Jamal Hijazi v Stephen Yaxley-Lennon

A bankruptcy does not, of itself, create a jurisdictional bar to an application under CPR Part 71. The process is an information-gathering procedure anterior to enforcement, rather than enforcement itself. The court retains a discretion to refuse or stay it where the information is not sought for a legitimate purpose or would undermine the statutory insolvency process. A Part 71 order may nevertheless be made where the information could assist the trustees, support investigation of the bankruptcy, contribute to possible proceedings concerning transactions at an undervalue, or help determine whether the bankruptcy should be challenged. Any order must remain subject to the bankrupt’s obligations to the trustees.

The claimant was a judgment creditor of the defendant in defamation proceedings. The judgment debt was provable in the defendant’s continuing bankruptcy. The claimant sought an order under CPR 71.2 requiring the defendant to attend court, answer questions on oath and produce documents concerning his means. There was uncertainty whether an earlier examination order had been made, and the defendant, although validly served, did not attend the hearing.

The court therefore considered whether to make a fresh or protective order, and whether the defendant’s bankruptcy prevented or made inappropriate the continuation of the Part 71 process.

1. Protective order. In view of the uncertainty about the earlier order, the court proceeded on the basis that the issue was whether a fresh or continuing order should be made. The defendant had been properly served and had procedural avenues to challenge the order.
2. Effect of bankruptcy. The debt was provable in the bankruptcy. Section 285(3) of the Insolvency Act 1986 prevented enforcement against the bankrupt’s person or property in respect of that debt. Section 285(1) gave the court a power, but not an automatic obligation, to stay proceedings or legal process.
3. Nature of Part 71. Following Sucden Financial Ltd v Fluxo-Cane Overseas Ltd and Garcia and W Nagel (A firm) v Pluczenik Diamond Company NV & Ors, CPR Part 71 was an information process anterior to enforcement. It was not itself a remedy against the bankrupt’s property or person. The reasoning in Reid v Price was explained consistently with that analysis.
4. Legitimate purpose and discretion. The existence of the bankruptcy did not remove the Part 71 jurisdiction. The court had to consider whether the information was sought for a legitimate purpose. Relevant purposes included assisting the trustees, enabling the creditor to fund or support investigations, investigating whether the bankruptcy adjudication might be set aside, and examining possible transactions at an undervalue under sections 423 and 424 of the Insolvency Act 1986.
5. The trustees’ lack of objection, the pre-bankruptcy origin of the proceedings and debt, and the possible assistance to the insolvency process justified exercising the discretion in favour of an order. The order was made as a protective examination order, expressly subject to the bankruptcy and to the defendant’s prior obligations to deliver documents to the trustees under sections 311 and 312. A note of the judgment was to be provided under CPR 39.9(5).