NO RETROSPECTIVE SANCTION FOR SERVICE OF A BANKRUPTCY PETITION

Attempting service of bankruptcy proceedings can be exasperating when a debtor deliberately seeks to avoid personal service of the relevant documents.  Usually a frustrated creditor obtains a Court Order for Substituted Service permitting the creditor to go on to serve the bankruptcy petition by an alternative method.

The recent case of Ardawa v Uppal & Anor [2019] EWHC 456 (Ch) (01 March 2019) – confirmed that a court did not have the power to simply retrospectively sanction steps already taken – it must set out what has to be done in the future.  Divorce proceedings resulted in a substantial costs order against the former husband which his ex–wife sought to enforce.  The process server she instructed to serve the statutory demand attempted personal service by visiting the relevant property, then gave the usual notice of appointment and finally posted the statutory demand through the letter box.  Judge Roth ruled that constituted valid service – even though she chose not to attempt service at an alternative address she held for her former husband.

The same process server followed much the same procedure when it came to attempting service of the petition – visiting the property followed by letterbox service of the petition.  His ex-wife then obtained an Order from the Court retrospectively authorising service of the petition without requiring her to take any further steps.  Two months afterwards she obtained a Bankruptcy Order against her former husband.

He appealed against his bankruptcy on the basis he had not been properly served with the petition.  Under the then insolvency rules the requirements to serve a statutory demand and a petition were different.  In respect of a statutory demand the creditor has “to do all that is reasonable for the purpose of bring the statutory demand to the debtor’s attention if personal service is not possible”.  This contrasts with a petition where personal service is required failing which a court “may order substituted service to be effected in such manner as it thinks just”.  In other words, service by anything other than personal service requires prior ratification from the Court for a bankruptcy petition but not for a statutory demand. 

Although ruling the bankruptcy petition had not been properly served, Judge Roth then refused the former husband’s application for an annulment of his Bankruptcy.  The lack of sympathy for him reflected in the following comment – “This was an undisputed debt, arising from orders in court proceedings between these parties, which the Appellant had failed to pay …….” .

The ruling serves as a useful reminder of the more onerous service obligations for bankruptcy petitions.

 

The above article appeared in June 2019 edition of “The Consumer Credit Magazine “ published by the Consumer Credit Trade Association.


Our Core Values