Bankruptcy – section 375 Insolvency Act 1986 – power to review appellate decisions
Mr Cahillane was indebted to NALM for approximately €48 million. He unsuccessfully attempted to set aside NALM’s statutory demand, contending that NALM’s security equalled or exceeded the debt (see rule 6.5(4)(c) of the Insolvency Rules 1986). He had argued that the potential future value of the security (a Dublin property portfolio) was relevant. However, Registrar Jones rejected this argument, holding that only the present value of security matters.
HHJ Pelling QC dismissed Mr Cahillane’s appeal on the same basis. He then made a yet further application, under section 375 of the Insolvency Act 1986 to rescind or vary HHJ Pelling QC’s order. Meanwhile NALM presented a bankruptcy petition against him. When that came on for hearing, Chief Registrar Baister refused to make the bankruptcy order and adjourned the petition. He also gave further directions for Mr Cahillane’s section 375 application.
NALM appealed on the basis inter alia that there was no jurisdiction under section 375 to review an appellate decision (such as that HHJ Pelling QC made), alternatively that his application was hopeless on the merits, and that in either event the bankruptcy order should have been made.
The judge upheld NALM’s appeal and made the bankruptcy order. He held that section 375 does permit the court to review, vary or rescind an order made on appeal. In so doing, he found that Briggs J’s obiter conclusion to the contrary in Appleyard v Wewelwala [2013] 1 WLR 752 was “on balance” wrong. Likewise, Donaldson QC’s application of Appleyard in Sands v Layne (discussed above) was also wrong: he had incorrectly treated Briggs J’s dicta as being ratio.
However, the judge found that Mr Cahillane’s section 375 application was bound to fail. Rule 6.5(4)(c) was obviously concerned only with the present value of security; and even the further evidence he sought to adduce would not address that issue. Accordingly, there was nothing to stop the Chief Registrar making the order and he should have done so.
This case (together with Sands v Layne above) highlights an interesting divergence of views about whether section 375 permits the review of appellate decisions. Although Re Cahillane must be followed for now, the matter seems ripe for consideration by the higher courts.
