Place of residence
13 / 07 / 2021
Allowing an appeal against a judgment of Deputy ICC Judge Passfield, Bacon J has re-examined the meaning of having a place of residence in s 263I(2)(b) IA 1986, taking what some may feel to be a more restrictive approach than that adopted by the courts in the recent past, albeit by reference to an unusual set of facts.
“In outline,” she said, “the question is whether the courts have jurisdiction to declare the first respondent Mr Su bankrupt, in circumstances where his presence in England and Wales during the past three years has been involuntary and the product of various court orders restraining him from leaving as well as committal orders leading to Mr Su’s imprisonment in HMP Pentonville from March 2019 to April 2020, and where it is said that his presence at various other addresses during that period has been only temporary or transient.”
The background to Bacon J’s judgment in Lakatamia Shipping Co Ltd v Su  EWHC 1866 (Ch) was long standing litigation arising out of a 2008 contract between Lakatamia and Mr Su, a dual citizen of Japan and Taiwan, resulting in two judgments against Mr Su for more than $60m which he had failed to pay. In 2019 Mr Su had been committed to prison for 21 months for ten counts of contempt of court, including an attempt to flee the jurisdiction, and later for an additional four months for further contempts of court. Two applications for permission to purge his contempts had been dismissed. Mr Su had been released from prison in 2020, having served half of the two sentences imposed, but had been unable to leave the country because in January 2020 yet another order had been made prohibiting him from leaving the jurisdiction on his release from prison until he had given evidence regarding his assets under CPR Part 71. On 4 July 2020 Mr Su had applied for his own bankruptcy, and on 8 July 2020 a bankruptcy order had been made by the adjudicator. Lakatamia applied for annulment, and on 20 February 2021 applied for summary judgment on its application on the basis that the adjudicator had had no jurisdiction to make the bankruptcy order. The summary judgment application had been dismissed by Deputy ICC Judge Passfield, who found that Mr Su had had a place of residence in England and Wales during the relevant period,
Lakatamia relied on the fact that Mr Su’s presence in the country was involuntary: incarceration in prison could not be regarded as having a place of residence; and Mr Su’s subsequent occupation of properties belonging to friends was temporary and had none of the hallmarks of residence. Counsel for Mr Su submitted that the statutory language had to be interpreted as meaning no more than that the debtor had an entitlement, which could be a license or moral entitlement rather than a legal entitlement, to occupy a place that was capable of being described as a place of residence, whether or not the residence was that of the debtor himself. On that basis he contended that Mr Su had had places of residence at a hotel, apartments, a friend’s house in Surrey and a flat he was currently using in Maida Vale. All of those premises, he said, were places in which somebody was capable of residing, and where Mr Su had some sort of entitlement to stay.
Bacon J rejected the debtor’s case for jurisdiction.
She did so first by reference to 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.”
Secondly, she held that the construction put forward on behalf of Mr Su was not supported by authority. Citing the judgment in Reynolds Porter Chamberlain v Khan, she found that nothing in it suggested that a debtor could have a place of residence where he had not in fact ever resided, but which was the residence of a third party which the debtor was occupying with the permission of that third party on a temporary basis.
Thirdly, she found that the construction advanced on behalf of Mr Su “diminish[ed] the test in section 263I to complete triviality, in a way that would make no sense in the context of the statutory provision.” She agreed with counsel for the appellant that the primary jurisdictional test under the section was that the debtor’s centre of main interests should be in England and Wales; as a derogation from that test, jurisdiction was established where one of the four conditions in s 263I(2) was satisfied, namely domicile in England and Wales, being ordinarily resident there, having had a place of residence there, or having carried on business there during the relevant period. She said:
“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 [counsel for Mr Su’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 [counsel’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.”
Having found for the appellant, the judge went on to comment on what she considered to be the correct approach to the issue, albeit with the caveat that her comments should not be regarded as an exhaustive exposition:
(1) It is clear that there is a difference between the concept of “ordinarily resident” and the alternative test of having a place of residence under s 263I. That does not mean that the two tests are wholly separate. As Chief Registrar Baister noted at paragraph 27 of Khan, 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 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 the two separate tests would be meaningless.
(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 is relevant to have regard to authorities on the interpretation of the concept of residence in different statutory contexts. Thus, in the tax context, in Levene v Commissioners of Inland Revenue Viscount Cave LC defined the word “reside” by reference to the Oxford English Dictionary as meaning “to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place” (a definition which the judge noted remains unchanged save for the substitution of the word “home” for “abode” in the current online edition of the OED). In the more recent case of Bank of Dubai v Abbas, Saville LJ said, referring to Levene, that, “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.” On that basis he 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.” It followed, in Bacon J’s view, that in determining whether a debtor has had a place of residence in England and Wales during the relevant period for the purposes of s 263I, it was relevant to ask whether the place was for the debtor a settled or usual place of abode or home.
(3) Similarly, on the basis of the Court of Appeal’s judgment in Grace v Commissioners for HM Revenue & Customs, citing with approval 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) Although [counsel for the appellant] initially suggested that if a person remained involuntarily in England and Wales because, for example, they were restrained from leaving by order of the court, that would prevent that person from having a place of residence for the purposes of s 263I, he had accepted that this was merely a factor to take into account. “In my judgment,” Bacon J said, “that is the correct approach. The nature of someone’s presence in and connection to a particular place is a relevant factor in determining residence, as set out in (iii) of Lewison J’s summary cited at paragraph 6 of Grace. As part of that assessment it will be relevant to consider whether the debtor’s presence is voluntary or not. Beyond that, however, the assessment will turn on the facts of the particular case.” Noting that it was no longer suggested in the case before her that Mr Su’s incarceration amounted to residence or having had a place of residence, she said, “It does not, however, seem to me inexorably to be the case that the fact that Mr Su was injuncted from leaving the jurisdiction meant that he was a priori incapable of having a place of residence in England and Wales.”
Applying those factors to the case before her Bacon J held that Mr Su’s presence at each of the locations in contention had been temporary and transient with no degree of permanence or expectation of continuity. The longest period of time he appeared to have been spent in any one place had been at a flat in Maida Vale which a prison cellmate had allowed him to use, where he kept few possessions and which in his own evidence he had described as like still living in a prison.
Although the case was decided by reference to s 263I(2) IA 1986 (which deals with jurisdiction for a debtor’s bankruptcy application) it will be equally relevant to jurisdiction to present a creditor’s petition to which s 265 applies.