HH Aluminium & Building Products Ltd & Anor v Bell & Anor (Rev 1)

A county court may transfer a discrete application within bankruptcy proceedings to the High Court under rule 12.30(2) of the Insolvency (England and Wales) Rules 2016. It need not transfer the entire bankruptcy.

For rule 12.9(3), the date fixed for hearing is the date first fixed as part of the venue and endorsed on the application notice. A later relisting does not alter the service deadline without an extension of time. Where a substantive insolvency application is served late and limitation has expired, the court applies the same principles as for extending time to serve a claim form. The possible loss of a limitation defence is the primary consideration, although the court must consider the time allowed for service, the applicant's conduct and the explanation for delay.

The trustees in bankruptcy of Mrs Ide issued a substantive insolvency application against several respondents, including HH Aluminium & Building Products Ltd and its director, Mr House. It was issued at least arguably on the final day of the relevant limitation period.

The County Court initially fixed a hearing for 9 July 2019. Before service, the trustees obtained a without-notice order vacating that hearing and relisting it for October. They served HH and Mr House in September, more than 14 days before the relisted hearing but after the deadline calculated from the original hearing date.

HHJ Matthews transferred the respondents' strike-out and summary-judgment application to the High Court in Bell v Ide [2020] EW Misc 3 (CC). Sitting as a High Court judge, he held that service before the relisted date complied with the Rules and declined to follow Re Kelcrown Homes Ltd. The conjoined appeals concerned the transfer power, the meaning of rule 12.9, and the effect of limitation on late service.

1. The court dismissed the appeal against the transfer order, but allowed the appeal against the substantive order. It set aside the without-notice order of 27 June 2019 as against HH and Mr House and struck out the substantive application against them.

2. Rule 12.30(2) of the Insolvency (England and Wales) Rules 2016 permits transfer of a particular application within a bankruptcy. The expression “insolvency proceedings” has a fluid meaning and can include a discrete application. That construction accords with the practical administration of a bankruptcy: it avoids requiring all applications, including routine low-value matters, to move to the High Court merely because one application warrants transfer. Decisions under differently worded predecessor legislation did not govern the 2016 Rules.

3. Rule 12.9(3) required service at least 14 days before the hearing date originally fixed under rule 12.8 and endorsed on the application notice. The structure of the Rules proceeds from filing, to fixing the venue, to service. It also promotes prompt notice to a respondent and protects the proper operation of limitation periods. The trustees therefore had to serve by 24 June 2019, not merely 14 days before the relisted October hearing.

4. An order vacating and relisting the hearing had the practical effect of extending time for service. A substantive insolvency application is materially analogous to a claim form where the applicant requires an extension after limitation has expired. The same approach applies: the primary question is whether an extension may deprive the respondent of a limitation defence, and that defence should not ordinarily be lost save in exceptional circumstances. Re Kelcrown Homes Ltd [2017] EWHC 537 (Ch) was correct on that point.

5. Arnold LJ added that the insolvency context requires attention to the period for service actually fixed by the court, the applicant's efforts to serve, and the reason for delay. Here the trustees had nearly five months to serve the non-Burnett respondents and delayed for reasons that did not justify an extension. The limitation position was not put before the district judge. The only correct exercise of discretion was therefore to refuse an extension, so the claims against HH and Mr House could not proceed.

• Court of Appeal (Civil Division): Allowed the appeal against the substantive order, set aside the order of 27 June 2019 as against HH and Mr House, and struck out the substantive application against them. It dismissed the appeal against the transfer order.
• High Court: HHJ Matthews, sitting as a High Court judge, held that service before the relisted hearing complied with rule 12.9 and otherwise dismissed the October application, save for striking out the preference claim against HH: Bell v Ide [2020] EWHC 230 (Ch).
• County Court at Bristol: HHJ Matthews held that he had power to transfer the October application alone to the High Court: Bell v Ide [2020] EW Misc 3 (CC).