Raiffeisenlandesbank Oberösterreich AG v Meyden

Where a bankruptcy order is made without jurisdiction because the debtor’s centre of main interests was outside England and Wales, the court must annul the order once an affected person establishes that jurisdictional defect. The general procedural rule is that an order made without jurisdiction must be set aside as of right. Section 282 of the Insolvency Act 1986 does not replace that rule with an unfettered discretion in jurisdictional cases. Delay may raise a separate question about whether the applicant is a person affected by the order or whether the court should entertain a very late application, but it did not do so here.

The appellant bank claimed to be a creditor under guarantees given by the respondent, Nikolaus Meyden. Mr Meyden had petitioned for his own bankruptcy, stating that his centre of main interests was in England and Wales. The bankruptcy order was made on 9 June 2010, and he was discharged on 9 June 2011.

The bank later applied under section 282(1)(a) of the Insolvency Act 1986 to annul the order, contending that Mr Meyden’s centre of main interests had not been in England and Wales when the petition was presented. The Deputy Registrar accepted that conclusion but declined to annul the bankruptcy, treating delay as an exceptional circumstance within a discretion under section 282. The central issue on appeal was whether lack of jurisdiction required annulment as of right.

1. Appeal allowed. The bankruptcy order was annulled under section 282(1)(a) of the Insolvency Act 1986, and the petition was dismissed.

2. Article 3 of Council Regulation (EC) 1346/2000, read with section 265(3) of the Insolvency Act 1986, meant that only the courts of the member state where the debtor’s centre of main interests was situated had jurisdiction to open main insolvency proceedings. The Deputy Registrar’s finding that Mr Meyden’s centre of main interests was not in England and Wales therefore established that the bankruptcy order had been made without jurisdiction.

3. The court followed the general procedural principle stated in Munks v Munks [1985] FLR 576. An order made without jurisdiction, though valid on its face until set aside, must be set aside when the defect is established, and a person who might be affected by it is entitled to seek that relief as of right.

4. Section 282 confers a genuine discretion in ordinary cases where a bankruptcy order ought not to have been made. However, that discretion does not displace the default procedural rule where the court had no jurisdiction at all. Article 4 of the Insolvency Regulation imports the relevant English procedural rules, including the rule governing orders made without jurisdiction.

5. The court recognised a possible limitation in very late cases. After 10, 15 or 20 years, it might be difficult for an applicant to show that he was a person affected by the order, or the court might decline to reopen the jurisdictional issue. That question did not arise because the bank had established a possible continuing effect on its enforcement rights.

6. It was unnecessary to decide the alternative grounds challenging the Deputy Registrar’s exercise of discretion. The court nevertheless indicated that, if a discretion had applied, the decision would not have been flawed under the generous ambit test described in Re G v G [1985] UKHL 13 or the formulation cited from Roache v News Group Newspapers Ltd [1998].

• High Court (Chancery Division): allowed the appeal from the Deputy Registrar’s decision and annulled the bankruptcy order under section 282(1)(a) of the Insolvency Act 1986.