Richards v Vivendi SA

An application to annul a bankruptcy order is discretionary and may involve consideration of material that was not before the court which made the order. The court should ask what grounds existed when the order was made, whether the order ought not to have been made on those grounds, and whether annulment should be ordered. Fresh evidence is not inadmissible merely because it could have been adduced earlier, although that circumstance may affect the exercise of discretion. A court hearing the application must evaluate the new material itself. Disposing of the application without doing so may constitute a serious procedural irregularity and deny a fair hearing.

The appeal concerned a bankruptcy order made against Murray Richards on Vivendi SA’s creditor’s petition. Richards later applied under section 282(1) of the Insolvency Act 1986 to annul the order, alleging that the jurisdictional conditions had not been satisfied and relying on further factual material. The District Judge dismissed the application without reading or evaluating that material, treating it as an attempt to reargue matters already decided by the Registrar.

The central issues were whether the annulment court could consider new evidence capable of being adduced at the original hearing, and whether the District Judge had acted unfairly in dismissing the application without evaluating it.

1. Appeal allowed. The District Judge’s decision was wrong and involved a serious procedural irregularity.
2. Under section 282(1) of the Insolvency Act 1986, an annulment application may require the court to determine: the grounds existing when the bankruptcy order was made; whether, on those grounds, the order ought not to have been made; and whether the court should exercise its discretion to annul.
3. Where no new material is produced, the court will normally exercise its discretion against allowing a party to have a second attempt before a judge of coordinate jurisdiction, particularly where no appeal has been brought. That was the principle discussed in JSC Bank of Moscow v Kekhman [2015] 1 WLR 3737 and Ahmed v Mogul Eastern Foods [2007] BPIR 975.
4. Where further material is produced, it is not excluded merely because it could, with due diligence, have been produced at the original hearing. Its lateness is a discretionary factor. The court must assess whether it is sufficiently new and different, and whether it could have affected the original decision. The approach in Re a Debtor [1993] 1 WLR, concerning review applications under section 375, was relevant by analogy. The approach in Ladd v Marshall [1954] 1 WLR 1489 applies to appeals but should not be imported as an absolute rule into annulment applications.
5. The District Judge did not read or evaluate Richards’s written submissions and draft affidavit. She therefore wrongly concluded that there was no worthwhile new material and did not decide whether the material was sufficiently new and probative. This was a serious procedural irregularity and denied Richards a fair hearing.
6. The case was not one in which the appeal court could be satisfied that remission would serve no useful purpose or that the result was overwhelmingly obvious. Following Labrouche v Frey [2012] 1 WLR 3160 and Dunbar Assets plc v Dorcas Holdings Ltd [2013] EWCA Civ 864, the matter had to be reheard.
7. The annulment application was transferred to the High Court for a further hearing before the Registrar, with provision for cross-examination if required.

• High Court (Chancery Division): appeal from the order of District Judge Hay dated 29 November 2016 allowed. The annulment application was remitted to the High Court for rehearing.
• Croydon County Court: application to annul the bankruptcy order dismissed.
• High Court: bankruptcy order made by Registrar Derrett on 19 December 2014 after findings that jurisdiction existed under section 265 of the Insolvency Act 1986 and Article 3 of the EC Regulation.