Keely v Bell

Suspension of automatic discharge from bankruptcy requires proof that the bankrupt failed to comply with statutory obligations. Compliance is judged by whether the bankrupt did all that could reasonably be done to provide information, deliver records, permit access to assets and assist the trustee. The court may consider the trustee’s delay, but an application need only be made before the automatic discharge date. Where the breaches show thoroughgoing non-cooperation, a fixed-term suspension is appropriate rather than a conditional order tied to specified shortcomings.

The appellant, a bankrupt, appealed against an order of District Judge Bever suspending his automatic discharge for 12 months under section 279(3) of the Insolvency Act 1986. The trustee alleged failures concerning income information, bank records, litigation, other records, access to the bankrupt’s property and correspondence. The appellant also challenged the timing and procedure of the trustee’s application.

The appeal was heard as a rolled-up application for permission to appeal and, if permission were granted, the appeal itself. The central issues were whether the District Judge had made an error of law, whether the statutory breaches were established, and whether the suspension should be fixed-term or conditional.

1. Appeal approach. The appeal was not a rehearing. Absent serious procedural irregularity, intervention required an error of law, including a decision that was perverse on the material before the District Judge. Factual findings lawfully open to the primary fact-finder could not be revisited merely because the appellate judge might have assessed the evidence differently.
2. Timing of the application. Under section 279(3) of the Insolvency Act 1986, the trustee’s application only had to be made before the automatic discharge date: [2003] EWCA Civ 1925. The application was late and the bankrupt was denied the full period for evidence under rule 6.215(5) of the Insolvency Rules 1986. Those matters were relevant factors, but they did not bar relief.
3. Statutory compliance. A bankrupt does not fail to comply where he has done all that could reasonably be done to fulfil the broad and onerous statutory obligations. On the evidence, five breaches were established: inadequate disclosure of income, continued litigation concerning an interest vested in the trustee without consultation, failure to provide reasonably required records, failure to facilitate proper access to the principal property, and unreasonable restrictions on communication. The alleged failure concerning Allied Irish Bank accounts was not established because the trustee had not shown that the bankrupt ought to have known of the accounts or had failed to respond to a relevant request.
4. Form and duration of suspension. A conditional order may be suitable where one or two specific shortcomings can be identified and their remediation assessed. Where the breaches demonstrate thoroughgoing non-cooperation, a fixed-term suspension is appropriate. A 12-month suspension remained proportionate when the breaches were considered cumulatively and in the public interest.
5. Disposition. The appeal was dismissed. The application for a civil restraint order was refused. The appellant was ordered to pay the trustee’s appeal costs, assessed on the standard basis if not agreed.

• High Court (Chancery Division): the appeal from District Judge Bever’s order was dismissed. The 12-month suspension of automatic discharge was upheld.