Kasumu v Arrow Global (Guernsey) Ltd

Presentation of a further bankruptcy petition without prior permission under Insolvency Rule 6.26 does not necessarily render the petition a nullity. The court may consider retrospective permission, particularly where the rule’s purpose is to examine whether the earlier non-attendance made a further petition improper or unfair.

The failure to obtain permission first is capable of being treated as a defect or irregularity under Insolvency Rule 7.55. The court must consider whether substantial injustice has resulted and whether it can be remedied by a later order. A further petition is not necessarily an abuse of process merely because an earlier petition concerning the same debt was dismissed after the creditor failed to attend.

The appellant appealed against District Judge Major’s order in the Croydon County Court concerning a second bankruptcy petition for the same debt. The first petition had been dismissed in 2010 after the petitioning creditor failed to attend. The second petition had already been presented and served before the District Judge ordered an application for permission under Insolvency Rule 6.26 and directed that the permission application and bankruptcy petition be heard together.

The appellant argued that the second petition should have been dismissed because permission had not been obtained in advance, and that its presentation was an abuse of process. The central issues were whether retrospective permission was available, whether the petition was a nullity or an irregularity, and whether the circumstances caused substantial injustice.

1. Appeal dismissed. The District Judge had not granted permission retrospectively. She had directed that the already-presented petition and the application for permission be dealt with at a later hearing.
2. Insolvency Rule 6.26 does not expressly provide that a further petition presented without prior permission is void. The rule should be considered in its full context, including its purpose and the consequences of treating the petition as a nullity. Retrospective permission is therefore available.
3. The principal purpose of Rule 6.26 is to ensure that nothing arising from the creditor’s non-attendance at the earlier petition makes presentation of a further petition improper or unfair. That inquiry can be undertaken after presentation.
4. The failure to obtain permission before presentation is a defect or irregularity within Insolvency Rule 7.55. The court must determine whether substantial injustice has been caused and, if so, whether it can be remedied by retrospective permission. The appellant’s complaints about prejudice could be considered at the permission hearing.
5. The mere recital that the evidence had been read did not necessarily make the earlier dismissal a determination on the merits. If the first petition had been dismissed solely because the creditor failed to attend, the second petition was not, on the material presently available, an abuse of process in the Henderson v Henderson sense. That issue could nevertheless be explored at the permission hearing.
6. The court placed little weight on the alleged prejudice to creditors from requiring a fresh petition, since any resulting delay would arise from the creditor’s own failure to comply with the rule. The alleged failure to re-serve the statutory demand caused no identified additional detriment.

• High Court (Chancery Division): District Judge Major’s order was upheld. The appeal was dismissed.