Kumar v Hellard

Where evidence raises a real question about a party’s litigation capacity, the court must address capacity before allowing substantive proceedings to continue. A hearing’s summary or non-trial nature does not remove that obligation. A protected party cannot take procedural steps without the court’s permission until a litigation friend has been appointed. A bankruptcy order made without addressing those safeguards may be both wrongly made and unjust because of serious procedural error.

The appellant appealed against a bankruptcy order made by a district judge on a petition founded on judgment debts. Before the hearing, medical evidence indicated that he had Alzheimer’s disease, lacked capacity and could not meaningfully participate in court proceedings. He sought an adjournment, but the district judge proceeded on the basis that the debt remained outstanding and that the hearing did not require his attendance.

The appeal concerned whether the district judge had been required to determine the appellant’s litigation capacity and, if he was a protected party, to ensure that a litigation friend was appointed before the petition proceeded.

1. Appeal allowed. The bankruptcy order was set aside. The evidence before the district judge raised serious questions about the appellant’s litigation capacity. The district judge should expressly have addressed that issue.
2. Had the issue been addressed, the district judge should have concluded that a litigation friend was required. Under CPR 21.3(3), applied to insolvency proceedings by r. 12.1 of the Insolvency Rules 2016, no party may take a step in proceedings without the court’s permission until a protected party has a litigation friend. A step taken before then has no effect unless the court orders otherwise under CPR 21.3(4).
3. The fact that the bankruptcy hearing was not a formal trial, and did not require evidence or cross-examination, did not make the appellant’s capacity irrelevant. The failure to address capacity meant that the order was wrongly made and unjust because of serious procedural error.
4. The court appointed the appellant’s daughter, who held a lasting power of attorney, as litigation friend under CPR 21.6(1). The petition was transferred to the Business and Property Courts for case management with the earlier extant bankruptcy petition.
5. The existence of the earlier petition did not itself establish an appealable error, since the district judge had been unaware of it and had acted properly on the material before him. The later order might potentially be annulled or reviewed under sections 282(1)(a) or 375 of the Insolvency Act 1986, but that issue was outside the appeal.
6. Costs in the lower court were costs in the petition. The respondent was ordered to pay the Official Receiver’s costs, if any, and the appellant’s appeal costs, summarily assessed at £4,535.

• High Court (Chancery Division): The appeal from the County Court at Romford was allowed and the bankruptcy order made on 19 December 2019 was set aside.