Lau v Cowley & Anor

Under the Cross-Border Insolvency Regulations 2006, a recognition application must be served in accordance with Schedule 2. Where service cannot be made at the defined proper address, court directions are required. The court nevertheless has power retrospectively to authorise service outside the jurisdiction. That power is implicit in Schedule 2 paragraph 22(2), read with the application of CPR Part 6 and the court’s general power to give directions. Retrospective authorisation is appropriate where delivery gave timely notice and caused no detriment. Service gives notice of the proceedings; it does not establish substantive jurisdiction under article 4.2 of the Model Law.

Trustees in bankruptcy obtained recognition of Hong Kong bankruptcy proceedings as a foreign main proceeding under the Model Law. The recognition application was delivered to the debtor’s home in Hong Kong without prior directions for service outside England and Wales. The Deputy Judge retrospectively validated service.

Permission to appeal was granted on whether Schedule 2 empowered the court retrospectively to validate service outside the jurisdiction. The debtor argued that directions had to be obtained prospectively. The trustees relied on CPR rule 6.15, an implied power, and alternative arguments concerning irregularity and submission to the jurisdiction.

1. The appeal was dismissed. The court had power retrospectively to authorise delivery of the recognition application to the debtor’s home in Hong Kong as good service.
2. Schedule 2 paragraphs 21 and 22 require service of a recognition application. Paragraph 22(1) and (2) are mandatory: service must be by delivery to the proper address or in another manner directed by the court. An applicant unable to serve at the defined proper address must obtain directions.
3. The requirement for directions does not exclude retrospective authorisation. Section II of CPR Part 6 applies under Schedule 2, and CPR rule 6.15(2) permits steps already taken to be treated as good service. An equivalent power is implicit in paragraph 22(2). Abela v Baadarani [2013] UKSC 44 supported that conclusion.
4. The service provisions perform a notice function. They do not require prior determination of substantive jurisdiction under article 4.2 of the Model Law. A substantive jurisdiction challenge may be brought under CPR Part 11.
5. Re Ardawa (A Bankrupt) [2019] EWHC 456 (Ch) was distinguished because it concerned a different insolvency-service regime, the exclusion of CPR Part 6, and the traditional importance of personal service of a bankruptcy petition.
6. Alternatively, the debtor had voluntarily submitted to the jurisdiction by seeking an adjournment and directions for evidence on the merits. That conclusion was unnecessary to dispose of the appeal.

High Court (Chancery Division): Appeal from a recognition order made on 8 January 2020 by Deputy Insolvency and Companies Court Judge Barnett. Permission to appeal was granted on 28 April 2020 on the issue of retrospective validation of service outside the jurisdiction. The appeal was dismissed.