Second application to annul bankruptcy order an abuse of process (Lambert v Forest of Dean District Council and others)

Second application to annul bankruptcy order an abuse of process (Lambert v Forest of Dean District Council and others)  

Jessica Brooke, barrister at Enterprise Chambers, examines the High Court's decision in Lambert v Forest of Dean District Council and others that a second application to annul a bankruptcy order, after the first application was struck out for failure to comply with an unless order, would be refused primarily as an abuse of process and secondly on its merits, even in circumstances where the bankruptcy order ought not to have been made.

Re Philip John Lambert Lambert v Forest of Dean District Council and others  [2019] EWHC 1763 (Ch), [2019] All ER (D) 106 (Jul)

What are the practical implications of the decision?

  • in the first part, the judge emphasised that, where a party has their case struck out for breach of an unless order and, instead of applying for relief from sanctions, subsequently issues fresh proceedings which are materially identical to the first action, the second set of proceedings will be an abuse of process and should be struck out. In seeking to bypass the relief from sanctions exercise, the party has failed to correctly use the court’s procedures  
  • the second part of the judgment confirmed that, where a bankruptcy order ought not to have been made and the court’s discretion to annul the bankruptcy is engaged, if sums are indisputably owed to the petitioner this will weigh heavily against the granting of an annulment

What was the background?

The applicant was made bankrupt on a petition presented by the first respondent local authority based upon liability orders obtained against him in respect of unpaid council tax and business rates.

The applicant applied to annul the bankruptcy order under section 282(1)(a) of the Insolvency Act 1986, which provides the court with a discretion to annul if the bankruptcy order ought not to have been made. The applicant argued that the petition debt was not owing and the correct procedures for service of the statutory demand and the bankruptcy petition had not been followed. He also issued applications seeking a stay of his bankruptcy and an injunction restraining his original trustee in bankruptcy and the first respondent from dealing with his assets.

The annulment application was struck out for failure to comply with an unless order in terms that the applicant pay various costs orders made against him following dismissal of the stay and injunction applications.

The applicant subsequently made a second application to annul the bankruptcy order, relying upon grounds identical to those relied upon in his first application. The secon

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About the author:

Zahra started working as a paralegal at Lexis Nexis in Banking and Insolvency teams in April 2019. Zahra graduated with a 2.1 honours in a BA French and Spanish, completed the GDL at BPP University and is seeking some experience before commencing the LPC. She has undertaken voluntary work for law firms in London, Argentina and Colombia.