BANKRUPTCY — Concealment of property — Committal without notice — Bankrupt refusing to co-operate with trustee in bankruptcy — Trustee applying without notice for committal order — Order made without requirement for bankrupt to be brought back to court after committal — Whether detention in breach of Convention rights — Insolvency Act 1986, s 364 — Human Rights Act 1998, Sch 1, Pt I, art 5
Hickling v Baker [2007] EWCA Civ 287
CA: Sir Anthony Clarke MR, Rix and Lloyd LJJ: 4 April 2007
An application for a committal order under s 364 of the Insolvency Act 1986 where an undischarged bankrupt failed to co-operate with the trustee in bankruptcy should normally be made on notice, unless a statutory provision provided otherwise. Any other exception to that practice had to be justified by evidence. Further, any committal order made without notice should require that, once arrested, the person in question should be brought promptly before the court for a hearing in order to comply with art 5 of the Convention for the Protection of Human Rights and Fundamental Freedoms.
The Court of Appeal so held, giving reasons for discharging on 20 March 2007 an order made by Pumfrey J on 23 February 2007 on the application of the trustee in bankruptcy, Neil Francis Hickling, committing to prison the bankrupt, Timothy Darren Baker, under s 364 of the Insolvency Act 1986.
LLOYD LJ said that the first question was whether the bankrupt’s detention under s 364 of the 1986 Act could be justified under art 5(1)(b) of the Convention. That question went to the heart of the court’s power under s 364, the point of which was to prevent the person from evading his obligations or to encourage him to put right any evasion that he might have effected. S 364 was not incompatible with art 5. The question was as to the manner of the exercise of the power given by s 364. Notice to the bankrupt of an application under s 364 was not an essential prerequisite. However, the normal practice ought to be for an application to be made on notice, and any exception to that practice which was not authorised by a statutory provision (such as existed for orders for examination under s 366) had to be justified by evidence. Where the justification for proceedings without notice under s 364 was not self-explanatory, the evidence ought to deal specifically with why the applicant invited the court to consider that the order should be made without notice to the bankrupt. Even if it were permissible to withhold some of the evidence, it had to be possible to disclose, at least in summary, the reasons for proceeding without notice. Art 5(3) did not apply because the arrest was not under art 5(1)(c) but the requirement that the person arrested be brought promptly before a court, imposed by art 5(3) where it did apply, pointed to the need for a similar process in this kind of case as well. In the case of an order under s 364 made without notice, the person arrested ought to be brought before the court promptly after his arrest for a hearing at which both parties were represented. At that hearing the person arrested would have the opportunity to make representations as to the propriety of the order, and the court would be able to consider whether the objective of the trustee in bankruptcy could be met, even on a temporary basis, by interim protection other than continued arrest. If the person were to remain in custody for the time being, directions could be given as to what was to happen either pending an application for discharge or with a view to ensuring that the obligations under the bankruptcy were properly fulfilled. It was inappropriate to impose on the person arrested the need to take the initiative in applying for discharge. The order should itself require that, once arrested, the person in question be brought to court for a hearing at which the trustee in bankruptcy would also be represented. The order included no provision of that kind. It had been made in what had no doubt been the standard form for many years, but not in appropriate terms having regard to art 5 and to the fact that the order was made without notice.
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