Anglo Irish Bank Corporation Ltd v Flannery

For a bankruptcy petition to be presented under Insolvency Act 1986, section 265(1)(c)(ii), the creditor must show that the debtor carried on business in England and Wales during the relevant three-year period. Carrying on a company’s business does not itself establish that the debtor carried on a separate personal business. The court must assess the totality of the evidence. On appeal, interference with a Chief Registrar’s decision requires an error of principle, reliance on immaterial matters, failure to consider material matters, or a decision that was impermissible or plainly wrong.

Anglo Irish Bank Corporation Limited presented a bankruptcy petition against Mr James Flannery, who had guaranteed loans made to companies in the Pentagon Group. The petition was served out of the jurisdiction. The Chief Registrar concluded that the bank lacked a good arguable case that Mr Flannery had carried on business in England and Wales within the meaning of section 265(1)(c)(ii) of the Insolvency Act 1986.

The bank appealed, arguing that Mr Flannery’s involvement in the companies and their London property investments established a separate business of his own. The central issue was whether the Chief Registrar’s conclusion was open to appellate interference.

1. The appeal was dismissed. The Chief Registrar’s decision that the bank had not shown a good arguable case under section 265(1)(c)(ii) of the Insolvency Act 1986 stood.
2. The relevant question was whether Mr Flannery had carried on business in England and Wales himself. The fact that companies carried on business in England and Wales did not, without more, establish that he carried on a separate business. In re Brauch showed that the court must consider the totality of the evidence and distinguish the company’s business from any separate business of the debtor.
3. The evidence established, at most, that Mr Flannery had acted as guarantor, had been involved in some financing discussions, and had provided property advice. It did not demonstrate that he managed or directed the companies or carried on a personal business connected with them. His evidence that he had ceased to have a beneficial interest in the structure in 2003 was substantially uncontradicted.
4. The appellate court could interfere if the Chief Registrar had taken account of immaterial matters, omitted material matters, erred in principle, or reached an impermissible or plainly wrong decision. Those grounds were not made out. The judge would himself have reached the same conclusion on the evidence.
5. The judge declined to decide whether the parties should have addressed proof of the section 265 requirement rather than the existence of a good arguable case, or whether disclosure and cross-examination could be ordered. Those issues were unnecessary to the disposal of the appeal.

• High Court (Chancery Division): The appeal from the Chief Registrar’s decision was dismissed.
• Chief Registrar Baister: On 6 February 2012, he concluded that the creditor lacked a good arguable case that section 265(1)(c)(ii) of the Insolvency Act 1986 was satisfied.