Olena Tyshchenko v Adrian Hyde & Ors

A court has an inherent jurisdiction to stay bankruptcy proceedings, wholly or in part, although such relief will be unusual and requires compelling reasons. The court must assess all relevant circumstances and weigh the injustice to the bankrupt, creditors and other parties. There is no automatic presumption governing a stay, unlike the statutory starting point applicable to possession and sale applications under section 335A of the Insolvency Act 1986. A court considering a stay must determine whether the bankruptcy needs to continue in relation to the relevant asset, rather than deferring that question to a possession court. On the evidence, the appeal was allowed for error of approach, but the stay was refused after the decision was remade because the property’s deterioration, declining value and continuing costs strongly favoured its immediate sale.

The appellant, who had petitioned for her own bankruptcy, appealed two orders of ICC Judge Prentis dated 11 January 2023. The orders dismissed her applications to adjourn a hearing and to stay the bankruptcy proceedings, including the possession and sale of her former family home, pending determination of separate fraud proceedings brought by WWRT.

The appeal also sought relief concerning the appointment and removal of the bankruptcy trustees. The court held that those matters belonged to a separate application which had not been determined below. The central appellate issue was whether the lower court had erred by treating the effect of the pending WWRT proceedings as a matter for the possession court rather than deciding the stay application itself.

1. Time and scope of appeal. Time for filing the appellant’s notice was extended to 1 March 2023. Permission to appeal was refused on the issues concerning removal or appointment of the trustees and refusal of the adjournment. The court could address the reformulated stay relief under CPR r 52.20(2)(a), as it was consequential on the appeal and necessary to do justice.
2. Adjournment. An adjournment is a discretionary case-management decision. An appellate court should interfere only where the decision was plainly wrong, or involved an immaterial factor, omission of a material factor, or error of principle: Dhillon v Asiedu. Medical evidence supporting an adjournment should explain the condition and why it prevents participation. Where surgery is relied upon, the evidence should address whether it is emergency or elective surgery and, if elective, why it must occur at that time: Decker v Hopcroft, applying Levy v Ellis-Carr. The evidence here was inadequate and the refusal was within the judge’s discretion.
3. Stay jurisdiction. Although the Insolvency Act 1986 expressly addresses a stay of a bankruptcy petition under section 266(3), it does not expressly provide for a stay of bankruptcy proceedings. The court nevertheless has an inherent jurisdiction to grant a complete or limited stay. Outside a stay pending an appeal against the bankruptcy order, such relief is likely to be unusual. The bankrupt must show compelling reasons, and the court must consider whether creditors and other parties will be adequately safeguarded. The bankrupt is not subject to the standing limitation applicable to an application under section 303(1): Brake v The Chedington Court Estate.
4. Error below and remaking. ICC Judge Prentis erred by deferring consideration of the impact of the pending WWRT proceedings to the possession hearing. The possession court was applying section 335A, under which, after one year, it had to assume that creditors’ interests outweighed other considerations unless exceptional circumstances existed. The stay court faced a different question and had to weigh all relevant circumstances without that statutory presumption. The appeal was therefore allowed to that extent.
5. Result on remaking. Remittal was unnecessary because the appellate court had the evidence and submissions needed to decide the stay application. The further evidence showed substantial immediate and continuing costs, deterioration and declining value of the property, and no reliable means by which the appellant would meet the trustees’ expenses without a sale. Those matters outweighed the potential prejudice to the appellant. The application for a stay concerning possession and sale of the property was dismissed.

• High Court, Chancery Appeals (ChD): appeal from orders of ICC Judge Prentis dated 11 January 2023. Permission was refused on the trustee-removal and adjournment grounds. The appeal was allowed on the stay issue to the extent that the lower court had failed to consider the impact of the pending WWRT proceedings, but the stay application was dismissed when the decision was remade.