Allowing an appeal against a judgment of Deputy ICC Judge
Passfield, Bacon J has re-examined the meaning of having a place of
residence in s 263I(2)(b) IA 1986, taking what some may feel to be
a more restrictive approach than that adopted by the courts in the
recent past, albeit by reference to an unusual set of facts.
"In outline," she said, "the question is whether
the courts have jurisdiction to declare the first respondent Mr Su
bankrupt, in circumstances where his presence in England and Wales
during the past three years has been involuntary and the product of
various court orders restraining him from leaving as well as
committal orders leading to Mr Su's imprisonment in HMP
Pentonville from March 2019 to April 2020, and where it is said
that his presence at various other addresses during that period has
been only temporary or transient."
The background to Bacon J's judgment in Lakatamia
Shipping Co Ltd v Su [2021] EWHC 1866 (Ch) was long
standing litigation arising out of a 2008 contract between
Lakatamia and Mr Su, a dual citizen of Japan and Taiwan, resulting
in two judgments against Mr Su for more than $60m which he had
failed to pay. In 2019 Mr Su had been committed to prison for 21
months for ten counts of contempt of court, including an attempt to
flee the jurisdiction, and later for an additional four months for
further contempts of court. Two applications for permission to
purge his contempts had been dismissed. Mr Su had been released
from prison in 2020, having served half of the two sentences
imposed, but had been unable to leave the country because in
January 2020 yet another order had been made prohibiting him from
leaving the jurisdiction on his release from prison until he had
given evidence regarding his assets under CPR Part 71. On 4 July
2020 Mr Su had applied for his own bankruptcy, and on 8 July 2020 a
bankruptcy order had been made by the adjudicator. Lakatamia
applied for annulment, and on 20 February 2021 applied for summary
judgment on its application on the basis that the adjudicator had
had no jurisdiction to make the bankruptcy order. The summary
judgment application had been dismissed by Deputy ICC Judge
Passfield, who found that Mr Su had had a place of residence in
England and Wales during the relevant period,
Lakatamia relied on the fact that Mr Su's presence in the
country was involuntary: incarceration in prison could not be
regarded as having a place of residence; and Mr Su's subsequent
occupation of properties belonging to friends was temporary and had
none of the hallmarks of residence. Counsel for Mr Su submitted
that the statutory language had to be interpreted as meaning no
more than that the debtor had an entitlement, which could be a
license or moral entitlement rather than a legal entitlement, to
occupy a place that was capable of being described as a place of
residence, whether or not the residence was that of the debtor
himself. On that basis he contended that Mr Su had had places of
residence at a hotel, apartments, a friend's house in Surrey
and a flat he was currently using in Maida Vale. All of those
premises, he said, were places in which somebody was capable of
residing, and where Mr Su had some sort of entitlement to
stay.
Bacon J rejected the debtor's case for jurisdiction.
She did so first by reference to the statutory language:
"As set out in section 263I(2), the test is that 'the
debtor ... has had a place of residence'. On the plain meaning
of those words, therefore, the residence must be that of the debtor
not someone else."
Secondly, she held that the construction put forward on behalf of
Mr Su was not supported by authority. Citing the judgment
in Reynolds Porter Chamberlain v Khan, she found that
nothing in it suggested that a debtor could have a place of
residence where he had not in fact ever resided, but which was the
residence of a third party which the debtor was occupying with the
permission of that third party on a temporary basis.
Thirdly, she found that the construction advanced on behalf of Mr
Su "diminish[ed] the test in section 263I to complete
triviality, in a way that would make no sense in the context of the
statutory provision." She agreed with counsel for the
appellant that the primary jurisdictional test under the section
was that the debtor's centre of main interests should be in
England and Wales; as a derogation from that test, jurisdiction was
established where one of the four conditions in s 263I(2) was
satisfied, namely domicile in England and Wales, being ordinarily
resident there, having had a place of residence there, or having
carried on business there during the relevant period. She
said:
"The conditions of domicile, ordinary residence and
carrying on business all connote a degree of substantiality and
continuity of the connection of the debtor with the jurisdiction.
By contrast, on [counsel for Mr Su's] case a debtor could
invoke the jurisdiction of the Insolvency Adjudicator simply on the
basis that they had permission to occupy the residence of a third
party for some period of time during the three years preceding the
bankruptcy application, no matter how fleeting and transient that
occupation was – and indeed on [counsel's] submission
irrespective of whether the debtor even did occupy those premises
at all. That would be an absurd result that would render
effectively nugatory the jurisdictional test in section 263I of the
Insolvency Act."
Having found for the appellant, the judge went on to comment on
what she considered to be the correct approach to the issue, albeit
with the caveat that her comments should not be regarded as an
exhaustive exposition:
(1) It is clear that there is a difference between the concept of
"ordinarily resident" and the alternative test of having
a place of residence under s 263I. That does not mean that the two
tests are wholly separate. As Chief Registrar Baister noted at
paragraph 27 of Khan, it may be that similar factors are relevant
to both tests; but it does not follow that all of the factors that
may be relevant to the assessment of whether a debtor is ordinarily
resident will necessarily be relevant to the separate question of
whether the debtor has a place of residence in England and Wales.
If that were the case, then the existence of the two separate tests
would be meaningless.
(2) The starting point should be that the phrase "has had a place of residence" should be given its natural meaning. In that regard it is relevant to have regard to authorities on the interpretation of the concept of residence in different statutory contexts. Thus, in the tax context, in Levene v Commissioners of Inland Revenue Viscount Cave LC defined the word "reside" by reference to the Oxford English Dictionary as meaning "to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place" (a definition which the judge noted remains unchanged save for the substitution of the word "home" for "abode" in the current online edition of the OED). In the more recent case of Bank of Dubai v Abbas, Saville LJ said, referring to Levene, that, "Although this was a tax case, it is clear that the meaning given to the word in that case was its ordinary meaning, uncoloured by the fact that it was used in a revenue context." On that basis he held that a person was resident for the purposes of the relevant statutory provision in a particular part of the United Kingdom "if that part is for him a settled or usual place of abode." It followed, in Bacon J's view, that in determining whether a debtor has had a place of residence in England and Wales during the relevant period for the purposes of s 263I, it was relevant to ask whether the place was for the debtor a settled or usual place of abode or home.
(3) Similarly, on the basis of the Court of Appeal's judgment in Grace v Commissioners for HM Revenue & Customs, citing with approval the summary given by Lewison J at first instance, residence "connotes some degree of permanence, some degree of continuity or some expectation of continuity."
(4) Although [counsel for the appellant] initially suggested
that if a person remained involuntarily in England and Wales
because, for example, they were restrained from leaving by order of
the court, that would prevent that person from having a place of
residence for the purposes of s 263I, he had accepted that this was
merely a factor to take into account. "In my judgment,"
Bacon J said, "that is the correct approach. The nature of
someone's presence in and connection to a particular place is a
relevant factor in determining residence, as set out in (iii) of
Lewison J's summary cited at paragraph 6 of Grace. As part of
that assessment it will be relevant to consider whether the
debtor's presence is voluntary or not. Beyond that, however,
the assessment will turn on the facts of the particular case."
Noting that it was no longer suggested in the case before her that
Mr Su's incarceration amounted to residence or having had a
place of residence, she said, "It does not, however, seem to
me inexorably to be the case that the fact that Mr Su was injuncted
from leaving the jurisdiction meant that he was a priori incapable
of having a place of residence in England and Wales."
Applying those factors to the case before her Bacon J held that Mr
Su's presence at each of the locations in contention had been
temporary and transient with no degree of permanence or expectation
of continuity. The longest period of time he appeared to have been
spent in any one place had been at a flat in Maida Vale which a
prison cellmate had allowed him to use, where he kept few
possessions and which in his own evidence he had described as like
still living in a prison.
Although the case was decided by reference to s 263I(2) IA 1986
(which deals with jurisdiction for a debtor's bankruptcy
application) it will be equally relevant to jurisdiction to present
a creditor's petition to which s 265 applies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.