“An order varying the Order of Chief Master Marsh dated27 April 2016 as follows: (1) Delete paragraph 7. (2) Vary paragraph 9, to delete the reference to the First Defendant.”
“The Order is sought because the debts are provable in the Applicant’s bankruptcy and cannot be the subject of enforcement action (as the Respondent is wrongly seeking to do).”
“(1) “Bankruptcy debt”, in relation to a bankrupt, means (subject to thenext subsection) any of the following—(a) any debt or liability to which he is subject at the commencementof the bankruptcy,(b) any debt or liability to which he may become subject after thecommencement of the bankruptcy (including after his dischargefrom bankruptcy) by reason of any obligation incurred before thecommencement of the bankruptcy,...(3) For the purposes of references in this Group of Parts to a debt orliability, it is immaterial whether the debt or liability is present or future,whether it is certain or contingent or whether its amount is fixed orliquidated, or is capable of being ascertained by fixed rules or as a matterof opinion; and references in this Group of Parts to owing a debt are to beread accordingly. (4) In this Group of Parts, except in so far as the context otherwiserequires, “liability” means (subject to subsection (3) above) a liability topay money or money's worth, including any liability under an enactment,any liability for breach of trust, any liability in contract, tort or bailmentand any liability arising out of an obligation to make restitution.”
“ …..in administration, winding up and bankruptcy, all claims by creditors are provable as debts against the company or, as the case may be, the bankrupt, whether they are present or future, certain or contingent, ascertained or sounding only in damages.”
“88. In a number of cases, it has been held that, where an order for costs wasmade against a person after an insolvency process had been instituted against him, his liability for costs did not arise from an obligation which had arisen before issue of the bankruptcy proceedings, even though the costs order was made in proceedings which had been started before that insolvency process had begun ……89. In my view, by becoming a party to legal proceedings in this jurisdiction, aperson is brought within a system governed by rules of court, which carry withthem the potential for being rendered legally liable for costs, subject of course tothe discretion of the court. An order for costs made against a company inliquidation, made in proceedings begun before it went into liquidation, is therefore provable as a contingent liability under rule 13.12(1)(b), as the liability for those costs will have arisen by reason of the obligation which the company incurred when it became party to the proceedings. 90. I have little concern about overruling those earlier decisions, although theyare long-standing……………………… Although most of the provisions of rule 13.12 and section 382 can be found in section 30(3), (4) and (8) of theBankruptcy Act 1914 , over the past three hundred years, “the legislature has progressively widened the definition of provable debts and narrowed the class of non-provable liabilities” to quote from the written case of Mr Phillips QC who relied on those cases…………. 91. For the same reasons, I consider that the decisions of the Court of Appeal inGlenister v Rowe[2000] Ch 76 and Steele[2006] 1 WLR 2380 were wronglydecided, although I can see how it might be said that they were justified on thebasis of stare decisis. The reasoning of Arden LJ in the latter case at paras 21-23 is instructive, because, as she says, the previous authorities in relation to provable debts suggested a “narrower meaning of contingent liability” than was adopted by the majority in Sutherland. That observation neatly illustrates why they were wrongly decided. 92. The Report of the Review Committee on Insolvency Law and Practice (“theCork Report”, 1982, Cmnd 8558), para 1289, described it as a “basic principle of the law of insolvency” that “every debt or liability capable of being expressed in money terms should be eligible for proof” so that “the insolvency administration should deal comprehensively with, and in one way or another discharge, all such debts and liabilities”. 93. The notion that all possible liabilities within reason should be provable helps achieve equal justice to all creditors and potential creditors in any insolvency, and, in bankruptcy proceedings, helps ensure that the former bankrupt can in due course start afresh.”
“[78] A succession of Bankruptcy Acts culminating in the Bankruptcy Act1869 revolutionised the approach to provable claims. With a fewexceptions, all claims were to be provable and it was no longer regardedas a sound basis for exclusion that the claim was difficult to quantify....[82] Thus a wide range of contingent or unliquidated claims becomeprovable, with a just estimate being made of the value of the claim. Proofsof debt were therefore admissible for unliquidated damages for breach ofcontract (Re Sneezum, ex p Davis(1876) 3 Ch D 463 ), for a contingentclaim in respect of a repairing covenant in a lease (Hardy v Fothergill),for a contingent claim under a guarantee (Wolmershausen v Gullick[1893] 2 Ch 514 ), and for an annuity payable during joint lives and for solong as the recipient should lead a chaste life (Ex p Neal, In re Batey (1880)14 Ch D 579). The provisions for valuing such claims for the purposes ofproof are now contained in section 322 (3) and (4) (bankruptcy) and Rule 4.86 (winding-up)”
“…. A debt or liability to which he may become subject after thecommencement of the bankruptcy (including after his dischargefrom bankruptcy) by reason of any obligation incurred before thecommencement of the bankruptcy,” and “it is immaterial whether the debt or liability is present or future,whether it is certain or contingent or whether its amount is fixed orliquidated,…..”