Debra Elizabeth Adjei v The Official Receiver & Anor
[2023] EWHC 1553 (Ch)
Marcellus Adrianus Antonius Kooter v The Official Receiver & Ors
22 March 2023
[2023] EWHC 594 (Ch)
High Court
Someone went bankrupt, but it turned out the court didn't have the right to do that because they lived in the wrong country. The person who successfully challenged the bankruptcy had to pay some of the bankruptcy's costs, but not all of them, because it was mostly the bankrupt person's fault.
Key Facts
- •Bankruptcy adjudication of Manuela Raykova Radeva (debtor) dated 27 March 2019 was annulled on 24 October 2022.
- •Marcellus Adrianus Antonius Kooter (applicant), the largest creditor, applied for annulment under section 282(1)(a) of the Insolvency Act 1986, arguing lack of jurisdiction due to debtor's COMI being in Bulgaria, not England and Wales.
- •The debtor's application for bankruptcy stated her COMI was in England.
- •Kooter obtained a judgment against the debtor for approximately £206,000 on 7 February 2019, and freezing/third-party debt orders.
- •Trustees in bankruptcy were appointed on 2 July 2019.
- •The annulment application was made on 23 July 2019.
- •The court found the debtor's COMI was in Bulgaria, leading to the annulment.
- •The court considered the liability for the Trustees' costs and remuneration.
Legal Principles
Four components of costs incidental to an annulment: costs of the original petition; costs of the annulment application; Official Receiver's costs; trustee's costs.
London Borough of Redbridge v. Mustafa [2010] EWHC 1105 (Ch)
Trustees in bankruptcy are normally entitled to remuneration from the estate; discretion exists regarding who bears the costs in annulment cases.
Butterworth v Soutter [2000] BPIR 582
Court has unfettered discretion on trustee costs; no presumption in favor of awarding trustee costs; innocence of the successful applicant does not prevent costs order; trustee's conduct can affect the decision.
Oraki v Dean and Dean (A firm) [2013] EWCA Civ 1629
Remuneration of office holders should be considered according to the Practice Statement on fixing and approval of remuneration and Brook v Reed [2011] EWCA Civ 331.
Practice Statement and Brook v Reed [2011] EWCA Civ 331
Outcomes
Kooter's annulment application granted.
Court found debtor's COMI was not in England and Wales; jurisdictional challenge successful.
Kooter ordered to pay £7,500 plus VAT towards Trustees' costs.
Balancing factors: Trustees' high costs despite jurisdictional challenge; Kooter's success; debtor's unlikely ability to pay; Trustees' statutory obligations; avoidance of unjust result. Kooter's partial responsibility was deemed appropriate given the circumstances.
Costs order against debtor for all costs associated with the bankruptcy.
Debtor misrepresented her COMI, leading to the bankruptcy order that was subsequently annulled.