Lambert v Forest of Dean District Council

On an appeal by way of case stated, the High Court is confined to the legal questions stated and cannot revisit disputed facts. A second application to set aside identical liability orders is barred by cause of action estoppel where the first application was finally determined, absent fraud or collusion. Proceedings brought by a bankrupt on a right vested in the trustee are an abuse of process and are not a nullity; the lack of standing is fatal. A magistrates’ power to set aside a liability order is exceptional and must be exercised cautiously, including where there is a genuine and arguable dispute, substantial procedural error and prompt application.

The appellant appealed by way of case stated against the dismissal by the Gloucestershire Magistrates’ Court of a repeat application to set aside liability orders for unpaid national non-domestic rates. The same liability orders and substantially identical grounds had been considered and rejected in an earlier application. The appellant argued that his bankruptcy made the earlier proceedings a nullity and entitled him to a fresh hearing. The stated questions concerned res judicata, the magistrates’ jurisdiction to determine nullity, and the relevance of Yang v Official Receiver [2017] EWCA Civ 1465.

1. The appeal was dismissed. The court granted an extension of time because the appellant had lodged the case stated within time, albeit on the wrong form, and the nature of the appeal was clear.

2. On Q2, the magistrates had jurisdiction to decide whether the earlier proceedings were a nullity. That question arose as part of their consideration of whether the repeat application could proceed.

3. On Q1, the magistrates were correct. The 2017 application and the 2019 application concerned identical liability orders and the same cause of action. The strict form of res judicata, cause of action estoppel, therefore applied. Under the principles discussed by Lord Sumption in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160, the bar on re-litigation was absolute unless fraud or collusion justified setting aside the earlier judgment. No such basis existed.

4. The distinction between council tax and national non-domestic rates did not materially distinguish Yang v Official Receiver [2017] EWCA Civ 1465. However, Munday v Hilburn [2014] EWHC 4496 established that proceedings brought by a bankrupt on a right vested in the trustee are an abuse of process rather than a nullity. The lack of standing is fatal once raised and determined.

5. Under sections 306, 283(1) and 436 of the Insolvency Act 1986, the right to challenge the liability orders was a thing in action or interest arising out of property and vested in the trustee in bankruptcy. The appellant therefore lacked standing to bring the application or appeal. The exceptions in section 283(2), (3), (3A) and (5) did not apply.

6. The appeal failed on every point. It was totally without merit, and an Extended Civil Restraint Order was made preventing further proceedings concerning the liability orders unless reviewed for merit.

1. High Court (Administrative Court): The appeal by way of case stated from the Gloucestershire Magistrates’ Court was dismissed. The court answered Q1 in the affirmative and confirmed that the magistrates had jurisdiction to determine the nullity issue.
2. Gloucestershire Magistrates’ Court: The repeat application to set aside the liability orders was dismissed on 28 February 2020 because the same application had already been adjudicated in 2018.