Bankruptcy Adjudicator's Territorial Jurisdiction

Author: Simon Hill
In: Article Published: Monday 07 August 2023

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INTRODUCTION

Where a debtor applies in England and Wales for his own bankruptcy, are there any jurisdictional constraints on that application and the power of the bankruptcy adjudicator, to impose a bankruptcy order upon the debtor? 

This article will consider this question, in light of the key section on this, section 263I of the Insolvency Act 1986, and some of relevant authorities: (1) Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213 (Deputy ICC Judge Agnello KC) ('Kooter No.1'); (2) Dusoruth v Orca Finance UK Ltd (also known as Re Dusoruth (A Bankrupt) [2022] EWHC 2346 (Ch); [2023] BPIR 68 ('Dusoruth'); (3) Al Saud v Mobile Telecommunications Co KSCP [2023] EWHC 1144 (Ch) (ICC Judge Barber) ('Al Saud 1144')(a creditors bankruptcy petition case); (4) Lakatamia Shipping Co Ltd v Su [2021] EWHC 1866 (Ch); [2021] Bus LR 1285 (Bacon J) ('Lakatamia'); (5) Reynolds Porter Chamberlain LLP v Khan [2017] I.L.Pr. 13 [2016] BPIR 722 ('Khan'); (6) Durkan (as liquidator of Long Compton Project Ltd) v Jones [2023] EWHC 1359 (Ch) ('Durkan')(a creditors bankruptcy petition case); (7) Henwood v Barlow Clowes International Ltd (In Liquidation) [2008] EWCA Civ 577; [2008] BPIR 778 ('Henwood')(a creditors bankruptcy petition case); (8) HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud v Mobile Telecommunications Co KSCP [2022] EWHC 744 (Ch) ('Al Saud 744'); (9) Dusoruth v Orca Finance UK Ltd (In Liquidation) [2023] EWHC 1050 (Ch)('Dusoruth 1050').

Not only must the bankruptcy adjudicator consider this issue (under section 263K(1)(a), as part of determining the bankruptcy application), but the issue arises frequently where a debtor has obtained a bankruptcy adjudicator's bankruptcy order, and a creditor of the debtor subsequently brings an annulment application under section 282(1)(a), contending that the English (or Welsh) Court had no bankruptcy jurisdiction to make the impugned bankruptcy order.

Bankruptcy Applications

In England and Wales, where a debtor wishes to make him/herself bankrupt, the (only) route to obtaining a bankruptcy order is for the debtor may make a debtor's bankruptcy application. Debtor's bankruptcy applications are governed by:

(a) 8 sections contained in the Insolvency Act 1986 - namely, sections 263H to 2630, which are contained in Chapter AI entitled 'Adjudicators: Bankruptcy Applications by Debtors and Bankruptcy Orders', which is within Part IX of the 1986 Act, a part entitled 'Bankruptcy' (which itself is contained in The Second Group of Parts: Insolvency of Individuals; Bankruptcy' of the 1986 Act); and

(b) 15 rules contained in the Insolvency (England and Wales) Rules 2016 ('Insolvency Rules 2016') - namely, r.10.34 to 10.48, which are contained in Chapter 3, entitled 'Debtors’ bankruptcy applications'.

Such debtor's bankruptcy applications are determined by bankruptcy adjudicators[1] ('adjudicators').

For completeness, creditor bankruptcy petitions are made under different sections of the 1986 Act. Creditors bankruptcy petitions are governed by their own jurisdictional section, namely section 265 of the 1986 Act. It is to be noted that Section 263I  (debtor's bankruptcy applications) and section 265 (creditor bankruptcy petitions) are in substance identically drafted, differing only wording necessary to set the context (i.e. the context of being a debtor's bankruptcy application, or (as the case maybe) a creditors bankruptcy petition[2a]) in which the provisions apply. For a recent case on section 265, see Portrait v Minai [2023] EWHC 1605 (Ch)('Portrait'), decision of ICC Judge Greenwood[2b].

Overview

Not everyone in the world is amenable to the bankruptcy jurisdiction of the courts of England and Wales[3] (the 'E&W Bankruptcy Jurisdiction'). For a particular person to be amendable to E&W Bankruptcy Jurisdiction, there must be a connecting factor/forensic tie between that person, and England and Wales, such as to amount to the requisite link necessary to found E&W Bankruptcy Jurisdiction[4] - that is, according to English law, to confer jurisdictional competence (or jurisdictional foundation[5a]) upon the English legal system in respect to that person. There connecting factors can also be known as 'jurisdictional qualifications'[5b] or 'territorial jurisdiction', or 'jurisdictional prerequisites'[5c]. The word 'jurisdiction' is used here in its strict sense[5d].

Those connecting factors/forensic ties are listed in section 263I of the Insolvency Act 1986 ('Connecting Factors'). One Connecting Factor is sufficient[5e] to establish E&W Bankruptcy Jurisdiction (having additional Connecting Factors bestows no advantage - E&W Bankruptcy Jurisdiction is binary in the sense that it either exists or it does not exist, and for it to exist, it requires only a single Connecting Factor). But unless a Connecting Factor exists, so there is a requisite link, the adjudicator who considers the debtor's bankruptcy application, does not have the power to determine the bankruptcy application. In other words, the adjudicator will not have the power to make the bankruptcy order sought. The debtor's bankruptcy application must fail.

SECTION 263I OF THE INSOLVENCY ACT 1986

The Insolvency Act 1986

Section 263I of the The Insolvency Act 1986 ('1986 Act') is entitled 'Debtors against whom an adjudicator may make a bankruptcy order', and breaks down as follows.

Section 263I(1) deals with E&W Bankruptcy Jurisdiction. Section 263I(1) reads:

'An adjudicator has jurisdiction to determine a bankruptcy application only if -

(a) the centre of the debtor’s main interests is in England and Wales, or

(ab) the centre of the debtor’s main interests is in a member State (other than Denmark) and the debtor has an establishment in England and Wales, or

(b) the test in subsection (2) is met.'

Section 263I(2) sets out the 'test' (i.e. additional Connecting Factors), as follows:

'The test is that -

(a) the debtor is domiciled in England and Wales, or

(b) at any time in the period of three years ending with the day on which the application is made to the adjudicator, the debtor -

(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii) has carried on business in England and Wales.'

Section 263I(3) provides a definition for debtor carrying on business (i.e. for section 263I(2)(b)(ii)); it reads:

'The reference in subsection (2) to the debtor carrying on business includes -

(a) the carrying on of business by a firm or partnership of which the debtor is a member, and

(b) the carrying on of business by an agent or manager for the debtor or for such a firm or partnership.'

Section 263I(4) and (5) provides definitions for (4) centre of main interests; and (5) Establishment; they read, respectively:

'In this section, references to the centre of the debtor’s main interests have the same meaning as in Article 3 of the EU Regulation.'

'In this section "establishment" has the same meaning as in Article 2(10) of the EU Regulation'.

In Portrait (a section 265 creditors bankruptcy case), ICC Judge Greenwood held that COMI is assessed at the date of presentation of the petition (so date of bankruptcy application under section 263I)(paragraph 42)[6a].

The EU Regulation

The 'EU Regulation' is Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) (Recast Insolvency Regulation), which is now Retained EU Legislation (after the end of 2023, 'Retained EU Legislation' will be renamed 'assimilated law' see Retained EU Law (Revocation and Reform) Act 2023) ('the Retained Insolvency EU Regulation')

Article 3 of the the Retained Insolvency EU Regulation provides (so far as relevant) (as from December 31, 2020) (the subparagraphs are not numbered):

'The centre of main interests shall be the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.

...

In the case of an individual exercising an independent business or professional activity, the centre of main interests shall be presumed to be that individual's principal place of business in the absence of proof to the contrary. That presumption shall only apply if the individual's principal place of business has not been moved from the United Kingdom to a Member State or to the United Kingdom from a Member State within the 3-month period prior to the request for the opening of insolvency proceedings.

In the case of any other individual, the centre of main interests shall be presumed to be the place of the individual's habitual residence in the absence of proof to the contrary. This presumption shall only apply if the habitual residence has not been moved from the United Kingdom to a Member State or to the United Kingdom from a Member State within the 6-month period prior to the request for the opening of insolvency proceedings.'[6b]

Article 2(10) of the the Retained Insolvency EU Regulation provides (as from December 31, 2020):

''‘establishment’ means any place of operations where a debtor carries out or has carried out in the 3-month period prior to the request to open insolvency proceedings a non-transitory economic activity with human means and assets.'[7]

ROUTES

3 Routes to Establishing a Connecting Factor

As will be apparent, section 263I(1) provides 3 routes to establishing a Connecting Factor (i.e (a), (ab), or (b)). Readers will likely need to consider them all in turn.

(1) Central to (a) and (ab) is the phrase 'centre of the debtor’s main interests' ('COMI') and then were that is. Is it in England and Wales? if not, is it in a member state (excluding Denmark)? and if yes, does the debtor also have 'an establishment in England and Wales'?

(2) If (a) and (ab) tests are not established, then the reader will move onto (b), and consider the alternative tests in section 263I(2), based on, respectively, where the debtor is 'domiciled'; where, in the 3 years back from the date of the bankruptcy application, the debtor has been situated (to use a vague umbrella term) - that, where has he been ordinarily resident, or carrying on a business, or where has he had place(s) of residence?

The above amounts to 6 possible Connecting Factors. Generating, in turn, quite a number of legal tests to work through.

Primary Connecting Factor

As between the Connecting Factors, Bacon J in Lakatamia said, at paragraphs 28-29:

'...the primary jurisdictional test under section 263I is that the centre of the debtor's main interests should be in England and Wales. As a derogation from that test, jurisdiction is established where one of the four conditions in section 263I(2) is satisfied.'

6 CONNECTING FACTORS

Index

(1) Connecting Factor - Where is the debtor's Centre of the Main Interests ('COMI')

(2) Connecting Factor - COMI in a Member State (not Denmark) and Establishment in England and Wales

(3) Connecting Factor - Section 263I(2) Domiciled

(4) Connecting Factor - Section 263I(2) - Ordinarily Resident

(5) Connecting Factor - Section 263I(2) - A Place of Residence

(6) Connecting Factor - Section 263I(2) Test - Carried on business

(1) Connecting Factor - Where is the debtor's Centre of the Main Interests ('COMI')

Given the definition of 'centre of the debtor’s main interests' in section 263I(1)(a) and (ab) has 'the same meaning as in Article 3 of the EU Regulation' (section 263I(4); i.e. the Retained Insolvency EU Regulation), it is necessary to go straight to considering how Article 3 defines 'centre of the debtor’s main interests'[8].

At the top level, the location of an individual's COMI is '...the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' (Article 3). This is ultimately what determines where a individual's COMI is. But Article 3 also contains provisions, which create some preceding stages to addressing/answering this test. In Kooter No.1, Deputy ICC Judge Agnello KC referred to the elements here as COMI 'attributes', deriving the following (Kooter No.1 involved a pre 31.12.20 version of Article 3, but this makes no difference here[9a]), which she set out, at paragraph 17:

'(a) The place where the debtor conducts the administration of its interests on a regular basis;

(b) A place ascertainable by third parties, and in particular creditors and prospective creditors;

(c) For an individual engaged in a business or professional activity, rebuttably presumed to be that individual's principal place of business;

(d) For any other individual, rebuttably presumed to be the place of the individual's habitual residence.'

The Alternative Presumptions

In terms of working through the relevant test, the starting point is to discern which of the two rebuttable[9b] presumptions applies to the individual debtor? These two rebuttable presumptions will be labelled, for convenience, respectively as:

(a) the individual's 'Principal Place of Business' Presumption; and

(b) the individual's 'Habitual Residence' Presumption.

The relevant test to apply, to determine which of the two presumptions apply, is: On the relevant date, was the '...individual exercising an independent business or professional activity'?

If yes, then one presumption applies; if no, a other presumption applies. In other words, if the individual:

(1) was '...exercising an independent business or professional activity', then the Principal Place of Business Presumption will (subject to the disapplying provision dealt with below) apply;

(2) was not '...exercising an independent business or professional activity', then the Habitual Residence Presumption will (subject to the disapplying provision dealt with below) apply;

In determining this, as with other aspects,'COMI is very much a factual investigation.' and 'In order to ascertain which of the rebuttable presumptions applies, the starting point is to consider what is set out in [the bankrupt's] application for bankruptcy.' (Kooter No.1, paragraph 18). An illistration of a judge going through the evidence on '...individual exercising an independent business or professional activity', can be found in Kooter No.1[10].

Disapplying Provision - If there has been movement in the last 3/6 months back

As will be apparent, these two presumptions do not apply where there has been a movement in the individual's: (i) 'principal place of business'; or, as the case maybe, (ii) 'habitual residence':

(1) within the period immediate preceding the date of the 'request for the opening of insolvency proceedings'. The length of that period immediately preceding the relevant date, is:

(a) 3 months, for the Principal Place of Business Presumption; and

(b) 6 months, for Habitual Residence Presumption; and

(2) as between the United Kingdom and a Member State (other than Denmark[11]) (it matters not whether it was to, or from, the United Kingdom, to the Member State).

The location of the individual's COMI

Where the relevant would-be presumption does not apply (because of the individual's: (i) 'principal place of business'; or, as the case maybe, (ii) 'habitual residence', has moved in the relevant preceding period), the individual's COMI will simply be '...the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' (Article 3).Where a presumption does apply, the location of the individual's COMI will again ultimately be '...the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' (Article 3). But the structure requires the presumption to be applied, unless the presumption is rebutted (since of course, the presumption is rebuttable rather than irrebutable). In other words, while there will be a presumption that the place where the individual's (i) 'principal place of business'; or, as the case maybe, (ii) 'habitual residence' is, will be the place where that individual '...conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' (and so is that individual's COMI), a Court can be persuaded, by evidence, that that is not the case. That, while the individual's (i) 'principal place of business'; or, as the case maybe, (ii) 'habitual residence' is in one place, the evidence shows that the individual's '...conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' from a different place. And it is that (different, second) place, which determines the individual's COMI.

Where the Individual is exercising an independent business or professional activity?

Where: (i) the individual is 'exercising an independent business or professional activity', and (ii) the Principal Place of Business Presumption is not disapplied, then, in accordance with the Principal Place of Business Presumption, the next question is: where is the individual's 'principal place of business'? since wherever that is, is presumed (rebuttably) to be where the individual '...conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' and so be the individual's COMI.

Where the Individual is not exercising an independent business or professional activity?

Where: (i) the individual is not 'exercising an independent business or professional activity', and (ii) the Habitual Residence Presumption is not disapplied, then, in accordance with the Habitual Residence Presumption, the next question is: where is the individual's 'habitual residence'? since wherever that is, is presumed (rebuttably) to be where the individual '...conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' and so be the individual's COMI.

Assistance here can be obtained from Kooter No.1, wherein the Deputy Judge said, under the subheading 'Habitual Residence'. However, before setting out what the Deputy Judge said, it should be noted that:

(1) the law report contains apparent errors:

(a) the words in brackets are missing;

(b) the '17' before 'the person's situation' should be '(b)';  with '(a)' coming before the words 'duration and continuity...'

(2) Regulation No 987/2009 is a reference to: Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems (Text with relevance for the EEA and for Switzerland) (Retained EU Legislation). Article 11 was entitled 'Elements for determining residence' but Article 11 was repealed on 31.12.20 (repealed by Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020/1508 Pt 2 reg.3(b) (December 31, 2020: revoked subject to savings specified in SI 2020/1508 Pt.3)). The Deputy Judge describes the list in Article 11 as merely a 'useful guide' so, in the author's view, the fact Article 11 has now been repealed, should not affect the law here - that the list is a 'useful guide' to determining 'habitual residence'.

With those points noted, the relevant passage from the Deputy Judge in Kooter No.1 can be quoted. The Deputy Judge said, paragraphs 27 and 28:

'Habitual residence in the applicable EU context is a factual exercise having regard to all the circumstances as to a person's real choice of country as a state of residence. The principles are well known and I only provide a short summary in this judgment. A distinction is drawn between a short term stay or presence and habitual residence. Non exhaustive criteria include the following (article 11 of Regulation No 987/2009):-

"the duration and continuity of presence on the territory of the Member [States concerned]

17 the person's situation, including:

(i) the nature and the specific characteristics of any activity pursued, in particular the place where such activity is habitually pursued, the stability of the activity, and the duration of any work contract;

(ii) his family status and family ties;

(iii) the exercise of any non-remunerated activity;

(iv) in the case of students, the source of their income;

(v) his housing situation, in particular how permanent it is;

(vi) the Member State in which the person is deemed to reside for taxation purposes."

Using the above as a useful guide...' [the Deputy Judge then went on an consider the facts in Kooter No.1]

Other points the Deputy Judge made in In Kooter No.1, include:

(1) 'The cases make it clear that...evidence of permanent residence needs to be genuine, not be an illusion and have a quality of presence.' (paragraph 35);

(2) 'A change of habitual residence needs to be, in my judgment, genuine.' (paragraph 37) and that '...an attempt ... to create an illusion of habitual residence in England and Wales' will not be sufficient. (paragraph 37)

How the Deputy Judge analysed the evidence on habitual residence in Kooter No.1, can be found in the footnote[12a].

In Portrait (a section 265 creditors bankruptcy case), ICC Judge Greenwood considered Art 3(1) of the Retained Insolvency Regulation where the debtor: (a) was not alleged (by any party) to have been 'an individual exercising an independent business or professional activity' (when the petition was presented; paragraph 41); and (b) the Habitual Residence Presumption was not disapplied (paragraph 41). ICC Judge Greenwood:

(1) noted that the parties agreed that the earlier, pre-Brexit authorities, remained applicable (paragraph 44);

(2) said that Re Budniok [2017] EWHC 368 ('Budniok') (a decision of Mr Registrar Baister (as he then was)) contained 'a broad and useful summary' (paragraph 44 of Portrait) of the law here, at paragraphs 80-81 of Budniok. ICC Judge Greenwood in Portrait quoted that summary (so far as material):

“81. I turn next to the relevant law. Although it is set out in many cases I will take a short cut by recycling a summary I made relatively recently of the relevant provisions of the EC Regulation and related material and by way of attempt to draw together the factors to be taken into account as they emerged from the case law (see Doyle v Quinn [2015] BPIR 226 ….

"…

[ 38 ] Recital (13) [of the Regulation] provides:

'The "centre of main interests" should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties.'

[ 39 ] The Virgós-Schmit report comments on 'centre of main interests' (in para 75):

'The concept of "main interests" must be interpreted as the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties.

The rationale of this rule is not difficult to explain. Insolvency is a foreseeable risk. It is therefore important that international jurisdiction (which, as we shall see, entails the application of the insolvency laws of that Contracting State) be based on a place known to the debtor's potential creditors. This enables the legal risks which would have to be assumed in the case of insolvency to be calculated.

By using the term "interests", the intention was to encompass not only commercial, industrial or professional activities, but also general economic activities, so as to include the activities of private individuals (e.g. consumers). The expression "main" serves as a criterion for the cases where these interests include activities of different types which are run from different centres.

In principle, the centre of main interests will in the case of professionals be the place of their professional domicile and for natural persons in general, the place of their habitual residence.'

[ 40 ] It will be seen from the foregoing (a) that the 'interests' to which the Regulation refers are primarily economic: they include commercial, financial and professional activities, but also consumer activity; (b) that the word 'main' is important: a debtor may administer his interests in more than one centre; (c) that a professional person's centre of main interests is likely to be the place of his professional domicile, but that otherwise for natural persons it is likely to be that person's habitual residence.

[ 41 ] The leading English authority on the application of the EC Regulation remains Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170. A number of important principles emerge from that case.

[42] The first [this comment dealt with the issue of date of assessment...]... Secondly, the location of the centre of main interests falls to be determined in the light of the facts as they are at the relevant time, but those facts include historical facts. Thirdly, the court must have regard to the need for the centre of main interests to be ascertainable by third parties, in particular creditors and potential creditors. But, as Chadwick LJ noted (at para 55):

'There is no principle of immutability. A debtor must be free to choose where he carries on those activities which fall within the concept of "administration of his interests". He must be free to relocate his home and his business. And, if he has altered the place at which he conducts the administration of his interests on a regular basis, by choosing to carry on the relevant activities (in a way which is ascertainable by third parties) at another place, the court must recognise and give effect to that.'

Chadwick LJ went on to note that a debtor's freedom to move could be for a self-serving purpose, even where insolvency was threatened. He also noted, however, that:

'In circumstances where there are grounds for suspicion that a debtor has sought, deliberately, to change his centre of main interests at a time when he is insolvent, or threatened with insolvency, in order to alter the insolvency rules which will apply to him in respect of existing debts, the court will need to scrutinise the facts which are said to give rise to a change in the centre of main interests with that in mind. The court will need to be satisfied that the change in the place where the activities which fall within the concept of "administration of his interests" are carried on which is said to have occurred is a change based on substance and not an illusion; and that that change has the necessary element of permanence.'

[ 43 ] There is also a significant body of first instance case-law dealing with the factors the courts will take into account when dealing with what appears to be forum shopping, but the most comprehensive list is, I think, to be found in the judgment of HHJ Purle QC, sitting as a High Court judge, in Sparkasse Hilden Ratingen Velbert v (1) Benk (2) The Official Receiver [2012] EWHC 2432 (Ch), [2012] BPIR 1258, ChD (paras [19] and [22]), which, not for the first time, I gratefully adopt (with minor editorial changes):

(a) An individual's COMI [centre of main interests] is where he can be contacted; this will normally be his habitual place of residence (see Geveran Trading Co Ltd v Skjevesland [2003] BPIR 73, [2003] BCC 209, ChD, at 89; upheld on appeal Skjevesland v Geveran Trading Co Ltd [2002] EWHC 2898 (Ch), [2003] BPIR 924, ChD);

(b) A person's COMI must have an element of permanence (see Official Receiver v Mitterfellner [2009] BPIR 1075, ChD at paras [5] and [6]);

(c) The COMI must be ascertainable by third parties (see Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170, at para [54]);

(d) an individual is free to re-locate his COMI, even on the eve of insolvency; what a court must determine on the facts is whether the change in COMI is one of substance or a mere illusion (see Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170, at para [55]);

(e) A debtor can only have one COMI;

(f) A debtor's COMI is, in the case of professionals, the place of their professional domicile and for natural persons in general, the place of their habitual residence (Virgos-Schmidt Report, at para 75 and Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170 , at para [47]);

(g) 'A man's habitual residence is his settled, permanent home, the place where he lives with his wife and family, […] the place to which he returns from business trips elsewhere or abroad …' (Stojevic v Official Receiver [2006] EWHC 3447 (Ch), [2007] BPIR 141, ChD at para [59] and Re Eichler (No 2) (A Bankrupt); Steinhardt v Eichler [2011] BPIR 1293, at para [142](iv));

(h) Whilst a debtor's choice as to where he conducts the administration of his affairs may be subjective, where he actually carries on the administration of his affairs on a regular basis such that it is ascertainable by third parties and by the court is an objective question ( Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170, at para [43] and [47]; Re Eichler (No 2) (A Bankrupt); Steinhardt v Eichler [2011] BPIR 1293, at para [141](viii));

(i) 'Regular administration' of a debtor's interests means that the court must look for the place from which the debtor exercises the management, organisation and control of his interests (Stojevic v Official Receiver [2006] EWHC 3447 (Ch), [2007] BPIR 141 , at para [28] and Re Eichler (No 2) (A Bankrupt); Steinhardt v Eichler [2011] BPIR 1293, at para [142](i));

(j) The term 'on a regular basis' indicates 'a quality of presence', 'a degree of continuity', 'an idea of normality', 'a stable link with the forum' and 'a degree of permanence' (Stojevic v Official Receiver [2006] EWHC 3447 (Ch), [2007] BPIR 141, at para [29] and Re Eichler (No 2) (A Bankrupt); Steinhardt v Eichler [2011] BPIR 1293, at para [142](ii));

(k) Particular regard must be had for the COMI to be ascertainable by third parties, in particular creditors and potential creditors (Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170, at para [55]);

(l) Whilst the date on which the COMI is to be established is the date of presentation of the petition, evidence as to a debtor's activities and actions at other times may be significant in that they cast light on the truth or otherwise of his claim to have had his COMI in England at the relevant time ( Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170, at paras [47] and [55]);

(m) If the debtor relocates in the face of potential insolvency, the court must scrutinise the facts and determine whether the change in the place of the administration of interests is based on substance or is an illusion (Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170 , at para [55]);

(n) That change must also have an element of permanence (Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966, [2005] BPIR 1170, at para [55] and Re Eichler (No 2) (A Bankrupt); Steinhardt v Eichler [2011] BPIR 1293, at para [141](vi)).

To those matters I would add:

'[A] debtor does not appear to be obliged to advertise his centre of main interest but nor may he hide it. It should be reasonably or sufficiently ascertainable or ascertainable by a reasonably diligent creditor' (per Deeny J in Irish Bank Resolution Corporation Ltd v Quinn [2012] NICh 1, [2012] BPIR 322 , NI ChD at para 28)".[12b]

ICC Judge Greenwood in Portrait noted that there is now the ECJ decision in MH v OJ (Case C-253/19)[12c], where the ECJ considered 'the nature of an individual debtor’s relevant administered “interests”, and the rationale of the presumption based on his or her habitual residence' (paragraph 45). At paragraph 46, ICC Judge Greenwood noted that the ECJ in MH v OJ emphasized:

'i) first, that a debtor’s COMI is to be established by reference to matters both “objective and ascertainable by third parties”, to “ensure legal certainty and predictability”...

ii) second, that in assessing “ascertainability”, special consideration should be given to creditors, and to their perception of the place of administration by the debtor of his or her interests;

iii) third, that the COMI is to be determined following an “overall assessment” of all the objective criteria ascertainable by third parties, and in particular, by creditors;

iv) fourth, that the interests in question are financial and economic, and entail a consideration of the debtor’s economic activities, including economic decision making, earning and spending revenue, and holding assets;

v) fifth, the rationale of the presumption based on habitual residence is that there is a “strong possibility” that the place of habitual residence is the place where the debtor’s interests are administered.'

Expanding on point ii above, ascertainability, ICC Judge Greenwood in Portrait said:

(1) ascertainability is 'an important aspect of COMI' (paragraph 48), but this begged the question 'ascertainable by whom, how and by reference to which facts or matters?' (paragraph 48)

(2) Re Melars Group Ltd ('Melars') consider these interrogatories about ascertainable, at each stage of the case (1st instance before Deputy ICC Judge Baister; on first appeal before Miles J [2021] EWHC 1523 (Ch); and second appeal before the Court of Appeal [2022] EWCA Civ 1419). The judgments are considered in a footnote, but the answer is, essentially, typical creditors of the debtor[12d].

Expanding on point iv above, ICC Judge Greenwood in Portrait said:

(1) 'the question ultimately at issue concerns matters economic and financial, rather than social and familial' (paragraph 47) and that '...factors relating to a debtor’s social or family situation are material only insofar as they have economic implications (and may in any event not be “ascertainable” in the relevant sense)' (paragraph 47); further

(2) of “family status and family ties” in order to determine a debtor’s habitual residence:

'In my view, such matters are undoubtedly relevant to the determination of a debtor’s habitual residence, albeit that the ultimate issue concerns the place of administration of economic and financial interests by reference to matters both objective and ascertainable, in particular from the perspective of creditors – habitual residence creates merely a presumption.' and

(3) the sense or gist of the concept express by Mr Registrar Jacques in Stojevic v OR [2007] BPIR 141 ('Stojevic'), at paragraph 59, 'continues to be useful and relevant' (paragraph 47), namely:

“Essentially … a man’s habitual residence is his settled, permanent home, the place where he lives with his wife and family, until, in the case of the younger members of the family, they grow up and leave home, the place to which he returns from business trips elsewhere or abroad.”

(2) Connecting Factor - COMI in a Member State (not Denmark) and Establishment in England and Wales

Where a individual's COMI is not in England and Wales (and so, section 263I(1)(a) does not apply), a section 263I(1)(ab) Connecting Factor might still be established. For this Connecting Factor to be established, the individual must have:

(1) a COMI in a Member State (other than Denmark); and

Establishing COMI in a Member State (other than Denmark) (as distinct from any other country in the world) will involve the same question of identifying the place where the individual '...conducts the administration of its interests on a regular basis and which is ascertainable by third parties.' (Article 3).

(2) an 'estabilshment' in England and Wales.

The word 'establishment', which 263I(1) of the 1986 Act/Article 2(10) of the Retained Insolvency EU Regulation states that 'establishment' here '...means any place of operations where a debtor carries out or has carried out in the 3-month period prior to the request to open insolvency proceedings a non-transitory economic activity with human means and assets.' In other words, has the individual, in the 3-month period prior to the request to open insolvency proceedings, carried out in England or Wales, a 'non-transitory economic activity with human means and assets' operation.

Two things:

(1) this is a newly introduced Connecting Factor. Section 263I(1)(ab), with subsection 263I(5) providing the accompanying definition, was inserted into the 1986 Act by the Insolvency (Amendment) (EU Exit) Regulations 2019 (SI 2019/146)[13], as from IP completion day (namely, 11pm on 31 December 2020), subject to transitional and saving provisions in reg.4 (in light of Brexit); and

(2) as far as the author is aware, there are no reported authorities on this newly introduced provision (the bankruptcy order in Kooter No.1 was on 27.3.19, so prior to 31.12.20, and so this Connecting Factor was not available then[14]), nor are there, as far as the author is aware, any reported authorities on the equivolent provision inserted in section 265 of the 1986 Act (section 265(1)(ab) by Insolvency (Amendment) EU Exit) Reguations 2019 (SI 2019/146) reg.1(3), Schedule paragraphs 16 and 33)). No further guidance is therefore available.

The Section 263I(2) 'Test' - 4 Alternative Connecting Factors

Section 263I(1)(b) brings in section 263I(2), and the 4 alternative Connecting Factors contained therein. For convenience, the reader is reminded that section 263I(2) reads:

'(a) the debtor is domiciled in England and Wales, or

(b) at any time in the period of three years ending with the day on which the application is made to the adjudicator, the debtor-

(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii) has carried on business in England and Wales.'

The 4 Connecting Factors are therefore:

(1) the individual/debtor is domiciled in England and Wales;

(2) the individual/debtor has been, during the 3 year period, ordinarily resident in England and Wales;

(3) the individual/debtor has, during the 3 year period, had a place of residence, in England and Wales;

(4) the individual/debtor has, during the 3 year period, carried on business, in England and Wales;

These are the last of the Connecting Factors created in section 263I. It will be noted that there is no connecting factor of:

(1) being physically present in England and Wales. There used to be, but the legislature decided that mere physical presence in England and Wales should not be a Connecting Factor. The removal of physically present in England and Wales, as a Connecting Factor, occurred on 6.4.16 (prior to the whole bankruptcy adjudication system being introduced[15])

(2) nationality or citizenship;

While these are not Connecting Factors, it should be noted, for the avoidance of doubt, that:

(1) physically presence and/or nationality and/or citizenship (or absence of the same) are likely to be relevant as to whether one of the 6 Connecting Factors does exist between the individual and England and Wales; and

(2) the absence of physically presence and/or UK nationality and/or UK citizenship, will not be a bar to one of the 6 Connecting Factors existing.

Substantiality and Continuity

As to these 4 Connecting Factors, Bacon J in Lakatamia said, at paragraph 29:

'The conditions of domicile, ordinary residence and carrying on business all connote a degree of substantiality and continuity of the connection of the debtor with the jurisdiction.'

(3) Connecting Factor - Section 263I(2) Domiciled

The key word in the test of 'the debtor is domiciled in England and Wales' is the word 'domiciled'. The concept of 'domicile' was considered by the Court of Appeal in Henwood, the leading case on this Connecting Factor.

Firstly, some facts about Henwood. The Court of Appeal consisted of Arden LJ, with whom Moore-Bick LJ[16a] and Waller LJ agreed. It allowed an appeal against a first instance judge's determination that:

(1) a judgment debtor must have acquired a domicile of choice in Mauritius as the judgment debtor has abandoned his domicile of choice in the Isle of Man; and so

(2) the judgement debtor was not domicile in England and Wales (as would be the case if his domicile of origin had applied) on the key date - namely, when a creditors bankruptcy petition was presented against the judgment debtor by the judgment creditor; and so

(3) by virtue of section 265 of the 1986 Act, the courts of England and Wales had no E&W Bankruptcy Jurisdiction over the judgement debtor, to make a bankruptcy order against the judgment debtor (paragaph 1); and

(4) he (the first instance judge) should make a declaration - that the courts of England and Wales held no E&W Bankruptcy Jurisdiction over the judgement debtor and, that being so, he should therefore dismiss the pending bankruptcy petition against the judgment debtor (paragraphs 1 and 2).

As part of her judgment, Arden LJ in Henwood, under the heading 'Relevant principles of the law of domicile' and subheading 'General principles', set out the following principles, at paragraph 8:

'The following principles of law, which are derived from Dicey, Morris and Collins on The Conflict of Laws (2006) are not in issue:

(i) A person is, in general, domiciled in the country in which he is considered by English law to have his permanent home. A person may sometimes be domiciled in a country although he does not have his permanent home in it (Dicey, pages 122 to126).

(ii) No person can be without a domicile (Dicey, page 126).

(iii) No person can at the same time for the same purpose have more than one domicile (Dicey, pages 126 to128).

(iv) An existing domicile is presumed to continue until it is proved that a new domicile has been acquired (Dicey, pages 128 to 129).

(v) Every person receives at birth a domicile of origin (Dicey, pages 130 to 133).

(vi) Every independent person can acquire a domicile of choice by the combination of residence and an intention of permanent or indefinite residence, but not otherwise (Dicey, pages 133 to138).

(vii) Any circumstance that is evidence of a person's residence, or of his intention to reside permanently or indefinitely in a country, must be considered in determining whether he has acquired a domicile of choice (Dicey, pages 138 to143).

(viii) In determining whether a person intends to reside permanently or indefinitely, the court may have regard to the motive for which residence was taken up, the fact that residence was not freely chosen, and the fact that residence was precarious (Dicey, pages 144 to151).

(ix) A person abandons a domicile of choice in a country by ceasing to reside there and by ceasing to intend to reside there permanently, or indefinitely, and not otherwise (Dicey, pages 151 to153).

(x) When a domicile of choice is abandoned, a new domicile of choice may be acquired, but, if it is not acquired, the domicile of origin revives (Dicey, pages 151 to 153).'

Waller LJ pithily summarised the position in Henwood, at paragraph 147, as follows:

(1) 'Unlike a domicile of origin, a domicile of choice can simply be abandoned by giving up residence and no longer having the requisite intention, or it can be abandoned by acquiring another domicile of choice.' (paragraph 147). The requisite intention being 'the intention to reside there permanently' (paragraph 149)

(2) The law is not that a domicile of choice can only be abandoned if an alternative domicile of choice is acquired. Where a domicile of choice is abandoned but no new domicile of choice is at the same time acquired, then the person's domicile of origin revives and applies. On this, Waller LJ criticised the first instance judge. Waller LJ said 'In thinking that a domicile of choice can only be lost by the acquisition of another domicile of choice the judge was in error. A domicile of choice can be abandoned and, if abandoned, the domicile of origin revives.' (paragraph 148). The upshot of the law being that the domicile of origin revives and applies, if a domicile of choice is abandoned, is that '...there is no compulsion to find the acquisition of another domicile of choice.' (paragraph 149) in such cirucmstances - i.e. to find the requisite intention existed, when such intention was weak/non-existent.

The authors of Dicey, Morris and Collins on The Conflict of Laws (2006) ('Dicey') made the same point, this way:

'On abandoning the domicile of choice, a person may acquire a new domicile of choice, or he may return to and settle in the country of his domicile of origin. He may also simply abandon his domicile of choice without acquiring a home in another country. It was at one time thought that in such a case the previous domicile was retained until a new one was acquired. But it is now settled that where a person simply abandons a domicile of choice his domicile of origin revives by operation of law…' (p.152). Arden LJ in Henwood also commented on this[16b]

In Henwood, it was common ground that the judgment debtor bore '...the onus of showing that he had a domicile different from his domicile of origin.' (paragraph 22; also paragraph 117)

Arden LJ expanded, from paragraph 9 in Henwood, three of the 'General Principles' she identified in the quote above (i.e. paragraph 8 of Henwood):

(1) The intention required for a domicile of choice (Henwood general principle (vi) above, from paragraph 8 of Henwood)

In paragraphs 10 to 15, Arden LJ in Henwood said:

'The intention of residence must be fixed and must be for the indefinite future. It is not enough for instance that at any given point in time its length has not been determined.

In the leading case of Udny v Udny (1869) LR 1 Sc & D 441, the issue was as to the domicile of the respondent's father at the time of his (the respondent's) birth. His father had been born in Scotland but had left Scotland and taken a lease of a house in London. He had a castle in Scotland but that was not habitable. He visited Scotland frequently but had no residence there. In 1844, he sold the lease and his personal possessions and left London for France to avoid his creditors. But he did not intend to reside permanently in France. His first wife died in 1846, and he formed a liaison with the respondent's mother who, in 1853, gave birth to the respondent in London. He married her and went back to Scotland thinking that he would thereby legitimise the respondent, avoid his creditors and bar the entail on his estates. He intended to stay in Scotland because he thought he would be safe from his creditors.

The House of Lords held that the respondent's father had lost his domicile of choice in England and that his domicile of origin had revived. One of the issues was whether revival of his domicile of origin was precluded by the fact that he had a possible intention to leave Scotland again if his creditors pursued him there. At 449, Lord Hatherley L.C. held that this possible intention did not mean that he could not have a domicile in Scotland if he had decided that Scotland would be “his chosen and settled abode”. Lord Hatherley held that the acquisition of a domicile of choice was best described as “settling” in a place:

“A change of [a person's domicile of choice] can only be effected animo et facto - that is to say, by the choice of another domicile, evidenced by residence within the territorial limits to which the jurisdiction of the new domicile extends. He, in making this change, does an act, which is more nearly designated by the word “settling” than by any one word in our language. Thus we speak of a colonist settling in Canada or Australia, or of a Scotsman settling in England, and the word is frequently used as expressive of the act of change of domicile in the various judgments pronounced by our Courts.”

At 458, Lord Westbury made the following observations about the acquisition of a domicile of choice which also emphasise the fixed nature of the requisite intention:

“Domicil of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. This is a description of the circumstances which create or constitute a domicil, and not a definition of the term. There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation. It is true that the residence originally temporary, or intended for a limited period, may afterwards become general and unlimited, and in such a case so soon as the change of purpose, or animus manendi, can be inferred the fact of domicil is established.” (emphasis added)

Given that a person can only have one domicile at any one time for the same purpose, he must in my judgment have a singular and distinctive relationship with the country of supposed domicile of choice. That means it must be his ultimate home or, as it has been put, the place where he would wish to spend his last days. Thus, in Bell v Kennedy (1868) LR 1 Sc and Div 307, 311, Lord Cairns, having held that it was unnecessary for him to examine the various definitions that have been given of the term “domicile”, held that the question to be considered was in substance whether the appellant:

“had determined to make, and had made, Scotland his home, with the intention of establishing himself and his family there, and ending his days in that country?” (emphasis added) 

In my judgment this test by its reference to ending one's days usefully emphasises the need for the subject to have a fixed purpose that he will live in the country of his domicile of choice.' [words in bold are in italics in original]

(2) All the facts which throw light on the subject's intention must be considered (Henwood general principle (vii) above, from paragraph 8 of Henwood)

In paragraphs 16 to 19, Arden LJ in Henwood said:

'A finding as to domicile requires a careful evaluation of all the facts. This point is illustrated by a memorable passage from the judgment of Mummery LJ in Agulian v Cyganik [2006] EWCA Civ 129 at [46(1)]:

“Positioned at the date of death in February 2003 the court must look back at the whole of the deceased's life, at what he had done with his life, at what life had done to him and at what were his inferred intentions in order to decide whether he had acquired a domicile of choice in England by the date of his death. Soren Kierkegaard's aphorism that “Life must be lived forwards, but can only be understood backwards” resonates in the biographical data of domicile disputes.”

Some commonly occurring facts call for special mention. The fact that residence is precarious or illegal is a circumstance that is relevant to the question of intention (but the fact that presence is illegal does not prevent residence): Mark v Mark [2006] 1 AC 98.

A person can acquire a domicile of choice without naturalisation. (Dicey, page 136.). On the other hand, citizenship is not decisive: Wahl v Wahl [1932] 147 LT 382. An intention to be buried in a particular place has in some circumstances been treated as an important factor, but in other cases discounted (Dicey, page 140). If a person leaves a country to evade his creditors, he may lose his domicile there, unless he plans to return as soon as he had got rid of his debts.

Frequently the subject of a dispute as to domicile (often called “the propositus”) will make statements or declarations as to what he intends. But the court should not rely on these statements unless corroborated by action consistent with the declaration. Thus Dicey states:

“The person whose domicile is in question may himself testify as to his intention, but the court will view the evidence of the interested party with suspicion. Declarations of intention made out of court may be given in evidence by way of exception to the hearsay rule. The weight of such evidence will vary from case to case. To say that declarations as to domicile are “the lowest species of evidence” is probably an exaggeration. The present law has been stated as follows: “Declarations as to intention are rightly regarded in determining the question of a change of domicile, but they must be examined by considering the persons to whom, the purposes for which, and the circumstances in which they are made and they must however be fortified and carried into effect by conduct and action consistent with the declared expressions.”. Thus in some cases the courts have relied to some extent on declarations of intention in deciding issues as to domicile; indeed, in one case, the declaration was decisive. But in other cases the courts have refused to give effect to the declarations on the ground that they were inconsistent with the conduct of the propositus: a domicile cannot be acquired or retained by mere declaration. The courts are, in particular, reluctant to give effect to declarations which refer in terms to “domicile” since the declarant is unlikely to have understood the meaning of the word. Declarations which are equivocal have little effect: thus a declaration of intention to reside permanently in the United Kingdom is no evidence of acquisition of a domicile of choice in any of the countries which are included in the United Kingdom; although it may be evidence of the abandonment of a domicile elsewhere.” (pages 142 to 143)'

Arden LJ dealt with a further point:

(3) Revival of the doctrine of origin on loss of domicile of choice provides a default position (Henwood general principle (x) above, from paragraph 8 of Henwood)

Arden LJ in Henwood said, at paragraph 21:

'The revival of the domicile of origin (see (x) above) occurs as a matter of law. As no person can be without a domicile, the law attributes a domicile to a person who does not have one. A domicile of origin provides the domicile if there is no clear evidence as to a domicile of choice elsewhere (as in [Winans v Attorney General (No.1) [1904] A.C. 287, [1904] 5 WLUK 23]). The rule, that the domicile of origin revives where a domicile of choice has been abandoned and another domicile of choice has not yet been obtained, represents therefore a default rule. The rule about revival removes the need to come to the conclusion in any particular case that a person had a domicile of choice.' 

In a similar vein, Moore-Bick LJ in Henwood said, at paragraph 140:

'...It is necessary for the application of certain rules of law that a domicile be ascribed to every person and therefore the law provides that if a domicile of choice is abandoned in circumstances where no substitute domicile of choice is acquired the domicile of origin revives. That is so even though the person concerned has no intention of taking up residence in the country of his domicile of origin.'

Where a domicile of origin operates, Moore-Bick LJ in Henwood said, at paragraph 141:

'...the weight of evidence required to displace the domicile of origin where that has revived merely by operation of law is no greater than that which is required to displace an existing domicile of choice.'

Where a person maintains homes in more than one Country 

Moore-Bick LJ in Henwood said, at paragraph 141:

'where a person maintains homes in more than one country the question must be decided by reference to the quality of residence in each of those countries, since it is only by considering the quality of residence that one can decide which is his real home.' [bold added]

Henwood - on the facts

On the facts in Henwood, the judgment debtor had:

(1) abandoned his domicile of choice in the Isle of Man;

(2) not acquired any domicile of choice in Mauritius, nor in France: 'he had not formed an intention to make a permanent home in any specific location.' (Moore-Bick LJ, paragraph 140) and so,

(3) the judgment debtor's domicile of origin had revived, which it had been common ground was England and Wales. Consequently, the courts of England and Wales did have E&W Bankruptcy Juridiction over the judgment debtor. 

For a different case where domicile was in issue, see Revenue and Customs Commissioners v Stayton [2018] EWHC 3183 (Ch)[17]

Connecting Factors - Section 263I(2) - 3 Connecting Factors - 'Ordinarily Resident', 'Place of Residence' and 'Carried on Business'

Moving on to section 263I(2), there are in sectoin 263I(2) 3 (disjunctive) Connecting Factors. They can be shortened to:

(1) 'ordinarily resident';

(2) 'a place of residence' and

(3) 'carried on business'.

Each is in respect to a trailing time period:

(1) the time period is the 3 years immediately back from the day the bankruptcy application was made (section 263I(2)(b) of the 1986 Act);

(2) the the test is whether, 'at any time' during this 3 year period, any of the 3 Connecting Factors existed. In Al Saud 744, Roth J noted that the statutue refers to 'at any time' in the three year period - which Roth J said '...means that a period which is not de minimis is sufficient' (paragraph 42 (iv))

See also Re Akaydin [2013] BPIR 539, wherein Chief Registrar made a similar point. 

2 Connecting Factors - 'Ordinarily Resident' and 'A Place of Residence' - tests differ but there is overlap

Focusing on 'Ordinarily Resident' and 'A Place of Residence' for the moment:

(1) the tests are (clearly) different, for each Connecting Factor. Registrar Baister in Khan said, at paragraphs 23:

'Just as habitual and ordinary residence differ, so the terms “ordinarily resident” and “place of residence” are different things: the sub-section of the Act itself makes this clear, as do the authorities (see, for example, Hecquard, Re (1890) L.R. 24 Q.B.D. 71, [74] and Skjevesland v Geveran Trading Co Ltd (No.4) [2002] EWHC 2898 (Ch); [2003] BCC 391; [2003] BPIR 924, [5]).' however, 

(2) while the tests are different, there is substantial overlap in the factors that can go toward establishing them. Bacon J made this point in Lakatamia, while making 'some brief comments' (which he emphasised, were 'without in any way suggesting that the following should be regarded as an exhaustive exposition' (paragraph 31)). Bacon J said, at paragraph 31:

'...it is clear that there is a difference between the concept of “ordinarily resident” and the alternative and disjunct test of having a place of residence under section 263I. That does not mean that the two tests are wholly separate. As Chief Registrar Baister noted at para 27 of Khan [2016] BPIR 722, it may be that similar factors are relevant to both tests. But it does not follow that all of the factors that may be relevant to the assessment of whether a debtor is ordinarily resident in England and Wales will necessarily be relevant to the separate question of whether the debtor has a place of residence in England and Wales. If that were the case, then the existence of two separate tests would be meaningless.' What Registrar Baister in Khan said, at paragraph 27 was '...there is some overlap in the factors ..., even if the tests differ...'.

In Durkan, Deputy ICC Judge Baister (formerly Registrar Baister) said, at paragraph 5:

'The concept of being "ordinarily resident" and "having a place of residence" for the purposes of jurisdiction are not the same (Reynolds Porter Chamberlain LLP v Khan [2016] BPIR 722), although the same evidence and similar considerations may bear on or apply to both.'

(4) Connecting Factor - Section 263I(2) - Ordinarily Resident

The key case here is Khan. The case is a creditor's bankruptcy petition case under section 265 of the 1986 Act, but that is, in the author's view, not material. After quoting section 265(1)(c) of the 1986 Act, the equivolent of section 263I(2)(a), and surveying the authorities on point[18], Registrar Baister in Khan said, at paragraph 25:

'The following seem to be relevant to “ordinarily resident” (or its predecessor “ordinarily resided”):

(1) the expression is not to be treated as a term of art in a legal sense (Skjevesland [2002] EWHC 2898 (Ch), [13]).

(2) ordinary residence is a question of fact and degree (Norris (1888) 5 Morr. 111 113, Bright (1903) 19 T.L.R. 203, 204, Skjevesland [2002] EWHC 2898 (Ch), [20]).

(3) such residence must have a degree of permanence; the person concerned must intend to and actually reside for a substantial period of time; casual visits will not suffice (Skjevesland [32]). (I pause at this point respectfully to question the relevance of intention, but the learned judge does mention it.) It must be of some duration: two or three days do not suffice (Bright). A period of 92 days in a year was held to be sufficient in Skjevesland (see [18] and [19]; cf. Stojevic [2006] EWHC 3447 (Ch), [45]);

(4) “[g]eneral staying at an hotel” is probably not sufficient to amount to residence for the statutory purpose, although the court did not express a definite opinion on the point; but where a person has “exclusive use of lodgings and pays for them he does reside” (Norris, 114). Constant movement from, say, one boarding house to another would not suffice (Brauch [1978] Ch. 316);

(5) a person may have more than one usual residence (Skjevesland [33] and [34]) and may even be ordinarily resident in more than one country (Skjevesland [38]);

(6) it is not necessary to be able to specify the places at which the debtor is said to have ordinarily resided, although inability to do so may be a circumstance which tells against ordinary residence (Brauch, 333);

(7) ordinary residence does not necessarily require the person residing to be the landlord or tenant under any lease or tenancy agreement (Skjevesland [10] and [13]);

(8) ordinarily residing may include residing with family members (Skjevesland [12]). It is fair to note also, however, the use of the word “exclusive” in some of the authorities...'

(9) care is needed as to the weight to be attached to documentary evidence such as parking permits and letterheads, but documentary evidence does have a role to play especially if it gives an address for official purposes, e.g. for a firearms certificate or as an address for service (Skjevesland [40ff]);

(10) having access to a key kept at premises is “not without significance” (Skjevesland [45]);

(11) the purpose of a visit or visits to the jurisdiction may be relevant (Bright);

(12) it is important to distinguish between using a residence as such and using it to carry on corporate activity (Stojevic [53ff]);

(13) being capable of being telephoned at premises may be a factor (Brauch); and

(14) the cumulative effect of the evidence, which I take to mean both the oral and documentary evidence, is important (Skjevesland, [47]).'[19]

Registrar Baister in Khan did caution against treating this list of propositions, as an exhaustive list. Registrar Baister in Khan stated, at paragraph 23, that:

'The case law sets out a number of principles as well as dealing with the factors to which the courts have had regard from time to time and the weight that may be attributed to them. I list them ... but do not pretend that the list is exhaustive (there may be factors not contemplated which could be relevant in certain circumstances), that I have mined the cases for all their learning or that each factor I have identified will necessarily fall to be considered in every case.[20].

On the facts[21] in Khan, the 'ordinary resident' Connecting Factor was found (paragraph 39).

(5) Connecting Factor - Section 263I(2) - A Place of Residence 

Khan - Summary

Registrar Baister in Khan, also summarised some relevant propositions in respect 'A Place of Residence', at paragraph 26:

'(1) having a place of residence is a de facto situation rather than a matter of legal right (Skjevesland, [50] and the passage from Brauch there cited). So a licensee may have place of residence (Brauch, [334]);

(2) a moral claim to premises may be sufficient (Skjevesland, [52]);

(3) the person concerned may well have to phone to make arrangements to occupy because others use the premises as well as him but this is no obstacle to a finding of having a place of residence (Skjevesland, [53]);

(4) it is possible to have a dwelling house without being in occupation in the relevant period (Brauch, [335]) but the greater the occupation the more likely the finding; but not perhaps if the relevant property has been abandoned (Nordenfelt and Brauch, [335]); and

(5) living in a place with one’s family as a tenant in rooms makes those rooms a dwelling house (Hecquard, [74]).'

On the facts in Khan, the 'a place of residence' Connecting Factor was found (paragraph 41)[22]

Al Saud 1144 - Summary

In Al Saud 1144, ICC Judge Barber went through the authorites in this area, under the heading 'A Place of Residence', from paragraphs 53 to 85. While this is large number of paragraphs to quote, given it is: (1) so recent (18.5.23); and (2) a comprehensive survey of the authorities, it is worth quoting in full. Here then, is paragraphs 53 to 85 of Al Saud 1144:

'53. The question of what constitutes a place of residence for the purposes of s.265 IA 1986 has been considered in a number of authorities. It is clear from the Roth Judgment that the term 'dwelling house' used in s.4 of the Bankruptcy Act 1914 (the predecessor provision of s265) is to be treated as the same concept as a 'place of residence' under s.265 .

54. I shall start with the case of In re Brauch [1978] Ch 316. This was not a 'service out' case but a jurisdictional challenge to a bankruptcy petition where the debtor, who did not have an English domicile, worked much of the time from an office in London. He was the lessee of a house in London occupied by the mother of his son whom he visited there. The Court of Appeal dismissed an appeal from the registrar's decision finding that there was jurisdiction over the debtor on the basis that during the relevant 12-month period, the debtor had ordinarily resided, carried on business and had a place of business in England within the meaning of s.4 BA 1914. Any of those grounds was sufficient to dispose of the case.

55. The relevance of In re Brauch in the current context concerns the approach adopted by the registrar and appellate court on whether the 'dwelling house' ground had also been established. At first instance the registrar had not accepted that the debtor also had a dwelling house in England and that conclusion was challenged by a respondent's notice. Goff LJ (Orr and Buckley LJJ concurring) dealt with this aspect fairly briefly at the end of his judgment, confirming, among other things:

'I do not see why a licensee should not be held to have a dwelling house': 334G;

and

'I think it may be possible to find that the debtor had a dwelling house in England although he was not in fact in occupation of it at any time during the year. If it be established that he had a dwelling house to start with but he happened to be away throughout the year for a temporary purpose but with intent to return, it may be that on the facts of a particular case one could find he had a dwelling house, but the more there is actual occupation, the easier it is to reach the conclusion that there was a dwelling house, and the shorter the actual occupation, the more difficult it becomes': 335A-B.

56. At 335D Goff LJ continued:

'In my judgment, here again one has to look at all the facts and see whether or not they do lead to the conclusion that within the relevant year the debtor had a dwelling house in England. In the present case it is pointed out that whilst the debtor was not in fact in residence at 51, Connaught Street for any part of the year, he had installed the mother of his son there, and it appears from the evidence that he did at least go to see her there and may well have stayed nights, although whether he ought to be regarded as her guest or she as his might be a somewhat difficult question. I do not think, however, that we really can reach a conclusion from these matters. The registrar said the petitioning creditors fail because they know so little. In my judgment, that is a correct appraisal of the situation in this case. In my view, there is insufficient evidence upon which to form a conclusion whether or not the debtor had a dwelling house within the meaning of the section, and, in my judgment, therefore the respondents' notice fails'.

57. Reflecting on these conclusions in the Roth Judgment, Roth J observed at [29]:

'I do not regard Goff LJ's observation that it was unclear whether the debtor there may have stayed in the property that he owned (as lessee) as the guest of the mother of his son who was living there or whether she was there as his guest as establishing a rule that if a person in occupancy of a property is as a guest of someone else, the person cannot be said to have a place of residence in the property. In my judgment, what Re Brauch makes clear is that the determination depends on all the evidence and is very much a matter of fact and degree.'

58. Skjevesland v Geveran Trading Co Ltd (No 4) [2003] BCC 391 was a case concerning an appeal by a debtor from a decision that a bankruptcy petition could be presented against him in England, inter alia, because he had a place of residence in England during the relevant time. A company controlled by the debtor held a lease on a flat in London which provided that the flat was for the occupation of the debtor and his family. The debtor's son was living at the flat but the debtor would stay at it when he came over from Switzerland. Before he planned to come over, the debtor would call his son, who would move out for the short period involved to enable the debtor to stay there.

59. At first instance in Skjevesland, the registrar had noted that in In re Brauch, 'Goff LJ clearly considered that a licensee, which effectively is what Mr Skjevesland is, could be held to have a place of residence in the premises of which he was a licensee'.

60. On appeal, Judge Howarth (sitting as a judge of the High Court) stated at [50]:

'I do not find fault with the registrar's comment about what is to be found in the case of Re Brauch … It seems to me where you are saying that a person has a place of residence, you are looking at a de facto situation, not necessarily matters of legal right.'

61. At [52] Judge Howarth continued:

'It seems to me that a moral claim is quite sufficient in a family context.'

62. Judge Howarth went on to find that the flat was the debtor's place of residence for the purposes of s265, reasoning at [53]:

'Flat 8, in this case, was normally occupied first of all by Anna [the debtor's daughter], and then by John [the debtor's son], and finally by John and Charlotte [John's fiancée] together. But the evidence seems to be clear that Mr Skjevesland would phone up on a regular basis, and he and John between them would discuss when Mr Skjevesland could come over and stay there. On those times, first of all, John would move out to Charlotte's flat. Then after Charlotte had given up her flat, they would both move out and go somewhere else. It seems to me on those facts it was open to the registrar to conclude that Mr Skjevesland called the tune in regard to that flat. If he decided that he wanted to go there and stay there for a period of three or four days in a week or two weeks' time, he would get his own way. It was certainly open to the registrar to conclude that. Thus it seems to me that the registrar was entitled to conclude that Flat 8 was a place of residence in this country for Mr Skjevesland,… That being so, that ground of appeal must fail.'

63. In Reynolds Porter Chamberlain LLP v Khan [2016] BPIR 722, Chief Registrar Baister dealt with both ordinary residence and having a place of residence, noting that there was an overlap between the factors relevant to the two concepts although the concepts were distinct. He summarised at [26] some principles which he derived from earlier authorities:

'(1) Having a place of residence is a de facto situation rather than a matter of legal right (Skjevesland paragraph 50 and the passage from Brauch there cited). So a licensee may have a place of residence (Brauch 334).

(2) A moral claim to premises may be sufficient (Skjevesland paragraph 52).

(3) The person concerned may well have to phone to make arrangements to occupy because others use the premises as well as him but this is no obstacle to a finding of having a place of residence (Skjevesland paragraph 53).

(4) It is possible to have a dwelling house without being in occupation in the relevant period (Brauch, 335) but the greater the occupation the more likely the finding; but not perhaps if the relevant property has been abandoned (Nordenfelt and Brauch, 335).

(5) Living in a place with one's family as a tenant in rooms makes those rooms a dwelling house (Hecquard 74)'.

64. On the facts, the court in Khan held that the conditions for both ordinary residence and place of residence were satisfied. The debtor was resident in Pakistan where he had business and political interests. His children were being educated in England and he came here to visit them and also came to England for business. The debtor did not himself own any property in England but he was able to stay during his visits to London in one or more flats in an apartment building in Knightsbridge that was owned by given companies and he received mail addressed to him at that address. The Chief Registrar stated, at [31]:

'… it is plain from the oral evidence that the respondent was able to and did reside in one or more of the flats when he was here.'

65. At [40] the Chief Registrar went on to observe in Khan :

'It is of no significance that the respondent did not own the property or have a tenancy or licence agreement or anything of that kind. It is plain from his evidence that he could get a key and enter and use a flat in the building whenever he wished to. There is no evidence to suggest that he required permission to reside in or use one or more of the flats.'

66. As previously noted, in the Roth Judgment, Roth J (at [37]) confirmed that he did not regard these and other authorities as establishing that de facto control of the property is a necessary condition. His view was that In re Brauch of itself showed that the imposition of de facto control as a necessary condition would be inappropriate.

67. The reference to 'Nordenfelt' in paragraph 26(4) of RPC v Khan was a reference to In Re Nordenfelt 1895 QB 151. In Nordenfelt, a debtor had resided in a house of his own in England but had then gone to reside abroad in November 1891, leaving instructions with a house-agent to let the house, furnished or unfurnished. A board was put up announcing that the house was to be let. In May 1892, the house not having been let, the furniture was offered for sale by auction. A large part of it was then sold. The unsold furniture was packed up ready for removal. The debtor sold the house in December 1892. The petition was presented in November 1893. According to the report, at first instance the judge found that the debtor had left the house in 'circumstances which shewed an intention of never coming back to reside there – that he had left the house for good – and the house had therefore ceased to be his dwelling-house'. The creditor's appeal was dismissed, the Court of Appeal upholding the judge's conclusion that the debtor had abandoned the house as his dwelling house for more than a year prior to presentation of the petition.

68. In PJSC VTB Bank v Laptev [2020] EWHC 321 (Ch), ICC Judge Burton considered that period of occupation was a relevant factor when considering the place of residence test, but that it was not solely determinative.

69. The concept of a place of residence was recently considered in Lakatamia Shipping Co Ltd v Su [2021] Bus LR 1285. This concerned an application by the debtor (Mr Su) for a bankruptcy order under s263I of the IA 1986, but the same qualifying conditions apply under that provision as for a creditor's petition under s265.

70. In Lakatamia, the debtor, who was domiciled abroad, arrived in England in January 2019 and lived in various hotels and serviced apartments before serving a prison sentence. After his release from prison in April 2020, the debtor, who was prohibited by a court order from leaving the jurisdiction, stayed first with a friend for a few weeks, and then from late April 2020 in a small flat in Maida Vale which had been leased by someone he met in prison. He applied for a bankruptcy order under s263I of the IA 1986 on 4 July 2020. The bankruptcy order was made and a creditor sought its annulment on the basis that the insolvency adjudicator had lacked jurisdiction to make it. The creditor's application for summary judgment on his annulment application was refused, the deputy ICC Judge holding that at times in the three year period running up to the application for the bankruptcy order, the debtor had had a place of residence in England and Wales for the purposes of s263I(2) (b)(i) and that accordingly, the jurisdictional test was satisfied. The creditor appealed on the ground that the deputy ICC Judge had erred in his construction of the term 'place of residence' and/or had failed to take account of the wholly involuntary nature of the debtor's occupation of some of the places in which he had stayed while in England.

71. Giving judgment on the appeal, Bacon J observed at [19]:

'The judge did, however, decide that Mr Su had a place of residence in England and Wales during the relevant period, which he said must necessarily mean something different from having a place of ordinary residence. While the judgment did not make clear exactly which of Mr Su's addresses were considered to be his place of residences, para 55 of the judgment recorded the submissions of Mr Su's solicitor as having been that Mr Su was resident at HMP Pentonville, followed by a stay at his friend's property in Surrey, and subsequently his occupation of the flat in Maida Vale. It appears, therefore, that the judge considered that Mr Su had a place of residence in the jurisdiction on the basis of one or more of those locations.'

72. The debtor did not positively contend on appeal that HMP Pentonville was a place of residence. Nor did he contend that he 'resided' as such in any of the places that he occupied since his arrival in England. Rather, his submission was that the statutory language 'has had a place of residence in England and Wales' has to be interpreted as meaning no more than that the debtor had an entitlement, which could be a licence or moral entitlement rather than a legal entitlement, to occupy a place that was capable of being described as a place of residence of someone, whether or not the residence was that of the debtor. On that basis, the debtor maintained that he had places of residence at the Intercontinental Hotel, the Cromwell Apartments, the friend's house in Surrey and the current flat in Maida Vale. All those premises, he said, were places in which somebody was capable of residing, and where Mr Su had some sort of entitlement to stay: Lakatamia, [21]-[22].

73. Addressing these submissions, Bacon J reasoned as follows:

'[24] On the basis of the submissions made before me today the appeal comes down to a very short point of statutory construction: does the test of having a place of residence in section 263I simply mean, as Mr Underwood submitted, that the debtor should have had an entitlement of some sort to occupy a place that is capable of being described as someone's place of residence or does it require an assessment of the quality of the residence of the debtor, as Mr Phillips submitted?

[25] On that point I have no hesitation in rejecting Mr Underwood's submission. In the first place, it is not supported by the statutory language. As set out in section 263I(2), the test is that "the debtor … has had a place of residence". On the plain meaning of those words, therefore, the residence must be that of the debtor not someone else. Mr Underwood's construction effectively asks the court to rewrite the statutory language and replace the concept of residence with one of mere occupation. But that is not the wording used in section 263I.

[26] Secondly, Mr Underwood's construction is not supported by any authority whatsoever. Mr Underwood referred me to the judgment of Chief Registrar Baister in [RPC v Khan] in which the judge considered both the concept of ordinarily resident and the alternative test of having a place of residence for the purposes of section 263I. At para 26 of that judgment the Chief Registrar summarise some of the applicable principles, noting in particular that having a place of residence is a de facto situation rather than a matter of legal right such that a licensee may have a place of residence; that a moral claim to premises may be sufficient; that the premises may also be occupied by others; and that it is possible to have a dwelling house without being in occupation during the relevant period.

[27] Nothing in that summary, however, remotely suggests that a debtor may have a place of residence where the debtor has not in fact ever resided, but which is the residence of a third party which the debtor is temporarily occupying with the permission of that third party.

[28] Thirdly, Mr Underwood's construction would diminish the test in section 263I to complete triviality, in a way that would make no sense in the context of the statutory provision. As Mr Phillips pointed out, the primary jurisdictional test under section 263I is that the centre of the debtor's main interests should be in England and Wales. As a derogation from that test, jurisdiction is established where one of the four conditions in section 263I(2) is satisfied, namely that (1) the debtor is domiciled in England and Wales, (2) the debtor has during the relevant three-year period been ordinarily resident in England and Wales, (3) the debtor has had a place residence in England and Wales during that period, or (4) the debtor has carried on business in England and Wales during that period.

[29] The conditions of domicile, ordinary residence and carrying on business all connote a degree of substantiality and continuity of the connection of the debtor with the jurisdiction. By contrast, on Mr Underwood's case a debtor could invoke the jurisdiction of the insolvency adjudicator simply on the basis that they had permission to occupy the residence of a third party for some period of time during the three years preceding the bankruptcy application, no matter how fleeting and transient that occupation was - and indeed on Mr Underwood's submission irrespective of whether the debtor even did occupy those premises at all. That would be an absurd result that would render effectively nugatory the jurisdictional test in section 263I of the Insolvency Act 1986 .

[30] I therefore reject Mr Underwood's construction of section 263I. On that basis the appeal must succeed, since Mr Underwood's statutory construction point was the only point on which Mr Underwood relied to oppose the appeal.'

74. Bacon J went on (at [31]-[38]) to make some 'brief comments' on what she considered the correct approach to be, 'without in any way suggesting that the following should be regarded as an exhaustive exposition' ([31]):

(1) While there is a clear difference between the concept of 'ordinarily resident' and a separate test of having a 'place of residence', that does not mean that the two tests are wholly separate; it may be that similar factors are relevant to both tests. It did not follow however that all of the factors that are relevant to one of those tests will necessarily be relevant to the other ([32]).

(2) The starting point should be that the phrase 'has had a place of residence' should be given its natural meaning. In that regard it was relevant to have regard to authorities on the interpretation of the concept of residence even if those authorities arose in different statutory contexts. In this regard, Bacon J noted that:

(a) In Levene v Comrs of Inland Revenue [1928] AC 217, 222, a tax case, Viscount Cave LC defined the word 'resided' by reference to the OED definition of 'to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'.

(b) In Dubai Bank Ltd v Abbas [1997] IL Pr 308, Savile LJ said of the Levene case 'Although this was a tax case, it is clear that the meaning given to the word in that case was its ordinary meaning, uncoloured by the fact that it was used in a revenue context' and held that a person was resident for the purposes of the relevant statutory provision in a particular part of the United Kingdom 'if that part is for him a settled or usual place of abode'.

On this basis, Bacon J (at [36]) considered that in determining whether a debtor has had a place of residence in England and Wales during the relevant period for the purposes of establishing whether there is jurisdiction to make a bankruptcy order, it is 'relevant to ask' whether the place was for the debtor 'a settled or usual place of abode or home'.

(3) On the basis of the Court of Appeal's judgment in Revenue and Customs Comrs v Grace [2009] STC 2707, citing with approval at para 6 the summary given by Lewison J at first instance, residence: "connotes some degree of permanence, some degree of continuity or some expectation of continuity".

(4) Whether a person was involuntarily in England and Wales was a relevant factor as to whether that person has a place of residence in the jurisdiction but was not determinative: [38]-[39].

75. At [40] – [41] Bacon J concluded:

'40. Applying those principles to the facts of the case, as I have noted Mr Underwood accepts the evidence does not indicate that Mr Su "resided" at any of the properties that he occupied during the period since he arrived in England in January 2019. His presence at each of them was temporary and transient with no degree of permanence or expectation of continuity. The longest period of time appears to have been spent at the Maida Vale flat, which Mr Su's own evidence describes as a "squalid little flat" that his prison cell mate allowed him to use. Mr Su says that he has very few possessions at the flat and feels like he is still living in a prison.

41. It follows that Mr Su cannot be described as having had a place of residence at any of the places that he has occupied since arriving in England for the purposes of section 263I. In concluding otherwise, the deputy judge, respectfully, in my judgment, fell into error.'

76. Addressing Lakatamia in the Roth Judgment, Roth J observed at [41]:

'I respectfully agree that the factors set out by Bacon J are relevant considerations but I do not read her judgment as specifying that any of those factors are essential requirements for a debtor to be held to have "a place of residence" for the purpose of these provisions of the insolvency regime. For example, I think it is well-established that a debtor may have a place of residence in the jurisdiction although his home is elsewhere: see RPC v Kahn and PJSC Bank Ltd v Laptev. I note that the reference to "a settled or usual place of abode" is derived from a Court of Appeal decision on whether the defendant was "resident" in the jurisdiction for the purpose of s41(3) of the Civil Jurisdiction and Judgments Act 1982, so as to satisfy the test for domicile: Dubai Bank v Abbas [1996] EWCA Civ 1342 … However, being "resident" in England and Wales is not the same as having "a place of residence" in England and Wales: the former is closer to the alternative test under s.263I(2)(b) and 265(2)(b) IA 1986 of being ordinarily resident here'.

77. Roth J went on to consider whether the Debtor had a place of residence in England and Wales in the First Relevant Period.

78. First, Roth J took account of the fact that the Debtor had stayed for several years at York House in the 1980s and 1990s while a student at LSE. At 42(i) he observed:

'Although a long time ago, Mr Wardell realistically accepted that it would have been difficult to contend that at that time the Debtor did not have a place of residence in the jurisdiction (although I do not think that the Debtor had de facto control of the property where his mother was living).'

79. Second, York House was a 'substantial apartment' and the express finding of the judge below that the Debtor had permission from his mother to stay there at any time could not be challenged on appeal (permission to appeal against the judge's appraisal of the evidence having been refused). That said, quite independently of the finding of the judge below, Roth J went on to observe on the evidence that the Debtor's mother had said that the Debtor, his wife and their children have stayed at York House 'over the years'. This was a reference to the 2019 Statement. Roth J considered it legitimate to conclude from such evidence 'that the permission which the Debtor had while a student continued after he had his own family' and that 'it appears that this was his and his mother's expectation': [42](ii).

80. Third, the Debtor had not occupied York House at any time during the First Relevant Period. This, Roth J considered, was 'clearly relevant'. Whilst his lack of occupation after August 2018 was readily explicable (since if he came to England he would have gone to prison to serve the sentence imposed for contempt), there had been a period of 18 months in the First Relevant Period prior to the imposition of the prison sentence and he did not occupy York House then. That, Roth J considered, was a 'factor pointing against it qualifying as his place of residence'.

81. Fourth, the Debtor had argued that since he was appointed governor in a province of Saudi Arabia in April 2017 and travelled with a large entourage, York House was too small to accommodate them all and therefore it could not be his place of residence. Roth J observed that there was a two-month period at the start of the First Relevant Period before his appointment as governor, noting that the statute refers to having a place of residence in the jurisdiction "at any time" in the three-year period, which in Roth J's view 'means that a period which is not de minimis is sufficient'.

82. He continued at [42](iv):

'In any event, if someone has a permanent place where they can stay on their visits to London, but chooses instead to stay in a hotel, e.g. because they would like the benefit of a hotel's facilities or because they accompanied by too many friends or relations to accommodate, I do not consider that they cease on that account to have a place of residence in London. When the Debtor came to England after being appointed governor in February/March 2018 with his entourage, when 24 York House was therefore too small for them, he stayed at 1 Phillimore Terrace…. That was possible because a nearby property (which as I understand it similarly belonged to the Debtor's wife and three of his children) was vacant, so that they could use that to provide extra accommodation. So for a visit when 24 York House was unsuitable, the Debtor was able to use other properties belonging to his family.'

83. Fifth, Roth J noted that York House was not the Debtor's settled or usual place of abode or home.

84. Sixth, Roth noted that the Debtor had been registered for Council Tax in relation to York House while he was a student and that he continued to be so registered until December 2019. Roth J observed: 'As Mr Wardell had to accept, a person does not undertake the liability to pay Council Tax on a property with which they have no connection'. He considered that explanations given in witness evidence filed by Princess Noorah and her solicitor, Mr Wood (to the effect that the Debtor's registration for Council Tax assisted as proof of address for the purposes of opening bank accounts and applying for visas for members of the Debtor's family and their staff) to be 'very unsatisfactory'; noting in particular, that it was obviously 'not a requirement to be registered for Council Tax in order to obtain a visa to visit this country or to open a bank account; nor is it a requirement that your father is registered here for Council Tax to obtain a student visa'. Roth J considered the registration of the Debtor for Council Tax purposes at York House 'a significant factor pointing to this address being a place of residence for the Debtor'.

85. Roth J also took into account the fact that he was dealing with a case of service out and that a number of the authorities which he had considered fell to be decided on the balance of probabilities. In both RPC v Khan and PJSC VTB Bank v Laptev, for example the debtor had been cross-examined on his evidence. As matters stood before Roth J, the Debtor had given no evidence at all, still less had he been cross-examined on the same. At [43] he concluded:

'Applying the lower standard of proof which I have held here applies and taking all the above matters into account, I have no doubt that the Creditor has shown a good arguable case that the Debtor has a place of residence in the jurisdiction, or that it has "the better of the argument" on the material available. At the hearing of the petition, the Court will have to assess the matter on the balance of probabilities and it will be open to the Debtor to give evidence explaining matters more fully.'

Durkan - Summary

In Durkan (decided 25.5.23), Deputy ICC Judge Baister considered some of the caselaw, and attempted '...to distil some of the may points that arise from it', at paragraphs 6 to 10:

'In Re Brauch (A Debtor) Ex parte Britannic Securities & Investments Ltd [1978] Ch 316...Goff LJ held that:

(1) It was possible for a debtor to have a place of residence in the jurisdiction even though he was not in actual occupation during the relevant period.

(2) The shorter the period of actual occupation of premises, the more difficult it would be to hold it to be a "dwelling house" (the relevant term under the Bankruptcy Act 1914).

(3) It was doubtful whether a debtor had to have a legal or equitable interest in a place of residence to satisfy the test.

Re Brauch remains good law on "place of residence", there being no real difference between a "dwelling house" the expression used in the Bankruptcy Act 1914, and a "place of residence" the expression used in the Insolvency Act 1986 (see HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud v Mobile Telecommunications Company KSCP [2022] EWHC 744 (Ch), [2022] BPIR 1001).

The "place of residence" limb of jurisdiction was recently considered by Bacon J in Lakatamia Shipping Co Ltd v Su [2021] EWHC 1866 (Ch), [2022] BPIR 181, at paragraphs 24-26 and 36-37, from which [counsel for the debtor] derives a number of principles ... which I gratefully adopt, adapt and supplement as follows, continuing the numbering used in paragraph 6 above:

(4) The concepts "ordinarily resident" and "having a place of residence" are not totally separate, so that similar factors may be relevant to both tests; but it does not follow that all factors that may be relevant to one will be relevant to the other (para 32).

(5) The phrase "has had a place of residence" should be given its natural meaning (para 33).

(6) Regard may be had to authorities on the interpretation of the expression, even if they arose in different statutory contexts (para 33).

(7) The nature of a person's presence in and connection to a particular place is a relevant factor in determining residence.

(8) The test of "having a place of residence" requires an assessment of the quality of the debtor's residence. It does not simply mean that the debtor has an entitlement of some sort to occupy a place that is capable of being described as someone's place of residence (para 24).

(9) The residence must be that of the debtor, and not someone else (para 25).

(10) Thus, the residence cannot merely be the residence of a third party that the debtor is temporarily occupying with the third party's permission (para 26).

(11) In determining whether a debtor has had a place of residence in England and Wales, it is relevant to ask whether the putative place was a "settled or usual place of abode or home" for the debtor (para 36).

(12) Residence connotes "some degree of permanency, some degree of continuity or some expectation of continuity" (para 37).

(13) The nature of a person's presence may be a relevant factor: for example whether it was voluntary or not (paras 38-39).

The last point was of particular relevance to the unusual facts of the case before Bacon J. She followed it with the observation that any assessment will turn on the facts of the case, which is of general significance.

In HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud v Mobile Telecommunications Company KSCP Roth J made much the same point (para 41): he accepted that the factors set out in Lakatamia were relevant considerations, although he did not think they should be regarded as indispensable requirements. That must be right, and indeed, is very much the point I think Bacon J herself was making: much will depend on the facts of each case, in the context of which many of the factors in all the authorities may be significant, whilst others may play little or no part. I am reinforced in that view by Roth J's comments at para 37 of his judgment:

"I do not regard these cases [In Re Hecquard (1889) 24 QBD 71, KT Skjevesland v Geveran Trading [2002] EWHC 2898 (Ch), [2003] BPIR 924, Reynolds Porter Chamberlain LLP v Khan [2016] BPIR 722, or PJSC VTB Bank v Laptev [2020] EWHC 321 (Ch), [2020] BPIR 624] as setting out or supporting any single or conclusive test for what constitutes a "place of residence". In particular, they do not in my view establish that de facto control of the property is a necessary condition. That concept does not feature in the list of potentially relevant factors set out by the Chief Registrar in RPC v Khan nor does it appear in the most recent authority, Lakatamia Shipping Co Ltd v Su [2021] EWHC 1866 (Ch), to which I return below. In my judgment, these cases are simply illustrations of the broad range of factual considerations which may be relevant in determining whether an individual has "a place of residence" in this country within the meaning of the statute. The expression should be given its ordinary meaning and the assessment depends on all the facts[...]."

The absence of a need to establish control of a property is another factor that should be added (as (14)) to the list of those I have already noted.

...I do not pretend that the factors I have listed above are exhaustive. They are illustrative. I simply say that they are the ones that appear to me to be most commonly relevant.'

Later, Deputy ICC Judge Baister in Durkan said, at paragraph 21:

'...there is a difference between having an address and having a place of residence.' 

On the facts in Durkan, Deputy ICC Judge Baister rejected the contention that the debtor had had, in the relevant 3 year period, a 'place of residence' in England and Wales (paragraph 23), rejecting various points as insufficient, whether individually, or cumulatively[23a].

Portrait - Summary

ICC Judge Greenwood in Portrait (decided 28.6.23), also set out a summary of the law here (set out in a footnote[23b]).

(6) Connecting Factor - Section 263I(2) Test - Carried on business

Update: see by anology the case of Jones v Aston Risk Management Ltd [2024] EWHC 2553 (Ch) (HHJ Cawson KC sitting as a Judge of the High Court) on section 265(1)(b)(ii) of the Insolvency Act 1986[23c] (for the purposes of an application for permission to serve out of the jurisdiction).

Seemingly the only section 263I(2)(b)(ii) case on this Connecting Factor is the Brauch case (i.e. Brauch (A Debtor), Ex p. Brittanic Securities & Investments [1978] Ch. 316; [1977] 3 WLR 354; [1978] 1 All ER 1004 ('Brauch')), a decision of the Court of Appeal of course, with Goff LJ giving the lead judgment. Brauch was a creditors bankruptcy petition and the Connecting Factors were contained in section 4(1)(d) of the Bankruptcy Act 1914 (now obsolete). The key words for present purposes, for the 'carried on business' Connecting Factor, was: 

'...within a year before the date of presentation of the petition...has carried on business in England, personally or by means of an agent or manager, or ...is or within the said period has been a member of a firm or partnership of persons which has carried on business in England by means of a partner, or an agent or manager...'

In Brauch, the second part (about 'member of a firm or partnership') was not applicable, and so Goff LJ considered only the first part. Goff LJ concluded:

(1) '...it would be wrong to hold that section 4(1)(d) applies to a man who is running his company's business even though he be the sole beneficial shareholder and in complete control.' (at 328); however, 

(2) a person can be running a company's business (which would not establish this Connecting Factor) and also be conducting a separate independent business of his own (which would establish this Connecting Factor) - see In re Charles Bright (1901) 18 T.L.R. 37, at 328.

In Brauch, the debtor was running the company's business, but also carrying on a separate independent business - which established the Connecting Factor 'carried on business'. The separate independent business was 'carrying on personally the business of promoting companies, or acquiring shell companies, to speculate in land...'. Basically, his separate independent business was to undertake all the preliminary stages, before the companies acquired the land[23d].

(3) as to what that business is exactly, 'It is not necessary to be precise, and... the definition or description which I have given is completely adequate.' (at 329)[24]

On the analogous section 265, there are some authorities, namely:

(1) Anglo Irish Bank Corp Ltd v Flannery [2013] BPIR 1 (Chief Registrar Baister), and the appeal [2012] EWHC 4090 (Ch); [2013] BPIR 165 (Newey J); and 

(2) Durkan (Deputy ICC Judge Baister - formerly Chief Registrar Baister);

In Durkan, Deputy ICC Judge Baister made the following observations about 'carrying on business', at paragraphs 24 to 31:

'Whether someone is carrying on business gives rise primarily to a factual inquiry (Anglo Irish Bank Corporation Ltd v Flannery [2013] BPIR 1), although it is necessarily a mixed question of fact and law. [Counsel for the debtor] submits that the court must decide (a) what the debtor did; (b) when he did it; and (c) whether what he did amounted to carrying on business (see Masters v Barclays Bank plc [2013] EWHC 2166 (Ch), [2013] BPIR 1058). I agree.

Although the petitioner initially sought to rely on some of the debtor's activities in the form of doing business connected with a company, [counsel for the petitioner] accepted at the hearing that carrying on business through a company or being a director or shareholder of a company did not amount to carrying on business as an individual. He also accepted that the fact that the debtor owed money to Long Compton Project Limited on his director's loan account could not have amounted to his doing business with the company without establishing whether, for example, making loans was the company's business or, I suppose, borrowing from a company could be said to be a business. I should also mention that [counsel for the petitioner] abandoned the suggestion that the petitioners' case was assisted by either Re a Debtor (No 784 of 1991) [1992] Ch 554 or Wilkinson v Inland Revenue [1998] BPIR 418. For the avoidance of doubt, I should say that had he pressed them I would have rejected them. That left him with the allegation that the debtor carried on the business of property letting, namely as joint landlord with his wife of The Grange, which, as we have seen, was let to [the tenants]

To the extent that the debtor did carry on business as the petitioners suggest, he plainly did so in the relevant period. That leaves the questions exactly what it was he did and whether what he did amounted to carrying on business.

What constitutes carrying on business is hard to define. In Charlton v Funding Circle Trustees Ltd & Anor [2019] EWHC 2701 (Ch), [2020] BPIR 125 Barling J noted that the authorities failed to provide a "magic touchstone of what amounts to carrying on a business" but that they did contain helpful guidance in the form of examples of what had been held to amount to doing so (para 21). He went on to give some of those examples. Unfortunately none enables me to latch onto it and apply it directly to the facts of this case.

The term 'business' similarly elusive. I was referred by both [counsel for the petitioner] and [counsel for the debtor] to the judgment of Judge Berner in Ramsay v Revenue and Customs Commissioners [2013] UKUT 226 (TCC), [2013] STC 1764 in which he said this:

"[25] As [counsel for HMRC] pointed out, the word 'business' has been described, by Lord Diplock in Town Investments Ltd v Department of the Environment [1977] 1 All ER 813 at 819, [1978] AC 359 at 353, as 'an etymological chameleon; it suits its meaning to the context in which it is found.' That case concerned whether a lease to a government ministry, where the premises were occupied by civil servants was a business tenancy within the meaning of then-applicable counter-inflation legislation. By reference to the mischief of those provisions, 'business' was construed broadly, so as to have no less wide a meaning than that applicable in covenants regarding the use of demised premises.

[26] That construction followed from Rolls v Miller (1884) 27 Ch D 71, where Lindley LJ pointed out ((1884) 27 Ch D 71 at 88) that the dictionary meanings of 'business', where the word means almost anything which is an occupation, as distinguished from a pleasure, or anything which is an occupation or duty which requires attention, were not of great assistance. The word must be construed according to its ordinary sense, having regard, in that context to the object of the covenant, and in this to the purpose of the legislation.'

The learned judge went on to say a great deal more, but much of it is directed to issues of tax law, so I should be wary of drawing too heavily on a judgment that is not about the issue which I have to decide.

It does seem to me that just as Roth J said that the expression "place of residence" should be given its ordinary meaning, so too the expression "carrying on business" should be construed according to its ordinary sense, having regard to the context (cf the passage from Rolls v Miller cited by Judge Berner above).

[Counsel for the petitioner] says that Ramsay v Revenue and Customs Commissioners establishes that residential property letting is a business. [Counsel for the debtor] counsels greater caution. I agree with [counsel for the debtor]. I think I should be cautious of adopting for the purposes of insolvency legislation any holding that relates to taxation, although it is plainly a consideration. I think it is more appropriate to ask what exactly the debtor did and whether, on the ordinary meaning of the words, that appears, on the balance of probabilities to amount to carrying on business.'

On the facts in Durkan, the debtor was found to be renting out a property he owned. Did this amount to 'carrying on business'? Deputy ICC Judge Baister said that it did (paragraph 34). He said, at paragraph 35:

'I hesitate to attempt a definition of "business" or "carrying on business" where better legal minds have not done so. I do, however, think that as a matter of ordinary sense the foregoing activities did and do amount to carrying on the business of letting property. I think most people contemplating activity in the form of the provision of goods or services for profit or gain (or perhaps, as [counsel for the petitioners] pointed out, some other benefit) would conclude that it amounted to carrying on business. I do. The business which the debtor carried on may not have been on a grand scale, but it has been going on, it seems, for some time, starting at about the time [the debtor's wife] was facing bankruptcy and continuing, it seems, even now. The monthly rent is not an insignificant amount: it is an income many people would be happy to have.'

Later, Deputy ICC Judge Baister put forward another way of approaching the question of whether an activity carried on, qualifies as a 'business'. Deputy ICC Judge Baister said, at paragraph 36:

'There is another way of looking at the matter, which is to ask what the debtor was doing if he was not carrying on business.' discounting alternatives to business.

Highlighting what alternative categories exist, Deputy ICC Judge Baister continued, at paragraph 36, in relation to the facts in Durkan:

'He was not engaged in charitable work, nor was he engaged in a pastime or hobby.' Deputy ICC Judge Baister also rejected the submission that the debtor was an 'investor' (paragraph 36).

Deputy ICC Judge Baister went on, at paragraph 37 of Durkan, to reject the debtor's submissions that 'carrying on business' Connecting Factor was not established, because:

(a) this was at a modest scale - the debtor owned 1 property in England, and rent it out to one set of tenants for about 34 months, at £3500 per month; that therefore 'The necessary 'degree of substantiality and continuity' is plainly lacking.' (paragraph 38)

(b) there was a lack of any employees; and 

(c) lack of any corporate structure.

Addressing (a) and (c), Deputy ICC Judge Baister said:

(a) the rent paid by the tenants '...was not modest by the standards of most people' (paragraph 38); he went on to '...reject the idea that a business has to be conducted to any specific scale: the sums of money involved cannot be determinative, nor can the number of properties involved.' (paragraph 39)

(c) 'Many people carry on business as sole traders and without any corporate structure; indeed the absence of any corporate structure is, in my view, precisely an indicator of carrying on business on one's own account.' (paragraph 38)

ANNULMENT APPLICATIONS

Applications to annul a bankruptcy order because it ought not have been made, are made under section 282(1)(a) of the 1986 Act. Section 282(1)(a) of the 1986 Act provides:

'The Court may annul a bankruptcy order if it at any time appears to the Court - (a) that, on any grounds existing at the time the order was made, the order ought not to have been made …'

Further, annulment application are governed by 10 rules contained in the Insolvency Rules 2016, namely, rules 10.132 to 10.141, which are contained in Chapter 16, entitled 'Annulment of bankruptcy order', which is within Part 10 Bankruptcy of the Insolvency Rules 2016.

Determining such an application involves a 3 stage exercise, as follows (see JSC Bank of Moscow v Kekhman [2015] EWHC 396 (Ch); see Kooter No.1 paragraph 12[25]):

(1) What grounds existed for making the order when it was made;

(2) Whether on those grounds the order ought not to have been made, and

(3) If it determines that the order ought not to have been made, whether to exercise its discretion to annul.

The usual rule is that the annulment applicant bears the burden of proof in respect to stages (1) and (2) - that is, of establishing '...the order ought not to have been made and this includes establishing that the [bankrupt's] COMI was not in England and Wales at the time that the bankruptcy order was made.' ([26a] Kooter No.1, paragraph 15). The Court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy, or not (section 282(3) of the 1986 Act; see Deutsche Apotheker-Und Arzebank EG v Leitzbach [2018] EWHC 1544 (Ch); [2018] BPIR 1299 ('Leitzbach')).

The law in relation to stage (3), the discretionary stage, requires some additional commentary now, as a result of a recent decision of Miles J in Dusoruth 1050. The issue, which requires some additional commentary because it has been somewhat unsettled by Miles J, is as to whether the discretion bestowed up the Bankruptcy Court by Parliament, is a discretion which is:

(a) 'full', 'real' or 'two-way' - that is - a discretion which the Bankruptcy Court is at liberty, to go either way upon[26b]; or

(b) effectively closed - that is - a discretion which the Bankruptcy Court is effectvely obliged to find in one way.

Update: what cases have which type of discretion, was recently considered in Khan v Singh-Sall [2023] EWCA Civ 1119; CA ('Singh-Sall'). In essence, where the Court:

(i) ought not to have exercised its power to make the bankruptcy order, because certain statutory requirements were not met, but if those requirements has been met, it could have made the order - here the discretion is category (a) 'full', 'real' or 'two-way

(ii) lacked the pwer to make a bankruptcy order at all against the debtor/bankrupt - here the discretion is category (b) - effectively closed[26c].

Prior to Dusoruth 1050 - Miles J

Prior to Dusoruth 1050, a decision of Miles J on 18.4.23, it could be said that the law as generally understood, was that (b) above applied. Where a bankruptcy order was made without territorial juridiction (which an absense of a Connecting Factor, would be), the Bankruptcy Court is effectvely obliged to exercise its discretion in favour of acceding to the annulment application, and setting aside the bankruptcy order. 

This was seen as a modification to the typical position, which was that (a) above applied - that is, typically the Bankruptcy Court has a 'real', 'full' or 'two way' discretion. The exception being for a bankruptcy order made in absence of a territorial jurisdiction, where, the annulment applicant was entitled to have the bankruptcy order set aside, as of right[27]. In Kooter No.1, at paragraph 3, Deputy ICC Judge Angello KC said:

'In so far as [the bankrupt's] COMI was not in England and Wales as at the time of the bankruptcy order, then the order made stands to be annulled. A challenge relating to a lack of jurisdiction falls to be determined under section 282(1)(a) of the Insolvency Act 1986 on the grounds that the order ought not to have been made. In so far as I determine that, at the time, [the bankrupt's] COMI was not in England and Wales, then the cases of Raiffeisenlandesbank Oberosterrich AG v Meyden [2016] EWHC 414 (Ch), Munks v Munks [1985] FLR 576, Sparkasse Hilden Ratingen Velbert v Horst Konrad Benk [2012] EWHC 2432 (Ch) and Deutsche Apotheker-Und Arzebank EG v Leitzbach [2018] EWHC 1544 (Ch) establish that the order ought to be set aside or annulled as of right.' [bold added] (the quote mispells 'Meyden' as 'Mayden' - this mistake has been corrected in the quotation) 

The decision of Miles J in Dusoruth 1050

The decision of Miles J in Dusoruth 1050 at least raises an element of doubt about this now.

In Dusoruth 1050, at first instance, ICC Judge Mullen heard an annulment application, and had decided that, while s.267(2)(b) had not need satisfied at the date of the original bankruptcy order (because ICC Judge Mullen found 'the debt was not, in fact, liquidated' (paragraph 6 of Dusoruth 1050), he would not exercise his discretion in favour of the annulment applicant, and annul the bankruptcy order.

The debtor/bankrupt appealed, and the application for permission to appeal came for oral hearing before Miles J, who refused permission to appeal. In his judgment, Miles J:

(1) said that though his judgment was a permission to appeal judgment, '...this judgment may be cited in later cases as it turns on a point of law.' ;

(2) said a Bankruptcy Court hearing an annulment application, in respect to a bankruptcy order made when the (later annulment) Bankruptcy Court determines s.267(2)(b) was not satisfied, holds a 'full', 'real' or 'two-way' as to whether to annul the bankruptcy order. This is because the pre-conditions in s.267(2)(b) can not be rationally parcelled out. The pre condition that the debt must be unsecured, and the pre condition that the debt must be liquidated, as two requirements that must be met. Neither is a more 'threhold' requirement than the other. They are both pre conditions for the presentation of a valid petition. And that for the pre condition that the debt must be unsecured, the Court of Appeal had decided in Owo-Samson v Barclays Bank Plc (No.1) [2003] EWCA Civ 714; [2003] BPIR 1373; [2003] 5 WLUK 624 ('Owo-Samson') that the Bankruptcy Court has a 'full', 'real' or 'two-way' discretion on an annulment application, at the discretionary stage, there.[28]

(3) recorded that counsel for the debtor/bankrupt in Dusoruth 1050 had argued that there should be no discretion at the discretionary stage, drawing on Nugee J's decision in Raiffeisenlandesbank Oberosterrich AG v Meyden [2016] EWHC 414 (Ch) ('Meyden'). In essence, drawing no distinction between an absence of: (1) territorial jurisdiction; as against (2) s.267(2)(b) jurisdiction. But Miles J only thought there 'may well be important differences' between the two types of cases, warranting a different approach to nature of discretion held by the Bankruptcy Court hearing the annulment application.

Miles J said in Dusoruth 1050, at paragraph 30:

'It also seems to me that there may well be important differences between that kind of case and a case where the court lacks territorial jurisdiction even to open bankruptcy proceedings because the debtor's COMI is elsewhere. But that is not this case.'[29a]

It is noteworth that Miles J did not refer to any of the other post Owo-Samson authorities on territorial jurisdiction, namely Sparkasse Hilden Ratingen Velbert v Horst Konrad Benk [2012] EWHC 2432 (Ch); [2012] BPIR 1258 (HHJ Purle QC sitting as a High Court Judge) (in effect, a s.265 case)[29b] and Leizbach (HHJ Hodge QC sitting as a High Court Judge)[30]

What then is the upshot? seemingly, though not without doubt now, the law is as summarised by in Kooter No.1, at paragraph 3, by Deputy ICC Judge Angello KC. 

Update: In Singh-Sall, the Court of Appeal considered the law in relation to the territorial jurisdiction cases (there referred to as "the COMI cases') of: (1) Raiffeisenlandesbank Oberösterreich AG v Meyden [2016] EWHC 414 (Ch) ('Meyden'); and Leitzbach. Nugee LJ in Singh-Sall (with whom Snowden LJ and Lewis LJ agreed) set out, at paragraphs 20 to 23 of Singh-Sall, that:

(1) in Meyden, he had decided (at first instance, as Nugee J) that '...the Court has no choice but to set the order aside' (paragraph 37) where the bankruptcy order was made without jurisdiction; and

(2) in Leitzbach, HHJ Hodge QC sitting as a Judge of the HIgh Court, had followed his (Nugee J's) decision in Meyden on this point;

and that, in Singh-Sall:

'Neither advocate before us submitted that the decision in these cases was wrong.' (paragraph 23)

and so, as a result,

'I will therefore proceed on the basis that what I said in re Meyden, followed by HHJ Hodge QC in re Leitzbach, does represent the law.' (paragraph 23).

Later, Nugee LJ affirmed in Singh-Sall that, where the Court lacked all jurisdiction to make a bankruptcy order (which is the case in territorial jurisdiction cases (called in Singh-Sall, COMI cases)), the order will fall to be set aside as of right (paragraph 58).
 

Annulment Applications - Official Receiver + Trustee in Bankruptcy Roles and Costs

Following the annulment of the bankruptcy adjudication in Kooter No.1, the Deputy ICC Judge '...directed that a subsequent hearing be listed ... to enable the Trustees in Bankruptcy...to make such application in relation to costs and or remuneration and expenses as advised' (paragraph 2). Such an application was made, and necessitating a determination as to 'whether the Trustees were entitled to an order for all or part of their costs, remuneration and expenses from Mr Kooter.' It will be recalled that it was Ms Radeva who had issued a debtor's bankruptcy application and who had obtained a bankruptcy order against herself, and it was Mr Kooter, a creditor of Ms Radeva, who had successfully applied for an order annulling that bankruptcy. The application was therefore that an adverse costs order be made against the successful creditor annulment applicant (paragraph 17), on a joint and several basis (paragraph 13) with the Ms Radeva, for: (i) the Trustee's costs of the annulment (known as limb (d) or limb 2 - paragraph 11(b)); and (2) 'The costs and expenses of the trustee in bankruptcy in acting as such from the time of his appointment to the order for annulment' (known as limb (d) or limb 2 - paragraph 11(d))[31].

The Deputy ICC Judge decided, in the first instance, to split the issue, dealing with the principle of costs first, leaving the quantum of such costs for a subsequent hearing (paragraph 2)[32]

The Deputy ICC Judge addressed the issue ('(paragraph 7) as follows, at paragraphs 8 and 9:

Generally, a trustee in bankruptcy is not involved in any meaningful sense in a section 282(1)(a) application with the known proviso that the trustee will seek that one or both of the parties before the court will be made liable for the costs of the trustee. The Trustees in this case attended the first hearing of the annulment application and had prepared, filed and served a witness statement which declared that the Trustees' position was one of neutrality. Whilst the Trustees do of course have a statutory obligation, pursuant to Insolvency Rule 10.137, to attend the annulment application hearing, the Court almost invariably dispenses with the attendance of the trustee in section 282(1)(a) cases. No such application was made by the Trustees at the first directions hearing. This was, in my judgment, precisely the type of case on its facts, where office holders should seek at the earliest possible moment to have their attendance at the hearings dispensed with and for their attendance and any representations to be confined to when the case has terminated and the issue of costs becomes live.

The Trustees did eventually seek such a direction, but at a later date rather than at the first hearing. In the meantime, the Trustees had sought and obtained an entitlement to file further evidence if so advised. There is a clear distinction, in my judgment, between the role of a trustee in bankruptcy in section 282(1)(a) and section 282(1)(b) annulment applications. In relation to section 282(1)(a) cases, as recognised early on in this case by the Trustees in asserting that their role was neutral, there is in general, no role or necessity for the trustee to be involved. In this particular case, the Trustees' involvement was even more limited because effectively this was a jurisdiction challenge. There is effectively in jurisdiction cases, no real discretion to be exercised by the Court which will, if satisfied on the issue, annul the bankruptcy order and dismiss the petition/application'

After much discussion, in her discretion, she determined to capped Mr Kooter's possible liability; she held, at paragraph 35:

'...I direct that Mr Kooter should be liable to pay the sum of £7,500 plus VAT by way of a proportion of the overall costs of the Trustees under limbs 2 and 4.'

Note, the Deputy ICC Judge made other costs orders as well[33].

SIMON HILL © 2023*

BARRISTERS

33 BEDFORD ROW

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole, or the Copyright holder. No attempt has been made to provide an exhaustive review/account of the law in this area. *Copyright is owned by Barrister Search Limited.

[1] A few points to note about the bankruptcy adjudicator ('adjudicator' for short).

(1) The office of bankruptcy adjudicator was created by section 398A of the Insolvency Act 1986, a section entitled 'Appointment etc of adjudicators and assistants'. Section was inserted in the Insolvency Act 1986 by section 71 of the Enterprise and Regulatory Reform Act 2013 ('ERRA 2013'), a section entitled 'Bankruptcy applications: determination by adjudicators', when Commencement Order No.9 (SI 2016/191) brought it into force on 6.4.16. Section 398A is entitled 'Appointment etc of adjudicators and assistants' and reads:

'The Secretary of State may appoint persons to the office of adjudicator.

(2) A person appointed under subsection (1)-

(a) is to be paid out of money provided by Parliament such salary as the Secretary of State may direct,

(b) holds office on such other terms and conditions as the Secretary of State may direct, and

(c) may be removed from office by a direction of the Secretary of State.

(3) A person who is authorised to act as an official receiver may not be appointed under subsection (1).

(4) The Secretary of State may appoint officers of the Secretary of State’s department to assist adjudicators in the carrying out of their functions.'

(2) Other relevant provisions governing the adjudicator's role and process, are contained in sections 263H to 263O of the Insolvency Act 1986 (inserted into Insolvency Act 1986, from 6.4.16, by s.71/schedule 18 of ERRA 2013 - adjudicators: bankruptcy applications by debtors and bankruptcy orders). This appears as Chapter AI Adjudicators: Bankruptcy Applications by Debtors and Bankruptcy Orders in the Insolvency Act 1986. For completeness, schedule 19 of ERRA 2013, introduced some amendment/consequential amendments.

(3) In addition to Insolvency Act 1986, section 398A, and sections 263H to 263O, Insolvency Rules 2016, Chapter 3, entitled 'Debtors’ bankruptcy applications', containing relevant rules, between r.10.34 to 10.48 inclusive.

(4) While adjudicators are appointed by the Secretary of State, the Scrertary of State has no direct control over their decisions. After referring to sectoin 398A as that '...statutory provisions governing the appointment of adjudicators and assistants...', HHJ Hodge QC (sitting as a Judge of the High Court) explained in Office of the Bankruptcy Adjudicator v Shaw [2021] EWHC 3140 (Ch); [2022] BPIR 807 ('Shaw'), at paragraph 54, that:

'In summary, the Secretary of State appoints the adjudicator, and is responsible for the payment and the removal from office of the adjudicator, and for directing the terms and conditions on which they hold office; but the Secretary of State has no direct control over the adjudicator's decisions.'

(5) '...the adjudicator's role is, essentially, administrative and not judicial' (paragraph 55) was a concession made by counsel for the debtor/respondent in Shaw. A proposition of law which, seemingly, HHJ Hodge QC agreed with (paragraph 55). HHJ Hodge QC said, at paragraph 55:

'That is the effect of section 263K of the 1986 Act. By subsection (2), if the adjudicator is satisfied that each of the requirements in subsection (1) are met, she must make a bankruptcy order against the debtor. By contrast, under subsection (3), if she is not so satisfied, she must refuse to make a bankruptcy order. There is no element of judicial discretion there.'

(6) the decision making sequence (so ignoring the ancillary notification/dissemination requirements for present purposes) of an adjudicator is, essence, the adjudicator makes a decision on the debtor's bankruptcy application. If the bankruptcy order is made, that is the end of the process. Where an adjudicator refuses to make the bankruptcy order, the debtor/applicant can request (if within the prescribed period) that the adjudicator review his decision (Insolvency Act 1986, section 263N(2)). The prescribed period is 'within 14 days from the date of delivery of the notice of refusal' (Insolvency Rules 2016, r.10.43(1)). The adjudicator can then confirm the refusal, or make a bankruptcy order (see Insolvency Rules 2016, r.10.43(3 and (4))

Where, after a review, the adjudicator confirms the refusal, the debtor may appeal (if within the prescibed period) that adjudicator's decision (i.e. the refusal). Insolvency Act 1986, section 263N(5) provides:

'If the refusal is confirmed under subsection (3), the debtor may appeal against the refusal to the court before the end of the prescribed period.'

The appeal is to a court (Insolvency Rules 2016, r.10.44(1)). The prescribed period for the appeal to the court is: 'within 28 days from the date of delivery of the notice of refusal' - Insolvency Rules 2016, r.10.44(2).

A more indepth summary of the process was given by Registrar Baister in Budniok v Adjudicator, Insolvency Service [2017] EWHC 368 (Ch)('Budniok') - quoted at the end of this footnote, for convenience.

Though called an 'appeal', it is not technically, an 'appeal' as properly so called, within the court system. So if the first instance court's decision, is itself appealed, that appeal to a higher court would be a first appeal rather than a second appeal. In Shaw, HHJ Hodges QC heard an appeal from the decision of a district judge, which was itself a challenge (so to speak) to a bankruptcy adjudicator's determination. As to this, he said, at paragraph 8:

'Whilst the procedure is referred to as an appeal, it is clear that the hearing before the district judge is a first hearing, and this is therefore a first, rather than a second, appeal.'

On the appeal, the first instance court will tasked with determining whether the adjudicator correctly determined the section 263K(1) of the Insolvency Act 1986 requirements. Section 263K(1) requirements are:

'(a) the adjudicator had jurisdiction under section 263I to determine the application on the date the application

was made,

(b) the debtor is unable to pay his or her debts at the date of the determination,

(c) no bankruptcy petition is pending in relation to the debtor at the date of the determination, and

(d) no bankruptcy order has been made in respect of any of the debts which are the subject of the application at the date of the determination.'

(7) as to the exposure of the adjudicator to adverse costs orders:

(a) in the event that the adjudicator's refusal to make a bankruptcy order (after a review) is successfully appealed by the debtor/bankrupt in court, the adjudicator cannot be made subject to an adverse costs order by the court. This immunity from adverse costs orders is contained in Insolvency Rules 2016, r.10.44(6), where it states:

'The adjudicator is not personally liable for costs incurred by any person in respect of an application under this rule.'

As HHJ Hodge QC in Shaw said,

(i) at paragraph 50, this r.10.44(6) provision as a:

'...special provision relating to orders for costs in relation to appeals from decisions of the bankruptcy adjudicator...'; and

(ii) at paragraph 55, in relation to appeals in court:

'...no costs are to be awarded against the adjudicator, notwithstanding the part that she plays on the appeal...'

(b) in the event that the adjudicator's bankruptcy order is subject to an annulment application under section 282 of the Insolvency Act 1986, then Insolvency Rule 2016, r.10.137(6) will apply. R.10.137 is contained in Insolvency Rules 2016, Chapter 16 entitled 'Annulment of bankruptcy order' and r.10.137 relates to the hearing of that annulment application. R.10.137(6) provides:

'The adjudicator is not in any event to be liable for costs arising on an application under section 282.'

So, even where a bankruptcy adjudicator's bankruptcy order is set aside on an annulment application under section 282, the adjudicator cannot be made subject to an adverse costs order as a result.

(c) otherwise, the general rule in Insolvency Rule 2016, r.12.47 contained in Part 12, Chapter 8 'Costs') will apply ('Without prejudice to any provision of the Act or Rules...'). Rule 12.47 is entitled 'Awards of costs against an office-holder, the adjudicator or the official receiver' and provides:

'…where an [insolvency] office-holder, the adjudicator or the official receiver …is made a party to any proceedings on the application of another party to the proceedings …[such person] is not to be personally liable for the costs unless the court otherwise directs'.

Note, r.12.41, entitled 'Application of Chapter and interpretation' reads:

'(1) This Chapter applies to costs of and in connection with insolvency proceedings.

(2) In this Chapter “costs” includes charges and expenses.

(3) CPR Parts 44 and 47 (which relate to costs) apply to such costs.'

In Shaw, HHJ Hodges QC said of r.12.47, where it applied (so absent special provision like r.10.44(6))

'...an order for costs should only have been directed to the adjudicator in a special case, or where there was good reason to make such an order.' (paragraph 52)

He reached this conclusion, by analogy, after noting that '...there is clear authority for the proposition that where Rule 12.47 is engaged, the court should not direct an office-holder to pay costs except in a special case, or where there is good reason to do so: see Re The Burnden Group Ltd, Fielding v Hunt (No. 2) [2017] EWHC 406 (Ch), [2017] BPIR 585 , per HHJ Stephen Davies at paragraph 19.' (paragraph 51)

(8) Can r.10.44(6) be circumvented by the court on appeal, making an adverse costs order against the adjudicator's appointor, the Secretary of State?

HHJ Hodge QC in Shaw held that that would be 'wholly inappropriate' (paragraphs 54 and 63), 'wholly wrong in principle' (paragraph 61) and 'entirely, and clearly, wrong in principle' (paragraph 50). At paragraph 53, he said:

'...it is a wholly inappropriate exercise of the jurisdiction under section 51 [of the Senior Courts Act 1981] to make a non-party costs order, rendering the Secretary of State liable for costs, in circumstances where Parliament has directed that no order for costs should lie against the actual party to the appeal.'

That any such application for a (third party) costs order against the Secretary of State, in such circumstances, '...was clearly motivated by the inability to obtain any order for costs against the bankruptcy adjudicator, as a result of the provisions of the Insolvency Rules.' (paragraph 56) and that this fell within the warning from Symphony Group Plc v Hodgson [1994] QB 179, in different circumstances, that

'...the court should be alert to the possibility that an application for costs against a non-party was motivated by resentment of an inability to obtain an effective order for costs against a legally- aided litigant.' (paragraph 56 of Shaw).

Further, the situation, while the case was a novel one (paragraph 60), it was not 'exceptional' for s.51 of the Senior Courts Act 1981 (paragraph 59 of Shaw).

HHJ Hodges QC in Shaw added, at paragraph 60:

'Here, there was no question of the Secretary of State, or the adjudicator, litigating for their own benefit and at their own expense. The adjudicator was simply the respondent to a statutory appeal, and she was discharging her duty of assisting the court.'

Summarising, HHJ Hodges QC in Shaw said, at paragraph 61:

'...I fail to see that this was an exceptional case justifying making an adverse costs order against the Secretary of State, who was not even a party to the appeal. In any event, and independently of that, however, I am satisfied that it was wholly wrong in principle to make an order against the Secretary of State simply because no order could be made against the proper respondent to the appeal, the bankruptcy adjudicator.'

(8) On an appeal against a adjudicator's decision (on review), the role of the adjudicator was stated by HHJ Hodge QC in Shaw, as follows, at paragraph 55 - that it

'...should be one of neutrality, seeking to assist the court, and properly addressing the court as to the appropriate law.'

As quoted above, HHJ Hodges QC in Shaw said, at paragraph 60:

'...there was no question of ... the adjudicator, litigating for their own benefit and at their own expense. The adjudicator was simply the respondent to a statutory appeal, and she was discharging her duty of assisting the court.'

End of Footnote: Budniok

Returning now to Budniok, and the judgment of Registrar Baister in Budniok (i.e. Budniok v Adjudicator, Insolvency Service [2017] EWHC 368 (Ch)), at paragraph 14, the Registrar set out the (then) new regime, as follows (though note that there is, in the author's respectful, a mistake in this summary - see below):

'(a) An individual may make an application to the adjudicator for a bankruptcy order to be made against him on the ground that he is unable to pay his debts (see section 263H Insolvency Act and rule 6.38 as to the form of the application). The application must include the information set out in Schedules 2A and 2B Insolvency Rules 1986;

(b) The adjudicator has 28 days in which to decide the application (section 263K and rules 6.42 and 6.43);

(c) Before reaching a decision, the adjudicator may seek further information from the applicant in order to determine the bankruptcy application, and the 28 day period may be extended by 14 days (section 263L and rule 6.42(3));

(d) The adjudicator may also make a number of verification checks on her own initiative, including checking credit reference agencies and the electoral register and contacting the official receiver (rule 6.41);

(e) The adjudicator's decision on the bankruptcy application must be made on the basis of the information provided by the applicant in his application, any further information he has provided upon request and the adjudicator's verification checks (rule 6.42(4) and (5));

(f) The adjudicator must make a bankruptcy order (section 263K(2)) if satisfied that:

(i) the applicant's centre of main interests is in England and Wales (section 263I(1)(a) and (4) and section 263K(1)(a));

(ii) the applicant is unable to pay his debts at the date of the determination (section 263K(1)(b));

(iii) no bankruptcy petition is pending in relation to the debtor at the date of the determination (section 263K(1)(c)); and

(iv) no bankruptcy order has been made in respect of any of the debts which are the subject of the application at the date of the determination (section 263K(1)(d)).

(g) If the adjudicator is not satisfied of these matters, then she must refuse the application and give reasons (section 263K(3), section 263N(1) and rule 6.45;

(h) The applicant may ask the adjudicator to review any refusal within 14 days, but he may not seek to adduce any further information (section 263N(2) and rule 6.46);

(i) The adjudicator, on review, may either uphold the refusal or make a bankruptcy order. If the refusal is upheld, again, the reasons must be given (sections 263N(3)-(4) and rule 6.46);

(j) If the refusal is upheld on review, the applicant may apply to the court to appeal that decision within 28 days (section 263N(5) and rule 6.47).

(k) On the appeal, the court must either dismiss the application or make a bankruptcy order (rule 6.47(4)).'

The mistake, in the author's view, with this summary, is in the sentence that reads '(i) the applicant's centre of main interests is in England and Wales (section 263I(1)(a) and (4) and section 263K(1)(a))'

Section 263K(1)(a) specifies that there needs to be jurisdiction under section 263I, which is any of the 6 Connecting Factors. Section 263K(1)(a) does not say there must be the Connecting Factor COMI in existence.

[2a] Section 265 of the Insolvency Act 1986 is entitled 'Creditor’s petition: debtors against whom the court may make a bankruptcy order' and reads:

'(1) A bankruptcy petition may be presented to the court under section 264(1)(a) only if -

(a) the centre of the debtor’s main interests is in England and Wales, or

(ab) the centre of the debtor’s main interests is in a member State (other than Denmark) and the debtor has an establishment in England and Wales, or

(b) the test in subsection (2) is met.

(2) The test is that

(a) the debtor is domiciled in England and Wales, or

(b) at any time in the period of three years ending with the day on which the petition is presented, the debtor -

(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii) has carried on business in England and Wales.

(3) The reference in subsection (2) to the debtor carrying on business includes

(a) the carrying on of business by a firm or partnership of which the debtor is a member, and

(b) the carrying on of business by an agent or manager for the debtor or for such a firm or partnership.

(4) In this section, references to the centre of the debtor’s main interests have the same meaning as in Article 3 of the EU Regulation.

(5) In this section “establishment” has the same meaning as in Article 2(10) of the EU Regulation.'

So the difference between sections 263I and 265 is that:

(1) the first subsection starts differently. That is:

(a) for section 263I, subsection (1) starts: 'An adjudicator has jurisdiction to determine a bankruptcy application...' ; whereas,

(b) for section 265, subsection (1) starts: 'A bankruptcy petition may be presented to the court under section 264(1)(a)...'

and

(2) the subsection (2)(b) contains some different wording. That is:

(a) for section 263I, subsection (2)(b) contains: '...ending with the day on which the application is made to the adjudicator...'; whereas,

(b) for section 265, subsection (2)(b) contains: '...ending with the day on which the petition is presented...'

[2b] In Portrait v Minai [2023] EWHC 1605 (Ch) ('Portrait'), ICC Judge Greenwood:

(1) set out section 265 of the Insolvency Act 1986;

(2) said that, it is for the petitioner on the creditors bankruptcy petition, to prove the England and Wales Bankruptcy Jurisdiction exists (paragraph 12);

(3) recorded that the petitioner contended that England and Wales Bankruptcy Jurisdiction (to make the bankruptcy order) existed because: (a) of the location of the debtor's centre of main interests ('COMI'; i.e. England and Wales); or (b) the debtor had a 'place of residence' in England (based on her owning 3 properties in London (paragraph 11(i) and (ii) and 14). For completeness, the petitioner did not contend that England and Wales Bankruptcy Jurisdiction existed because of the jurisdictional Connecting Factors: (a) domicile; (b) 'ordinarily resident'; or (c) 'carried on business', existed (paragraph 14). Furthermore, '...no case was advanced by the Petitioners that Miss Minai’s COMI had changed as a result of her (admitted) stay in England since October 2021; that date was irrelevant to the way they put their case; they drew no distinction between the period before, and the period since; they advanced no positive case that if the Court were to conclude that Miss Minai’s COMI was in Ukraine as at October 2021, it was nonetheless in England by and on 2 March 2022, when the Petition was presented.' (paragraph 14)

[3] For brevity, instead of the 'England and Wales', this article will simple say 'England'

[4] There is an excellent summary of the basic position in Fletcher 'The Law of Insolvency' (5th Ed), in paragraph 5-010, under the heading 'The debtor's personal amenability to the jurisdiction of the English Court', which reads:

'It is a fundamental requirement of the law of bankruptcy, as indeed is true of every type of legal procedure, that any person who is to be subjected to its process must satisfy certain criteria which render that person amenable to the jurisdiction of the courts of the country in question. Depending upon the type of proceedings, different sorts of forensic ties (known as connecting factors) are used to furnish the requisite link between a particular person and the jurisdiction of the courts of a particular place. With regard to bankruptcy, the different possible connecting factors, any one of which will suffice to render the debtor personally amenable to the jurisdiction of the English courts, are listed in ss.263I and 265 of the Act. The provisions of these sections are of considerable importance because unless the debtor can be brought within them a bankruptcy application cannot be made, or alternatively (as the case may be) a bankruptcy petition cannot be presented to any court in England and Wales. This is the case even though it may be that the debtor is demonstrably insolvent and is indebted to persons in this country under circumstances which would otherwise qualify them to serve as petitioning creditors in view of the amount and nature of the debts involved. It is equally true that the debtor is ineligible personally to procure his or her own bankruptcy by means of a bankruptcy application unless the requisite jurisdictional criteria are met....the jurisdiction requirements embodied in the Insolvency Act are subject to the overarching provisions of the EC/EU Regulation on Insolvency Proceedings, and must be read and applied subject to those rules...'

[5a] In Reynolds Porter Chamberlain LLP v Khan [2017] I.L.Pr. 13 [2016] BPIR 722, a creditor bankruptcy petition/s.265 of the Insolvency Act 1986 case, Registar Baister referred to this as the 'jurisdictional foundation'. At paragraph 9, Registrar Baister said:

'The jurisdictional foundation for seeking a bankruptcy order is set out in the petition...'

[5b] In Re Brauch (A Debtor), Ex p. Brittanic Securities & Investments [1978] Ch.316, at 325, Goff LJ referred to them as 'jurisdictional qualifications'. 

[5c] In Durkan (as liquidator of Long Compton Project Ltd) v Jones [2023] EWHC 1359 (Ch), Deputy ICC Judge Baister used this description, in paragraph 1, where he said:

'It is common ground that the burden of satisfying the court that the jurisdictional prerequisites for making a bankruptcy order are made out rests on the petitioners and that the civil burden of proof applies.'

[5d] 'Jurisdiction' can have two means, though only one is its strict sense. In Bacci v Green [2023] Ch. 201 [2023] 2 WLR. 681, a case on the court's jurisdiction under section 37(1) of the Senior Courts Act 1981, Newey LJ identified and summarised some authorities on this point, at paragraph 15:

(1) In Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536, Pickford LJ noted that the word "jurisdiction" can be used in two senses. He said at p 563:

"The first and, in my opinion, the only really correct sense of the expression that the court has no jurisdiction is that it has no power to deal with and decide the dispute as to the subject-matter before it, no matter in what form or by whom it is raised. But there is another sense in which it is often used, i e, that although the court has power to decide the question it will not according to its settled practice do so except in a certain way and under certain circumstances."

(2) In Fourie v Le Roux [2007] 1 WLR 320, Lord Scott of Foscote drew this distinction in the context of section 37(1) of the 1981 Act . He said at para 30 that, "provided the court has in personam jurisdiction over the person against whom an injunction, whether interlocutory or final, is sought, the court has jurisdiction, in the strict sense, to grant it". It was therefore clear, Lord Scott said in para 25, that Park J had had jurisdiction to grant injunctive relief as he had against a Mr Le Roux and a company referred to as "Fintrade", both having been within the territorial jurisdiction of the court when the order was made and served with an originating summons shortly afterwards. The issue, Lord Scott explained in para 25, was "not whether Park J had jurisdiction, in the strict sense, to make the freezing order but whether it was proper, in the circumstances as they stood at the time he made the order, for him to make it".

[5e] It is right to record that a recently authority on section 265 of the Insolvency Act 1986 ('1986 Act') said differently. In Portrait v Minai [2023] EWHC 1605 (Ch)('Portrait') (a section 265 creditors bankruptcy petition case) ICC Judge Greenwood set out section 265 of the 1986 Act at paragraph 9, and then said, at paragraph 10:

'If one or other of these conditions is not met, the Court does not have jurisdiction to make a bankruptcy order, and the Petition must be dismissed.'

In the author's opinion, this must be a judicial slip. As the idiom goes: Homer-nodded (to take a irrelevant tangent, this idiom appeared in Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 1 WLR 948 at 957, wherein the House of Lords allowed an appeal (in effect) against a decision of Bingham J (as he then was), Lord Brandon, who ave the reaons for allowing the appeal, remarked: 'on this occasion even Homer nodded'). It should, in the author's opinion, be that if none of these conditions are met, the Court does not have jurisdiction to make a bankruptcy order, and the Petition must be dismissed.

Indeed, in Portrait, ICC Judge Greenwood did not consider whether or not all potentially Connecting Factors existed. He only (1) COMI and (2) 'place of residence'. On 3 potential Connecting Factors, ICC Judge Greenwood in Portrait said, at paragraph 14:

'The Petitioners did not allege that the Debtor is or was at a relevant time domiciled in England and Wales, or that she had been “ordinarily resident” in England and Wales, or that she had “carried on business” in England and Wales, for example, in respect of her two alleged “investment” properties...'

If paragraph 10 of Portrait was correct, the creditors bankruptcy petition would inevitably have been dismissed, as 3 at least of the Connecting Factors would not be found, as the petitioners was not even arguing that they were present.

[6a] In Portrait v Minai [2023] EWHC 1605 (Ch)('Portrait'), decision of ICC Judge Greenwood said that the debtor's COMI was to be assessed at the date of presentation of the petition (“the request for the opening of insolvency proceedings”) rather than the date of the Petition’s final hearing (paragraph 42). This was despite comments by Chadwick LJ at paragraphs 39 and 55(1) of Shierson v Vlieland-Boddy [2005] EWCA Civ 974. ICC Judge Greenwood said, at paragraph 43:

'In that regard, I was referred to O’Donnell v Bank of Ireland [2012] EWHC 3749 (Ch) in which Newey J. (as he then was), having considered the matter by reference to certain decisions of the ECJ since Shierson (Re Staubitz-Schreiber (Case C-1/04) and Interedil Srl v Fallimento Interedil Srl and another (Case C-369/09) concluded, at [36], “In the light of these cases, it is now apparent, I think, that a debtor’s COMI falls to be determined as at the date of presentation of a bankruptcy petition rather than the date (if different) on which the petition is heard.” More recently, in Re Melars Group Ltd [2021] EWHC 1523 (Ch), at [61], Miles J. confirmed the proposition: “the matter has to be examined at the date of the petition. Earlier or later events may be relevant, but only in so far as they may throw helpful light on the position as at that date [2022] EWCA Civ 1419.” Although that decision was appealed (albeit unsuccessfully, at [sic], in a decision to which I return below) that proposition was neither challenged nor contradicted. It is therefore the approach I shall adopt.'

The missing reference in the above quotation, is (seemingly) to the citation to the Court of Appeal decision in Re Melars Group Ltd - which is: [2022] EWCA Civ 1419, which does appear in quotation, in the sentence before, inexplicably.

[6b] Two things here:

(1) Words substituted by Insolvency (Amendment) (EU Exit) Regulations 2019/146 Sch.1(1) para.4(3)(d) (December 31, 2020: substitution has effect subject to savings specified in SI 2019/146 regs 4 and 5)

(2) for completeness, the full Article 3 of tthe Retained Insolvency EU Regulation reads:

'The centre of main interests shall be the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.

In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary. That presumption shall only apply if the registered office has not been moved from the United Kingdom to a Member State or to the United Kingdom from a Member State within the 3-month period prior to the request for the opening of insolvency proceedings.

In the case of an individual exercising an independent business or professional activity, the centre of main interests shall be presumed to be that individual's principal place of business in the absence of proof to the contrary. That presumption shall only apply if the individual's principal place of business has not been moved from the United Kingdom to a Member State or to the United Kingdom from a Member State within the 3-month period prior to the request for the opening of insolvency proceedings.

In the case of any other individual, the centre of main interests shall be presumed to be the place of the individual's habitual residence in the absence of proof to the contrary. This presumption shall only apply if the habitual residence has not been moved from the United Kingdom to a Member State or to the United Kingdom from a Member State within the 6-month period prior to the request for the opening of insolvency proceedings.'

[7] Certain words from this definition were deleted (repealed), by Insolvency (Amendment) (EU Exit) Regulations 2019/146 Sch.1(1) para.3(g) (December 31, 2020: repeal has effect subject to savings specified in SI 2019/146 regs 4 and 5)

[8] For those interested in legal history, it might be interested to read:

(1) Council Regulation (EC) No 1346/2000 ('Insolvency Regulation 2000') applied to insolvencies beginning before 26.6.17;

(2) Insolvency Regulation 2000 were replaced and superseded by Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) (Recast Insolvency Regulation) for insolvencies beginning on or after 26.6.17.

Insolvency Regulation 2000 contained article 1

But Insolvency Regulation 2000 did not contain a specific definition of COMI.

The case of Sparkasse Hilden Ratingen Velbert v Horst Konrad Benk [2012] EWHC 2432 (Ch); [2012] BPIR 1258 ('Sparkasse') was determined under Insolvency Regulation 2000. In reaching his judgment, HHJ Purle QC sitting as a High Court Judge said the following about the then applicable law:

At paragraph 19:

'The legal principles for determining an individual's COMI were not seriously disputed. They were summarised by [counsel for the debtor/bankrupt] as follows:

a. an individual's COMI is where he can be contacted; this will normally be his habitual place of residence (see Geveran Trading Co v Skjevesland [2003] BCC 209, at 223; upheld on appeal [2003] BCC 391);

b. a person's COMI must have an element of permanence (see Official Receiver v Mitterfellner [2009] BPIR 1075 at paras 5 and 6);

c. the COMI must be ascertainable by third parties (see Shierson v Vlieland-Boddy [2005] 1 WLR 3966, at 3985F);

d. an individual is free to re-locate his COMI, even on the eve of insolvency; what a court must determine on the facts is whether the change in COMI is one of substance or a mere illusion (see Shierson, at 3986A).'

And at paragraph 22:

'[counsel for the creditor/annulment applicant] enunciated the following propositions, with which [counsel for the debtor/bankrupt] did not demur:

a. A debtor can only have one COMI;

b. A debtor's COMI is, in the case of professionals, the place of their professional domicile and for natural persons in general, the place of their habitual residence (Virgos-Schmidt report 1 para 75 & Shierson para 47); c. “A man's habitual residence is his settled, permanent home, the place where he lives with his wife and family, […] the place to which he returns from business trips elsewhere or abroad…” (Official Receiver v Stojevic [2007] BPIR 141 para 59 and Re Eichler (No 2) [2011] BPIR 1293 para 142(iv));

d. Whilst a debtor's choice as to where he conducts the administration of his affairs may be subjective, where he actually carries on the administration of his affairs on a regular basis such that it is ascertainable by third parties and by the court is an objective question (Shierson paras 43 & 47; Re Eichler (No 2) para 141 (viii));

e. “Regular administration” of a debtor's interests means that the court must look for the place from which the debtor exercises the management, organisation and control of his interests (Stojevic para 28 and Re Eichler (No 2) para 142(i));

f. The term “on a regular basis” indicates “a quality of presence”, “a degree of continuity”, “an idea of normality”, “a stable link with the forum” and “a degree of permanence” (Stojevic para 29 and Re Eichler (No 2) para 142(ii));

g. Particular regard must be had for the COMI to be ascertainable by third parties, in particular creditors and potential creditors (Shierson para 55);

h. Whilst the date on which the COMI is to be established is the date of presentation of the petition, evidence as to [a debtor/bankrupt's] activities and actions at other times may be significant in that they cast light on the truth or otherwise of his claim to have had his COMI in England at the relevant time (Shierson paras 47 and 55);

i. If the debtor relocates in the face of potential insolvency, the court must scrutinise the facts and determine whether the change in the place of the administration of interests is based on substance or is an illusion (Shierson at para 55);

j. That change must also have an element of permanence (Shierson para 55 and Re Eichler (No 2) para 141(vi)).'

After referring to a case called Irish Bank Resolution Corporation Ltd v Quinn [2012] NICh 1, decided by Deeny J in Northern Ireland, at paragraph 23, HHJ Purle QC in Sparkasse, said, at paragraph 24:

'In considering the potential of professional domicile to have precedence over habitual residence, Quinn is also useful for citations suggesting that the business or professional activities in question must be at the root of the insolvency for the professional domicile to have precedence, and for its acceptance that the ascertainability of a person's COMI should not normally require actual notification by that person to his creditors (though it may do so sometimes) but nor should a debtor hide his COMI. COMI should be ascertainable by a reasonably diligent creditor, but no creditor should be required to search through every phone book in Europe.'

On the facts of Sparkasse, the debtor/bankrupt's COMI was found to be in Germany rather than England (paragraph 25), and the English bankruptcy order was annuled (paragraph 31).

In Deutsche Apotheker- und Arztebank EG v Leitzbach [2018] EWHC 1544 (Ch); [2018] BPIR 1299 ('Leitzbach'), HHJ Hodge QC sitting as a Judge of the High Court said, at paragraphs 20 to 21:

'Article 3.1 of that Regulation provides, so far as material, that the courts of the Member State within the territory of which the centre of a debtor's main interests is situated shall have jurisdiction to open insolvency proceedings. The concept of a person's centre of main interests (or COMI) was not specifically defined in the EC Regulation; but recital (13) provided that "the 'centre of main interests' should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties".

Judicial analysis and exegesis of the meaning of COMI, and of how a court should go about determining the location of a person's COMI, is legion. Probably the leading modern authority is the decision of His Honour Judge Purle QC (sitting as a Judge of the High Court in the Birmingham District Registry) in the case of Sparkasse Hilden Ratingen Velbert v Benk [2012] EWHC 2432 (Ch), reported at [2012] BPIR 1258.'

After setting out extracts from paragraphs 19 and 22 of Sparkasse (quoted above), HHJ Hodge QC in Leitzbach said, at paragraphs 24 to 25:

'In the later case of Commerzbank AG v Brehm [2014] BPIR 359 at paragraph 25, Chief Registrar Baister cited and endorsed the considerations set out in Sparkasse; but he went on to add the following (at paragraphs 25 and 26): 'To those matters I would add: '[A] debtor does not appear to be obliged to advertise his centre of main interests but nor may he hide it. It should be reasonably or sufficiently ascertainable or ascertainable by a reasonably diligent creditor'. The Chief Registrar went on to note that ascertaining a debtor's centre of main interests involved a mixed question of law and fact

At paragraph 41 of his judgment in that case, the Chief Registrar noted that it would be a rare case where shifting one's centre of main interests from one place to another did not leave loose ends that needed to be tied up. What would make the COMI reasonably ascertainable to creditors would inevitably depend on the individual facts of each case. The location where a professional person conducted his professional activities was a material factor and a pointer to be taken into account in ascertaining COMI.'

On the facts of Leitzbach, the debtor/bankrupt's COMI had not been England and Wales (paragraph 84), and the English bankruptcy order was annuled (paragraph 88).

[9a] In Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213, the bankruptcy order was made on 27.3.19, so prior to 31.12.20. The version of Article 3(1) under consideration in Kooter is not, for present purposes, materially different from the current Article 3(1). But for completeness, the version of Article 3(1) relevant in Kooter, read (so far as Deputy ICC Judge Agnello KC considered relevant), as follows (paragraph 16 of Kooter):

"1. The courts of the Member State within the territory of which the [COMI] is situated shall have jurisdiction to open insolvency proceedings ('main insolvency proceedings'). The [COMI] shall be the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.

In the case of an individual exercising an independent business or professional activity, the [COMI] shall be presumed to be that individual's principal place of business in the absence of proof to the contrary. That presumption shall only apply if the individual's principal place of business has not been moved to another Member State within the 3-month period prior to the request for the opening of insolvency proceedings.

In the case of any other individual, the [COMI] shall be presumed to be the place of the individual's habitual residence in the absence of proof to the contrary. This presumption shall only apply if the habitual residence has not been moved to another Member State within the 6-month period prior to the request for the opening of insolvency proceedings."

[9b] The presumption is rebuttable (rather than irrebutable) because the provision contains the words 'in the absence of proof to the contrary'

[10] By way of illistration, in Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213 ('Kooter No.1'), Deputy ICC Judge Agnello KC considered whether the evidence demonstated '...the exercise by [the bankrupt] of a business or profession.' (paragraph 26), from paragraphs 19 to 26 (under the heading 'Employment and further education'), before concluding that the evidence did not show this (paragraphs 25 and 26). As a result, the Deputy Judge concluded 'Accordingly, the relevant test is one of habitual residence as a rebuttable presumption.' (paragraph 26) - presumably also implicitly finding that the test for disapplying the habitual residence presumption, did not apply.

The Deputy ICC Judge said, at paragraphs 19 to 24:

'19. In [the bankrupt's] application for bankruptcy, [the bankrupt] describes herself as unemployed. She attributed her bankruptcy to a relationship breakdown rather than, for example some business failure. [the bankrupt] has filed three witness statements. Her first witness statement dated 4 November 2019 states that she is, at that date, resident in the UK and studying in Oxford Said Business School. It states that she has numerous marketing management qualifications achieved in the UK. The witness statement as states, 'I am a graduate from Birkbeck College, UCL with an MBA'. She relies on the fact that she has instructed UK lawyers since the service upon her of the freezing injunction related to the proceedings brought against them by the [the annulment applicant] . At paragraph 7, she states, 'My habitual residence is in the UK because I have obtained my university education here and have formed a professional and social circle of connections which enable me too[sic] state the UK is my home. 'She asserts that her permanent address is 21 The Driftbridge, Epsom. She asserts at paragraph 16, 'My COMI is undoubtedly in the UK and has been for several years both as a student and pursuing a marketing career after.' She sets out details of courses which she asserts she had attended. That list does not include details of the period in which she attended 'Birkbeck. UCL' and obtained an MBA, but in her statement, she asserts she did the MBA at Birkbeck college in 2015-2016. The other courses she listed appear by their dates to be very short courses:-

September 2018 – University of the Arts- Digital Marketing Strategy Programme (part time)

October 2018 – Digital Online Content Strategy

November 2018 [left blank]

December 2018 – Data Visualisation for Marketeers

December 2018 – Management Programme – Graduation (part time)

January 2019 University of the Arts – Digital Marketing Strategy Programme Gradation

20. It is noticeable that no further details have been given in later witness statements to explain the length of the courses and whether these course were online or required actual physical attendance. She provides details of graduation but this, in my judgment, does not provide evidence of attendance, not even of attendance at any graduation ceremony. Significantly, she provides no details as to the funding of the numerous courses she asserts she attended.

21. She states ... that she has in fact worked in number of marketing jobs with Nepresso Club UK and Picturehouse Cinemas, Marketing Department. No details of dates or the type of jobs are provided. No details as to the duration of such different employments are provided. Equally, there is no evidence of salary being paid into the bank accounts for which [the bankrupt] provided copies. No pay slips and no P60s or P45s have been provided. She asserts that since January 2018, she has been unable to work in the UK due to the freezing order. I pause to note that the freezing order does not prevent [the bankrupt] from working. It provides restrictions, subject to her providing disclosure, on her ability to deal with her assets which would include earnings from any job. In my judgment, there were no restrictions on [the bankrupt] working or seeking employment after the freezing order was made. Evidence of previous jobs in the UK are merely bare assertions by [the bankrupt]. Although [the bankrupt] asserts in many places in her statements that her COMI is in England, her statements are bare assertions, subject only to certain modest utility bills, dental and doctors' appointments and voter registration, which I will deal with further below. Her statements lack any detail relating to how she funds her life in England, details of her earnings and any evidence of paying tax. ... the bank statements she has produced provide little evidence of earnings coming into the accounts. They show...modest sums and spending. By way of example, they show no evidence of rental payments being made.

22. In her written statements, [the bankrupt] also asserted that she was unable to work due to [the annulment applicant] retaining her mobile phone and her diplomas. In my judgment, these explanations by [the bankrupt] lack a sense of reality. There is no evidence of any jobs applied for where proof of diplomas relating to very short courses was necessary. Equally, duplicate of diplomas relating at least for longer courses such as a Masters or an undergraduate degree can be obtained. The loss, or, as alleged, retention by a third party of a mobile phone does not prevent someone seeking employment. There is a real lack of detail to support this bald assertion. There is also the point made by Mr Shoylov, namely that there is no such place as Birkbeck UCL. It is difficult to imagine that a person who attended either of these well-known higher education institutions and obtained an MBA there, would make such an error. It is also significant that no genuine diploma from either of those institutions certifying that [the bankrupt] did obtain an MBA has been exhibited to her various witness statements. I will deal with the certificate produced by her. This certificate which has been produced by [the bankrupt] raises significant issues as to its authenticity.

23. She exhibits a 'Certificate of Attendance' which has the Birkbeck, University of London, logo on it at the right-hand side. This document is undated, which is unusual for what is presented as being evidence of her certificate of her MBA. The document says she attended and successfully completed, 'The MBA Programme'. That is itself unusual working for an MBA certificate. There are two typographical errors on this certificate. One of them is the repeat of the word 'the' and the other is a misspelling of BirkBeck in the details of the Programme Director. 'Birkbeck' is spelt as 'Birbeck'. [counsel for the annulment applicant] has directed my attention to a certificate of attendance of a 'Mini MBA' which he says is a genuine certificate for the course consisting of the same four courses set out in [the bankrupt's] certificate. Significantly, this certificate states that the holder attended a four day course leading to a Mini MBA and it provides the relevant dates. In my judgment, based on the comparison of the two certificates and the anomalies contained in [the bankrupt's] certificate, I reject that this certificate is genuine. Accordingly, there is no evidence which supports [the bankrupt] having completed an MBA in England and Wales. This means that for current purposes, the evidence shows at best, either in presence or online attendance at a number of very short courses.

24. [The bankrupt's] second witness statement is dated 30 March 2022...referred therein to the court proceedings costing her time off work, but she did not provide any further details relating to her work position at that stage. She did exhibit what she called was a confirmation that she attended a 'Content Marketing Strategy' course at the London College of Communications between 25 February 2019 and 28 June 2019. Again, the same points I have set out above relate to this latest course. There is no evidence relating to whether it was online or in person and importantly where the funding for this course was obtained.'

Deputy ICC Judge Agnello KC concluded, at paragraphs 25 and 26:

'25. In my judgment, [[the bankrupt's] evidence filed in opposition to the annulment application does not establish that during the period before her bankruptcy and/or at the date of her bankruptcy, she was involved in any business or profession. [counsel for the annulment applicant] did take me to the evidence whereby [the bankrupt] introduced herself to [the annulment applicant] as being an investment manager and in this way [the annulment applicant] was persuaded to invest. However, the judgment dated 7 February 2019 by which [the bankrupt] was ordered to pay the sum of £206,145.70 to [the annulment applicant] demonstrates that these representations to [the annulment applicant] were part of a sham. So no reliance upon them is made by me in assessing whether [the bankrupt] had a business or professions at the relevant time.

26. [The bankrupt] is keen in her evidence and in the exhibits to rely upon utility bills to establish that she resided in England and Wales. She also produces details of being registered with a GP, being registered with a dentist and having attended a hospital here In my judgment, evidence of utility bills in this case does not relate to her exercising any business or profession. Having considered the evidence before me...the evidence points to her not exercising any business or profession in England and Wales. Put simply, her evidence fails to demonstrate the exercise by her of a business or profession. Accordingly, the relevant test is one of habitual residence as a rebuttable presumption....'

[1] 'Member State' is defined in Article 2(1A) of the EU Regulation 2015/848 (the Retained Insolvency EU Regulation). Article 2(1A) reads: “Member State” means a state which is a member of the EU other than Denmark

 

[12a] An illistration of a judge going through 'habitual residence' test, can be found in Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213 ('Kooter No.1'), from paragraphs 27 to 36, where the bankrupt claimed she was habitually resident in England and Wales, whereas the annulment applicant asserted, on the contrary, she was, at the material time, habitually resident in Bulgaria (where she was, at least, initially from). After going through the evidence, Deputy ICC Judge Agnello KC concluded, at paragraph 37:

'...[the bankrupt's] habitual residence remained in Bulgaria'  and that 'The evidence does not support a genuine change of habitual residence'.

In paragraph 27, Deputy ICC Judge Agnello KC sets out the law (quoted in the main body of this article).

Continuing under the sub-heading 'Habitual residence', Deputy ICC Judge Agnello KC said, at paragraphs 28 to 31:

‘[t]here appears no dispute…that her original habitual residence is Bulgaria. She was born there, domiciled there and it appears, educated there. I have noted above that [the bankrupt] asserts she obtained her university education here in the UK, but, in my judgment, there is a lack of evidence to support such an assertion. I have dealt above with the various diplomas and courses which [the bankrupt] asserted she had acquired or attended. I have rejected her evidence that she had an MBA from Birkbeck or indeed UCL. The evidence relating to other courses fails to provide any details relating to duration, whether the course was online or in person. Again, as I have already set out above, there is a lack of evidence in relation to the funding for any of these courses. Funding in relation to study is an important factor to be considered. This is clear from article 11 (b)(iv) of the above named Regulation. There is no evidence before me relating to funding of any of the courses taken by [the bankrupt]. There is also no evidence relating to how she funds her lifestyle when she is in the UK. I will deal further with this point below. It is the Applicant's case that essentially, [the bankrupt] is seeking to create an illusion of permanent presence in the UK. [Counsel for the annulment applicant] relies on the strong ties to Bulgaria of [the bankrupt]. I deal with these below.

29. Evidence of [the bankrupt] relating to a period in 2022 and her being an employee of a 'top 100' university is in my judgment not relevant to the COMI exercise in 2019. In any event, these statements by [the bankrupt] are challenged as being false. It is correct that much of [the bankrupt]'s statement consists of bare assertion with no contemporaneous documentation to support the same. For example, despite her assertions of being employed at various times, she produces no evidence relating to the sums paid to her by way of salary, or tax deductions made. Equally her evidence is devoid any explanation relating to her earnings and/or income and the source of sums she uses in order to live. She provides no details or explanation as to her source of funds and/or income in the period leading up to the bankruptcy and as at the time that the judgment was handed down against her. This is, in my judgment, significant, because consideration of what a person does, that person's economic activity, as well as income source, are important factors for consideration of whereabouts of habitual residence. Evidence from [the bankrupt] that she has, an English bank account, that she pays certain modest bills, that she is on certain utility bills, are not conclusive and are to be weighed against the lack of any evidence relating to source of income as well as what exactly she did workwise. She asserts she is registered with a doctor and a dentist. However, these factors need to be considered alongside the lack of evidence relating to how exactly she funded her life when in the UK. Her evidence is silent. There is no real evidence of economic activity in England and Wales. IN relation to any non economic activity, such as studying, there is no evidence as to the funding of the studies and importantly whether the course themselves were online or required physical presence.

30. In Die Spakrasse Bremen AG v Mehmet Armutcu [2021] EWHC 4026 (Ch), Mrs Justice Proudman considered an appeal from a Registrar who held that a debtor's COMI had remained in Germany. In considering whether the alleged residence in the UK had the requisite degree of permanence, the Judge agreed with the Registrar that existence of an economically unviable job in the UK was not sufficient when there was evidence of significant emotional and economic ties with Germany. The evidence demonstrated that the debtor travelled to Germany often to collect cash from his wife to fund his lifestyle in the UK. In the case before me, the Applicant asserts that the evidence does not demonstrate the relevant degree of permanence. The Applicant also asserts that essentially the alleged change of habitual residence is not genuine. Such a submission is similar to the one made in Mehmet Armutcu .

31. There is no evidence of any security of tenure in relation to where [the bankrupt] asserts she lives, being 21 The Driftbridge, Epsom, Surrey. The evidence from [the bankrupt] is silent as to the arrangement between herself and the owner of 21 The Driftbridge Epsom, Surrey where she asserts she lives. There is no evidence of tenancy agreement, licence or in fact of any sums being paid by [the bankrupt]. In my judgment, this is an important factor in assessing whether she has her habitual residence in England and Wales. [counsel for the annulment applicant] went painstakingly through the various addresses used by [the bankrupt] as well as inconsistencies which arose from the evidence. I do not propose to set this out in this judgment. Having determined that [the bankrupt]'s evidence fails to satisfy me that she carried out either a business or profession in the UK, or exercised any economic activity in the UK, there is no need to consider the various addresses she has used.

Under the subheading ‘Evidence of habitual residence remaining in Bulgaria’, Deputy ICC Judge Angello KC continued:

'32. There is clear evidence, which does not appear to be disputed by [the bankrupt] in her evidence that she maintains strong family ties with her family in Bulgaria and in particular, her parents. I agree with the submission of [counsel for the annulment applicant], that her family ties and interests in Bulgaria are important in this case where I have no evidence of any economic activity in England and Wales. [counsel for the annulment applicant] also relied upon various transfers of cars acquired by her in the UK and then exported to Bulgaria and transferred to her father. There is evidence of real estate holdings of [the bankrupt] in Bulgaria. A property which was in the name of [the bankrupt] was transferred in 2018 to her mother. The Applicant asserts that this transfer was carried out in breach of the terms of the freezing order. For current purposes, the transfers and dealings between [the bankrupt] and her parents are, in my judgment, evidence of strong ties to Bulgaria, in dealing with assets and property, which go beyond simply visiting close family.

33. [counsel for the annulment applicant] relies on evidence, which he submits, are indications that [the bankrupt] engaged in business in Bulgaria. There is evidence that [the bankrupt] researched real estate investments in 2017 in Bulgaria. [the annulment applicant] states in his first witness statement [the bankrupt] had informed him in 2017 that she wished to establish a bitcoin 'mining' business in Bulgaria where she stated that she had both the contact and the cost effective access to electricity and equipment storage space. She imported cryptocurrency mining equipment into Bulgaria and significantly immediately after the bankruptcy order on 27 March 2019, she headed a private foundation dedicated to promoting private enterprise. Her application for the bankruptcy order was made on 4 March 2019. On 28 March 2019, [the bankrupt]'s father incorporated a private foundation in Bulgaria (Enterprise in Action). [the bankrupt] was appointed as sole manager. She opened bank accounts in the name of the foundation and is given exclusive power to dispose of funds in the accounts. Although her position as head of the private foundation in Bulgaria is dated the day after the bankruptcy order is made, I agree with [counsel for the annulment applicant] that steps were clearly taken before the bankruptcy order was made in order to set up the private foundation. For current purposes, I accept that the evidence demonstrates connections with Bulgaria and that those connections may well be related to employment or a profession.

34. [counsel for the annulment applicant] also relied upon evidence relating to [the bankrupt]'s declared permanent residence in Bulgaria. Although there is no direction relating to expert evidence of Bulgarian law, [the annulment applicant] sets out that a Bulgarian permanent resident who is a citizen of Bulgaria must be identifiable in Bulgarian government records on the formal application of creditors as resident in Bulgaria. [the annulment applicant] states that in both 2018 and also in 2019, when he had to obtain [the bankrupt]'s address, he was provided, from these records, with an address in Bulgaria, initially in Troyan and thereafter an address in Sofia. [counsel for the annulment applicant] explained that [the bankrupt] would have been able to apply in an administrative procedure to amend her permanent and/or current addresses which he asserted was a requirement of Bulgarian law to keep them up to date. Whilst no direction has been given relating to an expert in Bulgarian law, I accept the evidence, which as it stands, is unopposed. Moreover, [the annulment applicant] states that he searched to locate [the bankrupt]'s address in Bulgaria. In my judgment, it is also significant, that in the register of permanent residence in Bulgaria, [the bankrupt] changed her address from one in Troyan to an address in Sofia. A change of her Bulgarian address from Troyan to Sofia is, in my judgment, a conscious move by [the bankrupt]. This information was and is available for creditors, like [the annulment applicant]. It is a matter of public record.

35. Accordingly, creditors of [the bankrupt] were able to ascertain her address in Bulgaria. I accept that [the bankrupt] presented evidence of bills, such as a credit card, bank statements and utility bills, which it can be said would lead those creditors to consider her address in Epsom to be where they could locate her. However, this needs to be weighed up against the evidence of her activity and ties with Bulgaria and the real lack of any economic activity in England and Wales. The cases make it clear that, as [counsel for the annulment applicant] addressed me on, evidence of permanent residence needs to be genuine, not be an illusion and have a quality of presence. [the bankrupt] seeks to rely on her bare assertion backed up by her modest utility bills and unreliable evidence relating to her studies.

36. In 2018 – 2019, in court proceedings issued and continuing in Bulgaria, [the bankrupt] stated that her permanent address was in Bulgaria. In an application made by her to the Bailiff in the District Court of Lovech, Bulgaria, [the bankrupt] stated that her address was 93 Tsar Samuil Street, entrance B, 3rd floor, apartment 46, Sofia. This was an application dated 3 October 2018, which she sought to make in relation to what she averred was an unlawful enforcement measure in relation to the court proceedings brought against her by [the annulment applicant]. There is also in the evidence a sworn statement from [the bankrupt] in the court proceedings in Bulgaria, which is dated 17 January 2018. She sets out details of certain bank accounts she has, which includes two in Bulgaria. Significantly for current purposes, she declares in that statement, that her permanent address is 207, Vasil Levski Str, 2, floor 4, town of Troyan. The later application made to the Bailiff provides the address in Sofia. This accords with the change of address registered in Bulgaria. [the bankrupt]'s evidence is silent on all these issues relating to the nature of her residence in Bulgaria and her real estate interests there.'

Summarising, Deputy ICC Judge Agnello KC said, at paragraph 37:

'The evidence demonstrates an attempt by her to create an illusion of habitual residence in England and Wales. Her evidence fails to deal with the close and strong ties she has in Bulgaria. She has presented to this court a certificate which I have held is not genuine. She places reliance upon her various marketing and other courses, but fails to provide any evidence as to how she funds her studies or her lifestyle in England and Wales. There is no evidence relating to her arrangement relating to 21 The Driftbridge. Certainly she has provided no evidence relating to security of tenure, or any licence agreement, or even that she pays any rent. As I have held on the evidence, she did not exercise any economic activity in England and Wales at the relevant time. Her activities in Bulgaria have meant that she has provided sworn statements and also expressly declared what is her permanent residence in Bulgaria. A change of habitual residence needs to be, in my judgment, genuine. I reject the evidence presented by Ms Radeva that her change of habitual residence is genuine. Accordingly, I am satisfied that at the time that Ms Radeva sought to apply for a bankruptcy order, the Court had no jurisdiction to make such an order by reason of her COMI being in Bulgaria.'

[12b] As to the degree of permanence required for COMI (paragraph 43 (b) of Sparkasse Hilden Ratingen Velbert v (1) Benk (2) The Official Receiver [2012] EWHC 2432 (Ch), [2012] BPIR 1258, ChD (paras [19] and [22] - a person's COMI has a degree of permanence about it. Any change in a person's COMI must be real, not illusionary. In Kooter No.1, Deputy ICC Judge Agnello KC said, at paragraph 18 that the '...courts are alive to abuse and in particular cases where a debtor seeks to change his COMI for forum shopping or for other reasons. The well-known case of Shierson v Vlieland Boddy [2005] EWCA Civ 974, sets out the need for someone's COMI to have an element of permanence. A change of COMI needs to be real and not one where there are indications of opportunism or abuse.'

[12c] In Portrait v Minai [2023] EWHC 1605 (Ch), ICC Judge Greenwood describes, at paragraph 45, the facts and issue in MH v OJ (Case C-253/19) before ECJ, as:

'a case in which the Portuguese court had refused to open bankruptcy proceedings in respect of a married couple who lived and worked (and were treated as being habitually resident) in the UK but whose sole immovable asset was located in Portugal. The question referred to the ECJ was whether the presumption is rebutted “solely because the only immovable property of that person is located outside the member state of habitual residence”. The answer to that question, perhaps unsurprisingly, was “no [2021] 1 WLR 2499” (see [19]-[31] at 2520).'

[12d] Helpfully, ICC Judge Greenwood in Portrait v Minai [2023] EWHC 1605 (Ch) set out some quotes from the Melars Group judgments (Miles J's judgment and then the Court of Appeal's judgment (Snowden LJ, within whom Henderson and Lewison LJJ agreed)) at paragraphs 50 to 54 of Portrait:

'50. ...Miles J. held, amongst other things:

i) ...

ii) second, that in respect of the ascertainability of factors relevant to COMI, Judge Baister had erred (having not been referred to all relevant authority on the point) in failing to consider whether they were “ascertainable, in the sense of being available to typical third parties of the company without further enquiry” [68]. At [69], Miles J. added, “To my mind, the judge's error is well illustrated by his comment … that the petitioner had ascertained the company's centre of main interests in the face of a cloud of obscurity. He said that it had been discovered by a reasonably diligent creditor (the petitioner). The judge was referring there to the petitioner reaching that conclusion in the light of all of the evidence that was before the court, including evidence, for example, about the banking contracts and the various contracts that had been disclosed in the course of the proceedings. There is no reason to suppose that those matters would have been ascertainable to typical creditors of the company, and the judge did not address that question separately.”

51. Following this decision, the petitioner appealed. Its appeal (at [2022] EWCA Civ 1419) was ultimately unsuccessful. Although the Court of Appeal differed from Miles J in respect of his approach to ascertainability, it agreed (see [46]-[49]) with his approach to the presumption based on the location of the company’s office.

52. The principal judgment, agreed by Henderson and Lewison LJJ, was given by Snowden LJ. As to ascertainability (and having considered the decisions of the ECJ in Leonmobili Srl v Homag Holzbearbeitungssysteme GmbH (Case C-353/15) EU:C:2016:374 and MH v OJ (see above at paragraph 45), neither of which had been cited to Miles J.) he explained:

i) at [60]-[62], in connection with the decision of the Court of Appeal in Re Stanford International Bank [2010] EWCA Civ 137, that although “factors relating to a fraud which was deliberately concealed from third parties and which only became apparent as a result of subsequent investigation by the relevant authorities or insolvency officeholders, cannot possibly be relevant to a determination of the company's COMI”, it was “not authority for the proposition that matters that were known to or ascertainable at the relevant time by creditors should be excluded from consideration on the COMI question simply because they were not generally known or advertised to the public at large”; and,

ii) that as part of its “comprehensive assessment of all relevant factors”, the Court should not “disregard a factor that a third party actually ascertains from the course of his dealing with the company, which indicates to him where the debtor company is administering its interests, simply because other third parties who dealt with the company in the past or who might deal with it in the future, may not also know of it” [70]. The issue was not one of admissibility, but of appropriate evidential weight.

53. To illustrate the Court’s preferred approach, at [65]-[66], Snowden LJ provided an example:

“65. Suppose that in the course of its business a debtor company entered into ten separate and bespoke commercial contracts with ten separate counterparties; that each contract was negotiated and signed by the same representative of the company in the same office; and that in each contract, the company identified the same person in the same office as being responsible for dealing with the counterparty in respect of all matters arising out of the contract.

66. From their individual viewpoints, each of the counterparties would have the same perception of where the company was administering its interests relevant to the dealing with them. Taken together, the facts in relation to the ten contracts would also indicate that the company was administering its interests in relation to the ten creditors concerned from the same place, and hence might be thought to be doing so on a regular basis. Assuming that the ten contracts represented a material proportion of the company's commercial interests, it seems to me that on a straightforward reading of Article 3(1), those facts would plainly be relevant to the determination of its COMI.”

54. Finally, Snowden LJ acknowledged at [71] that this broader approach “might mean that a prospective creditor could not be certain in advance what weight will be attached to his perspective by a court: but the same problem arises in a more acute form if the creditor can have no assurance that what he actually knows will be taken into account at all in the determination of COMI unless he is ultimately found to be "typical" of others dealing with the company”. The point might to some extent be illustrated by a variation of the example stated above, in which one of the ten counterparties dealt with representatives of the company but in a different place, and without knowledge of the other nine, perhaps wrongly assuming itself to be “typical”. But on any approach, a difficulty of sorts may arise. The present case, in which the Petitioners’ evidence was that until comparatively recently, they knew nothing of Miss Minai’s alleged close connections with Ukraine, also touches on this point, but I bear in mind that what is ultimately required is a “comprehensive assessment of all relevant factors”, attaching appropriate weight to the available evidence.'

[13] The relevant amending provisions in Insolvency (Amendment) (EU Exit) Regulations 2019 (SI 2019/146) are:

(1) reg.1(3), which, save for those introduced on 30.1.19, provides for the remainder of the provisions in the regulations 'come into force on exit day';

(2) reg.2 says 'The Schedule has effect.'

(3) Schedule, Part 2 entitled 'Amendments to the Insolvency Act 1986', contains paragraph 16, which reads 'The Insolvency Act 1986 1 is amended as follows' and paragraph 31 states the relevant amendments.

[14] When the bankruptcy order was made in Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213, section 263I was as follows:

'(1) An adjudicator has jurisdiction to determine a bankruptcy application only if -

(a) the centre of the debtor's main interests is in England and Wales, or

(b) the centre of the debtor's main interests is not in a member state of the European Union which has adopted the EU Regulation, but the test in subsection (2) is met.

(2) The test is that -

(a) the debtor is domiciled in England and Wales, or

(b) at any time in the period of three years ending with the day on which the application is made to the adjudicator, the debtor -

(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii) has carried on business in England and Wales.

(3) The reference in subsection (2) to the debtor carrying on business includes—

(a) the carrying on of business by a firm or partnership of which the debtor is a member, and

(b) the carrying on of business by an agent or manager for the debtor or for such a firm or partnership.

(4) In this section, references to the centre of the debtor's main interests have the same meaning as in Article 3 of the EU Regulation'

[15] From 31.5.02 to 5.4.16, section 265 of the Insolvency Act 1986 contained a 'connecting factor' of the individual being 'personally present' in England and Wales on the date the debtor's bankruptcy petition (as the procedure then was). That 'connecting factor' was contained in subsection (1)(b)). For completeness, the full section 265 (as it was from 31.5.02 to 5.4.16) read:

'(1) A bankruptcy petition shall not be presented to the court under section 264(1)(a) or (b) unless the debtor-

(a) is domiciled in England and Wales,

(b) is personally present in England and Wales on the day on which the petition is presented, or

(c) at any time in the period of 3 years ending with that day-

(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii) has carried on business in England and Wales.

(2) The reference in subsection (1)(c) to an individual carrying on business includes-

(a) the carrying on of business by a firm or partnership of which the individual is a member, and

(b) he carrying on of business by an agent or manager for the individual or for such a firm or partnership.

(3) This section is subject to Article 3 of the EC Regulation.'

[16a] In Henwood v Barlow Clowes International Ltd (In Liquidation) [2008] EWCA Civ 577; [2008] BPIR 778, Arden LJ gave the main judgment. Moore-Bick LJ gave the second judgment, where he said, at paragraph 130:

'I am grateful to Arden LJ for her description of the circumstances giving rise to this appeal and her exposition of the law relating to the acquisition and loss of domicile with which I agree and which I gratefully adopt...'

[16b] Expanding upon Henwood general principles (ix) and (x), Arden LJ in Henwood said, at paragraph 20:

'A domicile of choice is lost when the subject both ceases to reside in the relevant country and gives up the intention permanently or indefinitely to reside there. A domicile of choice in one place may be lost by acquiring a domicile of choice in another place, but it is not necessary to show that the subject has acquired a new domicile of choice because, as Dicey states:

“On abandoning a domicile of choice, a person may acquire a new domicile of choice, or he may return to and settle in the country of his domicile of origin. He may also simply abandon his domicile of choice without acquiring a home in another country. It was at one time thought that in such a case the previous domicile was retained until a new one was acquired. But it is now settled that where a person simply abandons a domicile of choice his domicile of origin revives by operation of law. This rule has been much criticised since it may result in a person's being domiciled in a country with which his connection is stale or tenuous and which, indeed, he may never even have visited. It has been abolished in New Zealand and Australia, and replaced by a statutory rule that a domicile continues until a new domicile is acquired. The English and Scottish Law Commissions have proposed similar legislation.” (page 152)'

[17] In Revenue and Customs Commissioners v Stayton [2018] EWHC 3183 (Ch), HMRC presented a creditors bankrupt petition (30.5.14; so a section 265 of the 1986 Act case) against the respondent Mr Stayton. After finding the following connecting factors existed between Mr Stayton and England Wales: (1) his physical presence on 30.5.14 (Note: since this time, Parliament has removed this as a connecting factor)(paragraphs 5 - 11); and (2) residence (paragraphs 12 to 25), the Deputy High Court Judge moved on to consider the connecting factor domicile existed on 30.5.14. At paragraph 26, the Deputy High Court Judge said:

'In so far as Mr Stayton contended that he has adopted the US as a domicile of choice, the burden is on him to prove that he had acquired such a domicile in the US by arriving there with the intention of staying there permanently. I find that that evidence is not made out at all and that, on the contrary, there is no evidence that he intended to stay in the United States permanently, arriving with an ESTA visa and staying for periods as long as 14 days on two occasions certainly does not show an intention to stay permanently in the United States. Accordingly, he has not discharged the burden of proof in relation to that. Accordingly, section 265(1)(a) of the Act is satisfied.'

[18] In Reynolds Porter Chamberlain LLP v Khan [2017] I.L.Pr. 13 [2016] BPIR 722 ('Khan'), Registrar Baister undertook a survey of the authorties on section 265(1)(c) of the Insolvency Act 1986 (for creditors bankruptcy petitions), the equiolvent to section 263I(2)(a)(i) of the Insolvency Act 1986 (for bankruptcy applications). Referring to 2 Connecting Factors in section 265(1)(c) as the provision, he started his survey, at paragraphs 11 to 18:

'11. The provision is quite deeply rooted in English insolvency law. The Bankruptcy Act 1883 contained a similar provision, s.6(1)(d) which used the expressions “ordinarily resided” and “had a dwelling house.”

12. It was considered in Norris Ex p. Reynolds, Re (1888) 5 Morr. 111; (1888) 4 T.L.R. 452. The debtor had taken a room in a hotel which he appears to have occupied for some time. Lord Esher MR said:

“Then it was said that the debtor had a dwelling house, but I cannot myself think that a person who stays and pays ordinarily at an hotel makes the hotel his ‘dwelling house’ even though he stays there for months. Then did the debtor ‘ordinarily reside in England’? Now ‘ordinarily reside’ I think means something of the nature of residence, but I do not think that the mere general staying at an hotel is residence at all. At any rate I may say that I should doubt it, although I do not pretend to give a definite opinion. But in this case there is something more. Where a man has exclusive use of lodgings and pays for them he does reside. Here the debtor took part of the hotel; he kept it for himself; he paid for it and used it just as if it were a lodging in the hotel. So I think he did reside there and in this case it may properly be said that the debtor had ordinarily resided in England.”

13. In Hecquard, Re (1890) L.R. 24 Q.B.D. 71 the court considered a case in which the debtor also stayed at an hotel but went on to take furnished rooms in a house, staying there some three months before returning to his home in France. Lord Esher said: 

“The debtor was a tenant of Mayhew, and as such was to have the exclusive and absolute use of the five rooms. He brought his wife and his own servant with him, and lived with them in the rooms. In my opinion the rooms became his ‘dwelling house’.”

14. Nordenfelt, Re [1895] 1 Q.B. 151 decided that a property which had been abandoned could not be considered to be a dwelling house within the meaning of s.6(1)(d).

15. Bright (Charles), Re (1903) 19 T.L.R. 203 concerned an American citizen who spent time in London in 1900 to conduct litigation here. He remained in England for 242 days between May 1900 and May 1901 and stayed at hotels. On the facts it was held that he was ordinarily resident. In Brauch (A Debtor), Ex p. Brittanic Securities & Investments, Re [1978] Ch. 316; [1977] 3 W.L.R. 354; [1978] 1 All E.R. 1004 Goff LJ cites the following passage from the judgment of Sir Henn Collins MR:

“In this case there is no controversy about the domicile of the debtor. His domicile is America. The question is whether he has ordinarily resided or had a place of business in England within the year of the presentation of the petition. It was decided by this court in November 1901, on the statement of the facts then before them, that the debtor had so resided. But the matter was sent back to the registrar on the ground that there had been some material misunderstanding, the court, in allowing the rehearing, acting ex majori cautela. The learned registrar has again held that the debtor has ‘ordinarily resided’ and had a place of business in accordance with the section. In dealing with the decision of the registrar, unless we can see that he has applied some wrong principle of law, we ought not to interfere with his decision on a question of fact. The facts show that for only three months during the year in question was the debtor continuously absent from London. During the rest of the time he was in London for a definite purpose, and, though he made occasional visits to the Continent, his central place of dwelling was London. It has been argued that in point of law the debtor cannot have ‘resided,’ because his place of dwelling was one or more hotels, and that, unless it is shown that he paid for his rooms, whether he occupied them or not, he cannot be said to have resided in them. The question here is not residence at large, but residence within a particular year. The residence may be a temporary residence for a particular purpose. A long sojourn is not a sine qua non. There must, of course, be some duration - for instance, two or three days would not be sufficient. The purpose for which the debtor was here is one of the elements to be taken into consideration. If he was here for a particular purpose which could not be conveniently disposed of without his presence, and was here for a substantial time, then it becomes a question of fact whether he was ordinarily resident or not. In my opinion there is abundant evidence to support the learned registrar’s conclusion.”

16. By the time Brauch (A Debtor), Re was decided the Bankruptcy Act 1914 was in force, although s.4(1)(d) still used the terms “ordinarily resided” and “a dwelling house”; but I was taken to the authority not so much for the meaning of those terms but rather for a passage dealing with the hypothetical position of a person who might reside at a number of boarding houses in the course of his work. Goff LJ said,

“It is of course a circumstance to be considered and tells against a finding of ordinary residence, but that is all, just as the existence of a commercial reason or purpose for residence is a factor to be considered and tells in favour of such a finding, whilst its absence tells against.”

17. The meaning of the expressions “ordinarily resident” and “having a place of residence” used in the 1986 Act were considered by HH Judge Howarth in Skjevesland v Geveran Trading Co Ltd (No.4) [2002] EWHC 2898 (Ch); [2003] B.C.C. 391; [2003] B.P.I.R. 924 on appeal from a decision of Mr Registrar Jaques. [Counsel for the Petitioner] distils the following guiding principles from that judgment...

“28.1 the expression ‘ordinarily resident' should not be treated as a term of art in a legal sense but should [sic] given its ordinary natural meaning;

28.2 the question is a mixed question of fact and law, or more properly, fact and degree;

28.3 for a person to be ordinarily resident at a property, his residence there must have some degree of permanence;

28.4 where you are saying that a person has a place of residence, you are looking at a de facto situation, not necessarily matters of legal right;

28.5 a person can have more than one residence and, indeed, can have more than one usual residence;

28.6 in contrast to the position with regard to taxation, for insolvency purposes, a person can be ordinarily resident in more than one country, one of which is England;

28.7 a court has to look at the cumulative effect of all the evidence.”

I agree with the foregoing but will elaborate below. It is nonetheless instructive to consider the following passages from the judgment:

“[32] What are the relevant principles? I think one can state them fairly shortly. For a person to be ordinarily resident at a property, his residence there must have some degree of permanence. He must intend to reside there for a substantial period of time and must do so. Casual visits alone will not be sufficient to make him ordinarily resident at any of the places which he casually visits. A man can have more than one residence and indeed can have more than one usual residence.

[33] In the authorities, examples are given of people who have London residence during the week, and what they are pleased to call a country residence at the weekends, then it is said they are ordinary resident at both of them. In these days of travel by aircraft, the weekend residence would not just be in the country, it could be abroad, perfectly simply.

[34] A man who travels on business can have more than one usual residence. Examples drawn from time past as well as now would no doubt have included a long distance railway engine driver, perhaps travelling between the north of Scotland and London, who would have an ordinary residence in the north of Scotland when the train happened to be there and another one in London. There is no reason why not. Pilots of aircraft could, perhaps, have an ordinary residence in London, or any other large United Kingdom airport city and, say, New York. People carrying on business, as indeed Mr Skjevesland did, across Europe as an international securities trader, could perhaps have residences and be ordinarily resident in more than one financial centre.”

Here the judge is plainly considering habitual residence. As to having a place of residence he said:

“[50] I do not find fault with the registrar’s comment about what is to be found in the case of Re Brauch. It seems to me where you are saying that a person has a place of residence, you are a looking at a de facto situation, not necessarily matters of legal right.”

Summarising the facts and dealing with the registrar’s findings on them, he went on:

“[53] Flat 8, in this case, was normally occupied first of all by Anna, and then by John, and finally by John and Charlotte together. But the evidence seems to be clear that Mr Skjevesland would phone up on a regular basis, and he and John between them would discuss when Mr Skjevesland could come over and stay there. On those times, first of all, John would move out to Charlotte’s flat. Then after Charlotte had given up her flat, they would both move out and go somewhere else. It seems to me on those facts it was open to the registrar to conclude that Mr Skjevesland called the tune in regard to that flat. If he decided that he wanted to go there and stay there for a period of three or four days in a week or two weeks’ time, he would get his own way. It was certainly open to the registrar to conclude that. Thus it seems to me that the registrar was entitled to conclude that Flat 8 was a place of residence in this country for Mr Skjevesland, and that he had a place of residence there and in this country. That being so, that ground of appeal must fail.”

18. In Stojevic v Komercni Banka AS [2006] EWHC 3447 (Ch); [2007] B.P.I.R. 141 Mr Registrar Jaques examined the concepts of habitual residence (applicable to jurisdiction under the Regulation) and ordinary residence (applicable under s.265(1)), holding...:

“30.1 … the two concepts, habitual residence and ordinary residence are very different and must not be confused;

30.2 a man’s habitual residence is his settled, permanent home, the place where he lives with his wife and family, until, in the case of the younger members of the family, they grow up and leave home, the place to which he returns from business trips elsewhere or abroad.

30.3 a man’s ordinary residence is a place where he lives, which is not his settled, permanent home, the place where he lives, when away from home on business or on holiday with his wife and family.

30.4 depending on the nature of his work, a man may well live away from his settled, permanent home for a greater number of days in any given year than he spends there with his wife and family.”

[19] The cases referred to are:

(1) Skjevesland is Skjevesland v Geveran Trading Co Ltd (No.4) [2002] EWHC 2898 (Ch);

(2) Norris is Re Norris Ex p. Reynolds (1888) 5 Morr. 111; (1888) 4 T.L.R. 452;

(3) Bright is Re Bright (Charles) (1903) 19 TLR. 203;

(4) Stojevic is Stojevic v Komercni Banka AS [2006] EWHC 3447 (Ch); [2007] BPIR 141;

(5) Re Brauch (A Debtor), Ex p. Brittanic Securities & Investments [1978] Ch. 316; [1977] 3 WLR 354; [1978] 1 All ER 1004.

[20] Registrar Baister in Reynolds Porter Chamberlain LLP v Khan [2017] I.L.Pr. 13 [2016] BPIR 722, made a further caveat/observation, at paragraph 23:

'I leave to one side considerations that go primarily to the EC Regulation on Insolvency Proceedings, which does not apply here, though refer in passing to Stojevic even though it is primarily to do with the Regulation because it considers residence, both habitual and ordinary which are carefully distinguished: see paras [58] and [59] in particular.'

[21] The facts in Reynolds Porter Chamberlain LLP v Khan [2017] I.L.Pr. 13 [2016] BPIR 722 where that a debtor resisted a creditors bankruptcy petition, arguing there was no E&W Bankruptcy Jurisdiction, on the basis that none of the 6 Connecting Factors existed, in particular, he had not been 'ordinarily resident', nor had he had a place of residence, in England and Wales, in the relevant 3 year period. The debtor was a Pakistani senator. Register Baister, accepted that the debtor 'usually resides in Lahore given his political and professional interests in Pakistan.' (paragraph 28) (bu said 'That does not, however, preclude his being usually resident in this jurisdiction as well.' - paragraph 28). Register Baister set out the facts he found as he set out his reasoning whether these Connecting Factors existed; from paragraph 29 to 39:

'29. The [debtor's] time spent in this country evidences a degree of permanence of the kind to which I have made reference (though perhaps continuity or frequency would be better words to use). In his witness statement he says that he has been coming to this country for 40 years for business and family holidays. His children are now being educated here, his sons at school, his daughter at university. I infer that he comes here to visit them from time to time. He has also been in this country more recently because his father has been receiving medical treatment here. He concedes that he has been here:

• in 2015 for 18 days; in 2014 for 167 days; in 2013 for 100 days; and

• in 2012 more frequently but for fewer than 180 days.

Plainly in the three years ending with that date he spent more than two or three days here, and in 2013 and 2014 more than 92 days each year. I do not know in which part of 2012 he spent more or less of the period of up to 180 days here.

30. The [debtor's] family reside at 11A Grosvenor Crescent Mews, London SW1.

30. There is some evidence that he visits them there, as one might expect, but even if there were not I think I could infer that visits take place, though on what basis and of what duration I could not say. In his oral evidence the [debtor] emphasised that 11A was primarily for his children’s use. I accept that.

31. It is plain, however, that the [debtor], as well as members of his family and political contacts or friends, resided from time to time in one or more flats in a building called The Knightsbridge Apartments, 199 Knightsbridge, London SW7. ...the building or the flats within it... it or they are owned by one or more companies which may or may not be owned or controlled by the [debtor] or members of his family or others. It matters not, because it is plain ... that the [debtor] was able to and did reside in one or more of the flats when he was here. He was asked about his 50th birthday (a balloon was found in one of the flats) and said that he had celebrated the occasion at the Dorchester Hotel but returned to the flat afterwards. Asked whether during this time he had stayed at The Knightsbridge Apartments, he confirmed that he had. He was next asked whether he had a right of occupation....he said that there was no tenancy agreement or licence....[the debtor] had a key ... he could come and go freely...He went on to describe how he would pick up a key from the concierge but would then usually leave it in the flat with the door unlocked since there was almost always someone present. If anyone else was going to stay an arrangement for a key to be made available would be made with the concierge.

32. Asked about the furniture in the flat he used ...[the debtor] said that it belonged to a company, but he agreed that apart from the balloon found there he had family photographs there.

33. Post was also sent to the Knightsbridge address or addresses. The petitioner’s evidence exhibits a significant amount of documentation addressed to the [debtor] alone or together with his wife at Flat 1.05 or one of the other flats: bank statements from Metro Bank plc, congestion charge penalty notices, parking tickets, car tax notices and the like, and two letters addressed to a company called Berkeley Private Wealth Management Ltd, of which the respondent is or was a director and the registered office of which was at The Knightsbridge Apartments. There are also utility bills addressed to the [debtor] at Flat 1.03. The bank statements show payments to a health and fitness club, from which the court is plainly asked to infer some continuity of residence...

34. The [debtor] kept seven cars in England. The evidence also exhibits letters to the [debtor] at the Knightsbridge address terminating finance agreements and calling for repossession of some or all of them. Taken in conjunction with what some of the documents show, I can, I think, infer that the [debtor] drove at least some of the cars, which is another matter that points to residence for more than a day or two.

...

36. Not all the documentary evidence carries great weight, but taking it together with the other evidence canvassed in the foregoing paragraphs, the cumulative effect points very much to the [debtor] having been ordinarily resident at one or other apartment in the Knightsbridge building during the relevant period.

37. ...Very little of the material relied on by the petitioner is challenged. The [debtor] fails almost completely to deal with the majority of facts and matters which the petitioner has put forward in support of its case for jurisdiction. This is an important point to which I attach considerable weight, for what is not said is often as important as what is said.

38. There is, however, some evidence pointing in the [debtor's] favour. The petitioner itself addressed its letter of demand to the [debtor] at his Lahore address....

39. It is plain from the weight of the largely unchallenged evidence that on the balance of probabilities the [debtor] was ordinarily resident in England and Wales in the period of three years ending on the day of presentation of this petition, and I so find.'

[22] The facts in Reynolds Porter Chamberlain LLP v Khan [2017] I.L.Pr. 13 [2016] BPIR 722 are set out in the footnote above. In particular respect to 'a place of residence', Registrar Baister added, at paragraph 40:

'...it is ... plain that the [debtor] had a place of residence in England and Wales in the statutory period. ...unchallenged evidence... is that the [debtor] and his family were living in the flat from which they were evicted... It is of no significance that the [debtor] did not own the property or have a tenancy or licence agreement or anything of that kind. It is plain from his evidence that he could get a key and enter and use a flat in the building whenever he wished to. There is no evidence to suggest that he required permission to reside in or use one or more of the flats. There is no requirement of exclusivity. The short passage from Hecquard cited in para.[13] above makes this clear. Exclusive or absolute use contemplates the possibility of occupying premises as a residence with: (a) family members; and (b) others (the servant in Hecquard). That the [debtor] allowed others the use of one or more flats does not detract from that. The fact that one allows others to use one’s place of residence (perhaps even moving out to let them do so on a temporary basis) does not mean that the premises cease to be one’s residence. This is a far cry from abandoning one’s residence, as was the case in Nordenfelt.'

The reference to Nordenfelt is a reference to In Re Nordenfelt 1895 QB 151, summarised in Al Saud v Mobile Telecommunications Co KSCP [2023] EWHC 1144 (Ch) (ICC Judge Barber), at paragraph 67 (above). A property can cease to be a person's place of residence if the person has abandoned it.  

[23a] In Durkan (as liquidator of Long Compton Project Ltd) v Jones [2023] EWHC 1359 (Ch) ('Durkan'), Deputy ICC Judge Baister:

(a) went through the submission of the petitioner, as to why the petitioner contended that the debtor had had (during the relevant 3 year period) a place of residence in England and Wales;

(b) gave his judgment on the weakness of these points, whether considered individually or cumulatively;

(c) concluded, at paragraph 23, that the debtor did not have, during the relevant 3 year period, a place of residence in England and Wales.

It is illuminating to quote (a) and (b). Between paragraphs 13 to 22, Deputy ICC Judge Baister said:

'[Counsel for the petitioners] accepts, as he must, that The Grange was not available to the debtor for occupation while the [tenants] were living there, but he points out that it has been free of tenants since around January 2022, meaning that it was available to the debtor as a place of residence thereafter. He accepts, however, that he has no concrete evidence that the debtor actually resided there, but he points to matters that, he says, may enable an inference to be drawn that he either did or could have.

[Counsel for the petitioners] relies on statements in a website of Mrs Charles-Jones. The first says that she is a wife, mother of three children and an entrepreneur. The second records, "I live in London, England and Los Angeles with my husband, three children and Taffy our dog/" [counsel for the petitioners] invites the inference that husband and wife have necessarily had a place of residence in which to live as Mrs Charles-Jones says they did or do.

He also relies on communication with the petitioners' solicitors showing that Mrs Charles-Jones and her family still potentially resided in England, which includes a communication address for her in London given in a letter of 14 November 2020. This demonstrates she still resided in this jurisdiction at the time, and by inference (as she lives with her husband), so did the debtor, he contends.

He also notes a representation to the Registrar of Companies in relation to the debtor's reappointment as director of Fair Global Prime Group that his country of residence on 28 March 2022 was England.

Finally, he notes the debtor's use of The Grange (as opposed to a US address) as his address on a claim form issued recently in the County Court.

"All of the above," [counsel for the petitioners] says, "are clear evidence that the Debtor has a place of residence in this jurisdiction and has had in the three years preceding the date the Petition was presented on."

I do not agree. All the points relied on are individually weak, nor cumulatively do they come to more than the sum of their parts. I accept the debtor's long standing connection with England and his continued family roots here, but nothing in the petitioners' points is enough, in my view, to undermine the debtor's assertions in his written evidence that he left this country in 2018 and has no intention of returning (other than to visit his parents, which he concedes he has for short periods). There is no evidence of his having used The Grange as a place of residence and nothing to indicate he has had any other place in which to reside. The debtor says he does not even have the keys to The Grange. His interest in it (if any) is unclear. Brief periods spent at his parents' home or in a hotel are not enough.

As to the website, [counsel for the debtor] rightly says that I cannot attribute to the debtor statements made on the internet by his wife. I agree: the context is casual; the statements themselves have no real probative value.

I also accept [counsel for the debtor's]  contention that there is a difference between having an address and having a place of residence. For that reason I decline to attach any weight to the use by either the debtor or his wife of any address in this jurisdiction for the purpose of establishing the existence of a place of residence. I accept at face value, as I must, the debtor's explanation that the reference in the Companies House document to England being his residence was an error.

As I have noted, [counsel for the petitioners] said that he was trying to build a picture. He made a reasonable fist of doing so on the limited material which he has; but it is not a compelling picture, in my view, nothing like enough to meet the requisite burden of proof or to enable me to disbelieve the debtor's evidence on this issue. The debtor's connection with The Grange lacks the elements of permanence, continuity or control that are the hallmarks of having a place of residence.

[23b] In Re Brauch (A Debtor), Ex p. Brittanic Securities & Investments [1978] Ch. 316 [1977] 3 WLR 354 [1978] 1 All ER 1004 ('Brauch'), Goff LJ said, at 329:

'...the debtor was carrying on personally the business of promoting companies, or acquiring shell companies, to speculate in land, or alternatively that of finding suitable sites for development or investment, negotiating a price, including of course obtaining all necessary valuations, and financing the purchase. He then caused the properties to be vested in companies, which the "one company per project" scheme shows that he must have promoted or acquired for the purpose. Once the property came to the company, its future management, development and realisation was, of course, the business of the company, and any liabilities which it incurred, for example for breach of covenant as landlords or for defective work or anything of that sort, would be the company's liability, not the debtor's; but all the preliminary stages I have described were, in my judgment, his business.'

Orr LJ agreed with Goff LJ. Buckley LJ, the third member of the Court of Appeal in Brauch said the debtor in Brauch was a 'property developer' (at 335) and said, at 335-336:

'For the implementation of his projects he made use of a large number of limited liability companies, each company being apparently concerned with only one project at any one time. The fact that the contractual liabilities of the companies occurred in connection with the developments with which they were severally concerned may have been the companies' liabilities and not in any way liabilities of the debtor does not...in the least deprive those parts of the entire operations which were undertaken by the debtor himself from constituting a business carried on by him on his own behalf. It was he who found and selected the properties to be developed; it was he who had them valued...they were dealing with him on valuations as a principal and not as an agent of any company or companies. The debtor and not the companies seems to have organised the financing of the transactions. It was he who selected the company to carry out any particular project; he either promoted the companies or acquired them specifically for the purpose of carrying out those projects; he enabled and procured the companies to acquire their properties and carry out the developments, and in doing so he undertook very considerable personal liabilities in the form of guarantees and in other ways. Informally the debtor controlled these companies in the sense that the boards of directors, of many, and perhaps most, of which he was not formally a member, did whatever he told them to; and the debtor had a beneficial interest in the ultimate profits arising from these activities. The precise nature of this interest and whether he was or was not the only beneficiary does not appear clearly, but that he had such an interest is clear.

The role assumed by the debtor in these transactions was...certainly not confined to that of an investor in companies engaged in property developments...Nor was he acting in all respects merely on behalf of the companies: on the contrary I think on a true view of the evidence it would be more accurate to say that the companies were part of the machinery by which the debtor implemented his business projects. It is probable that in the course of doing so the several companies entered into contracts and incurred liabilities in respect of which the debtor could not have been made personally liable. There is no inconsistency between this and the debtor's having carried on a business which was distinct from the companies' activities, although associated with them, just as in In re Clark [1914] 3 K.B. 1095 Mrs. Clark's activities in her personal capacity and not as managing director of the hotel companies constituted a business of her own distinct from the business of those companies. I am consequently of opinion that ...the debtor in this case was carrying on a business of his own in England.'

[23c] In Jones v Aston Risk Management Ltd [2024] EWHC 2553 (Ch), HHJ Cawson KC sitting as a Judge of the High Court) consider the analogous provision of s 265(1)(b)(ii) of the Insolvency Act 1986. Under the heading 'Meaning of “carried on business” - s . 265(2)(b)(ii) IA 1986', he said, at paragraph 44:

'I was referred ... to a number of authorities concerned the meaning of “carried on business in England and Wales” for the purposes of s. 265(2)(b)(ii) IA 1986, and the circumstances in which a debtor might be considered to have so carried on business, including In re Brauch (A Debtor), ex parte Britannic Securities & Investments Ltd [1978] Ch 316 (CA), re A Debtor (No.784 of 1991) [1992] Ch 554 (Hoffmann J), Anglo Irish Bank Corporation Ltd v. Flannery (supra) (Chief Registrar Baister), Masters v. Barclays Bank plc [2013] BPIR 1058 (Norris J), Gate Gourmet Luxembourg IV Sarl v. Morby [2015] BPIR 787 (Mr Registrar Briggs), Charlton v. Funding Circle Trustee Ltd [2020] BPIR 125 (Barling J), and Durkan v. Jones [2023] BPIR 1074 (Deputy ICC Judge Baister).'

He then, at paragraph 44, set out the proposition he extracted from these authorities:

'I gather from these cases the following propositions:

i) The question is one of mixed fact and law, and the court must consider: (a) what the debtor did; (b) when he did it; and (c) whether what he did amounted to carrying on business – see Masters v. Barclays Bank plc (supra) at [16(a)], and Durkan v Jones at [24]. This may invite the question as to what the debtor is or was doing if not carrying on business – see Durkan v Jones at [36]: “There is another way of looking at the matter, which is to ask what the debtor was doing if he was not carrying on business. He was not engaged in charitable work, nor was he engaged in a pastime or hobby.”

ii) Carrying on business through a company or being a director or shareholder (even sole director or shareholder) of a company does not, in itself, amount to the carrying on of business as an individual and on one’s own account – see In re Brauch (A Debtor) (supra) at 328F-G, per Goff LJ. Likewise, simply providing a guarantee for the indebtedness of a company – see Masters v Barclays Bank plc (supra).

iii) However, it is open to the court to find that a director or shareholder, in addition to his involvement in the company, is also conducting a separate business of his own – see In re Brauch (A Debtor) (supra) at 328G-329F, per Goff LJ. In the latter case, the debtor was held to have conducted a separate business of his own involving the incorporation and use of some ninety companies to acquire land. The companies were held to form part of the machinery by which the debtor implemented his own business project. It was held that it was necessary to look at the totality of the evidence and see whether or not the right conclusion was that there was a business being carried on by the debtor independently of the business of the companies – see 330F, per Goff LJ.

iv) The number of occasions upon which a person has been involved in the promotion or establishment of businesses assists towards the conclusion that the person has an independent business of promoting companies – see Masters v Barclays Bank plc (supra) at [20].

v) A one-off transaction might be sufficient to show that the debtor was carrying on a business. An example is provided by Gate Gourmet Luxembourg IV Sarl v. Morby (supra), where the entry by the debtor into a share purchase agreement concerning the sale of his shareholding in a significant number of companies was held to be sufficient to amount to the carrying on of a business distinct from that of the companies themselves – see at [26], per Mr Registrar Briggs. Cf. Charlton v. Funding Circle Trustee Ltd (supra) where a discussion between the debtor and potential investors with regard to the sale of his shares in a company did not amount the carrying on of a separate business. The director in that case was held to have simply been exploring options for the rescue of the company.

vi) There is authority for the proposition that where a debtor has been shown to be carrying on business, then the relevant business will be considered to have continued until such time as all debts of the business had been discharged albeit that the actual conduct of the business itself might have ceased – see re A Debtor (No.784 of 1991). In this case, the debtor had sold a nursing home business carried on in her own name, and had moved to Tenerife, but leaving an unpaid tax debt. The existence of the latter debt meant that the debtor was to be regarded as continuing to carry on business and, for the purposes of s. 265(2)(b) (ii), until such time as the debt was discharged. This principle was applied in Gate Gourmet Luxembourg IV Sarl v. Morby(supra) with the result that the business (i.e. the sale of shares by the debtor in a number of companies pursuant to the share purchase agreement) was held to have continued throughout subsequent litigation involving a claim of breach of warranty, and given the existence of an outstanding tax debt – see at [27], per Mr Registrar Briggs.

vii) It does not matter that the business is only carried out on small scale. What matters is the nature and quality of what is being done, rather than its extent – see Durkan v Jones (supa) at [39], per Deputy ICC Judge Baister.'

[23d] In Portrait v Minai [2023] EWHC 1605 (Ch), ICC Judge Greenwood gave a summary of the law applicable to section 265(2)(b)(i), 'place of residence', under the heading 'Legal Principles' and subheading '[B] A Debtor’s “Place of Residence” under S.265(2)(b)(i)', at paragraphs 55 to 66:

'55. It was common ground, and I agree, that there is no single or conclusive test for what constitutes a “place of residence” for the purposes of s.265(2)(b)(i) of the 1986 Act. As was said by Roth J in HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud v Mobile Telecommunications Company KSCP at [37] - a case concerning service of a bankruptcy petition out of the jurisdiction - the “expression should be given its ordinary meaning and the assessment depends on all the facts”; a “broad range of factual considerations … may be relevant”.

56. As to what is or may be relevant, the authorities contain guidance. As a result, the meaning of the expression has been refined.

57. First, in Reynolds Porter Chamberlain LLP v Khan [2016] BPIR 722, Chief Registrar Baister (as he then was) considered the meaning of the words, “ordinarily resident” and “place of residence”, both in the context of s.265(2)(b)(i). Although the two expressions, and the tests they embody, are distinct (it is perfectly possible to be ordinarily resident in England but without having a place of residence, and vice versa) the judge noted that there was some overlap between the factors relevant to each. As to “place of residence”, he summarised some of the principles which he derived from earlier authorities, as follows (in a passage subsequently cited with approval in numerous cases including HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud at [34]):

“(1) Having a place of residence is a de facto situation rather than a matter of legal right (Skjevesland para 50 and the passage from Brauch there cited). So a licensee may have a place of residence (Brauch 334).

(2) A moral claim to premises may be sufficient (Skjevesland para 52).

(3) The person concerned may well have to phone to make arrangements to occupy because others use the premises as well as him but this is no obstacle to a finding of having a place of residence (Skjevesland para 53).

(4) It is possible to have a dwelling house without being in occupation in the relevant period (Brauch, 335) but the greater the occupation the more likely the finding; but not perhaps if the relevant property has been abandoned (Nordenfelt and Brauch, 335).

(5) Living in a place with one's family as a tenant in rooms makes those rooms a dwelling house (Hecquard 74).”

58. The proposition at (4), and the reference to “abandonment”, was supported by the decision of the Court of Appeal in Re Nordenfelt [1895] 1 QB 151, which was decided under the Bankruptcy Act 1883, s.6. According to that provision, a creditor was not entitled to present a petition against a debtor unless, amongst other things, “the debtor, within a year before the date of the presentation of the petition, has ordinarily resided or has a dwelling-house or place of business in England”. In HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud, Roth J. accepted that there is no “substantive distinction between” the two expressions “dwelling-house” and “place of residence”, and that “the change was probably made simply in order to use a more modern term”.

59. In Nordenfelt, the debtor had, without question, resided in a house which belonged to him, at Beckenham in Kent. However, in May 1891, he had left the house and gone with his wife and servants to live in Paris. The house and furniture were left in the charge of a caretaker, and an agent was instructed to let the house, whether furnished or unfurnished. The house having not been let, the furniture was offered for sale at auction, and a large part of it was sold and taken away. The unsold remainder was left in the house, but was packed up ready for removal. In December 1892 the lease of the house was sold. The petition was presented on 9 November 1893.

60. Although, had he chosen to do so, the debtor could have occupied the property at any time before its sale, including within the year before presentation of the petition, and notwithstanding that in the proceedings themselves, in his affidavit evidence, he had described himself as being of “Downs House, Beckenham”, a place which had previously been his dwelling-house, the Court of Appeal refused the petitioners’ appeal against the dismissal of their petition.

61. Lord Esher, MR said, at [1895] 1 QB 151, 153:

“I will not attempt to give an exhaustive definition, or indeed any definition, of the term “dwelling-house” as used in this section. I only intend to say what I think is not a “dwelling-house.” If a man has a house belonging to him, but he has abandoned it as his dwelling-house, that house is not his “dwelling-house” within the meaning of this section.”

Rigby LJ said, at [1895] 1 QB 151, 154:

“The debtor had, no doubt, had a dwelling-house at Beckenham, and he might very easily after he went away to Paris have adopted the house again as his dwelling-house. But when it appears, as it does, that he offered all his furniture in the house for sale, and had that which was not sold packed up in such a way that it could not, without some trouble and expenditure, be placed in a position to be used, I am satisfied that he had abandoned the house as his dwelling-house before the commencement of the critical year. I am satisfied also that he did nothing during the year to adopt it again as his dwelling-house.”

62. This illustrates that in a given case, in order to determine the nature of the debtor’s connection with the property said to be his or her place of residence, the court may have to consider, as a relevant factor, the debtor’s state of mind, or intentions, with regard to the property’s use. In Nordenfelt, an intention to “abandon” or relinquish the house as a dwelling (in that case at least to some extent acted upon by the debtor) was enough to change its character for these purposes, even though his intention was not irreversible.

63. In Lakatamia Shipping Company Ltd v Su [2021] EWHC 1866, Bacon J considered and allowed an appeal against a refusal to annul a bankruptcy order made by an adjudicator under s.263K of the 1986 Act. The case raised the question whether or not the debtor had had a “place of residence” in England under s.263I, which is the same test as under s.265(2)(b)(i). The (“somewhat involved”) facts were summarised by Roth J in HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud, at [38]:

“The application was made on 4 July 2020, so the three year period commenced in July 2017. Mr Su was not in the jurisdiction at all in the first 18 months of that period. The debt arose under two English court judgments of 2014- 2015, and in January 2018 the court ordered that the debtor surrender his passports and remain in the jurisdiction until he had given disclosure of his assets. The debtor came here only in January 2019, flying in from Taipei and intending to stay overnight in a hotel before flying on to Germany. However, he was detained pursuant to the 2018 order and his passports were confiscated. He nonetheless attempted to leave a few days later when he was arrested and served with a committal application. He spent the next month staying at various hotels and then for a month stayed in a serviced apartment that he rented until he was sentenced to prison for 21 months for contempt. He was released after serving half his sentence in April 2020 but was unable to leave the jurisdiction because a further court order had been made in January 2020 prohibiting him from leaving and continuing the surrender of his passports until he had given evidence regarding his assets. He therefore stayed, first, with a friend for a few weeks, and then from late April 2020 in a small flat in Maida Vale which had been leased by someone he met in prison. It was common ground that he had no right to remain in the UK nor to rent a property or work in the UK. He wished to leave the country and in December 2020 applied unsuccessfully to vary or discharge the January 2020 order.”

64. The “very short point” decided by Bacon J was that an “entitlement of some sort to occupy a place that is capable of being described as someone’s place of residence” does not satisfy the test in s.263I: [24]. Amongst other things, the judge said, at [25], that on the plain meaning of the words in the statute, “the residence must be that of the debtor not someone else”. Having reached that conclusion, sufficient to refuse the appeal, the judge set out “some brief comments” on what she considered to be the correct approach to the test, “without in any way suggesting” that they comprised an exhaustive exposition. She made three points:

i) that the phrase should be given its natural meaning, and that it was relevant to have regard to authorities concerning the concept of residence even if arising in a different statutory context; as a result, she concluded that it is “relevant to ask” whether the place in question was, for the debtor, “a settled or usual place of abode or home” [36];

ii) that residence “connotes some degree of permanence, some degree of continuity or some expectation of continuity” [37]; and,

iii) that a debtor is present in England involuntarily, and is restrained from leaving - even if by court order - does not preclude that person having a place of residence under s.263I, although it is a relevant factor: the court must consider the “nature of someone's presence in and connection to a particular place”.

65. Applying those principles to the facts, the judge held that Mr Su’s presence at each of the properties occupied since his arrival in England in January 2019, “was temporary and transient with no degree of permanence or expectation of continuity. The longest period of time appears to have been spent at the Maida Vale flat, which Mr Su's own evidence describes as a "squalid little flat" that his prison cellmate allowed him to use. Mr Su says that he has very few possessions at the flat and feels like he is still living in a prison.”

66. In HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud, Roth J, having considered these comments, agreed that the factors identified are relevant, although none are “essential requirements”. He noted for example that it is well established that a debtor may have a “place of residence” in the jurisdiction, although his “home” is elsewhere [41]. With respect, that is the approach that I shall adopt.'

[24] See In re Clark, Ex parte Pope & Owles [1914] 3 KB 1095, wherein Pickford LJ merely described the business the debtor carried on (pp. 1110-1111) - quoted by Goff LJ in Re Brauch (A Debtor), Ex p. Brittanic Securities & Investments [1978] Ch. 316 [1977] 3 WLR 354 [1978] 1 All ER 1004 ('Brauch'), at 329. Orr LJ agreed with Goff LJ. Buckley LJ, the third member of the Court of Appeal in Brauch felt more confident, referring to the debtor in Brauch as a 'property developer' (at 335).

[25] In Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213, Deputy ICC Judge Agnello KC said, at paragraph 12:

'Section 282(1)(a) of the Insolvency Act 1986 states that an annulment may be granted by the Court if, 'on any grounds existing at the time the bankruptcy order was made, it ought not to have been made'. JSC Bank of Moscow v Kekhman [2015] EWHC 396 (Ch) sets out the 3 step exercise being as follows:

(1) What grounds existed for making the order when it was made;

(2) Whether on those grounds the order ought not to have been made, and

(3) If it determines that the order ought not to have been made, whether to exercise its discretion to annul.'

[26a] The longer passage where this sentence is found, in Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213 ('Kooter No.1'), reads:

'I will approach this case on the basis that the usual rules as to the burden of proof applies and that it is for the Applicant to establish that the order ought not to have been made and this includes establishing that the [bankrupt's] COMI was not in England and Wales at the time that the bankruptcy order was made.' (paragraph 15)

Note counsel for the annulment applicant in Kooter argued that the law prescribes that the burden of proof (on stage (1) and (2)) is reversed in certain circumstances, based on his reading of Paulin v Paulin [2009] EWCA Civ 221 (Civ). The argument, as recorded by Deputy ICC Judge Agnello KC in paragraph 15 of Kooter:

'[counsel for the annulment applicant] submitted ...that in annulment cases, the standard burden of proof reverses and the respondent/debtor needs to discharge the burden of proof where two conditions are met, being (1) the debtor had not been insolvent on the balance sheet test at the material time and (2) the debtor had been dishonest in obtaining the bankruptcy order.'

However, Deputy ICC Judge Agnello KC in Kooter No.1, paragraph 15 found, that:

(1) 'Having considered the case relied upon, I am not convinced that this is an accurate summary of the case itself.'; but, the issue did not arise anyway in the case, because

(2) the annulment applicant had the burden of proving that the 'debtor had not been insolvent on the balance sheet test at the material time' and he failed at showing that on the evidence;

[26b] It was argued (unsuccessfully) in Khan v Singh-Sall [2023] EWCA Civ 1119; CA ('Singh-Sall') the 'full' or 'two way' discretion was actually curtailed/circumscribed in this way - that: 'where a bankruptcy order ought not to have been made and was an abuse of the process of the Court, the Court should only decline to annul it in exceptional circumstances.' (paragraph 59).

After:

(1) noting that there was nothing in s.282(1) of the 1986 Act which provides for this (paragraph 60);

(2) considering: (b) Guinan III v Caldwell Associates Ltd [2004] EWHC 3348 (Ch) ('Guinan III'); and (b) Mowbray v Sanders [2015] EWHC 296 (Ch), between paragraphs 61 and 65,

Nugee LJ held that there was no such principle to the exercise of the two way discretion, where the bankruptcy order ought not to have been made, because the petition debt had been in good faith disputed on substantial grounds. It was not the case that in such circumstances, the discretion must be exercised to annul the bankruptcy order, unless there are 'exceptional circumstances'. Rather, Nugee LJ in Singh-Sall formulated that law as follows, as paragraph 66:

'...the Court has a discretion to be exercised having regard to all the circumstances; but where the Court has concluded that the bankruptcy order ought not to have been made, there must usually be something of some weight to put in the scales on the other side before that fact is outweighed and an annulment refused. I do not think it is right to say that that has to be exceptional; but it does have to be something sufficient to lead to the conclusion that annulment should be refused.'

Nugee LJ had earlier, at paragraph 63, taken Neuberger J in Guinan III to be saying a very similar thing, when Nugee LJ interpreted Neuberger J in Guinan III as saying:

'I read it as saying that there must be something to set in the scales against annulment, whether that be other creditors with undoubted debts, or other evidence of insolvency, or that the debt was not challenged, or something else; and that in the absence of anything of that nature, one would normally expect the bankruptcy order to be annulled, and the circumstances would have to be unusual not to do so. Read in this way, I do not find it a surprising proposition.

Factors which will go into determining this discretion, were (non-exhaustively) noted to be:

(1) debtor/bankruptcy's solvency.

Nugee LJ in Singh-Sall said, at paragraph 67:

'In practice the most significant consideration is likely to be the question of the applicant's solvency. If there are debts which can be pursued against the debtor and which he cannot meet, then there is usually little benefit to anyone in granting an annulment. This is, as [counsel for the bank/petitioner] said, a consistent theme which runs through the cases: see re Davenport [1963] 1 WLR 817 at 819f per Lord Denning MR, Artman v Artman [1996] BPIR 511 ("Artman") at 517 per Robert Walker J, Owo-Samson at [35] per Carnwath LJ, Guinan at [49] per Neuberger J, JSC Bank of Moscow v Kekhman [2015] EWHC 396 (Ch), [2015] 1 WLR 3737 at [74] per Morgan J, and Mowbray at [82] per Hildyard J.'

(2) bankrupt's conduct in relation to the bankruptcy - particularly, his/her conduct/extent of co-operation with the trustee in bankruptcy. On this factor, Nugee LJ:

(a) rejected that notion that the bankrupt's conduct will be important in every case (paragraph 71); and

(b) lay down a note of caution:

'the question whether a bankrupt has cooperated with a trustee, or has been obstructive or worse, is often a highly contentious one involving a protracted factual inquiry. It seems to me that the Court should be careful not to allow annulment applications to be unduly taken up with or diverted by issues of conduct that may involve extensive oral evidence, especially where such allegations are really being ventilated as a prelude to arguing over who should pay for the trustee's costs and expenses.' (paragraph 71)

[26c] In Khan v Singh-Sall [2023] EWCA Civ 1119; CA ('Singh-Sall') Nugee LJ said, at paragraph 49:

'...there is a conceptual difference between a case such as re Meyden where (under s. 265 IA 1986 ) there was no jurisdiction to make Mr Meyden bankrupt at all, and a case such as the present where the Court under s. 271 IA 1986 ought not to have made Mr Khan bankrupt, but could have done so had the petition, or the evidence, been in different form.'

The petitioning creditor/bank in Singh-Sall had failed, when petitioning, to comply with s.269(1)(a) or (b) of the Insolvency Act 1986 (entitled 'Creditors with security') in that it was a secured creditor, but had failed to either make a statement it would give up its security; or estimate the value of its security and say its petitioning on the unsecured part of the debt. As to this, later, Nugee LJ said, at paragraphs 54 and 55:

'...since the Bank had not taken advantage of s. 269(1)(a) or (b), the requirement in s. 267(2)(b) that the debt be unsecured applied. Since that was not complied with, it followed that the bankruptcy order should not have been made. To that extent there was indeed a defect in the proceedings.

...this defect was not in my judgement such as to deprive the Court of jurisdiction. It was a failing by the Bank, but the Bank could have petitioned had it complied with s.269, and the Court could have made [the debtor] bankrupt on its petition. In terms of the analysis I have adopted above it was a case where the Bank's failure to comply with the statutory requirements meant that the Court ought not to have exercised the power it had to make [the debtor] bankrupt, not a case where the Court lacked power to make a bankruptcy order against [the debtor] at all'

[27] In Kooter v Official Receiver (also known as Re Radeva (In Bankruptcy)) [2022] EWHC 2683 (Ch); [2023] BPIR 213 ('Kooter No.1'), under the heading 'Legal Principles', Deputy ICC Judge Agnello KC said, at paragraphs 13 -14:

'...the position in cases which raise a jurisdiction objection, such as the one before me, the discretion element of the above test is somewhat modified. [Counsel for the Annulment Applicant] relies upon the case of Meyden [2016] EWHC 414 (Ch) where Mr Justice Nugee stated (paragraph 17)

'I proceed on the basis that the authorities before me do establish that the general position is that, once it becomes apparent to the Court that an order has been made without jurisdiction, a party or any person who might be affected by such an order is entitled as of right to have it set aside'

These principles are well established in the case law which [Counsel for the Annulment Applicant] relied upon and Meyden is merely one of the more recent cases which sets out effectively the entitlement of a party affected in a lack of jurisdiction case to have the order set aside as of right. As I stated in the introduction of this judgment, I approach the current case under these principles and will turn to the issue of COMI shortly.' [bold added]

Later, in Kooter No.1, at paragraph 38, Deputy ICC Judge Agnello KC said:

'I am satisfied that at the time that [the bankrupt] sought to apply for a bankruptcy order, the Court had no jurisdiction to make such an order by reason of her COMI being in Bulgaria.'

In Kooter v The Official Receiver (No.2) (also known as Re Radeva (In Bankruptcy) (No.2)) [2023] EWHC 594 (Ch)('Kooter No.2'), handed down on 22.3.23, Deputy ICCJ Agnello QC gave judgment on some consequential matters arising from her earlier judgment. In her introduction in Kooter No.2, she said, at paragraph 1:

'A jurisdictional challenge, if successful, results in the bankruptcy order (and its petition or application) being annulled/set aside as of right (see paragraph 3 of the 24 October 2022 annulment judgment and the authorities cited therein).'

And later, at paragraph 7:

'There is effectively in jurisdiction cases, no real discretion to be exercised by the Court which will, if satisfied on the issue, annul the bankruptcy order and dismiss the petition/application'

And at paragraph 30:

'The annulment application made in this case was a jurisdictional challenge. This means that once the Court was satisfied that the debtor's COMI was not in England and Wales, the annulment of the bankruptcy order would be granted as of right.'

[28] To get a full picture, it is helpful to quote the relevant passages in full from Dusoruth v Orca Finance UK Ltd (In Liquidation) [2023] EWHC 1050 (Ch)('Dusoruth 1050'). Miles J said, from paragraph 25 to 31:

'...I remain of the view that Owo-Samson is binding authority for the proposition that the court has a discretion whether to annul an order which did not comply with the requirements of section 267(2)(b).

The Court of Appeal in Owo-Samson decided that the petition had not satisfied one of the statutory conditions. At [31] of the judgment Carnwath LJ indeed said that under section 267(2)(b), a pre-existing security which exceeds the debt is an "absolute bar" to the presentation of the petition. But at [35] he said that the court retains a discretion not to annul. In other words, though the petition did not overcome an absolute bar to its presentation, this did not deprive the court of a full (two-way) discretion whether to annul the bankruptcy order. As he explained, bankruptcy proceedings are a class remedy and when considering annulment the court may need to consider the other creditors of the debtor.

I do not see how one can rationally parcel out one of the statutory conditions found in section 267(2)(b) - that the debt must be unsecured - from the other condition - that it must be for a liquidated sum. The two conditions are contained in the very same subsection. They are two requirements which must both be met. I do not think that one can be seen as more of a "threshold" requirement than the other: they are both preconditions for the presentation of a valid petition. I do not think that there is any force in the suggestion of counsel that debtors may not always raise questions about security on the hearing of petitions. The present issue is a hard-edged one of principle about the court's jurisdiction and it cannot turn on (anyway unevidenced) predictions about the probabilities of debtors raising one of the issues (security) rather than the other (liquidated debt or not).

In short, to my mind Owo-Samson establishes, that whatever may be said at the time of the hearing of the bankruptcy petition concerning the court's jurisdiction to make an order on a petition which does not comply with 267(2)(b) of the 1986 Act, if a bankruptcy order is actually made on such a petition, when it comes to a subsequent application to annul, the court retains a full discretion to decide whether or not to do so. The court may for instance refuse to do so because of the position of other creditors. Section 282 gives the court a full discretion not to annul the order even where the necessary preconditions for presentation of a petition have been held not to have existed at the time the order was made. And for the reasons already given I do not think that the [debtor/bankrupt] has advanced a realistically arguable case for distinguishing Owo-Samson .

[Counsel for the debtor/bankrupt] did not suggest (and could not) that the non-citation of Hope meant that Owo-Samson was per incuriam. As for the decision in Meyden, Nugee J did not consider a case where the preconditions in section 267(2)(b) of the 1986 Act were not met as that point was not before him. I accept that there is some force in the argument of [Counsel for the debtor/bankrupt] that Nugee J drew his conclusion from domestic cases concerning orders made without power or in excess of power. But he did not have the benefit of citation (it appears) of a potentially relevant decision of the Court of Appeal which was binding on him and which (at the very least) qualifies those principles at least in the case where the petition did not comply with the statutory pre-conditions of section 267(2)(b) .

It also seems to me that there may well be important differences between that kind of case and a case where the court lacks territorial jurisdiction even to open bankruptcy proceedings because the debtor's COMI is elsewhere. But that is not this case.

At any rate I conclude that there is binding Court of Appeal authority which covers this case. The judge was right to hold that he had a real (two-way) discretion whether to annul the bankruptcy order. There is no appeal from the exercise of the discretion against the [the debtor/bankrupt].'

[29a] Miles J in Dusoruth v Orca Finance UK Ltd (In Liquidation) [2023] EWHC 1050 (Ch) ('Dusoruth 1050') said of Raiffeisenlandesbank Oberosterrich AG v Meyden [2016] EWHC 414 (Ch), at paragraph 29 of Dusoruth 1050:

'As for the decision in Meyden, Nugee J did not consider a case where the preconditions in section 267(2)(b) of the 1986 Act were not met as that point was not before him. I accept that there is some force in the argument of [counsel for the debtor/bankrupt] that Nugee J drew his conclusion from domestic cases concerning orders made without power or in excess of power. But he did not have the benefit of citation (it appears) of a potentially relevant decision of the Court of Appeal which was binding on him and which (at the very least) qualifies those principles at least in the case where the petition did not comply with the statutory pre-conditions of section 267(2)(b).'

[29b] In Sparkasse Hilden Ratingen Velbert v Horst Konrad Benk [2012] EWHC 2432 (Ch); [2012] BPIR 1258, HHJ Purle QC sitting as a High Court Judge, heard an application under s.282(1)(a) of the Insolvency Act 1986 ('1986 Act')(i.e. that'...the order ought not to have been made...') for an order, annulling a bankruptcy order made against a debtor/bankrupt Mr Benk. The applicant on the annulment application was a creditor of Mr Benk, a certain Bank (the 'Bank') and so the case was, in effect, a s.265 of the 1986 Act case (though the law then applicable was Council Regulation (EC) No 1346/2000 of 29th May 2000 on Insolvency Proceedings (2000) OJ L 160/1 - paragraph 3*) rather than a s.263I of the 1986 Act case, but that, in the author's view, makes no different to its relevance here.

In its annulment application, the Bank alleged that the bankruptcy order impugned, ought not to have been made, on the ground that the Court had had no (territorial) jurisdiction to make the bankruptcy order (paragraphs 1 and 2).

As to the second stage of the annulment appliction, the discretionary stage, the High Court Judge said, at paragraph 12:

'The power to annul is discretionary. Once it appears, however, that an order has been made without jurisdiction, the presumption must, in a case such as the present, be in favour of annulment.' [bold added]

*Note:

(1) Council Regulation (EC) No 1346/2000 ('Insolvency Regulation 2000') applied to insolvencies beginning before 26.6.17;

(2) Insolvency Regulation 2000 were replaced and superseded by Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) (Recast Insolvency Regulation) for insolvencies beginning on or after 26.6.17.

[30] In Deutsche Apotheker-Und Arzebank EG v Leitzbach [2018] EWHC 1544 (Ch); [2018] BPIR 1299, HHJ Hodge QC sitting as a High Court Judge was referred and heard argument about the power to annul under Section 282(1)(a) of the 1986 Act (paragraphs 28 to 44). He recorded expressly hearing argument about:

(1) Owo-Samson v Barclays Bank Plc & Boyden (No.1) [2003] EWCA Civ 714; [2003] BPIR 1373 (paragraph 28)

(2) JSC Bank of Moscow v Kekhman [2015] EWHC 396 (Ch); [2015] 1 WLR 3737 (Morgan J) at paragraphs 71 to 76 (paragraph 28;

(3) Raiffeisenlandesbank Oberosterreich AG v Meyden [2016] EWHC 414 (Ch) reported at [2016] BPIR 697 (paragraph 34)

HHJ Hodge QC in Leitzbach then said, at paragraphs 45 and 47:

'In my judgement, I should follow the approach of Nugee J in the Meyden case and should hold that if a bankruptcy order is made without jurisdiction, then it should be set aside, without consideration of discretionary matters.

...

If, however, I am wrong in that, and there does remain a residual discretion, the fact that the order was made without jurisdiction is a very powerful factor to weigh in the balance in deciding whether the original bankruptcy order should be set aside, consistently with the pre-Meyden authorities. If the matter is one of discretion, the court will almost invariably exercise the discretion to annul where a bankruptcy order has been made without jurisdiction, particularly if the debtor has in any way contributed to the making of a bankruptcy order without the necessary jurisdiction in the court to do so.' [bold added]

In reaching this decision, he dismissed an argument that to hold this way, would be to permit stale annulment applications to be made, many years after the bankruptcy order is made (the 'limitation problem'). HHJ Hodge QC in Leitzbach said, at paragraph 46:

'In my judgement, the answer to the limitation problem is that supplied by Nugee J at paragraph 39 of his judgment: whether under the general law established in Munks v Munks, or under Section 282(1)(a) of the 1986 Act, before a person can apply to annul a bankruptcy order, he must show a sufficient interest to have it set aside, in the sense that he is a person who may be affected by the order. That question is, in my judgement, to be determined not by reference to the facts as they existed at the time the bankruptcy order was originally made, but by reference to the facts as they exist at the time of the application to set it aside. The question is whether, at the date of the application to annul, the applicant can be said to be a person affected by the bankruptcy order so as to have the necessary standing to apply to have it annulled. Thus, for example, a person who was a creditor at the time the bankruptcy order was made, but whose debt has since become statute-barred, would, in my judgement, not have the necessary standing to apply for an annulment of the bankruptcy order. In my judgement, that is a sufficient answer to the concern that a bankruptcy order could be annulled very many years after it had been made.'

Those interested in the argument (including points made, but not accepted, about why Meyden was said to be wrongly decided - paragraph 35), at  paragraphs 29 to 44:

'29. [Counsel for the debtor/bankrupt] submits that, even if the court finds that a bankruptcy order ought not to have been made, it nevertheless retains a discretion not to annul that order. This is said to be for the good reason that the bankruptcy procedure is a collective insolvency process; it should not be used as a forum for litigating bilateral disputes. Delayed prejudice to creditors and to the bankrupt, and the pointlessness of an annulment, are said to be just some of the many potential factors which the court is obliged to take into account.

30. Although a decision to refuse permission to appeal in which permission to cite the decision as an authority would not appear to have been given, [counsel for the debtor/bankrupt] relies upon observations of Kitchin LJ in the case of Taylor v The MacDonald Partnership [2015] EWCA Civ 921 at paragraph 22 to the effect that the discretion to annul must be exercised so as to achieve a just and proportionate result. That decision, refusing permission to appeal from a decision of my own, was not, it should be noted, a decision where there had been no jurisdiction to make the original bankruptcy order.

31. [Counsel for the debtor/bankrupt] submits that there is an established line of authority which expressly recognises the court's discretion under Section 282(1)(a), even in cases where the court finds that the location of the debtor's COMI was such that the court should not have had jurisdiction to make the original bankruptcy order. A finding that there was no jurisdiction to make the bankruptcy order will militate heavily in favour of annulment; but [counsel for the debtor/bankrupt] submits that the court retains a discretion in principle not to annul, as appears from the decision of Chief Registrar Baister in the case of Re Eichler (No. 2) [2011] BPIR 1293 at paragraphs 168 to 171. It is worthy of note that in that case (at paragraph 168), the Chief Registrar observed that the court ought to be slow to assist a bankrupt who has obtained his bankruptcy order on the basis of a manifestly, and substantially, false statement of affairs. At paragraph 170, the Chief Registrar observed that the jurisdictional point ought, in any event, to outweigh the exercise of the discretion, save in exceptional circumstances.

32. The Sparkasse v Benk case is said to have identified a presumption that the discretion should be exercised in favour of annulment in situations where there is found to have been no jurisdiction. However, the court is said to have declined to decide the point in the later case of Die Sparkasse Bremen AG v Armutcu [2012] EWHC 4026 (Ch), reported at [2013] BPIR 210 . At paragraphs 7 and 8, Proudman J did not consider it necessary in that case to decide the issue whether a discretion applied at all where the question was one of jurisdiction in the light of the COMI requirement, merely flagging up the point for future decision. [Counsel for the debtor/bankrupt] also acknowledges that in Commerzbank v Brehm (previously cited) Chief Registrar Baister held that, whilst the discretion remained, the Court would almost invariably exercise the discretion to annul where a bankruptcy order was made without jurisdiction: see paragraph 17.

33. In Finanzamt Braunschweig-Wilhelmstrasse v Riemann [2015] BPIR 1405, Mr Registrar Briggs determined that the debtor's COMI was in this jurisdiction; but he nevertheless went on to observe (obiter at paragraph 28) that, even if he were wrong on that, he would exercise his discretion against annulling the bankruptcy for a number of reasons which he proceeded to identify.

34. [Counsel for the debtor/bankrupt] acknowledges that there is one decision going the other way, that of Nugee J in the case of Raiffeisenlandesbank Oberosterreich AG v Meyden [2016] EWHC 414 (Ch) reported at [2016] BPIR 697 . There, Nugee J held that, where it was determined on the evidence that the debtor's COMI was not in this jurisdiction, the court was compelled to annul the bankruptcy, and the discretion under Section 282 was rendered inoperative, because the court would not have had jurisdiction to make a bankruptcy order in the first place. This decision is said to be in direct conflict with the line of cases previously cited, and in particular with Morgan J's decision in the JSC Bank case where, in confirming the discretionary nature of Section 282, Morgan J had expressly taken into account (at paragraph 71) a situation where the court later found that there was no jurisdiction to make the bankruptcy order.

35. [Counsel for the debtor/bankrupt] submits that Meyden was wrongly decided on this point and that this court, to the extent that it has to decide the matter, should follow the dicta in the previous line of authority. [Counsel for the debtor/bankrupt] submits, first, that unlike the opposing line of authority, Nugee J did not have the benefit of adversarial argument on the point, the debtor being a litigant in person. (By coincidence, [counsel for the creditor/annulment applicant] appeared for the creditor and applicant in the Meyden case.) Secondly, Nugee J is said to have given insufficient credence to the point that the statutory test expressly provides for the discretion, even in circumstances where the order ought not to have been made. Thirdly, [counsel for the debtor/bankrupt] submits that the conflation of the principles for setting aside an order and the annulment of a bankruptcy order is misconceived. The difference is said not just to be one of nomenclature; the entire purpose of the bankruptcy regime is to provide a formal process for a debtor to draw a line under his debts and to move on with his affairs. The annulment is necessarily discretionary because it is open for an applicant to come to court many years after the discharge of the bankrupt and effectively expunge that entire process, which may have involved the appointment of a trustee, assessment of proof of debts, the allocation and distribution of assets, and interviews with the debtor. [Counsel for the debtor/bankrupt] submits that both the discharged bankrupt and his creditors should have been entitled to arrange their affairs on the basis of the bankruptcy, and it may be both undesirable and practically impossible to expect them to reverse those affairs. Fourthly, and finally, it is said that the court should have given more credence to the notion that bankruptcy is a collective insolvency procedure and that the court must quite rightly act as a gatekeeper in deciding whether to admit one party to a process that is intended to be in the interests of all creditors, as well as the debtor.

36. Nugee J himself is said to have acknowledged in Meyden (at paragraph 39) that it was a matter of concern that there was no limitation period for an application for annulment and that, in principle, such an application on the grounds of lack of jurisdiction could be made at any time, however remote from the making of the original bankruptcy order. The ability of the parties to apply years after the event, in circumstances where the court would have no jurisdiction to refuse an annulment if the case turned on jurisdiction, is said to militate against the approach adopted by Nugee J. Nugee J had rationalised the position by holding that, in situations of lengthy delay, the applicant would be unlikely to be a person affected by the order, and so would not be entitled to apply to set aside the bankruptcy. [Counsel for the debtor/bankrupt] submits that that analysis does not address the concern at all because there is said to be no such requirement that applies in the case of a Section 282 application since such an application is not one to set aside a court order under the court's inherent powers; and, in any event, [counsel for the debtor/bankrupt] says that a creditor, by definition, will satisfy the test because it would have been a party affected by the bankruptcy order at the time it was made. If any other timeframe were to be selected, it is said not to be clear why an applicant who had applied after discharge without culpable delay should be deprived of an annulment that might otherwise have been given.

37. For all of these reasons, [counsel for the debtor/bankrupt] submits that the only sensible rationalisation is for a court to weigh up all the competing considerations in determining which way to exercise its discretion under Section 282. That approach is said to derive support from the decision of the Privy Council in PricewaterhouseCoopers v Saad Investments Company [2014] UKPC 35, reported at [2014] 1 WLR 4482. That case, which was not cited in Meyden, held that in circumstances where there had been no jurisdiction to make a winding up order, the court nevertheless retained its discretionary power to order a general stay under Section 184 of the applicable Bermudan Companies Act 1981. The court identified circumstances that might cause a stay not to be granted, notwithstanding an absence of jurisdiction, at paragraph 44:

'In many cases, it may be that a court could be persuaded that it was too late for a winding up to be stayed even if it was plainly granted without jurisdiction. The liquidation will very often have proceeded far too far for matters to be satisfactorily capable of being restored or otherwise reorganised, as would be required if there was to be a stay, or third party rights may have been created or varied in such a way as would render it unjust to stay the winding up (or more unjust to stay than not to stay)'.

38. For the applicant, [counsel for the creditor/annulment applicant] submits that when a debtor's COMI is not in England and Wales, the court had no jurisdiction to make a bankruptcy order in the first place. As Nugee J said in the Meyden case (at paragraph 13):

'It follows, as night follows day, that the effect of Article 3 of the Insolvency Regulation, and section 265(3) of the Insolvency Act is that the English court did not have jurisdiction to open insolvency proceedings, and therefore the bankruptcy order was made without jurisdiction'.

39. Nugee J considered the general law regarding orders made without jurisdiction, including the decision of the Court of Appeal in a family case, Munks v Munks [1985] FLR 576. As a result, at paragraph 17 he proceeded:

'… on the basis that the authorities put before me do establish that the general position is that, once it becomes apparent to the court that an order has been made without jurisdiction, a party or any person who might be affected by such an order is entitled as of right to have it set aside'.

40. The Judge went on to consider whether the use of the word 'may' in Section 282(1) ousted the general law and (at paragraph 37), after a full consideration of the authorities, he concluded that it did not. He confessed to having been persuaded by [counsel for the creditor/annulment applicant] that, although in other circumstances, Section 282 conferred a true discretion, in a case in which the bankruptcy order was made without any jurisdiction at all, the logic of Munks v Munks dictated that the court had no choice but to set the order aside.

41. [Counsel for the creditor/annulment applicant] therefore submits before me, as she did before Nugee J, that if the court is satisfied that the respondent debtor's COMI was not in England and Wales when the bankruptcy order was made, that order must be annulled.

42. In her oral submissions, [counsel for the creditor/annulment applicant] pointed out that Nugee J's decision in Meyden was the only decision in the bankruptcy context where the point founded upon Munks v Munks had been raised and considered. She points out that, in earlier cases, that point had not been raised, and was not in issue. She submitted that there was no reason for this court to refuse to follow Nugee J's approach. His decision was said to be exactly in point. The Riemann case was said to be obiter because there had been no objection to jurisdiction on the grounds of COMI, and the Munks v Munks point had not been raised. The same applied to Morgan J's decision in the Kekhman case. The Privy Council decision in the PricewaterhouseCoopers case was, if anything, said to assist [counsel for the creditor/annulment applicant's] submissions rather than those of the respondent. [Counsel for the creditor/annulment applicant] submitted, by reference to paragraphs 37, 43, and 46 of the judgment of Lord Neuberger in that case, that the fact that a winding up order had been made without jurisdiction was so serious that a court would set aside an order made without jurisdiction. She pointed out that the availability of a stay of the winding up had not been before any of the lower courts and had only emerged in argument before the Privy Council. She submitted that this court should follow Nugee J's decision in the Meyden case; but she submitted  that if that were wrong, and the discretion was at large, then the lack of any jurisdiction on COMI grounds should outweigh everything else unless the circumstances of the case were exceptional, which she submitted was not so in the present case, where the delay since the making of the winding up order should not be enough to amount to exceptional circumstances. She pointed to the fact that this was a case where there had been nothing distributed to creditors in the bankruptcy, and where no trustee in bankruptcy had been appointed in reliance on the bankruptcy order.

43. In his oral submissions [counsel for the debtor/bankrupt] submitted that I should decide that Nugee J had wrongly stated the law; the annulment of the bankruptcy order was said to be entirely a creation of statute and not a matter of general law. Nugee J's decision was said to create clear difficulties in relation to the lack of any applicable limitation period. He submitted that Nugee J's suggested solution to that difficulty would not work because the real issue was whether a person was affected by the making of the bankruptcy order at the time it was made. A person who was a creditor would always be so affected, by definition. Nugee J was said to have fallen into error.

44. In her brief reply, [counsel for the creditor/annulment applicant] submitted that an applicant for annulment should not be in any worse position because he had a statutory right to apply to annul a bankruptcy order rather than relying upon the general law stated in Munks v Munks; either a creditor had the necessary standing to apply for an annulment or he did not. The general position was said not to be similar to that before the Privy Council in the PricewaterhouseCoopers case. The stay argument had only arisen during the course of submissions. As a result, the general law, as established by the Munks v Munks line of authority, had not been cited; no reference to that authority was made, either in the judgments or in argument.'

[31] In Kooter v The Official Receiver (No.2) (also known as Re Radeva (In Bankruptcy) (No.2)) [2023] EWHC 594 (Ch)('Kooter No.2'), Deputy ICC Judge Agnello QC used the 4 limb categorisation of possible costs recoverable, from the case of London Borough of Redbridge v. Mustafa [2010] EWHC 1105. Under the heading 'Legal Principles', she said, at paragraph 11:

'The issue of costs before me fall into four categories. In London Borough of Redbridge v. Mustafa [2010] EWHC 1105 (Ch), the Chancellor, Sir Andrew Morritt, at paragraph 25, held that there were four components of costs incidental to an annulment:

a. The costs of the original petition,

b. The costs of the annulment application;

c. The costs of the Official Receiver arising on or after the making of the original bankruptcy order and;

d. The costs and expenses of the trustee in bankruptcy in acting as such from the time of his appointment to the order for annulment'

[32] In Kooter v The Official Receiver (No.2) (also known as Re Radeva (In Bankruptcy) (No.2)) [2023] EWHC 594 (Ch)('Kooter No.2'), Deputy ICC Judge Agnello QC said on this ('...whether I should order that Mr Kooter be liable for the costs, or part of the costs, of the Trustees' - paragraph 7), at paragraphs 2 and 7:

'2. At the hearing on 24 October 2022, I made the annulment order but also directed that a subsequent hearing be listed before me to enable the Trustees in Bankruptcy, who had been appointed shortly before the issue of the annulment application, to make such application in relation to costs and or remuneration and expenses as advised. I did not direct that the remuneration application, seeking to fix the remuneration of the Trustees which had subsequently been issued by the Trustees, be listed and heard at the same time. It seemed to me that such an application should be heard, at a later date after the determination of the issue as to whether the Trustees were entitled to an order for all or part of their costs, remuneration and expenses from Mr Kooter. If I made such an order making Mr Kooter liable in general terms for the remuneration and costs and expenses, then Mr Kooter may well have objections to the level of remuneration and expenses. A separate hearing of the Trustees' application for fixing the remuneration seemed therefore sensible and this is reflected in the 24 October 2022 order.

...

'7.....This encompasses both the legal costs or and occasioned by the annulment application and also the Trustees' remuneration, costs and expenses of the bankruptcy itself (see below for the categories of costs set out in the case law). [Counsel for the Trustee in Bankrtuptcy] relied on the schedule of costs in relation to the costs of the annulment application and also the sums which had been set out in the witness statements relating to the Trustees' remuneration and expenses. She explained that the Trustees had done work that was necessary and that in fact their remuneration costs were higher than envisaged but they were prepared to restrict them to £25,000. She pointed out that their time costs were approximately £52,000. In my judgment, remuneration is not an issue of simply dealing with time costs. Reference should be made to the Practice Statement on the fixing and approval of the remuneration of office holders as well as the judgement in Brook v Reed [2011] EWCA Civ 331. For current purposes, I note the figures and make no further comment at this stage. [Counsel for the Trustee in Bankrtuptcy] pointed out the bankruptcy went on for many years and that the Trustees had statutory obligations to comply with.'

Having said that the issue of remuneration would be left to a subsequent hearing, Deputy ICC Judge Agello QC in Kooter No.2 placed a low cap on what quantum would be recoverable from Mr Kooter. She held, at paragraph 35:

'...I direct that Mr Kooter should be liable to pay the sum of £7,500 plus VAT by way of a proportion of the overall costs of the Trustees under limbs 2 and 4.'

[33] In Kooter v The Official Receiver (No.2) (also known as Re Radeva (In Bankruptcy) (No.2)) [2023] EWHC 594 (Ch)('Kooter No.2'), Deputy ICC Judge Agnello QC made other costs order as well. She said, at paragraph 3:

'I granted Mr Kooter an order for costs against the debtor. It also follows...that an order for the Trustees' costs of and occasioned by the annulment application should also be made against the debtor. Likewise, it seems to me that the debtor should also be liable for the Trustees' remuneration, costs and expenses of the bankruptcy. That also follows from the annulment application. The debtor clearly, in my judgment, mispresented where her COMI was located. There was no jurisdiction to make the bankruptcy order. The Trustees are therefore entitled to costs orders against her as well as orders that she is liable to pay their remuneration, costs and expenses of the bankruptcy.'

See also paragraph 12, where she said:

'As for the costs of the Official Receiver, ...the Official Receiver's costs be limited to what it recovered by way of the deposit....'

After making Mr Kooter liable for the Trustees costs and expenses, with a cap fo £7,500 plus VAT, she said, at paragrah 35:

'Mr Kooter will be granted whatever indemnity he invites me to make in order for him to seek to recover that sum for the debtor.'