Lakatamia Shipping Company Ltd & Ors v Su & Ors

Pending committal proceedings may continue after a bankruptcy order where they concern alleged contempt and seek punishment for personal misconduct rather than enforcement of a provable debt. Insolvency Act 1986, section 285 distinguishes proceedings already pending from proceedings commenced after bankruptcy. The leave requirement in section 285(3)(b) therefore does not apply to an existing committal application. The court may decline to stay such proceedings under section 285(2), particularly where they protect the administration of justice and do not prejudice the general body of creditors. Amendments adding discrete alleged contempts may be permitted before the committal hearing, even though further allegations might later emerge, provided the respondent has a fair opportunity to prepare.

The claimant sought permission to re-amend an existing committal application against the first defendant by adding 11 alleged contempts involving non-disclosure, dissipation of assets and non-compliance with court orders. The defendant had been made bankrupt after the committal proceedings were issued. The court considered whether bankruptcy restricted continuation of the proceedings and whether the proposed amendments should be refused because review of seized documents was incomplete and the defendant lacked funding to review all material.

1. The application to re-amend the committal application notice was granted. The additional allegations were discrete and sufficiently particularised, and the committal hearing was to be fixed shortly.
2. Section 285(3)(a) of the Insolvency Act 1986 was not engaged. The committal proceedings did not seek to enforce the judgment debt against the bankrupt’s property and did not prejudice the general body of creditors.
3. The proceedings had been commenced before the bankruptcy order. Accordingly, section 285(3)(b), which concerns commencing proceedings after bankruptcy, was not the applicable provision. Section 285(2) governed the question whether the pending proceedings should be stayed.
4. A committal proceeding is punitive and concerns personal misconduct. It is materially different from proceedings designed to enforce a legal obligation or obtain control of the bankrupt’s estate. There was a significant public interest in securing compliance with court orders, and the other creditors had an interest in the defendant providing a full and accurate account of his assets. A stay would have been refused if sought.
5. The possibility that further contempts might be discovered did not make the present amendment pointless. Nor did the defendant’s limited funding establish unfairness. He could focus his legal team’s review on the specific topics raised by the amended allegations.