Papanicola v Humphreys & Ors

Section 375 of the Insolvency Act 1986 confers a wide discretion to review, vary or rescind an order made in the bankruptcy jurisdiction. Its exercise nevertheless requires exceptional circumstances. The applicant must identify a material change from the circumstances before the original court, such as changed circumstances or significant fresh evidence. Re-presenting the same facts and arguments more effectively is insufficient. The court may consider why evidence was not produced earlier. An applicant absent from the original hearing must explain the absence and apply promptly for rescission. The jurisdiction cannot be used as an appeal against a decision of a court of co-ordinate jurisdiction.

The trustee in bankruptcy appealed against a Registrar’s November 2004 order which rescinded an earlier order concerning credit-card receipts generated by the bankrupt’s restaurant business. The November order declared the receipts to be the bankrupt’s post-bankruptcy income and rescinded orders requiring the respondents to attend examination.

The application for rescission relied on the first respondent’s non-attendance at the earlier hearing, but introduced no new evidence, circumstances or arguments. The central issues were the scope and exercise of the jurisdiction under section 375 of the Insolvency Act 1986, and whether the Registrar had been entitled to rescind the earlier order.

1. Appeal allowed. The Registrar had no proper basis to rescind the Second June Order.

2. Section 375 gives the bankruptcy court a wide discretion to review, vary or rescind any order made in the exercise of its jurisdiction. The discretion remains one to be exercised cautiously and only in exceptional circumstances.

3. The applicant bears the burden of showing circumstances justifying intervention. There must be something materially different from what was before the original court. This may be a change occurring after the order or significant facts, including fresh evidence, which were not previously brought to the court’s attention.

4. The jurisdiction is not available merely because the applicant wishes to present the same facts and arguments more persuasively. If there has been no relevant change, the proper route is an appeal. Evidence which could have been obtained earlier, together with the explanation for not producing it, may be considered when exercising the discretion.

5. Non-attendance does not prevent an application under section 375. However, an absent applicant must explain the absence and apply for rescission with reasonable celerity. The reasoning underlying CPR r 39.3(3)–(5) is relevant by analogy.

6. The first respondent had deliberately chosen not to attend the earlier hearing, relied on the same evidence and arguments, and delayed several weeks before applying. Those matters did not constitute exceptional or relevant circumstances. In any event, there was no material justifying the rescission of the examination orders.

• High Court (Chancery Division): allowed the trustee’s appeal against the Registrar’s November 2004 order. The judgment also records the earlier orders of Registrar Rawson and District Judge Blomfield.