this time which caused him to consider that his ground for annulment, based on his non-domicile in England and Wales, might not be a good point and he prepared further documents for use at the hearing. The further documents comprised written submissions extending to 21 pages and a one page unsworn affidavit in which, amongst other things, he stated that the contents of his written submissions were true to the best of his recollection. The unsworn affidavit described the position in relation to his domicile and then further stated:(1) He had never been resident in any country other than New Zealand or Australia;(2) He had never been ordinarily resident in England and Wales;(3) He did not undertake business in England in his own right in the three years prior to 4 March 2014;(4) He did not have his COMI in England and Wales at any time;(5) He was in Geneva on 4 March 2014;(6) He repeated his earlier affidavit as to his immigration status and the conditions in his Entry Permit.[29]In his written submissions, Mr Richards continued to submit that the creditor had to show that Mr Richards had been domiciled in England and Wales but he then said, in the alternative, that none of the other heads of jurisdiction in section 265(1)(b) or (c) was satisfied. He also submitted that his COMI had not been in England and Wales. Apart from these assertions as to the position, his written submissions included the following assertions as to matters of fact:(1) There was material which had come into existence in connection with service of the original proceedings on which he relied;(2) He was in Geneva on 4 March 2014 and he produced three documents in support of that contention; two of the documents showed that money had been withdrawn from an ATM in Geneva, first at 14:09 on 3 March 2014 and then at 15:22 on 4 March 2014; the third document was a receipt for purchases at a bar or café in Geneva at 13:59 on 4 March 2014; the credit or debit card used for each of these three transactions was a Visa card; Mr Richards did not adduce any specific evidence to show that the Visa card was linked to his account, apart from that being a permissible inference from his attempt to rely on these documents to show his presence in Geneva on 4 March 2014;(3) Mr Richards had sold a residence in England in June 2006;(4) In or around September 2006, a company which was ultimately owned by him, DEVPRO SA, leased an apartment in Geneva and from that date he spent the largest portion of his time in Geneva;(5) He took his cars and personal effects from England to Geneva;(6) He operated from Geneva in respect of his businesses and his personal interests;(7) Since 2010 he shared his life in Switzerland with his Russian partner;(8) From September 2006, he only made short visits to the UK and more particularly to Scotland and England and the Channel Islands, for the purposes of the business of companies of which he was a director or a consultant;(9) On 19 December 2010, he travelled from Germany to Geneva and from there, on 20 December 2010, he travelled to London to appear in hearings related to the earlier proceedings brought by Vivendi;(10) In early January 2011, he returned from London to Switzerland to be with his Russian partner with whom he had plans to live in a number of countries which he identified (not including England and Wales) but, following the bringing of the earlier proceedings, all those plans failed;(11) From late 2006, he operated from his base in Switzerland and then from 2010 onwards he also operated from Australia and he only visited England principally for the purposes of attending to the earlier proceedings;(12) Whilst in England in connection with the earlier proceedings, he attended briefly to his responsibilities of certain companies in England, Scotland and Jersey until they were closed down;(13) He travelled on business to other countries in the EU, and nine other named countries where he had business projects;(14) He was unable to continue with his business projects principally as a result of the earlier proceedings;(15) As to 45 Amity Grove, he stayed there as a guest in a friend’s house while in London in connection with the earlier proceedings.[30]Mr Richards’ written submissions also addressed the question of his delay in applying to annul the bankruptcy. He said that he did not attend the bankruptcy hearing as a result of receiving a death threat and because he was in Australia and could not afford to travel to England to appear in person and, due to his lack of funds and the death threat, he withdrew his instructions from the solicitors he had previously instructed. After the bankruptcy order was made, the effect of that order on his financial position was that he was unable to earn a living and unable to afford to obtain legal advice. The order suspending his discharge from bankruptcy meant that he would be unable to earn his living in the future and that lead to him deciding to make the application to annul the bankruptcy order.[31]In the afternoon of 28 November 2016, Mr Richards went to the county court to file his written submissions and to swear, and then file, his further affidavit. He told me that he had checked on the website for the county court that the court was open until 6.00 pm but, when he arrived at the county court at around 3.00 pm, he was told that the court office had closed at 2.00 pm and that he was unable to file his written submissions or draft affidavit and unable to swear that affidavit. Later that day, after 6.00 pm, he sent his written submissions and draft affidavit (apart from certain exhibits) to the solicitors for Vivendi.

The hearing on 29 November 2016

[32]The hearing of the annulment application was listed for 10:30 am before District Judge Hay. The hearing began at 11:00 am. Mr Richards appeared in person and Mr Hamilton appeared for Vivendi. Ms Carroll from the Insolvency Service also attended. I have a transcript of the hearing. At the outset of the hearing, the District Judge explained that she had received “a huge wad” of documents provided by Mr Richards. She said that all she had been able to pre-read had been the letter from the trustees of 23 November 2016. Mr Hamilton confirmed that he had received the further material being relied upon by Mr Richards. The District Judge confirmed that she had received a hearing bundle (I assume from the solicitors for Vivendi) but she had not been given any reading time and she had a full list of cases that day.[33]The hearing then continued with a dialogue between the District Judge and Mr Hamilton. Mr Hamilton said that the court could deal with the short point as to Mr Richards’ domicile. As to the longer points relating to the other possible heads of jurisdiction, they could not be dealt with substantively but they did not need to be dealt with because it was not appropriate for the court to go behind or to rehear the matters decided by Registrar Derrett on 19 December 2014.[34]The District Judge then indicated that she felt she ought to read the further material provided by Mr Richards. Mr Hamilton suggested that that was not necessary as a great deal of it was not relevant. Thereafter, the District Judge did not read that material. She said that she could not deal with the matter at that hearing in view of the amount of material to be considered. She noted that Mr Richards had travelled from Australia to attend the hearing. Mr Hamilton pressed the District Judge to deal with the matter. The District Judge indicated that the arguments about the various heads of jurisdiction required her to consider some evidence at least. Mr Hamilton submitted to the contrary on the ground that the matter had already been determined by Registrar Derrett and it was not appropriate to allow Mr Richards to reopen an evidential inquiry which had been conducted by the Registrar. He submitted that the proper way for Mr Richards to challenge the bankruptcy order was by way of an appeal. He accepted that if there was new material to be considered on the annulment application, an annulment application could be appropriate. He submitted that there was no “meaningful” new evidence apart from two one-page affidavits from Mr Richards. The District Judge challenged the assertion that there was no meaningful new evidence and Mr Hamilton then made a different point that it was not appropriate to allow Mr Richards to provide materials in support of an annulment application two years after a bankruptcy order had been made.[35]The District Judge then considered a transcript of the hearing before the Registrar. The District Judge then said that she understood Mr Hamilton to be saying that there was nothing new in Mr Richards’ further material. She then looked at the receipts from Geneva on 3 and 4 March 2014 and Mr Hamilton made submissions as to the receipts not being probative as to Mr Richards’ whereabouts on 4 March 2014.[36]The District Judge then asked Mr Richards why he was only applying at that stage to annul the bankruptcy order. He explained his case as to why he had not attended the bankruptcy hearing. The District Judge then said that Mr Richards was effectively trying to appeal the bankruptcy order which had been made at a hearing when all of the issues as to jurisdiction had been considered. She said that Mr Richards could not test Vivendi’s evidence but instead he had to appeal the bankruptcy order.[37]The District Judge then said that she had run out of time to hear the annulment application. Her instinct was to dismiss the application but an alternative was to list it for a longer hearing to consider all of the evidence. However, as Mr Richards would have to fly in from Australia to attend such a hearing, he would be better trying to appeal the bankruptcy order. The District Judge then had an exchange with Ms Carroll and the District Judge stated that Mr Richards was trying to “rehash material that was gone over thoroughly”. The District Judge then dismissed the annulment application. Mr Hamilton asked her to clarify that she had dismissed that application in the exercise of her discretion under section 282 but the District Judge did not agree to record that that was the basis of her decision.

The appeal

[38]Mr Richards sought permission to appeal against the dismissal of his annulment application. His grounds of appeal repeated his earlier contention that the creditor had to demonstrate that he was domiciled in England and Wales. Having considered the matter on the papers, I refused permission to appeal on that ground and I held that that ground of appeal did not have a real prospect of success. However, I gave permission on other grounds raised by Mr Richards which were, in summary, that he had not had a fair hearing on 29 November 2016 and that the District Judge had wrongly thought that he had not provided new material in support of his application to annul, in addition to the material which was before the Registrar when the bankruptcy order was made.[39]On 4 April 2017, Vivendi filed a Respondent’s Notice which made the following points:(1) The hearing was not unfair;(2) Any failure by the District Judge to consider Mr Richards’ submissions or evidence was due to his own failure to comply with the CPR;(3) The annulment application was without merit and would not have succeeded in any event;(4) Mr Richards’ only proper course was to appeal the bankruptcy order;(5) Mr Richards’ late evidence did not provide any sufficient basis for annulling the bankruptcy order;(6) Annulment was a discretionary remedy and it would have been appropriate to have refused to annul on discretionary grounds, including the delay in applying to annul and delay in filing evidence in support of the application;(7) The court should certify that the application to annul was totally without merit.[40]Vivendi filed a further witness statement from Ms Kaplan which dealt with the history of the matter and added that the website for the County Court at Croydon stated that the court counters closed at 2.00 pm. She produced a copy of a print out of the website as at 6 January 2017.

Annulment

[41]Under section 282(1) of the 1986 Act, the court is given a discretionary power to annul a bankruptcy order if at any time it appears to the court that, on any grounds existing at the time the order was made, the order ought not to have been made. This provision and its application were considered in detail in JSC Bank of Moscow v Kekhman [2015] 1 WLR 3737. An annulment application can, potentially, involve the court in asking three questions:(1) What were the grounds existing when the bankruptcy order was made? in this respect, the court hearing the annulment application is not restricted to the evidence which was before the court which made the bankruptcy order;(2) Whether, on those grounds, the bankruptcy order ought not to have been made? and(3) If the bankruptcy order ought not to have been made, should the court annul the bankruptcy order?[42]In JSC Bank of Moscow v Kekhman, I considered the approach which the court should normally adopt in a case where there was no material before the court hearing the annulment application which was different from the material before the court which made the bankruptcy order. I said at [76]:
“It is also relevant to refer to the type of case where nothing has changed between the date of the hearing of the petition and the date of the hearing of the annulment application and the party seeking the annulment is effectively seeking to re-run the original arguments before a different judge, hoping for a different result. Ahmed v Mogul Eastern Foods [2007] BPIR 975, in particular, at paras 19, 20, 23 and 25, is authority for the proposition that, in such a case, the court will normally take the view that, in the absence of an appeal against the bankruptcy order, the court should not permit an attempt to have a second bite of the cherry before a judge of co-ordinate jurisdiction; this approach is an exercise of the discretion conferred by section 282(1) not to annul a bankruptcy order.”
[43]That passage from Kekhman referred to the normal response of a court to the exercise of its discretion where there was no new material to be considered on the annulment application. That passage does not deal with a case where there is new material. In such a case, a different question might arise and that is: what should be the normal response of a court, hearing an annulment application, to material which is put before it, which was not put before the court hearing the bankruptcy petition, but which could have been put before that earlier court?[44]It is well known that when an appeal court is asked to admit fresh evidence on an appeal it attaches great importance to the question whether the appellant could have been expected to adduce that evidence before the court against whose order the appeal is brought: see the approach in Ladd v Marshall [1954] 1 WLR 1489 at 1491, an approach which remains highly relevant even under the CPR. In Ahmed v Mogul Eastern Foods [2007] BPIR 975, Patten J (as he then was) stated that he would not wish to import into annulment applications under section 282 a rule equivalent to that in Ladd v Marshall. He adopted, in relation to applications under section 282, the approach identified by Millett J in Re a Debtor [1993] 1 WLR in relation to applications under section 375, where he had said at 318-319:
“The second question is whether fresh evidence is admissible upon an application under section 375, that is to say, evidence which could with due diligence have been obtained in time for the original hearing. In my judgment there is a significant distinction between an application under section 375 of the Act of 1986 and an appeal. When an appeal is brought from the making of an order the appellant must persuade the appellate court that the original order should not have been made on the material then before it or upon fresh material adduced in the appellate court in accordance with the rule in Ladd v. Marshall [1954] 1 W.L.R. 1489. Where an application is made to the original tribunal to review, rescind or vary an order of its own, however, the question is not whether the original order ought to have been made upon the material then before it but whether that order ought to remain in force in the light either of changed circumstances or in the light of fresh evidence, whether or not such evidence might have been obtained at the time of the original hearing. The matter is one of discretion, and where the evidence might and should have been obtained at the original hearing that will be a factor for the court to take into account; but the rationale of the rule in Ladd v. Marshall, that there should be an end to litigation and that a litigant is not to be deprived of the fruits of a judgment except on substantial grounds, has no bearing in the bankruptcy jurisdiction. The very existence of section 375 is inconsistent with such a rationale.” [Emphasis added]
[45]The way in which a court should approach an annulment application where there is further material which was not, but could have been, put before the court hearing the bankruptcy petition was also considered in Crammer v West Bromwich Building Society [2012] EWCA Civ 517 at [5] per Patten LJ and in Mowbray v Sanders [2015] EWHC 296 (Ch) per Hildyard J at [40]-[47], in a way which is entirely consistent with that which I have described above. Further, I consider that there is nothing in the recent decision of the Court of Appeal in Harvey v Dunbar Assets plc [2017] Bus LR 784 which alters this position.

Discussion

[46]The District Judge did not give reasons for her decision. I have referred in some detail to what happened at the hearing and what was said by Mr Hamilton, counsel for Vivendi, and then what was said by the District Judge. From the discussion, it is fairly clear that the District Judge took the view that there was nothing new in the material before her as compared with the material which had been before the Registrar when the bankruptcy order was made. If that had indeed been the position, then the District Judge would not have committed an error of law if she had directed herself that she had a discretion to refuse to annul and that a refusal to annul (where there was no new material) would be a normal exercise of such a discretion.[47]Prima facie, the District Judge was wrong to take the view that there was no new material before her. I have referred earlier to the written submissions put in by Mr Richards and by his draft affidavit. Prima facie, these constituted new material. The reason why the District Judge went wrong in this respect was that she did not read the material on which Mr Richards wished to rely and she understood that counsel had submitted that there was no worthwhile new material. This is not a case where the District Judge excluded the written submissions and the draft affidavit on the grounds that they were too late. The District Judge did not indicate that she had considered whether to admit the material and then declined to do so in the exercise of her discretion on that ground. If she had made a ruling to that effect, and if there were to be a challenge to such a ruling, then that challenge would raise different considerations.[48]In response to this prima facie position, Ms Leahy sought to rely upon the following passage from the judgment of Patten J in Ahmed v Mogul Eastern Foods [2007] BPIR 975 at [25] where he said:
“25 It is, I think, clear from the authorities I have mentioned, that there is no absolute ban to the bankruptcy court entertaining an application to annul or rescind a bankruptcy order merely because at the bankruptcy hearing the judge has decided the question of whether there was a disputed debt. The availability of new evidence may justify the review of that earlier decision if it is material which, in the judgment of the court hearing the application, is likely to have led the judge at the earlier hearing to reach a different conclusion. The realities are that if the judge hearing the application for annulment or rescission reaches that view, it will only be because he has been presented with material sufficiently new and different in nature as to cause him to reach that conclusion. In a sense, the probative effect of the new material is likely, in practice, to determine whether the application in discretionary terms is justified.”
[49]Ms Leahy submitted that the material relied upon by Mr Richards, insofar as it had not been before the Registrar when the bankruptcy order was made, should not be regarded as “sufficiently new and different in nature” as to cause the court to reach a conclusion different from that of the Registrar. However, the District Judge did not assess the further material relied upon by Mr Richards and did not reach the conclusion that the material was not sufficiently new and different in nature in this way. If she had done so, then an appeal against such a finding would raise different considerations from the present appeal.[50]Accordingly, because the District Judge did not read the further material and did not attempt to assess that material and did not attempt to make findings in relation to it, I consider that Mr Richards’ first ground of appeal is established. I therefore have to consider what should now be done. It would be open to me to remit the annulment application to the County Court at Croydon or to make my own decision on that application, based on the material which was before the County Court. Mr Richards asked me to make my own decision based on that material. Ms Leahy took instructions as to these alternative courses of action. She stated that Vivendi did not accept the assertions made by Mr Richards in his submissions and his draft affidavit and, if that material were to be appraised by the court, Vivendi would wish to cross-examine Mr Richards. However, before accepting that the result of taking that stance would be that I would have to remit the matter for a hearing at which Mr Richards could be cross-examined, Ms Leahy submitted that I should dispose of the matter summarily in Vivendi’s favour and for that purpose I should form my own view that the further material relied upon by Mr Richards was plainly not sufficiently new and different in nature from the material considered by the Registrar and did not have any real probative effect.[51]I have considered the material which was before the Registrar (although I was not shown the exhibit to Ms Kaplan’s witness statement of 23 September 2014) when she made the bankruptcy order and the further material relied upon by Mr Richards. I do not accept that the matter can fairly be disposed of in the summary way suggested by Ms Leahy. This conclusion means that the matter will have to be remitted to a further hearing with cross-examination of Mr Richards. In view of that fact, I consider that it would be unhelpful for me to comment on the evidence put in by either side. The weight to be given to that material, and any further material which is ultimately relied upon, will be for the judge who is asked to determine the issues between the parties.[52]The above conclusions mean that it is not strictly necessary to deal with Mr Richards’ further ground of appeal which is his contention that he did not have a fair hearing on 29 November 2016. However, as this ground of appeal has been fully argued, and as I consider that it should be upheld, I will give my reasons for that conclusion.[53]The District Judge was faced with an application by Mr Richards to annul the bankruptcy order. His application was based on the material which he had provided to Vivendi’s solicitors the evening before the hearing and which he had provided to the court on the morning of the hearing. Through no fault of the District Judge, she had not had any opportunity to consider the nature and content of the material being relied upon by Mr Richards. In this situation, there were a number of courses open to the District Judge. She could have treated the hearing as a directions hearing and given appropriate directions which would lead to an effective hearing on a later date with adequate time provided for the matter to be considered. In fairness to the District Judge, she did recognise during the hearing that that was a course which she might feel she ought to take although she was driven off that course by the submissions of counsel for Vivendi. A very robust approach, which might conceivably have been open to the District Judge, would have been to hold that the material provided by Mr Richards just before or at the hearing was too late and would be excluded. However, fairness would have required the District Judge to investigate the circumstances in which Mr Richards was providing material at the last moment and it might not have been straightforward to investigate that matter fairly in the time available and also to have time left over to decide the application on the basis of the original point made by Mr Richards to the effect that the court had no jurisdiction because he had not been domiciled in England Wales. That was a bad point but it was also a short point and it might have been possible to address it relatively quickly. However, the District Judge does not appear to have been prepared to adopt what would certainly have been a very robust approach.[54]What the District Judge did was to allow counsel for Vivendi to address her and to provide no real opportunity for Mr Richards to explain himself. She understood that counsel had submitted to her that Mr Richards had not put forward any worthwhile new material but she did not evaluate that material for herself. This was a serious procedural irregularity. She ought not to have disposed of the annulment application on that basis without carrying out her own evaluation of the material relied on by Mr Richards.[55]In response to Mr Richards’ contention that he did not have a fair hearing before the District Judge, Ms Leahy referred to CPR 52.21(3) which identifies the circumstances in which an appeal court will allow an appeal against the decision of a lower court. The rule provides that the appeal court will allow an appeal where the decision of the lower court was wrong or “unjust because of a serious procedural or other irregularity in the proceedings in the lower court”. Ms Leahy submitted that if I were to find (as I do) that there was a serious irregularity in the hearing before the District Judge I should nonetheless find that the outcome of that hearing was not unjust. The submission was that there was no injustice in the order dismissing the application to annul because that order was the appropriate order to make in all the circumstances. Ms Leahy submitted that the approach which should be taken by an appeal court to a point of this kind was identified in Labrouche v Frey [2012] 1 WLR 3160 and Dunbar Assets plc v Dorcas Holdings Ltd [2013] EWCA Civ 864.[56]In Labrouche v Frey, there had been a serious procedural irregularity at a hearing before the judge. On the hearing of the appeal, the respondent submitted that the appeal should not be allowed because a re-hearing of the matter before another judge would be “a self-evident waste of time” on the ground that any judge would produce the same result as the original result. (It seems to me that there is a missing “not” in the report of this case at [2012] 1 WLR 3160 at [35], first sentence.) This submission by the respondent in that case was not the same as an acceptance that the ground of appeal was established, coupled with an invitation from the parties for the appeal court to decide the underlying issue itself, instead of remitting it to the lower court for decision. In relation to this submission, Lord Neuberger of Abbotsbury MR said at [38] that the appeal court would only dismiss the appeal and thereby prevent the appellant having a fair hearing in the lower court in “an overwhelming case” and that case was not an overwhelming case.[57]In Dunbar Assets plc v Dorcas Holdings Ltd, the respondent also submitted that the serious procedural irregularity which had occurred had not caused any injustice because the decision of the lower court was plainly correct. The appeal court considered Labrouche v Frey and also considered the arguments as to the correct resolution of the underlying issue but held that the respondent did not have an overwhelming argument that the decision of the lower court was obviously correct so that remission of the case to the lower court would serve no useful purpose.[58]Both of the cases cited by Ms Leahy stressed the fundamental importance of a party having a fair hearing with the right to make submissions in support of his case. In the present case, I have already considered, and rejected, the slightly different contention based on Ahmed v Mogul Eastern Foods Ltd that I should determine, on a summary basis, that the material relied upon by Mr Richards was inadequate for the purpose of supporting an annulment application. For essentially the same reasons, it is clear to me that this is not an overwhelming case where I should take the view that the serious procedural irregularity caused no injustice to Mr Richards.[59]It should not be thought that I am not alive to the very real difficulties faced by the District Judge in this case. She had not been given any time to pre-read for the hearing. Mr Richards produced his submissions and his draft affidavit at the hearing itself. The District Judge had the right instinct that she really had to see what was in Mr Richards’ documents. The District Judge was also correct to say that she might need to adjourn the matter to a further hearing which would provide enough time for the matter to be properly considered. However, she was influenced by the fact that Mr Richards lived in Australia and had travelled to England especially to attend the hearing and would have to travel from Australia again for a further hearing. Although I understand the difficult situation in which the District Judge found herself, the fact remains that she came to a conclusion about Mr Richards’ submissions and draft affidavit which was objectively wrong and she did not give Mr Richards a fair hearing.[60]In these circumstances, I will allow the appeal on this further ground that Mr Richards did not have a fair hearing before the District Judge as well as on the ground that the decision of the District Judge was wrong.[61]As explained, if both parties had agreed to this course, I would have been prepared to determine the underlying issue as to annulment myself to save the parties the expense and delay of the matter being remitted to the lower court but I have accepted that Vivendi is entitled to ask for the underlying issue to be determined at a hearing in the lower court with cross-examination of Mr Richards. Accordingly, I will remit the matter for a further hearing.[62]At the hearing before me it was agreed that if the annulment application were to be remitted, I should transfer the case to the High Court so that the further hearing would be before the Registrar. I consider that a transfer to the High Court would be appropriate and I will order accordingly.

Cited in 1 later judgment