Thomas & Anor (Joint Trustees In Bankruptcy of Stephen John Edmondson) v Edmondson

The existence of an income payments agreement under Insolvency Act 1986, section 310A, does not remove the court’s jurisdiction to make an income payments order under section 310. The statutory language is clear and contains no such restriction. The court may exercise its discretion to prevent any excessive or anomalous period of payment. In deciding whether to make a subsequent order, and determining its duration, the court should take account of the existence and length of the earlier agreement.

The joint trustees in bankruptcy appealed against a Slough County Court declaration that they had no jurisdiction to obtain an income payments order under section 310 of the Insolvency Act 1986 because the bankrupt had previously entered into an income payments agreement under section 310A.

The agreement had lasted for part of the relevant tax year. After the bankrupt declined to enter into a further agreement, the trustees applied for an income payments order. The central issue was whether the two statutory regimes were mutually exclusive, or whether the court retained jurisdiction to make an order despite the earlier agreement.

1. Appeal allowed. The District Judge had erred in law in concluding that the previous income payments agreement ousted the jurisdiction to make an income payments order.
2. On its plain and ordinary meaning, section 310 gives the court jurisdiction to make an income payments order on the trustee’s application before discharge. Neither section 310 nor section 310A states that the existence of an earlier agreement prevents the exercise of that jurisdiction.
3. The relevant provisions were introduced or amended together by sections 259 and 260 of the Enterprise Act 2002. If Parliament had intended the jurisdiction under section 310 to be limited by a previous agreement, an express provision to that effect could have been included.
4. The possibility that successive agreements and orders might create an excessive payment period did not justify departing from the statutory language. Any anomaly could be addressed through the court’s discretion when deciding whether to make a subsequent order and, if so, its duration. The earlier agreement and its length were relevant factors.
5. The legislative history, the Cork Report, the White Paper and the Explanatory Notes did not establish that the two regimes were mutually exclusive. The Explanatory Notes shed no light on that specific question.
6. The court did not need to decide whether the total duration of obligations under an agreement and an order could in every case exceed three years. That issue did not require the proposed restrictive construction of section 310.

The appeal was from an order of District Judge Jones made on 20 November 2013 in the Slough County Court. The District Judge declared that the trustees were not entitled to an income payments order under section 310 of the Insolvency Act 1986. The High Court allowed the appeal.