London Borough of Camden v Martin

Where a bankruptcy petition is adjourned on the clear direction that payment of a specified sum will result in dismissal, and the debtor pays that sum in time, the court must consider the fairness and justice of honouring that direction. The issue is wider than whether the direction was technically binding, created an estoppel, or was recorded in the formal order. A creditor cannot withdraw a concession on which the court acted and which the debtor acted upon, particularly where the creditor’s error caused the direction to be made. Later hearings founded on the failure to dismiss may be tainted by that error. Dismissal of the petition does not extinguish the underlying debt.

This was an appeal from a bankruptcy order made by Deputy Registrar Cheryl Jones on 2 June 2008. The petition had been presented by the London Borough of Camden for unpaid council tax. During the proceedings, Mr Registrar Rawson directed that the petition would be dismissed if Ms Martin paid £1,285 by 27 September 2007. She paid that sum on 24 September.

The petition was nevertheless adjourned and later resulted in a bankruptcy order. Camden had previously proceeded on the mistaken understanding that appeals against refusals of council tax benefit remained available. The central issue was whether, in the circumstances, the petition should have been dismissed after the specified payment was made.

1. Appeal allowed; petition dismissed. The direction made by Mr Registrar Rawson on 29 August 2007 was clear and unqualified. It stated that payment of £1,285 by 27 September would bring the petition to an end.
2. The absence of the direction from the drawn order did not alter its effect. The transcript established what had been said and showed that the Registrar intended to make the direction, rather than merely indicate how he might exercise his discretion at a later hearing.
3. The question was not confined to whether the direction was technically binding, created an estoppel, or constituted a formal order for payment. The court had to consider what was fair and just. Camden had mistakenly conceded that an appeal route remained available. On that basis, the Registrar treated part of the debt as disputed and required payment of £1,285. Ms Martin acted on the direction by paying the sum in time.
4. Camden could not withdraw the concession so far as this petition was concerned. The payment placed Camden in a stronger position and Ms Martin in a weaker position. The subsequent failure to dismiss the petition on 27 September 2007 was unjustified, and the later proceedings were dependent upon and tainted by that failure.
5. The appeal court therefore exercised the relevant discretion itself. The bankruptcy proceedings were brought to finality by dismissing the petition. The dismissal did not affect Ms Martin’s continuing liability to Camden for the balance of £4,871.01. Costs were to be addressed separately.

• High Court (Chancery Division): Appeal from the bankruptcy order made by Deputy Registrar Cheryl Jones on 2 June 2008. The appeal was allowed and the petition dismissed.
• High Court in Bankruptcy: Mr Registrar Rawson had directed that the petition would be dismissed if £1,285 was paid by 27 September 2007. The payment was made in time, but the petition was not dismissed and later resulted in a bankruptcy order.