Pre-trial or post-judgment relief - Income payments order - Defendant becoming voluntarily bankrupt in amount of £8,880

Official Receiver v Negus: ChD (Mr Justice Newey): 16 December 2011

In October 2010, the defendant became voluntarily bankrupt in the amount of £8,880. He earned around £1,000 per month.

In April 2011, an income payments order was sought by the claimant official receiver. Concern arose as to the fact that any payments made by the defendant would be exhausted by the fees payable to the secretary of state and the receiver’s costs. Consequently, no order was made. The official receiver appealed against that decision.

The issue arose as to whether it was appropriate for an interim payments order to be made where payments made by the person against whom the order was made would be exhausted by the fees payable. The appeal would be allowed.

Had parliament intended interim orders only to be made where they were of benefit to unsecured creditors, it would have explicitly provided for that to occur. In the circumstances, it had chosen not to. There was no reason for treating fees as less important than the debts of unsecured creditors. It would be peculiar in the circumstances for the secretary of state and the official receiver to end up out of pocket.

Further, the bankruptcy regime had an important public function, and was not just a private matter between the bankrupt and his creditors. It was not inconsistent that the bankrupt should have to contribute where his income allowed him to, especially where the bankrupt had presented the bankruptcy petition himself.

Moreover, even if the sums payable had been insufficient to assist the unsecured creditors at that moment, it was necessary to consider the possibility of acquiring money from the bankrupt in the future. Nothing would justify treating the official receiver’s fees as of less importance than the bankrupt’s provable debts. An order for interim payments would be made.

Andreas Gledhill (instructed by the Treasury Solicitor) for the Official Receiver; Peter Head (instructed by SGH Martineau) for the defendant.