Anthony James Broom v Maria Del Pilar Molina Aguilar

An order made in insolvency proceedings cannot be validated by alternative service where the defendant was outside the jurisdiction and permission to serve out had not been obtained. CPR rule 6.15 cannot be used to create long-arm jurisdiction or to bypass the specialist rules governing service abroad.

A foreign defendant who has not been validly served has no duty to respond or co-operate. Under section 375 of the Insolvency Act 1986, the court may review, rescind or vary its order where materially different circumstances justify doing so. The absence of jurisdiction was decisive. The appeal was allowed and the underlying order was set aside.

The appellant appealed against the dismissal by District Judge Taylor of her application under section 375 of the Insolvency Act 1986 to set aside an order made by District Judge Davies on 18 March 2015.

The original order required her to pay substantial sums to the trustee in bankruptcy of her husband in respect of alleged transactions at an undervalue and preferences. The proceedings had been sent to addresses in England and an order had been made under CPR rule 6.15 permitting alternative service. By the material time, however, the appellant had emigrated to Spain, and no permission to serve the proceedings outside the jurisdiction had been sought or obtained.

The respondent cross-appealed against the district judge’s conclusion that claims concerning mortgage payments and lump-sum payments were alternative rather than cumulative.

1. Appeal allowed. The appeal was a review under CPR rule 52.21(1). The appellate court could interfere where the decision below was wrong in law, fact or the exercise of discretion, or unjust because of serious procedural irregularity.
2. Section 375 of the Insolvency Act 1986 confers a wide discretionary jurisdiction. The applicant must show circumstances involving a material difference from what was before the original court. The absence of representation at the original hearing may itself constitute such a material difference. There is no limit to the factors that may be considered, including new evidence, changed circumstances, the merits and failures to serve the final order.
3. The fundamental rule is that a defendant outside the territorial jurisdiction is not subject to the jurisdiction of the English court unless the statutory conditions for service abroad are satisfied. In insolvency proceedings, the 2014 Practice Direction required permission for service outside the jurisdiction. No such permission had been obtained.
4. CPR rule 6.15 permits alternative service only where the court already has jurisdiction over the defendant. It cannot be used as a bootstrap to create long-arm jurisdiction or to outflank the rules governing service out of the jurisdiction. Compliance with the alternative-service order therefore did not constitute valid service, and the court had no jurisdiction to make the substantive order of 18 March 2015.
5. A foreign putative defendant who has not been validly served under the long-arm jurisdiction has no duty to respond or co-operate. The appellant’s knowledge that the trustee was pursuing her and her deliberate avoidance of service were relevant circumstances, but could not cure the absence of jurisdiction.
6. The judge below was also wrong to dismiss the substantive defence without adequately addressing the argument that mortgage payments made directly to the bank were repayments of borrowing jointly undertaken for the bankrupt’s business, rather than transactions at an undervalue. That defence had a real prospect of success. The failure to serve the final order was relevant, although insufficient alone to justify the appeal.
7. The challenge to the process-server’s email failed. CPR rule 32.19 concerns authenticity, not truth of contents. An email in an agreed hearing bundle was admissible under the relevant practice direction, and could be considered as hearsay, subject to weight.
8. The cross-appeal was dismissed. On the proper construction of the application and supporting evidence, the claims for the mortgage payments and the lump-sum payments were alternative, not cumulative. The order of 18 March 2015 was set aside.

• High Court, Chancery Appeals List: HHJ Paul Matthews allowed the appellant’s appeal against District Judge Taylor’s decision of 16 November 2023 and set aside the order of District Judge Davies dated 18 March 2015.
• County Court: District Judge Davies made the original insolvency order in the appellant’s absence. District Judge Taylor dismissed the section 375 application except as to the lump-sum payments, holding that the claims were alternative.