Murray Richards v Vivendi SA [2017] EWHC 1581 (Ch): annulments and procedural fairness

Judgment on BAILII at: http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2017/1581.html

Murray Richards v Vivendi was a bankrupt’s (“M”) appeal of an order dismissing his application for an annulment of a bankruptcy order.

The parties had previously been involved in litigation that ended with M being order to pay Vivendi (“V”) over £10m (see Vivendi v Richards [2013] EWHC 3006). M did not pay. Accordingly, in late 2013 / early 2014 V served a statutory demand and presented a bankruptcy petition.

M served evidence questioning the jurisdiction of the court to make an order but ultimately did not appear at the hearing and a bankruptcy order was made on 19 December 2014.

M’s automatic discharge was suspended. In September 2016, he applied for an annulment order of the bankruptcy order because (he said) the court had had no jurisdiction to make it. The day before the hearing in front of the District Judge, he served a significant quantity of evidence.

At the hearing, which only listed for 30 minutes, the District Judge was unable to read the new material. She considered giving directions but instead, on the basis of submissions from V’s counsel and because M lived in Australia, dismissed the application because she said that M was trying to “rehash” material that had been considered at the substantive bankruptcy hearing. She declined to read the new material, in part because V’s counsel said that (some or all of) it was irrelevant.

Morgan J allowed the appeal.

Key findings

  • Morgan J said that when the court is faced with new material in an annulment application, it should not apply the Ladd v Marshall approach to fresh evidence but should consider it as a matter of general discretion (having considered the content of the evidence itself). Accordingly, the District Judge erred because she had not even read the new material (or exercised a case management decision to disallow on it on the basis of it being served so late) so had not actually decided whether it ought to be allowed in.
  • Further (but linked), there was a serious procedural irregularity as the District Judge did not review the new material, allowed counsel for V to address her on its apparent irrelevance and did not allow M a real opportunity to explain himself. That was unfair to M.
  • Morgan J gave the parties the opportunity for him to decide the issue that day. Although M was willing, V wanted to cross-examine M. Accordingly, the application was remitted to the County Court (and then transferred to the High Court) for a decision.

Key takeaways

  • (An obvious point but…) the fact that a debtor’s COMI is outside England and Wales does not mean that the court has no jurisdiction to make a bankruptcy order. Section 265 IA 1986 has been amended since the petition was presented in Murray Richards to give it a more logical structure.
  • An annulment application pursuant to section 282(1) IA 1986 involves the court asking three questions (per Morgan J in JSC Bank of Moscow v Kekhman [2015] EWHC 396 (Ch] – http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2015/396.html): (i) what the grounds were when the order was made; (ii) whether, on those grounds, the bankruptcy order ought not to have been made; and (iii) whether it should exercise its discretion to annul the order.
  • Proposed new evidence in an annulment application is not subject to the Ladd v Marshall The court has a broad discretion as to whether to allow it in.
  • Be fair to the other side, even (perhaps especially) litigant in person bankrupts
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