Lee Jones v Aston Risk Management Ltd

On an application to serve bankruptcy proceedings outside the jurisdiction, the creditor must show a good arguable case that a jurisdictional gateway in section 265 of the Insolvency Act 1986 is satisfied. Carrying on business through a company, or acting as its director, shareholder, lender or borrower, does not of itself amount to carrying on a separate business personally. The court must assess objectively what the debtor did, when it was done and whether it amounted to carrying on business. Continuing directorship and unresolved company accounts do not necessarily create a separate business of the debtor. A statutory demand cannot generally be set aside under rule 10.5(5)(d) of the Insolvency (England and Wales) Rules 2016 merely because the court lacks bankruptcy jurisdiction. Where dismissal would trigger mandatory authority to present a petition despite the absence of jurisdiction, a stay may be appropriate.

The applications arose from substantial judgments obtained by Aston Risk Management Ltd against Lee Jones in earlier proceedings. Mr Jones had moved to Guernsey. Aston served two statutory demands and sought permission to serve bankruptcy proceedings outside the jurisdiction, relying solely on the gateway that Mr Jones had carried on business in England and Wales within the relevant three-year period.

Mr Jones sought to set aside the statutory demands and an injunction restraining presentation of a bankruptcy petition. The central issues were whether jurisdiction could be challenged on a statutory-demand application, whether Aston had a good arguable case under section 265(2)(b)(ii) of the Insolvency Act 1986, and what procedural orders should follow.

1. Statutory demands. Rule 10.5(5)(d) of the Insolvency (England and Wales) Rules 2016 is to be read in the context of paragraphs (a) to (c). It concerns injustice arising from the statutory demand or its form, and does not provide a general jurisdiction to determine whether England and Wales may entertain a bankruptcy petition. The applications to set aside the demands were therefore stayed rather than dismissed, because dismissal would engage the mandatory consequence in rule 10.5(8).
2. Service out. Aston had to show a good arguable case that the section 265(2)(b)(ii) gateway was satisfied. That required a plausible evidential basis and, where possible, a reliable assessment of disputed facts.
3. Carrying on business. The question was one of mixed fact and law, requiring consideration of what Mr Jones did, when he did it and whether it amounted to carrying on business. Directorship or shareholding in companies did not, without more, establish a separate business conducted on Mr Jones’s own account. Nor did lending money to, or borrowing money from, the companies, absent evidence of commercial activity beyond funding or ownership of them. The continuing filing and run-off obligations of the companies remained attributable to Mr Jones’s directorship and shareholding.
4. Objectively viewed, the evidence did not establish that Mr Jones had carried on a separate business in England and Wales during the relevant period. Aston therefore lacked a good arguable case under section 265(2)(b)(ii), and the Service Out Application was dismissed.
5. The anti-suit injunction application was dismissed. The statutory demands were stayed, with Aston permitted to apply to lift the stays if the jurisdictional position changed.