Rules on the service of an application notice and how proceedings under the Insolvency Act 1986 (IA 1986) and Insolvency Rules 2016 (IR 2016) should be treated differently to normal litigation issued and served under the Civil Procedure Rules 1999 (CPR), according to a recent judgment.
The case
In the case of Re Nicola Jane Ide, an application was made by the joint trustees in bankruptcy (the Applicants) seeking orders under sections 339, 340 and/or 423 of the IA 1986 against the bankrupt individual and five others (the Respondents) over various payments made before the bankruptcy. The application was issued on Wednesday 30 January 2019, the last day of the six year limitation period. The first hearing date eventually endorsed on the application was Tuesday 9 July 2019.
As one of the Respondents resided outside the jurisdiction, the Applicants required leave to serve overseas. Leave for service out was provided on Thursday 27 June 2019, and the original hearing date was vacated and relisted for Tuesday 15 October 2019. The Applicants then proceeded to serve the application notice and the order of Thursday 27 June 2019 on the Respondents in September 2019.
The issue that arose was whether the Applicants, by serving the Respondents in September and not before the original hearing in July 2019, were compliant with rule 12.9 (3) of the IR 2016. The rule required them to serve the Respondents at least 14 days before the “date fixed for hearing”. The court found that a reference to the date fixed for hearing related to the date on which the hearing actually went ahead, rather than the date endorsed on the application notice.
The court went on to consider whether the application could be made invalid if it wasn’t served within four months of issue, as is the case for a claim form issued under CPR 7.5. If this were to apply, the application would be deemed invalid unless the time for service was extended by the court. The judge found that insolvency proceedings were different to normal proceedings which were subject to the CPR, and there was no similar service period to the four months set out in CPR 7.5. An insolvency application simply had to be served 14 days prior to the date fixed for hearing.
Conclusion
This judgement makes clear distinctions on service provisions in respect of insolvency proceedings versus the CPR. It’s evident that the IR 2016 aren’t as strict, and the practice of issuing protective applications can continue.
It can sometimes be difficult for an insolvency practitioner coming late to a case to be in a position to obtain all the evidence available in time prior to issuing (and subsequent service). The Insolvency Rules say operating in this way isn’t unreasonable.
The clarification that insolvency actions are different to those advanced as ordinary litigation under the CPR is welcomed and is likely to be the start of further applications on specific procedural points.
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