Judges refuse pointless bankruptcy orders

Posted: 23rd January 2019

BankruptcyBankruptcy orders are discretionary and judges will not make them if they serve no useful purpose.

The High Court made that point in overturning one such order that had been issued against an all but penniless woman – on the basis that she was simply not worth powder or shot.

The woman claimed to have no income, no assets and no earning capacity.

She had little more than £60 to her name, received no benefits, rented her home from a social landlord and depended on her daughter for financial support.

A bankruptcy order was nevertheless made against her by a judge in respect of more than £8,000 in Council Tax arrears that she owed to her local authority.

In quashing the order, the Court noted that it was for the woman to prove that she lacked any means to pay the debt. However, as a public authority creditor, there was also a burden on the council to at least raise an arguable case that a bankruptcy order would achieve some useful purpose.

It was not good enough for the council to submit that the woman might come into an inheritance and that it had no other means of recovering the debt.

In the absence of evidence that she had any assets, whether present or prospective, which could be realised in any bankruptcy, the order was unjust.