Bankruptcy petitions – Negligence – Insolvency rules

Trustee in bankruptcy of Louise St John Poulton v Ministry of Justice: CA (Civ Div) (Lords Justice Pill, Lloyd, Pitchford): 22 April 2010

The appellant Ministry of Justice appealed against a decision ([2009] EWHC 2123 (Ch), [2009] BPIR 1512) that an action lay against it for breach of statutory duty, while the respondent trustee in bankruptcy (T) appealed against the judge’s ruling that he had no claim against the Ministry at common law. The bankrupt had, after the presentation of the bankruptcy petition, sold a property owned by her. Had the petition been the subject of an entry in the register of pending actions and in the registered title of the particular estate, the sale would not have taken place. Those steps had not been taken because the staff at the county court, at which the petition had been issued, had failed to comply with the obligation in rule 6.13 of the Insolvency Rules 1986 to give the Chief Land Registrar notice of the petition, and a request that it be registered in the register of pending actions. The judge held that an action lay at the instance of T against the ministry for breach of statutory duty but not at common law.

Held: (1) The judge had been wrong to hold that an action lay for breach of statutory duty. The question should be addressed as at January 1, 1926, with the introduction of the new Bankruptcy Rule 149A and at the same time the new provisions of the Land Charges Act 1925 and the Land Registration Act 1925. The new rule, seen in its proper context of the other bankruptcy rules and the changes made by the two acts, did not disclose an intention that failure to comply with the duty now found in rule 6.13 of the 1986 rules should give rise, if loss resulted, to a private claim for damages. No such sanction was necessary to make the rule more than a ‘pious aspiration’, since, on the part of the relevant court officers and staff, the obligation would be performed as a matter of course. It was not a case in which, in Lord Normand’s words, ‘otherwise the duty might never be performed’, Cutler v Wandsworth Stadium Ltd [1949] AC 398 HL considered. The fact that occasionally there might be a failure due to oversight was not a sufficient reason to find a private remedy for breach of the obligation created by the rule. That was supported by the fact that the petitioning creditor could, if it wished, make the request to the Chief Land Registrar itself. If, as Lord Browne-Wilkinson said in X (Minors) v Bedfordshire CC [1995] 2 AC 633 HL, the basic proposition was that in the ordinary case a breach of statutory duty would not, by itself, give rise to any private law cause of action, but such a cause of action would arise if it could be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that parliament intended to confer on members of that class a private right of action for breach of the duty, the correct view in this case was that the enactment of the new bankruptcy rule in 1925 had not been intended to confer such a right of action, X v Bedfordshire CC applied.

(2) The judge had been right to hold that no action lay at common law. In the absence of a claim for breach of statutory duty, there was no basis for such an action, Gorringe v Calderdale MBC [2004] UKHL 15, [2004] 1 WLR 1057 and Customs and Excise Commissioners v Barclays Bank Plc [2006] UKHL 28, [2007] 1 AC 181 applied.

Appeal allowed.

Gabriel Moss QC, Jonathan Lopian (instructed by the Treasury Solicitor) for the appellant; Augustus Ullstein QC, James Dawson (instructed by DWF Solicitors) for the respondent.