[1] The rationale is that, if it were otherwise, it would '...encourage a waste of court time, and a waste of the parties' money; and would defeat the obvious purpose of the statutory scheme.' (Turner v Royal Bank of Scotland [2000] BPIR 683, Chadwick LJ, at paragraph 49)

In Coulter v Chief Constable of Dorset [2005] EWCA Civ 1113 ('Coulter'), Chadwick LJ considered the analysis of Evans-Lombe J, at first instance, in relation to what Chadwick LJ had said in Turner v Royal Bank of Scotland [2000] BPIR 683, and Chadwick LJ said, at paragraphs 19 to 22:

'Estoppel and res judicata were not canvassed before the court in Turner. The basis of the observations of mine to which Evans-Lombe J referred was that it would be a waste of court time and the parties' money to allow a debtor, who had already failed on his application to set aside a statutory demand, to advance the same arguments by way of challenge to the petition debt on the hearing of the petition.

The same point was made by Neuberger LJ in Atherton v Ogunlende [2003] BPIR 21 at page 27C, where he put the point in these terms:

"However, in general, it seems to me right in principle and in the public interest that, if a party has raised an argument in a proper forum, where it has been considered in connection with a particular process, in this case a bankruptcy or a prospective bankruptcy, and from which forum he had a right of appeal if he wished to exercise it, if that argument is rejected and he does not appeal, it requires exceptional circumstances before he can raise the same argument at a later stage during the same process."

Neuberger LJ took that point a little further at page 27G, where he said this:

"It seems that the principle enshrined in the passage in the judgment of Vinelott J, [in Brillouet v Hachette Magazines Ltd [1996] BPIR 518] approved by Chadwick LJ, and indeed his own judgment in Turner v Royal Bank of Scotland [2000] BPIR 683, indicates that the principle should not be abrogated simply because the party has found a better way of putting the same point, or wants to put in more evidence to support the same point. If there were evidence from [the debtor] as to specific facts which really make a difference, and which he was unable to put forward on 11 March 1999 through no fault of his own (eg because it was then unavailable or unknown to him at that hearing) different considerations might apply. However, to my mind there is nothing in the subsequent evidence which justifies my going against the normal rule as laid down in Turner ."

The position is different, of course, where there has been no application to set aside the statutory demand, see the observations of HHJ Maddocks, sitting as a judge in the High Court in Barnes v Whitehead [2004] BPIR 693 at 698 and 699, paragraph 12.

The authorities following Turner were reviewed by Mr Bernard Livesy QC sitting as a Judge of the High Court in Adams v Mason Bullock [2004] EWHC 2910 (Ch), [2005] BPIR 241. I draw attention, if I may, to the citation in that judgment at paragraph 23, page 247, of a passage in an unreported judgment of mine in this court in West Bromwich Building Society v Crammer [2002] EWCA Civ at 1924, where, after referring to the passage in Turner, I said this:

"Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s 271 of the duty to decide whether or not to make a bankruptcy order on the material which is then before it. Plainly, a court will ask itself whether arguments that are being run before have already been run and failed; and it may go on to ask itself why arguments which have been run before it have not previously been run. But it is for that court to decide whether the conditions which must be satisfied before a bankruptcy order can be made are satisfied."

Further consideration was given to the point by Mr Launcelot Henderson QC sitting as a Judge of the High Court in Commissioners of Inland Revenue v Lee-Phipps [2003] BPIR 803. He observed that, in a case where there had been no reasoned determination of the arguments at the earlier stage and the application had simply been struck out for a formal defect, then the principle referred to in Turner was not engaged.

The principle is not based on estoppel, whether of a Henderson v Henderson nature or res judicata. It goes no further than this: (i) that it is indeed a waste of the court's time and the parties' money to rehearse arguments which have already been run and have failed; and (ii) that, in circumstances where it is desired to run arguments which have not already been run, then, as HHJ Maddocks pointed out in Barnes v Whitehead, the court will inquire why those arguments were not run at the time when they could and should have been run.'

[2] In Turner v Royal Bank of Scotland [2000] BPIR 683, Chadwick LJ said, at paragraph 17:

'[the first appeal court]...went on to consider whether [the bankrupt] was precluded from the decision of Judge Colyer, on the application to set aside the statutory demand, from reopening the question whether there was a viable cross-claim based on the allegations made in the Southampton proceedings...He pointed out an apparent inconsistency between observations in the judgment of Vinelott J in [Brillouet]... and approved by Leggett LJ on 19 November 1991 when refusing leave to appeal from Vinelott J's decision...; and the later decision of Evans-Lombe J in [Eberhardt] that the Brillouet case was not cited to him.'

[3] In Atherton v Ogunlende [2003] BPIR 21, Neuberger J said, at 8:

'I think there is some force in the claim that this approach is consistent with the approach which is already embodied in the decision of the Court of Appeal in Royal Bank of Scotland v. Farley [1996] B.P.I.R.638, where Lord Justice Hoffmann said this at 641:

“… I think it merely leads to wasteful litigation which is inevitably at the expense of the petitioner if a further opportunity to litigate the matter is provided after the bankruptcy order has been made. There are, as is pointed out in Heath v. Tang, procedures which can be invoked if it is likely to produce any real injustice.”

Earlier he said:

“The bankruptcy procedure has ample safeguards built into it for enabling the bankrupt to challenge the existence of the debt.”'

[4] In Turner v Royal Bank of Scotland plc [2000] BPIR 683, 694, Chadwick LJ at paragraph 50, appears to have missed out a 'not' in his first sentence. Paragraph 50 reads - with the missing 'not' added in { } brackets:

'The short answer, therefore, as it seems to me, to the appeal before Mr Laurence QC was that the Deputy Registrar, on 11 June 1997, could {not} properly have gone behind the decision of His Honour Judge Colyer QC on the application to set aside the statutory demand — a decision in respect of which permission to appeal had been refused by this Court — unless it was shown that there had been some real change in circumstances. In relation to the quantum of damage, there had been no change in circumstances. At least, no change in circumstance has yet been identified.'

[5] In Vaidya v Wijayawardhana [2010] EWHC 716 (Ch); [2010] BPIR 1016 ('Vaidya'), Sarah Asplin QC sitting as a Deputy High Court Judge, after reviewing the authorities (see below), reasoned:

'68. [The annulment application DJ] took the view therefore, that once the issue of the existence of a counterclaim, set off or cross claim had been dealt with at the paper hearing of the application to set aside the statutory demand, pursuant to rule 6.5(1), it could not be reconsidered as a relevant factor whether by him or by [the bankruptcy petition DJ] on the hearing of the petition, following Turner v Royal Bank of Scotland [2000] BPIR 683. It appears from his judgment that [the bankruptcy petition DJ] seems also to have taken that view. [Annulment application DJ] stated that the counterclaim had “obviously been considered” and there was nothing to say that [the statutory demand set aside application DJ] was required to give reasons for his decision.

69. However, in my judgment the position in this case is analogous to that which was under consideration in IRC v Lee-Phipps. In that case, it was held that the principle in Turner v Royal Bank of Scotland was not engaged because there had been no reasoned determination at the statutory demand stage, the application to set aside having been dismissed on the basis of a formal defect.

70. Although [the statutory demand set aside application DJ] was perfectly entitled to deal with the application before him under the paper procedure set out at rule 6.5(1) Insolvency Rules, in the absence of reasons for his decision, there was nothing on which to base an assumption that the issues including the 0811 claim had been dealt with on their merits and should not have been taken into consideration on the hearing of the bankruptcy petition or the subsequent application to annul.

71. In Popely v Popely the Court of Appeal, albeit in the context of a second appeal from the dismissal of an application to set aside a statutory demand under the rule 6.5(1) procedure, held that the failure to give reasons was contrary to Article 6 European Convention on Human Rights and lead inevitably to the conclusion that that decision could not stand. As Jonathan Parker LJ observed at 111, inferences are not good enough.

72. Obviously, neither [the bankruptcy petition DJ] or [the annulment application DJ] at the annulment hearing were dealing with the setting aside itself and as [counsel for the petitioner] points out, there has never been an appeal of that order. However, in my judgment, [the annulment application DJ] was wrong to rely upon the unreasoned decision of [the statutory demand set aside application DJ] rather than consider the existence of the 0811 claim when exercising his discretion. Furthermore, he took no account of the fact that [the bankrupt] had only been made aware of the decision of [the statutory demand set aside application DJ] at the hearing of the bankruptcy petition although in the light of the content of [the bankrupt's] affidavit before the court on that occasion I place little weight on this matter.

73. Adopting the test referred to by Chadwick LJ, if I ask myself the question whether the arguments raised in relation to the 0811 claim had already been run and failed, I cannot conclude that they were considered on their merits and rejected because no reasons were given and inference is not good enough.

74. In my judgment, therefore, [the annulment application DJ] failed to take into account all relevant matters or took into account irrelevant matters such that the exercise of his discretion should be set aside.'

Under the heading 'Relevant law and procedural framework', the Deputy Judge said, at paragraphs 54 onwards (note: (1) the statutory provisions are s.271 and s.375 of the Insolvency Act 1986; (2) the rules referred to, are references to Insolvency Rules 1986 rules, which have been superseded by the Insolvency (England and Wales) Rules 2016):

'(i) relevant provisions

54. The relevant provisions of the Insolvency Act 1986 are as follows:

(1) The court shall not make a bankruptcy order on a creditor's petition unless it is satisfied that the debt, or one of the debts, in respect of which the petition was presented is either-

(a) a debt which, having been payable at the date of the petition or having since become payable, has been neither paid nor secured or compounded for, or

(b) a debt which the debtor has no reasonable prospect of being able to pay when it falls due.”

…

(1) The court may annul a bankruptcy order if it at any time appears to the court:

(a) that on any ground existing at the time the order was made the order ought not to have been made”

…

(1) Every court having jurisdiction for the purposes of the Parts in this Group may review, rescind or vary any order made by it in the exercise of that jurisdiction.

(2) An appeal from a decision made in the exercise of jurisdiction for the purposes of those Parts by a county court or by a registrar in bankruptcy of the High Court lies to a single judge of the High Court; and an appeal from a decision of that judge on such an appeal lies … to the Court of Appeal.”

55. The relevant Insolvency Rules are as follows:

(1) On receipt of an application under Rule 6.4, the court may, if satisfied that no sufficient cause is shown for it, dismiss it without giving notice to the creditor. As from (inclusive) the date on which the application is dismissed, the time limited for compliance with the statutory demand runs again …

(4) The court may grant the application if-

(a) the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt or debts specified in the statutory demand; or

(b) the debt is disputed on ground which appear to the court to be substantial; or

…

(d) the court is satisfied, on other grounds, that the demand ought to be set aside.”

6.21 Where the debtor intends to oppose the petition, he shall not later than 7 days before the day fixed for the hearing -

(a) file in court a notice specifying the grounds on which he will object to the making of a bankruptcy order, and

(b) send a copy of the notice to the petitioning creditor or his solicitor”

(1) On the hearing of the petition, the court may make a bankruptcy order if satisfied that the statements in the petition are true, and that the debt on which it is founded has not been paid, or secured or compounded for.’

Further, paragraph 12.4 of the Practice Direction: Insolvency Proceedings provides as follows:

“Where the debtor (a) claims to have a counterclaim, set off or cross demand (whether or not he could have raised it in the action in which the judgment or order was obtained) which equals or exceeds the amount of the debt or debts specified in the statutory demand or (b) disputes the debt (not being a debt subject to a judgment or order) the Court will normally set aside the statutory demand if, in its opinion, on the evidence there is a genuine triable issue.”

(ii) Issue estoppel in bankruptcy proceedings

56. [The bankrupt's] main complaint which forms the basis of his first three amended grounds of appeal is that [the annulment application DJ] on the hearing to annul the bankruptcy order ignored the existence of and/or failed to give proper weight to claim 0811 and decided that it had already been dealt with by [the statutory demand set aside DJ] at the “paper hearing” of the application to set aside the statutory demand which was the appropriate time for it to have been considered.

57. It is clear from the extract from Ahmed v Mogul Eastern Foods which I have set out and the references in Patten J's judgment to the decision of the Court of Appeal in Turner v Royal Bank of Scotland plc [2000] BPIR 683 per Chadwick LJ and Atherton v Ogulende [2003] BPIR 21 per Neuberger J at 27, that on the hearing of a bankruptcy petition or an application to annul a bankruptcy order, although the court has unlimited jurisdiction, a debtor will not be permitted to re-argue the very grounds on which he was unsuccessful when seeking to set aside the statutory demand.

58. In IRC v Lee –Phipps [2003] BPIR 803 Launcelot Henderson QC sitting as Deputy High Court Judge, (as he then was), explained again that when hearing a bankruptcy petition, the court still has the duty to decide whether the order should be made on the material before it. In discharge of that duty the court will ask itself whether the arguments have already been run and failed and why arguments run before it have not be run on previous occasions.

59. In that case, an appeal against a bankruptcy order was allowed where an adjournment of the hearing of the petition had been refused despite a medical certificate in respect of the debtor. There was also a misunderstanding about the application to set aside the statutory demand. It had been dealt with on paper under rule 6.5(1) and dismissed on technical grounds, namely that the reasons for disputing the debt had been set out in a letter rather than an affidavit. The learned deputy judge (as he then was) dealt with the issue of whether the applicant should be allowed to raise the same issues on the appeal against the bankruptcy order as he raised on the application to set aside the statutory demand. At paragraph 19 of his judgment he dealt with the matter in the following way:

“But where, as in the present case, there has been no reasoned determination at all at the earlier stage and the application has simply been struck out for a purely formal defect in the manner in which it was brought, then it seems to me that the principle referred to by Chadwick LJ [i.e. the general rule in Turner v Royal Bank of Scotland plc] is not even engaged in the first place. If there were any doubt about the ambit of the dicta in that case I think it is resolved by his own subsequent statements in the case of West Bromwich Building Society v Crammer [2002] EWCA Civ 1924 (unreported) 19 December 2002 … the learned Lord Justice referred to his earlier observations in Turner v Royal Bank of Scotland plc [2000] BPIR 683 in response to a suggestion that there had been some concern as to the width of those observations. He then says this, at the end of para [19]:

“Buxton LJ expressly agreed with those observations; and Aldous J agreed with both judgments. Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s271 of the duty to decide whether or not to make a bankruptcy order on the material which is then before it. Plainly, a court will ask itself whether arguments that are being run before it have already been run and failed; and it may go on to ask itself why arguments which have been run before it have not previously been run. But it is for the court to decide whether the conditions which must be satisfied before a bankruptcy order can be made are satisfied.”

60. That case, together with Barnes v Whitehead [2004] BPIR 693 in which the same approach was adopted, were approved in the Court of Appeal by Chadwick LJ In Coulter v Chief Constable of Dorset Police (No 2) [2006] BPIR 10. At paragraph 20 of his judgment, Chadwick LJ drew attention once again to the passage in his judgment in West Bromwich Building Society v Crammer (unreported), referred to in IRC v Lee –Phipps. At paragraph 22 he went on to explain the principle in the following way:

“The principle is not based on estoppel, whether of a Henderson v Henderson nature or res judicata. It goes no further than this: (i) that it is indeed a waste of the court's time and the parties' money to rehearse arguments which have already been run and have failed; and (ii) that, in circumstances where it is desired to run arguments which have not already been run, then, as HHJ Maddocks pointed out in Barnes v Whitehead, the court will inquire why those arguments were not run at the time when they could and should have been run.”

61. A number of the central issues in this case were considered by the Court of Appeal in Popely v Popely [2004] BPIR 779. That was an appeal to the Court of Appeal from the decision of a deputy judge allowing an appeal from the decision of a deputy district judge dismissing an application to set aside the statutory demand pursuant to rule 6.5(1) Insolvency Rules.

62. The Court considered the true meaning of r 6.5(4)(a) Insolvency Rules conferring a discretion upon the court to set aside a statutory demand based on an undisputed debt where the debtor “appears to have a counterclaim, set off or cross demand which equals or exceeds the amount of the debt … ‘ and what approach to adopt where the “cross demand” relied upon was a claim in a pending action and the debt on which the statutory demand was based arose from costs orders made in proceedings closely associated with that action. It also dealt with the failure of a District Judge to give reasons when dismissing an application to set aside a statutory demand under the summary procedure in Rule 6.5(1) .

63. With regard to the rule 6.5(1) procedure, Jonathan Parker LJ held at paragraph 111:

“In the instant case it is to be inferred from the mere fact that the district judge thought it appropriate to adopt the procedure prescribed by r.6.5(1) that he must have been satisfied that no sufficient cause had been shown for the application. A further possible inference is that he was so satisfied because he regarded the application as indistinguishable from the application to set aside the earlier statutory demand. But possible inferences are not good enough, in my judgment. In particular, the peremptory character of the procedure does not absolve the court from its general duty to give reasons for its decisions. Indeed, its peremptory character makes it in my judgment all the more important that the court should explain why it was satisfied that no sufficient cause had been shown for the application.”

He also referred to Ruiz Torija v Spain (1995) 19 EHRR 553 in which the European Court of Human Rights said that Article 6(1) of the European Convention on Human Rights obliges courts to give reasons for their judgments although the extent of the duty will vary with the circumstances.

64. Furthermore, with regard to the nature of a cross claim for the purposes of rule 6.5(4) Jonathan Parker LJ held at paragraph 113 as follows:

“In contrast to the words “counterclaim” and “set off” the word “cross' in the expression “cross demand” does not imply any kind of procedural or juridical relationship to the debt which is the subject of the statutory demand: all it means, in my judgment, is that the “demand” is one which goes the other way, ie that is a “demand” by the debtor on the creditor.”

65. When hearing the application to annul the bankruptcy order, [the annulment application DJ] was exercising the discretion in s282(1) Insolvency Act 1986 and was required to do so judicially. In other words, save in exceptional circumstances he should not have made an order annulling the bankruptcy order made by a judge of co-ordinate jurisdiction, unless there was new evidence before him which would have justified him in doing so, or alternatively, the order ought not to have been made.'

[6] In Adams v Mason Bullock (A Firm) [2005] BPIR 241 ('Adams'), Bernard Livesey QC sitting as a Deputy Judge of the High Court, under the heading 'The Law', said, at paragraphs 20 to 33 (note the rules referred to, are references to Insolvency Rules 1986 rules, which have been superseded by the Insolvency (England and Wales) Rules 2016):

'20. A consideration of the applicable principles should begin with s 271 of the Insolvency Act 1986 which provides

The court shall not make a bankruptcy order on a creditor's petition unless it is satisfied that the debt, or one of the debts, in respect of which the petition was presented is either-

(a) a debt which, having become payable at the time of the petition or having become payable, has been neither paid nor secured or compounded for, or

(b) a debt which the debtor has no reasonable prospect of being able to pay when it falls due.

Rule 6.25 provides

(1) On the hearing of the petition, the court may make a bankruptcy order if satisfied that the statements in the petition are true, and that the debt on which it is founded has not been paid, or secured or compounded for …

21. In Brillouet v Hachette Magazines Ltd, Re a Debtor (No 27 of 1990) [1996] BPIR 518 where a debtor sought to raise on the hearing of the petition arguments which he had raised unsuccessfully on the application to set aside the statutory demand, Vinelott J observed

“There may be rare cases in which it can be said that a debt claimed in a statutory demand against which there has been an unsuccessful attempt to set it aside and which has not been paid or secured or compounded for is not payable at the date of the petition, for instance, if as a result of legislation it were to become unenforceable between those two dates. But unless there is some change of circumstance of that kind it seems to me that all the petitioning creditor is required to do is to show that he has made a statutory demand, that either no attempt has been made to set it aside or an unsuccessful attempt has been made, and that the amount of the debt has neither been paid nor secured nor compounded for. The debtor cannot go back and reargue the very grounds on which he unsuccessfully sought to have the statutory demand set aside. [Emphasis supplied].

22.. The leading case is Turner v Royal Bank of Scotland [2000] BPIR 683 where the first judgment was given by Chadwick LJ. In it he quoted from the observation of Vinelott J and then set out and explained the statutory code applicable to personal insolvency contained in the Insolvency Act 1986 and the Insolvency Rules 1986: see esp. ibid at p 692E. He then said

The scheme of those provisions, plainly, is to ensure that if the debtor wishes to dispute the debt, or wishes to raise a counterclaim or cross-demand against the creditor, he should have the opportunity to do so by an application to set aside the statutory demand; and that until that application has been heard and determined, no petition for bankruptcy can be presented. If an application to set aside a statutory demand is made, the court is required to consider, and adjudicate upon, any contention advanced by the debtor that he has a cross-demand which extinguishes the debt. …

And at p. 693 H he said:

Questions as to the existence of the debt at the date of the presentation of the petition, and any crossclaim, are intended to be dealt with on an application to set aside the statutory demand - that is to say, before the petition is presented.

As regards the discretion on the hearing of the petition under rule 6.25 of the 1986 Rules, at p. 694 A he said:

But, it cannot have been intended, as it seems to me, that when exercising the discretion (which it undoubtedly has under r 6.25), whether or not to make a bankruptcy order at the hearing of the petition, the court is required to revisit the arguments which have already been advanced on the hearing of the application to set aside the statutory demand; and which have already been rejected at that hearing. As Vinelott J pointed out in the Brillouet case . the debtor cannot go back and reargue the very grounds on which he unsuccessfully sought to have the statutory demand set aside. It will require some change of circumstance between the unsuccessful attempt to set aside the statutory demand and the hearing of the petition before the court (on the hearing of the petition) can be asked to go into the question which has already been determined at the hearing of the statutory demand. To hold otherwise would be to encourage a waste of court time, and a waste of the parties' money; and would defeat the obvious purpose of the statutory scheme.

23. These observations were modified to some extent in the later case of West Bromwich Building Society v Crammer [2002] EWCA Civ at 1924 (unreported) where Chadwick LJ said:

Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s 271 of the duty to decide whether or not to make a bankruptcy order on the material which is then before it. Plainly, a court will ask itself whether arguments that are being run before it have already been run and failed; and it may go on to ask itself why arguments which have been run before it have not previously been run. But it is for that court to decide whether the conditions which must be satisfied before a bankruptcy order can be made are satisfied.

24. Pausing there, in reliance on the above passages, counsel for the debtor argued that the discretion in the instant case should be exercised in the same way as Launcelot Henderson QC dealt with matters in Commissioners of Inland Revenue v Lee-Phipps [2003] BPIR 803 and HHJ Maddocks exercised it in the case of Barnes v Whitehead [2004] BPIR at p. 693.

25.. Lee-Phipps was a case where the debtor had sought to make an application to set aside the statutory demand but it had been struck out for a procedural irregularity. There was therefore no hearing on the merits and the Deputy Judge observed at p. 809

[19] But where, as in the present case, there has been no reasoned determination at all at the earlier stage and the application has simply been struck out for a purely formal defect in the manner in which it was brought, then it seems to me that the principle referred to by Chadwick LJ is not even engaged in the first place.

26. In Barnes v Whitehead the debtor was served with a statutory demand but did not apply to set it aside. When the petition was served the debtor then sought to dispute the debt. Judge Maddocks held that where a debtor had not challenged the statutory demand, while he exposed himself to the issue of a petition, he was not precluded from raising a dispute at the hearing of the petition. Accordingly, he did not regard as authority on the situation where there has been no prior application and thus no hearing in relation to the statutory demand. However, he also observed at p. 697:

It is clear that the requirement of a statutory demand affords the debtor an opportunity to challenge the debt before a petition has been issued. Plainly the correct procedure is for him to do so at that stage by an application to set aside the demand. If he makes the application and it fails, then the decision of the court precludes him from raising the same grounds of challenge, or indeed other grounds available at that hearing, on the principle that it would be an issue already determined (issue estoppel) or in the latter case that it would be an abuse of process.

27. In my judgment the essential difference between those cases where the debtor is prevented from raising an issue on the hearing of a petition and those where he is not so prevented is that in the former class of case there had been a hearing on the merits, at which the debtor had the opportunity to advance such arguments as he chose as to whether there was a valid debt (or set off or cross-claim) and those where there had not been such a hearing.

28. If there has not been a hearing, either because an application was not made (Barnes v Whitehead) or because it was dismissed for procedural reasons without a determination on the merits (Commissioners of Inland Revenue v Lee-Phipps), the discretion given by s 271 will almost invariably result in the non-application of the Brillouet and Turner principle.

29. Where however there has been a hearing on the merits, at which the point could have been advanced but was not advanced, the discretion given by s 271 will ordinarily be exercised in order to prevent the debtor taking the point on the hearing of the petition unless, following the observations of Chadwick LJ in West Bromwich Building Society v Crammer, the court having asked itself (and, I would add, having also asked the debtor,) why the point was not taken on the hearing of the application to set aside, is satisfied with the reason advanced and that it would be in the interests of justice for the point to be taken again.

30. The position is even stronger where, as here, the point was taken in the statements lodged by the debtor but was not argued at the hearing. The reason for this is that a party who has taken a point on an application but not at the hearing, will ordinarily be regarded as having abandoned the point, because he has re-considered its validity and has decided that it is factually or legally without merit. The court will usually not allow the argument to be run again because it would be an abuse of process for the debtor to seek to do so.

31.. I have used the word ‘ordinarily’ and ‘usually’ because there may be exceptional circumstances which may justify the court taking a different course if it were to be persuaded that it should do so. I also take heed of the words of Chadwick LJ in Crammer (set out in full in para 23 above) that

Plainly, a court will ask itself whether arguments that are being run before it have already been run and failed; and it may go on to ask itself why arguments which have been run before it have not previously been run.

32.. I have used the word ‘exceptional’ merely in contradistinction to the terms ‘ordinarily’ and ‘usually’. How ‘exceptional’ the circumstances have to be will need to be determined on a case by case basis. As I see it, the practice of the courts has moved from the very high level of what was exceptional as required by Vinelott J in Brillouet to a lower level in accordance with the observations set out in Crammer .

33.. In the instant appeal, I not only asked myself, but also asked counsel for the debtor, why the interest point, having been raised in the statements lodged prior to the hearing of the application to set aside, was not raised in argument at the hearing. Counsel for the debtor, who did not appear below, simply had no explanation to offer. There is nothing in the papers or in the explanations put before me which displaces the ordinary inference, which I draw, that the debtor or those acting for him had concluded that the interest point should be abandoned. I have therefore concluded that there is no basis for exercising my discretion to allow the debtor now to argue the point for to do so would be an abuse of process on his part. This was essentially the conclusion to which the District Judge came, although by a slightly different route.'

The Deputy Judge then dismissed the appeal (paragrpah 34)

[7] In Owo-Samson v Barclays Bank Plc (No.1) [2003] EWCA Civ 714; [2003] BPIR 1373 ('Owo-Samson No.1'), Lord Carnworth LJ (with whom Newman J and Ward LJ agreed), held, at paragraph 35:

'...the word “may” in section 282 makes clear that the court's power to annul, even if the grounds are made out, is discretionary. The court is not bound to set aside the petition, particularly if, as here, the creditor is found to have acted reasonably and the debtor has failed to raise defences which were open to him at an earlier stage. In such a case, a critical factor in exercising the discretion, in my view, must be the prospects, if the order is annulled, of the debtor being able to satisfy the petitioner and meet his other liabilities.'

[8] In Harvey v Dunbar Assets Plc [2015] EWHC 3355 (Ch) [2016] BPIR 48, Judge Roger Kaye QC sitting as a High Court judge also noted, at paragraph 21:

'But, in any event, the district judge concluded that even if he were wrong about that, his decision would still have been the same as on that previous occasion. Indeed, he attached and incorporated his previous judgment given in March 2012 as reflecting his further reasons for refusing to set aside the second statutory demand. He found the new evidence did not add materially to the evidence previously relied upon before the court and did not amount to any different case from that previously before the court. He refused permission to appeal.'

[9] In Harvey v Dunbar Assets Plc [2015] EWHC 3355 (Ch) [2016] BPIR 48, Judge Roger Kaye QC sitting as a High Court judge, under the heading 'The insolvency framework', said, at paragraphs 24 to 28:

'Before dealing with these issues it may be helpful to set out the legislative framework under the Insolvency Act 1986, as amended, and Rules so far as relevant to the present background.

The broad scheme of the Act is to permit a bankruptcy order to be made on a creditor's petition in respect of a debt exceeding £750 which the debtor appears to be unable to pay or to have no reasonable prospect of being able to pay and there is no outstanding application to set aside a statutory demand in respect of the debt: see section 267 of the Act. A debtor is to be taken as unable to pay the debt if the creditor has served a statutory demand in the prescribed form and manner on the debtor and at least three weeks have elapsed since service and the demand has been neither complied with nor set aside in accordance with the Rules: see section 268 of the Act and rules 6.1 to 6.3. Before a bankruptcy order can be made on the petition the court must still be satisfied the debt has not been paid nor secured or compounded for, or the creditor has unreasonably refused an offer to secure or compound for the debt: see section 271 of the Act and rule 6.25 .

Any application to set aside a statutory demand must also be made in the prescribed manner and time and supported by evidence: see rule 6.4.Unless satisfied there is no sufficient cause for the statutory demand, the court must hear the application and consider the evidence available to it and may grant the application if (amongst other grounds) the debt is disputed as set out above or if the court is satisfied on other grounds the demand ought to be set aside: see rule 6.5. There is a residual discretion in the court to decide at the hearing of the petition whether or not to make a bankruptcy order: Turner v Royal Bank of Scotland plc [2000] BPIR 683, 694, per Chadwick LJ.

Thus, even if the demand is not set aside the court still has to consider the evidence and decide whether or not a bankruptcy order ought to be made on the material before it: see, for example, Lee-Phipps v Inland Revenue Comrs [2003] BPIR 803. Where, however, the debtor raises the same arguments on the hearing of the petition that have already been run and failed or where the debtor has failed to raise previous arguments the court will inquire (in the latter case) as to the reasons. The court must still be satisfied the relevant conditions for making the bankruptcy order are satisfied: see, eg the Lee-Phipps case; Coulter v Chief Constable of Dorset Police (No 2) [2006] BPIR 10 and Vaidya v Wijayawardhana [2010] BPIR 1016.

Finally, it is also appropriate to refer to section 375(1) of the Act which empowers the court to “review, rescind or vary any order made by it in the exercise” of its jurisdiction under the Act.'

[Note: (1) the bankruptcy level has subsequently increased from £750 to £5000; (2) the Insolvency (England and Wales) Rules 2016 have come into force, replacing the Insolvency Rules 1986 - so the references in the above passages, to rules (for instance, rule 6.1 to 6.3.) are now out of date]

[10] In Harvey v Dunbar Assets Plc [2015] EWHC 3355 (Ch) [2016] BPIR 48 ('Harvey'), under the heading 'Can [the debtor] raise the promissory estoppel point again?', the Judge said, at paragraphs 32 to 40:

'32. On this first issue I was referred to and I considered a surprisingly large number of authorities including those cited above and amongst others also the following: Brillouet v Hachette Magazines Ltd [1996] BPIR 522, Eberhardt & Co Ltd v Mair [1995] 1 WLR 1180, Royal Bank of Scotland plc v Farley [1996] BPIR 638, West Bromwich Building Society v Crammer [2002] EWCA Civ 1924 (for a second round see [2012] EWCA 517), Atherton v Ogunlende [2003] BPIR 21, Barnes v Whitehead [2004] BPIR 693, Adams v Mason Bullock [2005] BPIR 241, Ahmed v Mogul Eastern Foods [2007] BPIR 975, Roseoak Investments Ltd v Network Rail Infrastructure Ltd [2010] BPIR 646 and Hayes v Hayes [2014] Bus LR 1238.

33. Most of these cases involved the point as to whether a debtor who has lost an application to set aside a statutory demand can raise the same point on the hearing of the petition: see the Brillouet, Eberhardt, Turner, Barnes, Adams, Lee-Phipps, Coulter, Roseoak Investments Ltd and Hayes cases. The point has also been raised on an application to annul the bankruptcy based on grounds previously argued unsuccessfully on an application to set aside the statutory demand (the Atherton case and see the second Crammer appeal) and also in connection with an application to review the decision under section 375(1) of the Act (the Brillouet, Farley, Ahmed and Vaidya cases). Of these authorities, the following involved decisions or dicta of the Court of Appeal, namely the Farley, Turner and Coulter cases.

34. Examination of the authorities reveals that the arguments have been well trod in these previous decisions. I do not propose to over-burden this judgment with lengthy quotations. The authorities in my judgment establish the following principles of relevance to this case:

First, the court, on the hearing of a bankruptcy petition at least, has a duty to consider, on the material before it, whether the conditions for the making of a bankruptcy order are satisfied: see the Eberhardt, Turner, Crammer and Lee-Phipps cases.

Second, on such a hearing where there has been a previous hearing on the merits, whilst the court ought always to ask itself whether the arguments have been previously run and failed, and, why arguments now advanced have not been run before, absent a change of circumstances or some other special or good reasons or circumstances, the debtor can not go back on the hearing of the petition (or for that matter on an application to annul or review under section 375(1) of the Act) to reargue or reiterate arguments presented earlier, or which he had an opportunity to present. The basis of this principle (which has been referred to

in the recent cases as the Turner principle) is that to hold otherwise would be to encourage a waste of court time, a waste of the parties' money and defeat the obvious purpose of the statutory scheme which was that arguments on whether or not there was a genuine debt ought to be raised at the earliest stage ie on the application to set aside the statutory demand: see the Brillouet, Farley, Turner, Barnes, Crammer, Lee-Phipps, Adams, Coulter, Roseoak Investments Ltd, Vaidya, Hayes cases.

Third, if there has not been a hearing on the merits, the court will have a residual discretion to satisfy itself, on the material before it, whether a bankruptcy order ought to be made but, subject to the court inquiring into the reasons why the point was not argued, raised or (as the case may be) abandoned previously, ordinarily, in the absence of exceptional circumstances (to be considered on a case by case basis), the court will not allow a point which could have been raised before but was not, or which was abandoned, to be raised because to do so would be an abuse of process: see the Atherton, Lee-Phipps, Barnes and Adams cases.

Fourth, because of the residuary discretion left in the court on the hearing of the petition and no doubt also because of the power of review given by section 375(1) the Turner principle is not based on issue estoppel or res judicata but, at most, on abuse of process or public interest: see the Turner, Atherton, Coulter cases.

Fifth, these principles apply equally throughout the bankruptcy process including on an application to annul or to review under section 375(1) of the Act (where even here the court will not generally permit a previously argued point to be reiterated in the absence of change of circumstances: see, eg Papanicola v Humphreys [2005] 2 All ER 418, the Ahmed case [2007] BPIR 975 and the Vaidya case [2010] BPIR 1016 . It is noteworthy that in the Atherton case [2003] BPIR 21, 27 Neuberger J, where amongst other authorities he was referred to the Turner case [2000] BPIR 683, said:

“in general, it seems to me right in principle and in the public interest that, if a party has raised an argument in a proper forum, where it has been considered, in connection with a particular process, in this case a bankruptcy or a prospective bankruptcy, and from which forum he had a right of appeal if he wished to exercise it, if that argument is rejected and he does not appeal, it requires exceptional circumstances before he can raise the same argument at a later stage during the same process … the principle should not be abrogated simply because the party has found a better way of putting the same point, or wants to put in more evidence to support the same point.”

35. Two observations of Chadwick LJ in the Coulter case [2006] BPIR 10 serve to emphasise and underline these principles. Chadwick LJ stated, at para 19:

“Estoppel and res judicata were not canvassed before the court in Turner . The basis of the observations of mine to which Evans-Lombe J [in the court below] referred was that it would be a waste of court time and the parties' money to allow a debtor, who had already failed on his application to set aside a statutory demand, to advance the same arguments by way of challenge to the petition debt on the hearing of the petition …”

36. Chadwick LJ added, in para 22:

“The [Turner] principle is not based on estoppel, whether of a Henderson v Henderson (1843) 3 Hare 100 nature or res judicata. It goes no further than this: (i) that it is indeed a waste of the court's time and the parties' money to rehearse arguments which have already been run and have failed; and (ii) that, in the circumstances where it is desired to run arguments which have not already been run, then, as Judge Maddocks pointed out in Barnes v Whitehead, the court will inquire why those arguments were not run at the time when they could, and should, have been run.”

37. There appears to be no authority on precisely the point as to whether, where there is a second statutory demand, the argument that was run unsuccessfully, and abandoned on appeal, can then be raised in respect of a second statutory demand based on the same debt. In principle, whilst the court will always have in mind the potentially serious consequences to the debtor of making a bankruptcy order, it seems to me, absent the special circumstances and duties of the court that apply on the hearing of a bankruptcy petition to be satisfied the conditions for making a bankruptcy order are made out, or absent other exceptional or special circumstances, it can not.

38. District Judge Pescod, at paras 30–49 of his reserved judgment dealing with his analysis of the res judicata argument, referring to the Eberhardt case [1995] 1 WLR 1180 and the Turner case [2000] BPIR 683 carefully noted that the refusal to set aside a statutory demand did not create a res judicata in relation to the making of a bankruptcy order. He also noted that the hearing before him was not the hearing of the petition but a second stab at the promissory estoppel point on an application to set aside the (second) statutory demand which had previously failed and been abandoned. The new evidence was merely more evidence of the type before the court on the first hearing and added nothing material even accepting Mr Harvey's own factual evidence. Hence the application was simply an attempt to re-litigate the same point already decided between the parties involved which Mr Harvey could not be permitted to do. The whole purpose of the doctrine of res judicata is to avoid repeat litigation on the same point.

39. I respectfully agree. I would add as Chadwick LJ has made clear in the Turner case [2000] BPIR 683 and the Coulter case [2006] BPIR 10, and Neuberger J made clear in the Atherton case [2003] BPIR 21, whether the result is based strictly on res judicata, issue estoppel, or the Turner principle on a second hearing on the same point in the bankruptcy process, apart from the special circumstances attending the hearing of the bankruptcy petition itself referred to above, and absent good reason, special, new, changed or exceptional circumstances (or however it might be described) the result is the same: the public interest was to avoid repeat litigation on the same point and same or similar material. Even allowing for the potentially serious consequences of bankruptcy, it would be a waste of time and money and, I would also add, the court's resources and be inclined to delay access to the courts of other litigants to the courts who had not even had a first opportunity to present their case. This cannot be in the public interest.

40. Accordingly, even if the point is not governed by issue estoppel or res judicata in the true sense, in my judgment the Turner principle at least applies to the instant case. Absent a change of, or special circumstances the debtor ought not to be permitted to raise the point again.'

[11] In Roseoak Investments Ltd v Network Rail Infrastructure Ltd [2009] EWHC 3769 (Ch); [2010] BPIR 646 ('Roseoak'); HHJ Purle QC sitting as a Judge of the High Court, said at paragraph 3:

'The default judgment itself is irregular. The claim is one for unliquidated damages, which are quantified in part at (it is said) £1. 5 million. The default judgment is purportedly for a debt (not damages as claimed) slightly in excess of £1. 5 million.'