Brittain v Haghighat & Anor

On an application under Insolvency Act 1986, section 375(1), a rehearing requires exceptional circumstances involving a material difference from the material previously before the court. The applicant must also show a realistic prospect that the rehearing would produce a different outcome. The discretion is broad, and may include new evidence, but the explanation for its earlier absence is relevant.

Where an earlier determination rested on separate grounds, new material addressing only one ground will not justify a rehearing if the other ground remains decisive. A purely legal challenge to the court’s decision should ordinarily be pursued by appeal. The general costs rule applied where no circumstances displaced it.

Louise Brittain, the trustee in bankruptcy, had obtained an order for possession of a flat occupied by Hamid Haghighat and Nasrin Haghighat. The court had previously held that the respondents could not contend that the beneficial interest belonged to Mrs Haghighat, both because of abuse of process and because an earlier judgment had created an estoppel by record.

Mr Haghighat applied for a rehearing of the preliminary issue, the possession decision and the costs order. He relied on his absence from part of the earlier hearing, alleged omissions from the hearing bundles, further documents concerning a 1995 declaration of trust, and alleged errors in the bankruptcy figures. The central issue was whether those matters justified reopening the earlier decisions under section 375(1) of the Insolvency Act 1986.

1. Application dismissed. The court dismissed the application for a rehearing and ordered Mr Haghighat to pay the trustee’s costs, subject to assessment if not agreed. No order was made as to Mrs Haghighat’s costs, save that they were subject to detailed assessment.
2. Under section 375(1) of the Insolvency Act 1986, the applicant had to establish exceptional circumstances involving a material difference from the material before the court when the original order was made. New evidence could be relevant, but the explanation for its earlier absence mattered. The applicant also had to show a realistic prospect of a different outcome. The court applied the guidance in Papanicola (as trustee in bankruptcy for Mak) v Humphreys [2005] 1 All ER 418.
3. The court assumed, without deciding, that the additional documents had been omitted from the earlier bundle and were authentic. They could materially affect the factual analysis of the abuse-of-process issue. Nevertheless, the earlier decision also rested independently on estoppel by record. The additional material did not affect that ground. A challenge to that pure point of law belonged in the Court of Appeal, rather than on a rehearing.
4. Even on the abuse-of-process ground, the respondents had no realistic prospect of success. If the declaration of trust had been known about but deliberately not deployed in the earlier proceedings, no adequate explanation had been given for that choice. The principle in Henderson v Henderson (1843) 3 Hare 100 therefore remained applicable.
5. The proposed challenges to the value of the property, legal aid liability and bankruptcy expenses could not produce a realistic prospect of an appreciable surplus. They therefore could not alter the possession outcome.
6. The trustee was the successful party on the possession claim. The general rule under Civil Procedure Rules 1998, Part 44.3(2), that the unsuccessful party pays the successful party’s costs was not displaced.

This was a first-instance application. The judgment records that Mr Haghighat had filed an out-of-time appellant’s notice seeking permission to appeal earlier decisions, but no appellate decision is stated.