Harvey v Dunbar Assets Plc

On a further application to set aside a statutory demand, a debtor will ordinarily be prevented from re-arguing a point already decided against him, including where the point was abandoned on appeal. The governing basis is the public interest in avoiding repeat litigation, waste of court and party resources, and delay to other litigants. The rule is subject to special, new, changed or exceptional circumstances. The court hearing a bankruptcy petition retains its statutory duty to decide whether the conditions for bankruptcy are satisfied. Promissory estoppel requires a clear and unequivocal assurance intended to affect legal relations, reasonable reliance, and a resulting inequity if the assurance is withdrawn.

Dunbar Assets plc served a second statutory demand on John Spencer Harvey under a joint and several guarantee. Harvey applied to set it aside, relying on the same promissory estoppel argument previously rejected by the District Judge. His earlier appeal had concerned only a separate issue about the signature of a co-guarantor, and that appeal had ultimately succeeded. After the co-guarantor was later found to have signed the guarantee, the Bank issued the second demand. The District Judge refused the second application, holding that the promissory estoppel point could not be re-litigated and would fail in any event. Permission had been refused below. The central issues were whether the point could be raised again and, if so, whether the debt was disputed on substantial grounds under the Insolvency Rules 1986.

Permission to appeal granted; appeal dismissed.

1. The court held that, absent special, new, changed or exceptional circumstances, a debtor cannot re-argue on a second statutory-demand application a point previously argued and rejected. This applies even though the point was not pursued on an earlier appeal and the first statutory demand was set aside on a different ground. The principle is founded at least on abuse of process and the public interest, rather than necessarily on issue estoppel or res judicata.
2. The court distinguished the position at a bankruptcy petition hearing. At that stage the court must still satisfy itself, on the material before it, that the statutory conditions for a bankruptcy order are met. Whether a previously abandoned or unsuccessful point may then be raised is for the petition judge, applying the relevant principles.
3. No exceptional circumstances existed. The additional evidence was not materially different, Harvey had chosen not to pursue the promissory estoppel point in the earlier appeals, and the proposed case remained the same in substance. Re-opening it would waste time and money and prejudice access to the courts by other litigants.
4. In any event, the promissory estoppel case failed on its merits. The alleged statements were capable of meaning no more than a general expectation that enforcement would not be needed. They were not a clear and unequivocal promise never to enforce the guarantee, and it was not reasonable to rely on them in that sense. The District Judge’s conclusion was therefore correct.

The order dismissing the appeal was made. The judgment did not determine whether the point could be raised on any later bankruptcy petition.

• High Court (Chancery Division): Permission to appeal granted, followed immediately by the substantive appeal; appeal dismissed.
• County Court at Newcastle upon Tyne: District Judge Pescod dismissed the second application to set aside the statutory demand on 6 July 2015 and refused permission to appeal.
• High Court: An earlier appeal on the separate Lenney point was dismissed on 7 September 2012.
• Court of Appeal: The earlier appeal on the Lenney point was allowed on 30 July 2013: [2013] EWCA Civ 952. Permission to appeal on the promissory estoppel point was not pursued.