Delivery matters: Gaster v. HMRC [2025] EWHC 328

This case concerned the correct method by which notice of an adjourned hearing of a bankruptcy petition should be given to a debtor. The Debtor here had been made bankrupt, and he sought to set aside or annul the order.   

Background 

At the first hearing of the petition, the Debtor has attended by Counsel, and it was adjourned for payment. The order was sealed and sent to HMRC, containing the usual service note which stated that “The court has provided a sealed copy of this order to the serving party”, followed by HMRC’s address, but with no operative order as to service.  

The same thing occurred at and following the second hearing. However, the Debtor’s solicitor understood from Counsel that the next (third) hearing was in fact a week later than it was.   

When the petition came back on at the third hearing, the Debtor was neither present nor represented. By then, the petition debt had been reduced by adjustments (presumably upon the late filing of returns) and payments. A bankruptcy order was made in the Debtor’s absence.  

The law 

Rule 10.23 of the Insolvency (England and Wales) Rules 2016 provides: –  

(1) This rule applies if the court adjourns the hearing of a bankruptcy petition. 

(2) The order of adjournment must identify the proceedings and 

contain— 

… 

(3) Unless the court otherwise directs, the petitioner must as soon as reasonably practicable deliver a notice of the order of adjournment to— 

(a) the debtor; and 

(b) any person who has delivered a notice of intention to appear under rule 10.19 but was not present at the hearing. 

(4) … 

The decision 

The Judge concluded that the Rules required that notice of an order adjourning a bankruptcy hearing did not need to be served on a Debtor (thus Sch.4 was irrelevant, and nor did the Debtor’s solicitors need to be served (at least pursuant to the Rules)) but delivered to him/her.  

HMRC had sent the Debtor a notice it intended to operate as a IR.10.23 notice. However, that letter failed to comply with the rules in various respects. Furthermore, the Debtor gave positive evidence that he had not received it, and the Judge concluded that HMRC could not give enough reliable evidence to contradict that.  

Thus, in considering whether the bankruptcy order ought not to have been made pursuant to s.282(1)(a), the Judge concluded that (a) it ought not to have been made, because the Debtor’s absence of notice deprived him of the opportunity to attend and be heard, and (b) she should exercise her discretion to annul the bankruptcy order. This was because (inter alia) the Debtor was solvent on a balance sheet basis, and he had made substantial inroads into the petition debt.  

Practical point 

This case demonstrates the importance of delivering notice of an adjournment of a bankruptcy petition to a Debtor.  

 

This case note was prepared by Katherine Hallett.