Hickling v Baker

An order under section 364 of the Insolvency Act 1986 may justify coercive detention under article 5(1)(b), rather than punishment. Notice is not invariably required, but the normal practice is to give notice. A without-notice application must be supported by evidence explaining why that course is justified, with the open evidence disclosing at least a summary of the reasons. The order must require the arrested person to be brought promptly before the court with both parties represented. It is insufficient to leave an application for release to that person’s initiative. The order need not identify a particular obligation if it recites the statutory basis. The court left undecided whether evidence may be withheld in a section 364 application, expressing serious doubts about extending the statutory confidentiality applicable to examination applications.

Timothy Baker was an undischarged bankrupt whose discharge had been suspended for failing to co-operate with his trustee in bankruptcy, Neil Hickling. On a without-notice application based on alleged concealment of assets, books and records, Mr Justice Pumfrey made a committal order under section 364 of the Insolvency Act 1986 on 23 February 2007. Mr Baker was arrested on 5 March.

Mr Justice Lindsay subsequently refused an application for disclosure of evidence withheld from Mr Baker and declined to order his release. Mr Baker appealed both orders. The central issues concerned article 5, the circumstances in which a section 364 application could proceed without notice, the need for a prompt post-arrest hearing, the contents of the order, and the use of undisclosed evidence.

1. First appeal allowed. Lord Justice Lloyd gave the judgment of the court. Mr Baker was released from custody. The court also ordered a further examination before a High Court judge under section 366 of the Insolvency Act 1986.
2. Section 364 provides a coercive enforcement power, not a punitive sentence. Its purpose is to prevent evasion of bankruptcy obligations or encourage disclosure and correction of concealment. Detention under it can therefore fall within article 5(1)(b).
3. Article 5 does not require notice of every application. Notice is not an essential prerequisite where the application relies on section 364(2)(c), just as it may be inappropriate where there is a risk of absconding or a failure to attend examination. However, the normal practice is to apply on notice. Evidence supporting a without-notice application must specifically explain why notice should be dispensed with. Where the need is not self-explanatory, the open evidence must disclose at least a summary of the reasons. The evidence before Pumfrey J established persistent non-co-operation but did not explain why notice would frustrate the process.
4. Where an order is made without notice, the order itself must require the arrested person to be brought promptly before the court for a hearing at which both parties are represented. Article 5(3) did not directly apply because the detention was not under article 5(1)(c), but it indicated the need for an analogous safeguard. The first order wrongly left it to Mr Baker to take the initiative.
5. The order did not need to specify the particular obligation whose fulfilment was intended to be secured. It was sufficient for it to make the nature of the case clear and recite the statutory basis under section 364(2). The discrepancy between the recital and the judge’s actual finding was nevertheless unfortunate.
6. The court made no substantive order on the second appeal. It did not decide whether evidence withheld from the arrested person could be justified under section 364. Examination applications under sections 236 and 366 were governed by specific confidentiality provisions, but a committal order was substantially more intrusive; the court expressed serious doubts about extending that exception.

• Court of Appeal (Civil Division): Allowed the appeal against Pumfrey J’s committal order, ordered Mr Baker’s release, and made a further examination order under section 366. Permission was granted on the second appeal, but no substantive order was made.
• High Court of Justice, Chancery Division: Pumfrey J made the committal order on 23 February 2007. Lindsay J refused disclosure of withheld evidence and declined to order release on 14 March 2007.