Centre Of Main Interests For Bankruptcy
In order to make someone bankrupt in England and Wales it must first be established where they are based ie. their centre of main interests for bankruptcy.
The Centre of main interest for Bankruptcy is determined by one of the following by virtue of Section 265(2) of the Insolvency Act 1986:
- They are domiciled ie. it is a person’s permanent home.
- In the last three years the person has been ordinary resident or it has been a place of residence or a place where they have carried on a business.
What Is A Place Of Residence?
A place of residence for Bankruptcy is somewhere that is ‘home’, and has a degree of continuity and permanence.
However, control of a relevant property is not the test.
In the case of Durkan & Anor v Jones (Re Nicholas Mark Jones & Insolvency Act 1986) [2023] EWHC 1359 (Ch) (“Durkan”) it was put in the following way:
The “place of residence” limb of jurisdiction was recently considered by Bacon J in Lakatamia Shipping Co Ltd v Su [2021] EWHC 1866 (Ch), [2022] BPIR 181, at paragraphs 24-26 and 36-37, from which Mr Leung derives a number of principles set out in his skeleton argument which I gratefully adopt, adapt and supplement as follows, continuing the numbering used in paragraph 6 above:
(4) The concepts “ordinarily resident” and “having a place of residence” are not totally separate, so that similar factors may be relevant to both tests; but it does not follow that all factors that may be relevant to one will be relevant to the other (para 32).
(5) The phrase “has had a place of residence” should be given its natural meaning (para 33).
(6) Regard may be had to authorities on the interpretation of the expression, even if they arose in different statutory contexts (para 33).
(7) The nature of a person’s presence in and connection to a particular place is a relevant factor in determining residence.
(8) The test of “having a place of residence” requires an assessment of the quality of the debtor’s residence. It does not simply mean that the debtor has an entitlement of some sort to occupy a place that is capable of being described as someone’s place of residence (para 24).
(9) The residence must be that of the debtor, and not someone else (para 25).
(10) Thus, the residence cannot merely be the residence of a third party that the debtor is temporarily occupying with the third party’s permission (para 26).
(11) In determining whether a debtor has had a place of residence in England and Wales, it is relevant to ask whether the putative place was a “settled or usual place of abode or home” for the debtor (para 36).
(12) Residence connotes “some degree of permanency, some degree of continuity or some expectation of continuity” (para 37).
(13) The nature of a person’s presence may be a relevant factor: for example whether it was voluntary or not (paras 38-39).
What Is Carrying On A Business?
What is carrying on a business can be difficult to define.
In Durkan it was put in the following way:
Whether someone is carrying on business gives rise primarily to a factual inquiry (Anglo Irish Bank Corporation Ltd v Flannery [2013] BPIR 1), although it is necessarily a mixed question of fact and law. Mr Leung submits that the court must decide (a) what the debtor did; (b) when he did it; and (c) whether what he did amounted to carrying on business (see Masters v Barclays Bank plc [2013] EWHC 2166 (Ch), [2013] BPIR 1058). I agree.
What constitutes carrying on business is hard to define. In Charlton v Funding Circle Trustees Ltd & Anor [2019] EWHC 2701 (Ch), [2020] BPIR 125 Barling J noted that the authorities failed to provide a “magic touchstone of what amounts to carrying on a business” but that they did contain helpful guidance in the form of examples of what had been held to amount to doing so (para 21). He went on to give some of those examples. Unfortunately none enables me to latch onto it and apply it directly to the facts of this case.
The term “business” is similarly elusive. I was referred by both Mr Gupta and Mr Leung to the judgment of Judge Berner in Ramsay v Revenue and Customs Commissioners [2013] UKUT 226 (TCC), [2013] STC 1764 in which he said this:
“[25] As [counsel for HMRC] pointed out, the word ‘business’ has been described, by Lord Diplock in Town Investments Ltd v Department of the Environment [1977] 1 All ER 813 at 819, [1978] AC 359 at 353, as ‘an etymological chameleon; it suits its meaning to the context in which it is found.’ That case concerned whether a lease to a government ministry, where the premises were occupied by civil servants was a business tenancy within the meaning of then-applicable counter-inflation legislation. By reference to the mischief of those provisions, ‘business’ was construed broadly, so as to have no less wide a meaning than that applicable in covenants regarding the use of demised premises.
[26] That construction followed from Rolls v Miller (1884) 27 Ch D 71, where Lindley LJ pointed out ((1884) 27 Ch D 71 at 88) that the dictionary meanings of ‘business’, where the word means almost anything which is an occupation, as distinguished from a pleasure, or anything which is an occupation or duty which requires attention, were not of great assistance. The word must be construed according to its ordinary sense, having regard, in that context to the object of the covenant, and in this to the purpose of the legislation.”
The learned judge went on to say a great deal more, but much of it is directed to issues of tax law, so I should be wary of drawing too heavily on a judgment that is not about the issue which I have to decide.
It does seem to me that just as Roth J said that the expression “place of residence” should be given its ordinary meaning, so too the expression “carrying on business” should be construed according to its ordinary sense, having regard to the context (cf the passage from Rolls v Miller cited by Judge Berner above).
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