Gate Gourmet Luxembourg IV Sarl & Anor v Morby

A bankruptcy petition is presented when it is delivered to the court for filing, rather than when it is later sealed or endorsed. Jurisdiction may therefore arise from the debtor’s presence in England and Wales on the filing date. A debtor’s domicile of origin revives unless a change of domicile by choice is proved by residence in another territory coupled with an intention to reside there permanently.

Rule 7.55 of the Insolvency Rules 1986 applies on a case-by-case basis to defects or irregularities in bankruptcy proceedings, including defective service. The court should ask whether insolvency proceedings are on foot, whether substantial injustice would result from curing the defect, and whether any such injustice could be remedied by an order. Service irregularities may be waived where the debtor knew of the petition and suffered no substantial injustice.

The petitioners sought a bankruptcy order against the respondent in respect of an unpaid liability arising from a settlement of warranty and tax-covenant claims connected with a share sale. The respondent resisted the petition on jurisdiction, service and security grounds.

The petition was filed at the Rolls Building on 21 July 2014, when the respondent was present in England. Personal service was disputed because the petition was handed to a friend in the respondent’s presence and at his direction. The petition also concerned a debt secured by a second charge over property in France. The court determined whether it had jurisdiction, whether service was effective or curable, and whether the security prevented the petition.

1. Jurisdiction. The petition was presented on 21 July 2014, when it was delivered to the court for filing. The court stamp, the petition’s date and the unchallenged evidence established that date. Later approval or sealing did not alter the presentation date. The respondent was present in England on that date, satisfying Insolvency Act 1986, section 265.
2. The respondent’s domicile of origin had revived because he had not proved that Dubai was his ultimate home or that he intended to reside there permanently. His employment, rented accommodation and family connections were insufficient, particularly in light of the retention of his English property and the limited evidence of permanent intention. Independently, his continuing business connection with the English companies and the unresolved settlement liability satisfied section 265. A business connection may continue after a sale where business debts or related claims remain outstanding.
3. Service. The court found, on the unusual facts, that personal service had been effected. The respondent knew the purpose of the meeting, knew that the document was the petition, directed that it be handed to his friend, was present while it was received and read, and engaged with its contents.
4. Alternatively, rule 7.55 of the Insolvency Rules 1986 empowered the court to waive the service irregularity. The rule requires a three-stage inquiry: whether insolvency proceedings are on foot; whether curing the defect would cause substantial injustice; and, if injustice is identified, whether it can be remedied by an order. The respondent had notice of the petition, understood its nature and had contested the underlying debt. No substantial injustice arose. The defect was waived. The specific insolvency service regime excluded retrospective substituted service under CPR 6.15.
5. Security and order. The second charge had no value after the prior charge was taken into account. The petition stated the estimated value of the security and was expressed not to be made in respect of the secured part of the debt, satisfying section 269(1)(b) of the Insolvency Act 1986. A bankruptcy order was made on handing down.

The Kingston County Court dismissed the respondent’s application to set aside the statutory demand and gave permission to present a bankruptcy petition. The present court then determined the final bankruptcy petition and made a bankruptcy order.