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21-04-2020

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The answer to the question is not necessarily obvious, as appears from the recent judgment of HHJ Paul Matthews (sitting as a High Court judge) in Bell and Anor. v Ide and Ors. [2020] EWHC 230 (Ch). The court considered whether there was a time limit to serve an insolvency application notice mirroring the 4 month period for a claim form in the Civil Procedure Rules and the application of the Insolvency Rules for an insolvency application notice to be served 14 days before the hearing.

 

The trustees in bankruptcy of Mrs Ide had brought proceedings against her and others for relief under ss. 339, 340 and/or 423 Insolvency Act 1986. Two of the four respondents applied to strike out the application on the basis that it had not been served on them in accordance with r. 12.9 Insolvency (England and Wales) Rules 2016, which provides, inter alia, that a sealed copy  must be served, or notice of the application and venue delivered, at least 14 days before the date fixed for its hearing unless the Insolvency Act or the Rules provide otherwise, the case is urgent or the court extends or abridges time. In Bell v Ide the applicants did not serve the application or notice at least 14 days before the date originallyfixed for the first hearing but did serve at least 14 days before the date subsequently fixed for what became the first hearing (the original hearing having been vacated because permission had been given to serve one respondent out of the jurisdiction). In short, the respondents contended that the reference in r. 12.9(3) to “the date fixed for its hearing” meant the date given by the court when it fixed the venue for the application to be heard. The applicants’ case was that the relevant date could be that, but could also be the date fixed for an effective hearing.

 

The judge reviewed a number of authorities on the point. He noted that in Re Kelcrown Homes Ltd [2017] EWHC 537 (Ch) Warren J (on the hearing of an application for permission to appeal) had found that under the predecessor rule (r. 7.4(5) Insolvency Rules 1986) late service did not make the application a nullity (as is the case for a claim form under CPR). He then reviewed the decision of deputy ICC Judge Prentis, as he then was, inRe HS Works Ltd [2018] EWHC 1405 (Ch) in which the learned deputy judge had given a number of reasons why an insolvency application fell to be treated differently from a claim form but  holding that the requirement to serve was calculated by reference to the hearing date endorsed on the application notice when issued, the general procedure is to lay an obligation on the claimant or applicant to serve promptly and an early provision for service maintains the public policy with regards to limitation purposes.. HHJ Matthews did not agreewith the deputy judge’s reasoning and so considered he could depart from that judgment. However, he concluded, accepting the submissions on behalf of the trustees, that “on a true construction of rule 12.9(3), the 14 days period…is to be calculated by reference to the hearing that actually goes ahead, rather than to the date endorsed on the application notice,” so there had been no failure to comply with the rules.

 

He also considered that there was no issue on the need to serve promptly and the question of limitation periods. The combination of the Rules and control by the court meant that there was no need to imply any further obligation to serve promptly. There was no need to imply such an obligation of prompt service for limitation purposes. That is dealt with by issuing the application in time. What happens thereafter in relation to service is a question for the court’s control and the procedural requirement to give sufficient notice of the forthcoming hearing.

 

This judgment could be construed as allowing an applicant an almost unlimited time to effect service of an issued application free from the sanction applicable to claim forms under CPR of being rendered a nullity. However, the judge emphasised that the service regime is governed by the rules and the court. It would be unwise in the extreme to consider that the court is likely to tolerate unlimited adjournments of an issued application. 

 

Whilst there is some relief here, the best advice remains to issue an application in good time so as to be able to proceed promptly with the case and, if limitation is a potential issue requiring an urgent application, the issuing party must be prepared to continue with the case even, perhaps, one that is in a less than ideal condition. It cannot not be known as to whether any of these general comments would apply to this particular case but they are points that should, generally, be considered. The trustees therefore held on to their application but tensions between the CPR and the insolvency regime on this issue are yet to be definitively resolved.

 

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