Eleanor Temple successful in appeal involving the interpretation of Section 265 of the Insolvency Act 1986

Eleanor Temple has been successful in an appeal involving the interpretation of Section 265 of the Insolvency Act 1986.

Judgment in the case of David George Charlton v (1) Funding Circle Trustee Limited  & (2) Joanne Wright 2019] EWHC 2701 (Ch) Barling J VC, was handed down yesterday.  Eleanor was instructed in the matter by Vanessa Stuart of Kuits Solicitors and acted for the Appellant. 

The Court allowed the appeal, set aside the Bankruptcy Order and dismissed the Bankruptcy Petition. Mr Justice Barling considered whether a person has carried on a business for the purposes of Section 265 of the Insolvency Act (bankruptcy) by reason of engaging in share sale discussions, particularly in the context of a corporate rescue attempt (as compared to the position in Gate Gourmet Luxembourg IV Sarl and another v Morby [2015] EWHC 1203 (Ch) where a sale transaction had been concluded). In a decision which makes new law the former Vice-Chancellor decided that Mr Charlton had not carried on a business within England and Wales in the relevant period and that the jurisdictional gateway for obtaining a bankruptcy order where a person is domiciled and resident out of the jurisdiction (in this case in Australia) had not been met at the time the Bankruptcy Order was made in 2017. 

The judgment also addresses whether statements made by directors in documents filed at Companies House are sufficient evidence of residence/the truth of their contents (considering the decision of Chief Master Marsh in Key Homes Bradford Limited and Ors v Patel [2014] EWHC B1 (Ch)), or whether that evidence, as the Judge found, is relevant but nevertheless can be of insufficient weight when set against direct witness evidence from the individual director.  

The judgment is an interesting read for those advising in this area. It addresses the test for presentation of a Bankruptcy Petition on the basis that an individual has carried on business in England and Wales in the period of 3 years ending with the day on which the Petition is presented and the consequences of that test not having been met for a petitioning creditor if a Bankruptcy Order is wrongfully obtained. 

A copy of the judgment can be viewed here.