Bankruptcy – time limits – trustees in bankruptcy – knowledge – notices – after acquired property
The appellant was made bankrupt in June 2002. In January 2003 his discharge was suspended. During 2003 he established an elaborate offshore company structure, purportedly designed so that he would not be the beneficiary of the same.
The trustee was appointed with effect from 9 April 2003. The appellant failed to co-operate with his trustee or provide bankruptcy questionnaires until February 2005 and January 2006. In both documents the appellant asserted he was not employed, received no income and had not acquired any assets post-bankruptcy.
Although questions concerning ownership of the offshore structure had been raised earlier, on 9 April 2009, the Trustee received disclosure of documents establishing the appellant’s beneficial ownership of the sole share in a Seychelles company within the structure. The trustee served a notice under section 307 of the Insolvency Act 1986 on 19 May 2009 claiming for the estate the beneficial interest in the share.
On 14 November 2013 the appellant applied for a declaration that the notice had been served out of time and was thus ineffective, and alleging the Trustee had had knowledge of the interest in the share on three occasions prior to 8 April 2009. At first instance, the Registrar dismissed the application.
Dismissing the appeal, the Judge affirmed the Registrar’s decision that for the purposes of section 309, actual knowledge of the facts (not merely claims or allegations) establishing that both the property had been acquired by the bankrupt, and of its acquisition after the commencement of the bankruptcy, was required.
The Judge held that in cases where the bankrupt has failed to comply with his obligations under section 333, a trustee should normally be held to have first obtained knowledge relevant for the purposes of section 309(1) only when the relevant facts had become clear to him, on cogent evidence verified to his reasonable satisfaction. The standard of knowledge was therefore to be set at a high level of certainty.
On the facts, the Registrar had been correct to dismiss the contention that the trustee had acquired actual knowledge of the fact of the Appellant’s beneficial ownership in the share before the Trustee had been provided with the documentation establishing the same.
This decision demonstrates the court’s reluctance to find in favour of bankrupts who fail to comply with their statutory obligations and seek to take advantage of that non- compliance, as well as providing support to trustees who seek certainty as to whether assets have been after-acquired before serving a statutory notice.
