Second court application to annul a bankruptcy order

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2 min read

The applicant’s second application to annul a bankruptcy order was an abuse of process; the applicant should have applied to court for relief from sanction instead. This application would have been refused, notwithstanding the abuse of process, in light of the fact that the bankruptcy order was founded upon statutory debts, that were due and owing, and there was no evidence that such debts could be repaid.

Forest of Dean DC successfully petitioned for the applicant’s bankruptcy for unpaid tax and business rates. Following which, the applicant applied for the bankruptcy order to be annulled on the basis that (i) the petition debt was not due; and (ii) the statutory demand and petition were not properly served (“First Annulment Application”). During this application, the applicant also failed to comply with cost orders, arising from the applicant’s unsuccessful application to stay the bankruptcy. The court proceeded to strike out the First Annulment Application due to the applicant’s failure to comply with an unless order.

The court, in this case, was dealing with the applicant’s second application, on grounds that were identical in all material respects to the First Annulment Application, to annul the bankruptcy order made against him, and held:

  • Where, as in the instant case, a party has been subject to a sanction, such as the striking out of their case, they should apply to court for relief from that sanction pursuant to CPR 3.9. It is an abuse of process for a party, as the applicant has sought to do in the instant case, to circumvent the relief from sanction regime by issuing a second application to court that is in all material respects identical to the first.
  • The applicant’s wholesale disregard for court orders and procedures designed to deal with cases justly and at proportionate cost, demonstrated by, amongst other factors, the applicant’s serious and unjustifiable failure to comply with the unless order and failure to cooperate with his trustees, would have resulted in the court refusing to grant the applicant relief from sanction in any event.
  • Even if the court’s conclusion on abuse of process was wrong, and notwithstanding evidence that supported that the statutory demand was not validly served, the court would have refused the annulment application on the basis that: (i) the bankruptcy order was founded on statutory debts. The court will not look behind such debts unless there was collusion, fraud or miscarriage of justice, none of which existed in the instant case, and (ii) there was no evidence that those debts could be paid. 

Lambert v Forest of Dean DC

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