Can a second annulment application be an abuse of process even though a bankruptcy order should not have been made?
- Personal Bankruptcy
In July 2019 the High Court held that it was an abuse of process for an individual to make a second application to annul his bankruptcy on substantially identical grounds to his first, failed, application.
In the case of Lambert v Forest of Dean District Council and others  EWHC 1763 (Ch) (8 July 2019) the first annulment application had been struck out as a result of the failure of the applicant (L) to comply with an outstanding costs order, which had been a condition for the continuation of the application.
When the court dismissed L's second application, the court noted that the proper way of seeking to reinstate an application that had been previously struck out was by applying for relief from sanction. By bypassing this process and still without attempting to comply with the costs order, L had abused the court's processes. The court also added that, even had L applied for relief from sanction, this would still have been refused due to the seriousness of his failures to comply with court directions.
The court also dismissed the second annulment application on its merits notwithstanding the fact that the court was prepared to accept that the petitioning creditor's original statutory demand had not been properly served and accordingly that the resulting bankruptcy order should not have been made.
As often happens the court could not question the validity of the petition debt because it arose out of a council tax liability order and such statutory liabilities could support a bankruptcy petition without further court scrutiny (other than where there was fraud, collusion or a miscarriage of justice). (That said, the court did not suggest that there was not ordinarily a need for the council to serve a valid statutory demand before a bankruptcy petition in respect of such liability orders.)
The court also observed that, even if the court annulled the bankruptcy order, the petitioning creditor would simply restart the bankruptcy process. Moreover, there were apparently suspicions that the bankrupt had concealed assets from his trustee.
How We Can help
At Summit Law LLP we feel that these indications from the High Court as to the proper approach to an application for relief where an annulment application has been refused are very useful. Should you wish to apply for an annulment please contact our team of experts.
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