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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

Guildhall Chambers , 03 MAR 2015

Sands v (1) Layne (2) Wycombe District Council [2014] EWHC 3665 (Ch); [2015] BPIR 163

Sands v (1) Layne (2) Wycombe District Council [2014] EWHC 3665 (Ch); [2015] BPIR 163
(Chancery Division, David Donaldson QC (sitting as a deputy High Court judge), 12 November 2014)

The decisions of appellate courts are not reviewable under s 375(1) IA.

The First Respondent (‘CL’) was declared bankrupt on the Second Respondent’s (‘WDC’) petition. CL appealed the decision to the High Court where it was disposed of by consent. The consent order provided that WDC would be given security over CL’s home and that he would also make monthly payments to discharge his indebtedness.

Almost a year after the consent order was drawn by the court, CL’s Trustee in Bankruptcy appealed the consent order on the basis that the court had failed to give sufficient regard to the interests of the Bankrupt’s (CL’s) other creditors.

The issue upon which the court had to rule was whether s 375(1) of the Insolvency Act 1986 (‘IA’) (which provides a court with jurisdiction to review or vary its own order) is applicable when the court’s decision is made pursuant to s 375(2) (appeal from the decision of a County Court Judge or a Registrar in the High Court).

The judge held that s 375(1) did not give a litigant an unlimited right to a second bite at the cherry. The court would only review its own orders in the light of fresh evidence or a change of circumstances. In Appleyard v Wewelwala [2012] EWHC 3302 (Ch), the High Court had held that the decisions of appellate courts could not be reviewed under s 375(1). Whilst the judge was of the view that this could create potential anomalies, he did not find that the decision in Appleyard v Wewelwala was wrong and therefore he concluded that he was bound by it.

The judge then addressed the question of whether, in the event that he was wrong to find that the decision was not susceptible to review, the interests of creditors were a material consideration under s 271(3), which set out the grounds upon which the court could dismiss a bankruptcy petition. The judge held that the creditors’ interests were not material considerations, it being neither necessary nor appropriate for their interests to be considered in the context of a dispute between the petitioning creditor and the debtor.
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