Crammer v West Bromwich Building Society & Ors

A bankruptcy annulment application cannot ordinarily be used to re-litigate grounds already rejected in the bankruptcy proceedings. A ground not previously adjudicated may be raised under section 282(1)(a) of the Insolvency Act 1986, but annulment remains discretionary. The court may consider whether the debtor reasonably could have raised the ground earlier.

The review power under section 375 will normally be confined to new material or a material change of circumstances. Applying those restrictions does not infringe the right to a fair hearing where the original decision and any alleged procedural unfairness could have been challenged by appeal.

The applicant renewed his applications for an extension of time and permission to appeal against HHJ Hodge QC's dismissal of his application to annul, rescind or review a bankruptcy order made by Lloyd J in January 2004.

The proposed appeal alleged procedural unfairness and relied on issues concerning an individual voluntary arrangement, the appropriation of mortgage recoveries and the petitioning creditor's standing. Those matters had been determined during the bankruptcy proceedings or raised in earlier applications for permission to appeal. The central question was whether any proposed ground justified reopening the bankruptcy order under sections 282 or 375 of the Insolvency Act 1986.

1. Permission to appeal refused. The proposed appeal had no proper basis and was bound to fail. It was therefore unnecessary to determine the application for an extension of time.

2. Section 282(1)(a) of the Insolvency Act 1986 permits annulment on grounds existing when the bankruptcy order was made which show that the petition debt did not exist or that the order should not have been made. It does not ordinarily permit the debtor to re-litigate points already raised and rejected in response to the statutory demand or at the petition hearing. Such points may be reopened only in exceptional circumstances, consistently with Turner v Royal Bank of Scotland [2000] BPIR 683.

3. A debtor may rely on an effective answer to the petition which has not previously been adjudicated, even if it could have been raised earlier. The court must review the order in light of the new material. Annulment nevertheless remains discretionary, and the court may consider the creditor's reasonable conduct and the debtor's failure to advance an available defence earlier, applying Owo-Samson v Barclays Bank plc [2003] EWCA Civ 714.

4. The power under section 375(1) to review, rescind or vary a bankruptcy order will not normally assist a debtor who merely seeks to re-argue matters determined at the original hearing. The proper remedy is an appeal. As a matter of principle and discretion, review will ordinarily be limited to new material or a material change of circumstances.

5. Those restrictions protect the court's process from abuse and do not infringe article 6 of the European Convention of Human Rights. The debtor could appeal both the substantive grounds of the bankruptcy order and any procedural irregularity said to have denied a fair hearing.

6. HHJ Hodge QC was entitled to reject the renewed arguments. The individual voluntary arrangement, appropriation and procedural complaints had already been determined in the bankruptcy proceedings or pursued through applications for permission to appeal. The delay, absence of new material and lack of evidence about the current state of the bankruptcy also justified the discretionary refusal of relief. The transfer direction in the bankruptcy order neither invalidated the order nor deprived Lloyd J of jurisdiction.

• Court of Appeal (Civil Division): On the renewed application reported as [2012] EWCA Civ 517, refused permission to appeal. It was unnecessary to determine the requested extension of time.

• High Court, Chancery Division: HHJ Hodge QC dismissed the application to annul, review or rescind the bankruptcy order on 22 March 2010. The Master of the Rolls subsequently refused permission to appeal on the papers.

• High Court: Lloyd J made the bankruptcy order on 28 January 2004 after rejecting the debtor's limitation, individual voluntary arrangement, appropriation and counterclaim arguments. Earlier applications for permission to appeal were refused.