Paul Allen (as Trustee in Bankruptcy of Pramod Mittal) v Pramod Mittal [2023] EWHC 920 (Ch)
On 19 June 2020, Pramod Mittal was declared bankrupt, having accrued debt reported to total £130 million. On 19 June 2021, pursuant to section 279(1) of the Insolvency Act 1986 (‘the Act’), Mr Mittal was due to be automatically discharged from bankruptcy.
On 10 June 2021, the Trustee in Bankruptcy made an application to suspend Mr Mittal’s discharge (‘the Suspension Application’) on grounds Mr Mittal had failed to comply with his obligations under the Act.
On 17 June 2021, ICC Judge Prentis made an interim order suspending Mr Mittal’s discharge from bankruptcy, only two days before the bankruptcy period was due to expire, on the basis there were ‘reasonable grounds for concluding that such an order would be made after the substantive hearing on the material then placed before the court’.
Notwithstanding the above, on 1 April 2022, at the substantive hearing of the Suspension Application, Deputy ICC Judge Agnello KC refused to grant the application, despite confirming she was ‘prepared to accept that there is a compelling case on the merits for the suspension of bankruptcy’. The matters with which Judge Agnello KC were concerned related to issues of service and jurisdiction.
Service of the Application
The Trustee’s legal representatives, Mishcon de Reya LLP (‘Mishcon’), had sent a copy of the Suspension Application by email to Mr Mittal’s legal representatives, Collyer Bristow LLP (‘Collyer’). In that same email, it was stated a copy of the Suspension Application would also be served in hardcopy by courier that same day.
The courier failed to deliver a hardcopy of the Suspension Application to Collyer, and Collyer subsequently confirmed in correspondence that it was prepared to accept service by email. Mishcon, however, did not send a further email serving the Suspension Application, and instead sought to rely on their earlier email which provided a copy of the documents.
Judge Agnello KC found that, in order to effect service by email, a prior indication in writing that a solicitor is willing to accept service by that method is required, pursuant to CPR 6.3(1)(d) and Practice Direction 6A. Accordingly, it was held that Mishcon’s attempt to serve by email failed to comply with the service provisions and, therefore, the Suspension Application was not properly served before Mr Mittal was discharged from bankruptcy.
Jurisdiction
Alongside her findings on service, Judge Agnello KC found that she had no jurisdiction at the hearing to suspend Mr Mittal’s discharge from bankruptcy, determining ‘the court needs to hear and make an order prior to the expiry of the bankruptcy period’. Judge Agnello KC’s decision was made despite the merits Allen v Mittal: Court of Appeal confirms scope of Court’s power to suspend expiry of bankruptcy period of the Suspension Application, and notwithstanding her recognition of the Court’s powers pursuant to rule 12.10 of the Insolvency (England and Wales) Rules 2016 (‘Rule 12.10’) to make an order suspending a bankrupt’s discharge in cases where there has been no service of the application, and/or where there has been short service.
Judge Agnello KC provided reasons for her decision with reference to Judge Prentis’ interim order. Judge Agnello KC stated that as Judge Prentis had not given directions that the hearing should proceed without notice, or that service of the application should be abridged, the Court could not be satisfied that the application was properly served prior to the expiry of the bankruptcy period, and thus did not have jurisdiction to grant the Suspension Application.
Appeal
On 14 and 15 February 2023, Mr Justice Trower heard an appeal by the Trustee in Bankruptcy against the Order of Judge Agnello KC.
The appeal was made on several grounds, to include grounds relating to Judge Agnello KC’s finding that the Suspension Application was not validly served prior to the expiry of the bankruptcy period. Submissions made included those concerned with the construction of Collyer’s email, and whether it should be construed as having accepted Mischon had effected service by email.
Trower J found that the most natural reading of Collyer’s email, in which they confirmed ‘we will accept service by email’, was that there was no need for a further email to be sent, and that Mishcon’s email amounted to valid, albeit late, service. The Trustee in Bankruptcy therefore succeeded in appealing Judge Agnello KC’s finding on service of the Suspension Application.
Trower J also considered grounds related to jurisdiction, which went to the core of Judge Agnello KC’s reasoning in her judgment. Trower J concluded Judge Agnello KC was wrong to conclude the interim order of Judge Prentis was invalid for failing to grant any relief in respect of service and, importantly, made clear that Rule 12.10 is a power in an urgent case to proceed without notice, subject to there being sufficient proof of the urgency to justify the relief. Trower J cited the leading authority of Bagnal1, and confirmed that a Court does not need to be satisfied an application for a suspension order has been properly served prior to making a suspension order, on even an interim basis.
Comment
In his judgment, Trower J provided important clarification on the scope of the Court’s power under Rule 12.10 to grant an order suspending the discharge of bankruptcy. Trower J confirmed that so long as a suspension application is made before the bankruptcy period has expired, and so long as any interim order has not later been set aside whether on appeal or otherwise, the Court is not precluded from further extending suspension as a matter of jurisdiction, irrespective of whether it has yet granted any required relief in respect of service.
Trower J’s judgment serves as useful guidance on the Court’s approach to applications to suspend bankruptcy, and as a reminder of the Court’s ability to use its discretion when navigating the balance between the desirability of a bankrupt knowing how to obtain discharge from their bankruptcy debts, and preventing uncooperative or dishonest bankrupts from frustrating a trustee’s legitimate enquiries.
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1 Bagnall v the Official Receiver [2004] 1 WLR 2832
Ellie Boreham (Associate) is a member of Keidan Harrison’s Dispute Resolution team.
