Annulling bankruptcy orders—limitation defences (Mowbray v Sanders)

Annulling bankruptcy orders—limitation defences (Mowbray v Sanders)

Why did the High Court decide to allow the annulment of a bankruptcy order in Mowbray v Sanders? Nick Brown, barrister at St Philip's Chambers, discusses the reasoning behind the ruling and the practical lessons the decision offers for insolvency office-holders.

Original news

Re Julie Ann Mowbray (A Bankrupt); Mowbray v Sanders (Trustee in Bankruptcy of the Estate of Julie Ann Mowbray) and another [2015] EWHC 296 (Ch), [2015] All ER (D) 161 (Feb)

The appellant debtor appealed against an order of a deputy district judge dismissing her application for the annulment of a bankruptcy order. In her grounds of appeal, the appellant had raised a limitation defence. Mr Justice Hildyard, in allowing the appeal, held that the belated revelation of the second respondent's only real answer to the appellant's limitation defence after the bankruptcy order had been made, without any explanation why it had not previously been put forward, materially altered the legal landscape and was an exceptional circumstance justifying review of the validity and enforceability of the petition debt.

What was the background to the case?

The case was an appeal to the High Court against an order of a deputy district judge who had dismissed the appellant's application, pursuant to section 282(1)(a) of the Insolvency Act 1986, for the annulment of her bankruptcy, such application having been made on the grounds that the debt upon which the petition was founded was in dispute and that the bankruptcy order should, therefore, never have been made.

What were the legal issues the judge had to decide?

Whether the deputy district judge had been in error to conclude, on the annulment application, that there had been no 'exceptional circumstances' permitting the court to reconsider the validity of the petition debt, such issue having been aired at the original bankruptcy hearing. In addition, whether the deputy district judge had been in error to conclude that the petition debt

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.