Simmonds v Pearce

A trustee in bankruptcy may use CPR 81.15 to apply for committal where a bankrupt’s non-compliance with statutory duties is punishable as contempt under the Insolvency Act 1986. The procedure applies whether or not the court has given a specific direction under section 363(2). Such applications should ordinarily be issued in the Chancery Division and transferred there if issued in the Administrative Court.

To establish contempt, the trustee must prove the breach to the criminal standard and show that the bankrupt acted without reasonable excuse. Deliberate concealment of assets, dishonest answers and refusal to provide information required for the administration of the estate may constitute intentional contempt. The court may admit answers given under compulsion at a public examination in contempt proceedings, although separate statutory restrictions apply to their use in criminal proceedings.

The applicant was the trustee in bankruptcy of the respondent, whose bankruptcy followed judgment requiring him to repay money received from an estate. The trustee alleged that the respondent had concealed the money, failed to disclose accounts and information, lied during public examinations and refused to answer questions.

The application was made in the Administrative Court under CPR 81.15 for breaches of sections 312, 333 and 363 of the Insolvency Act 1986. The court first considered the correct procedural route and the admissibility of answers given at the public examinations, then determined liability. The central issues were whether the statutory breaches had been proved to the criminal standard, whether they were without reasonable excuse, and whether they amounted to contempt of court.

1. The application was procedurally competent. CPR 81.15 is sufficiently wide to cover every form of non-cooperation with a trustee in bankruptcy that is punishable as contempt under the Insolvency Act 1986, whether or not the conduct involved breach of a direction under section 363(2). It was preferable to attempting to fit the matter into CPR 81.10 or creating an uncatered-for procedure. Permission was not required.

2. Future applications of this kind should be issued in the Chancery Division and dealt with by a Chancery Division judge. Applications issued in the Administrative Court should ordinarily be transferred administratively.

3. Answers given under compulsion at a public examination were admissible in the contempt proceedings. Section 433(1) permitted their use, while section 433(2) concerned criminal proceedings and did not prevent their use in this application. The privilege against self-incrimination did not entitle the respondent to refuse to answer questions at the public examination.

4. The alleged breaches of sections 333(1)(a), 333(1)(c) and 363(2) were proved to the criminal standard. The respondent had deliberately failed to disclose accounts and information about the inheritance money, had concealed assets through transactions involving family members, had given dishonest answers and had refused to answer further questions. The conduct was intentional, without reasonable excuse and calculated to obstruct the trustee’s statutory functions under section 305(2).

5. The court did not find the alleged breach of section 312 proved. It was not satisfied to the criminal standard that the respondent possessed bank records or other documents which he had failed to deliver up.

6. The court endorsed the trustee’s certification and found that each established breach amounted to criminal contempt of court. The question of sanction was reserved for further submissions.

The judgment records that a bankruptcy order was made against the respondent on 27 April 2015, and that the applicant became trustee in bankruptcy on 2 July 2015. The present application was determined at first instance by the Divisional Court.