| Bankruptcy — Annulment — Payment of debts in full — Solicitor’s undertaking to pay debts, costs and expenses of bankruptcy — Whether court having jurisdiction to accept undertaking — Insolvency Act 1986, s 282(1)(b) — Insolvency Rules 1986, r 6.211(2)
Halabi (A Bankrupt) v Camden London Borough Council and another; [2008] WLR (D) 46
Ch D: John Jarvis QC, sitting as a deputy High Court judge: 14 February 2008
The court had no jurisdiction to annul a bankruptcy order on the basis of an undertaking from the bankrupt’s solicitor to pay the debts, costs and expenses of the bankruptcy.
John Jarvis QC, sitting in the Chancery Division, so held on an application by the bankrupt, Hala Halibi, for an annulment pursuant to s 282(1)(b) of the Insolvency Act 1986 of the bankruptcy order made against her on 26 March 2007. The applicant was made bankrupt on a petition presented by the first respondent, Camden London Borough Council, in respect of unpaid rates. The second respondent, Susan Maund, was appointed as her trustee in bankruptcy.
The application to annul was issued in the Bankruptcy Registry of the High Court on the basis of an undertaking by the applicant’s solicitor to pay the creditors in full together with the costs and expenses of the bankruptcy. The registrar stated in correspondence to the applicant’s solicitor that the application would not be listed until evidence of payment of debts was filed and that undertakings to pay were not acceptable.
JOHN JARVIS QC said that the case was referred to the High Court because there was a divergence of view between the practice in the High Court Registry and the practice in some county courts, where annulment orders had been made on the basis of undertakings to pay. The system of undertakings followed in the county courts was not within the jurisdiction of the court. S 282(1)(b) of the Insolvency Act 1986 and r 6.211(2) of the Insolvency Rules 1986 (1986/1925) were very clear and stated, respectively, that the bankruptcy debts and the expenses of the bankruptcy had to have been paid and that all bankruptcy debts which had been proved must have been paid in full. The offering of a security by way of an undertaking did not amount to a payment. The present case was a proper case to exercise the discretion of the court and annul the bankruptcy. The court would make an annulment order, subject to a direction that it should not take effect until a later date and that certain specified conditions as to payment of the bankruptcy debt had been satisfied. |
