Bulletins | May 3, 2024

Becker v Ford

The judgment of Chief ICC Judge Briggs in Becker (A Bankrupt) v Ford & Ors [2024] EWHC 1001 (Ch) provides a useful summary of the matters to which the court should have regard when considering an application to lift the suspension of a bankrupt’s discharge.

Mr Becker was adjudged bankrupt on 21 June 2017. On 31 May 2018 his trustees applied under s 279(3) Insolvency Act1986 to suspend the running of his discharge period. An interim order was made on 18 June 2018 followed by a further order of 3 December 2018. That order was made on the basis that that Mr Becker had failed and was failing to comply with his obligations under the Act. The effect was that Mr Becker remained subject to the disabilities imposed as a consequence of the bankruptcy order made against him until the suspension was lifted.

On 15 February 2024 Mr Becker applied under r 10.143 Insolvency (England and Wales) Rules 2016 for an order lifting the suspension of his discharge and other relief.

The judge drew from the authorities (Shierson and Birch v Rastogi, Bramston v Haut, Keely v Bell, Weir v Hilsdon and Brittain v Ferster) the following propositions:

“1. As the court is to be satisfied that there has been non-compliance by a bankrupt to suspend automatic discharge, so it is to be satisfied that the bankrupt has cooperated to merit a finding that there has been cooperation consistent with the obligations imposed by the 1986 Act.

2. Ordinarily the court will give reasonable weight to a report of the official receiver or trustee. They are officers of the court, have knowledge of the bankruptcy and can inform the court of the bankrupt’s conduct. As HHJ Halliwell remarked in Brittain v Ferster [55], the court can expect an office-holder to exercise her functions consistently with her duties to the court.

3. The court may find that the bankrupt has not completely fulfilled his obligations. In these circumstances the court must understand the failure and the impact the failure(s) have on the ability of the officeholder to carry out his or her obligations. The courts recognise that there is a ‘spectrum between bankrupts who are being as difficult as possible and doing everything to frustrate the trustee’s inquiries, and those who are in the main cooperative and seeking to provide information to the trustee but have nevertheless failed to comply properly with their obligations’: Hilsdon v Weir[102]. If the failure falls into the latter category it is axiomatic that the court will ask whether the failure is material and if the cost of remaining bankrupt is so disproportionate that the suspension should be lifted. This is because even after discharge, a bankrupt still must provide information to the trustee. The difference is that the restrictions are lifted and criminal sanctions for non-compliance are no longer applied.

4. To the same end, it should be borne in mind that the legislation does not impose a requirement, at least not expressly, that discharge is conditional on full compliance: Shierson and Birch v. Rastogi (A Bankrupt) [65].

5. It is sufficient, if the debtor can demonstrate that, objectively viewed, he or she has done all that he or she could reasonably do in the circumstances of the case in fulfilling any outstanding obligation previously identified: Keely v. Bell[10(b)], [20], [30] and [36].”

He went on to consider the role of discretion on an application to lift suspension. Noting the lack of what he described as a “legislative discretion,” he said:

“I am not clear of the source of a discretion to exercise when determining an application to lift a suspension order. Nor am I certain that a discretion would serve a purpose. This is because the court is tasked to decide if an applicant has done all that he or she could reasonably do in the circumstances of the case in fulfilling any outstanding obligations.” But he went on: “As the existence of a discretion in cases such as this is not an issue before the court, it is best dealt with if and when the issue arises in argument, on another day.”

At the same time, however, he acknowledged that discretion did play a part, having regard to what Nugee J said in Hildson v Weir:

“[A] Court considering an application has first to be satisfied that the bankrupt has failed or is failing to comply with a relevant obligation (the jurisdiction stage or threshold question), and then must consider how it is to exercise its discretion (the discretion stage)…”

The suspension of discharge was lifted, the effect being to discharge the applicant’s bankruptcy from 27 April 2024.