Hellard (Trustee In Bankruptcy) v Kapoor

Under Insolvency Act 1986, s 279, the court may suspend a bankrupt’s discharge where it is satisfied that the bankrupt has failed, or is failing, to comply with obligations under Part IX. The power is penal, but also serves to encourage compliance and assist the trustee in collecting, realising and distributing the estate. The court assesses compliance at the hearing, while keeping the trustee’s grounds within the case advanced in the application evidence. Delay is relevant, particularly where the trustee waits until the discharge date, but it is not automatically fatal. Suspension requires reliable evidence of material non-compliance; lifestyle or suspicion alone is insufficient.

The trustee in bankruptcy applied under s 279(3) of the Insolvency Act 1986 to suspend Charnesh Kapoor’s automatic discharge. The trustee alleged failures to disclose shareholdings, bank accounts, information concerning Indian litigation, income and property interests. The application and evidence had been served late, and the bankrupt argued that the delay and procedural defaults should prevent relief. The central issues were whether Kapoor had failed, or was failing, to comply with his obligations under s 333(1), and whether the court should exercise its discretion to suspend discharge.

1. Threshold. The court had to be satisfied under s 279(4) of the Insolvency Act 1986 that the bankrupt had failed or was failing to comply with an obligation under Part IX. The relevant obligation was s 333(1), requiring the bankrupt to provide information, attend on the trustee and do such other things as the trustee reasonably required for the performance of his functions.
2. Evidence and timing. Whether the bankrupt was still failing to comply could be assessed at the hearing, including later evidence relating to the grounds in the original application. The trustee was not entitled to introduce wholly new grounds beyond those advanced in the supporting evidence.
3. Purpose of the power. The power under s 279 is penal in character, extends the period during which the bankrupt suffers the disabilities of bankruptcy, and assists the trustee to collect, realise and distribute the estate. It may also provide an incentive to comply. The court considered Shierson v Rastogi [2007] BPIR 891 and applied the approach in Bramston v Haut [2013] 1 WLR 1720.
4. Application. Kapoor had provided materially misleading or inadequate information concerning Management, Kapoor Investments Ltd, several bank accounts and the Indian litigation. The court could not determine ownership on the application, but the confused information itself demonstrated non-compliance. Suspicion based solely on lifestyle would not suffice, and the evidence concerning the paintings and 534 Finchley Road was insufficient on its own.
5. Discretion and delay. Delay is relevant because a trustee should not wait until the last moment, as recognised in Bagnall v Official Receiver [2004] 1 WLR 2832 and Hardy v Focus Insurance [1997] BPIR 77. However, the delay here did not outweigh the seriousness of the non-compliance. Chadwick v Nash [2012] BPIR 70 was distinguishable because the trustee there had done little to investigate and had used threatened suspension improperly.
6. The application was granted. Discharge was suspended until 9 May 2014.