How Bankruptcy Costs Can Avoidably Hoover Up All Realisations And Become Extremely Expensive For The Bankrupt

The case of Armstrong v Temblett & Anor [2025] EWHC 1649 (Ch) demonstrates how bankruptcy can become very expensive for the bankrupt. This is particularly the case in circumstances when a debt goes unpaid but there appear to be more than sufficient assets to pay it.

The case has a number of fascinating facets, not least an application by the bankrupt for committal of the Trustee in Bankruptcy. Sadly, it is one when restraint and cooperation might have been commercially beneficial instead of perhaps an approach that appears akin to going in for a penny, in for a pound.

Liability Orders Turn Into Bankruptcy

Bath & North East Somerset Council (“the Council”) obtained liability orders against Mrs Temblett, who was made bankrupt.

Sometimes it is commercially unviable to maintain a dispute in a matter without at least providing for payment. 

To put it in context, the sum owed to the Council was £15,007.79. As soon as a person is made bankrupt, the costs of the Official Receiver (“OR”) do not germinate gradually; they sprout immediately into effect due to The Insolvency Proceedings (Fees) (Amendment) Order 2024, resulting in an administration fee of £3,300 on a creditors petition and a general fee of £7,200. 

Before the OR had lifted a pen or paper, the costs of bankruptcy upon the making of the bankruptcy order immediately, in this case, were 70% of the Council’s debt.

It appears clear in this case that there were two properties that will now undergo repossession when perhaps neither was needed.

An extraordinary bankruptcy that culminated in the judge suggesting it was possible that the costs of bankruptcy might be such that creditors end up with nothing.

The documents filed by the bankrupt did not appear to be noted by the judge (indirectly) for their brevity.

Judgment Highlights

Mr Armstrong advised that it would be better if she could settle the bankruptcy debts and she should seek independent legal advice.

The response of Mrs Temblett was extraordinary. A thirteen page letter dated 22 August 2022, purportedly written by Mrs Temblett, covered many matters. I cite some passages here:

“In the letter you made very serious threats about action you would take against me and my estate if you did not receive a reply to your letter by 5 PM on Friday 19 August 2022 – a day after the date of your letter. You knew when sending me your letter dated 18 August 2022, which was a Thursday, that it would be highly unlikely that I would receive your letter on Friday 19 August 2022, even if you had posted it on 18 August 2022. This makes the demand in your letter more threatening, malicious and intimidating…”

“Your letter constitutes bullying and harassment. Through threatening and abusive behaviour you are illegally attempting to coerce me into acting to my detriment for the gain of yourself and those you are colluding with.”

“One of the many sinister subtexts and implications of your letter of 18 August 2022 is your certainty that non-compliance with the illegal threat contained within your letter…is sufficient to obtain a court order and an associated treasure trove of costs for you.”

“This indicates that you have already arranged with the court, through illegal collusion and corruption that you will obtain an uncontested, rubber-stamped order that is favourable to you and detrimental to me.”

“You… are attempting to illegally fabricate an narrative of non-compliance in order to pervert the course of justice and cause a miscarriage of justice.”

“You were put on notice in my letter of 07 August 2022 that any action taken by you in response to the fraudulently obtained bankruptcy order will be equally illegal, and you are not entitled to any costs.”

….

Meanwhile Mrs Temblett wrote to Jake Berry MP who, at that time, was the chairman of the conservative party. The six page letter annexed a 57 page letter to Martin Armstrong who Mrs Tremblett claimed was a major donor to the conservative party. She claims that Kwasi Kwarteng appointed Mr Armstrong to carry out illegal activities (the activities are not specified):

“Those illegal activities are evidence of the conservative government’s utilisation of authoritarian practises to annihilate an innocent citizen who has revealed evidence of lawbreaking and misconduct at a very high level by several public bodies. These public bodies have colluded together to circumvent and subvert and pervert the law under legal process, in order to cover up their own continuous and accelerating law breaking and misconduct…”

…

On 21 October 2022 Mrs Temblett made an Application for committal against Mr Armstrong, and sought a stay of the bankruptcy proceedings and an order to set aside the possession order made in respect of the Bath Property. In support of the application was a witness statement running to 33 pages. The statement refers to a 243 page document served on Kwasi Kwarteng MP, a 308 page document served on Dean Beale as CEO of the Insolvency Service and an additional 421 page document served on the Insolvency Service. These documents contain a restatement that the bankruptcy of Mrs Temblett is:

“Unproven because the amounts falsely claimed to be owing by the alleged creditor Bath and North East Somerset Council were illegally charged and have never been owing. The bankruptcy is alleged and unproven because the alleged creditor Bath and North East Somerset Council has never been able in nine years to produce any evidence whatsoever that the amounts falsely claimed to be owing where legally charged by the Council…The Bankruptcy is alleged and unproven because the judge who made the bankruptcy order, Deputy District Judge Adam Rushby Chambers, was not impartial and unbiased in making his decision. Deputy District Judge Adam Rushby Chambers who made the purported bankruptcy order in favour of the alleged creditor Bath and North East Somerset Council despite no evidence having been produced in the proceedings that the amounts falsely claimed to be owing had been legally charged or were legally owing was a director of a company that had received payments of over £355,000 from the alleged creditor…”

…

Mrs Temblett responded by filing an 85 page witness statement. She said that if the Bath Property had goods in it the liability orders cannot have been properly made:

“Michelmores, their counsel and Kemi Badenoch have misled the court from the outset of the proceedings and have committed perjury…Michelmores were fully aware, from thousands of pages of correspondence, that the property was not empty…”The witness statement is in a similar form to all previous statements and correspondence. At paragraph 23 of the statement Mrs Temblett writes:

“The Secretary of State’s and Michelmore’s scurrilous letter to the court dated 21 April 2023 (suggesting that the court make an order that I’ll be medically assessed for my mental capacity), and their enclosures to their letter of 03 November 2023, are evidence of the personal character assassination of me that they are attempting for the purpose of deflecting attention from the undisputed and undenied fact that they have no case against me have acted unlawfully and are unable to proceed…The issue here is not whether I am or am not lacking in mental capacity and incapable of participating in proceedings- and there is no evidence that I am lacking in mental capacity…”

….

By a 55 page witness statement dated 20 March 2024 Mrs Temblett (name typed as a signature) said (among other things):

“44. The newest depraved tactic mentioned in Judge Clive Jones’ Order dated 26 February 2024 is to have the Respondent, and her husband, ordered to attend Court to be ‘privately examined’.

45. The Respondent’s husband has also been falsely accused by the Applicant as being in need of ‘medical assessment’ for his mental capacity, with no evidence of this being provided.
46. No evidence whatsoever has been produced by the Applicant to indicate that the Respondent is lacking in mental capacity.
47. No evidence whatsoever has been produced as to why the Respondent and her husband should be ‘privately examined’ and again no legal process is being followed.
48. Yet again, no case against the Respondent and her husband has ever been made out, no case to answer has ever been made out, and there is no reason in law why the Respondent or her husband should attend any Court for ‘examination’, private or otherwise.
49. Any reasonable person – in possession of the well-documented evidence of the depraved totalitarian tactics that have already been practiced on the Respondent in this case by the Court and the Applicant, and the well documented evidence that the Court has completely failed to protect the legal rights of the Respondent and has actively abused the Respondent’s legal rights at every opportunity – would come to the conclusion that after entering the Court for ‘private examination’ the Respondent and her husband would never be seen again.
50. This is yet another example of the motivation of the Court and the Applicant to suppress and cover up evidence of corruption by civil servants and politicians in this case, by having proceedings conducted secretly, in private, away from the possibility of public scrutiny. This is not the first time that proceedings have been conducted in secret to the Respondent’s detriment.
51. All the thousands of pages of documentary evidence in this case confirm that the bankruptcy industry, presided over by the Department of Business and Trade, currently under the control of Kemi Badenoch MP as Secretary of State, has yet again been weaponised by the Government to suppress and cover up misconduct by public bodies and public servants, including politicians.
52. All the participants in the unlawful proceedings against the Respondent know that there is no legal basis upon which the Applicant can proceed.
53. Because there is no possible legal way forward, the purpose of the current proceedings being unlawfully conducted against the Respondent, with the full support of the Court, and backing of the Ministry of Justice, is to deflect attention from the fact that there is, and never has been, any legal case against the Respondent.
54. The other purpose of the current proceedings is to buy time for the Applicant.”

…

By an e-mail dated 20 August 2024 Mrs Temblett wrote (in 173 paragraphs) about the arrest warrant issued:

“01. The First Respondent is forced to continue to seek justice from the Lord Chancellor and the Lady Chief Justice, because of the well-documented failure of the Insolvency and Companies Court to comply with legislation and legal process, and because of its well-documented abuse and exploitation of the status of the First Respondent as a litigant in person.
02. The well-documented misconduct of the ICC has demonstrated it to be untrustworthy and undeserving of the respect of the public.
03. This document is, however, also being served on the ICC, like all the previous documents received by the Chancellor.
04. The First Respondent, on behalf of herself and the Second Respondent, exercises her legal right to oppose and reject the validity of the Order of Judge Paul Greenwood dated 30 July 2024.
05. The unlawful warrants for the arrest of the Respondents issued by way of the order are invalid and unenforceable, as the Court and the Applicant know, and must be rescinded.
06. No arrest warrants have ever been seen by the Respondents, and no warrants have been served on the Respondents.
07. Judge Paul Greenwood knows his Order is unlawful, just like the other judges in this case know that their orders have been unlawful.
08. I am the victim in this case. I am the victim of an 11-year-long fraud against me that began with a local authority’s unlawful attempts to extort unexplained amounts of money from me that I did not owe and which they have always been unable to prove I owe.
09. It is obvious to anyone that what the Court is attempting to do, to desperately vindicate 11 years of documented unlawful activities against me in which the Court has been complicit, is to turn me, a completely innocent victim, into some kind of criminal.
10. What the Court is doing is depraved. The Court knows this and gives the impression of revelling in this ignominy, along with the other lawyers involved in this case, who have shown they will stop at nothing in competing to score points against me, a litigant in person with no legal training.
11. The Order of Judge Paul Greenwood dated 30 July 2024 is a document made for the perpetration of fraud. It must be immediately rescinded. There is no need for debate about this, no need for a ‘hearing’. It is a fact which all the documentation in the case confirms.
12. Judge Paul Greenwood was fully aware from the preceding documents in the case which were before him on 30 July 2024, that there were no legal grounds for the issuing of arrest warrants, but the Judge issued unlawful arrest warrants anyway, as further weapons of oppression, intimidation and threat against the Respondents, when the Court and the Applicant have no way of legally progressing the proceedings.”

…

There would have been no bankruptcy order if Mrs Temblett had chosen to pay the council tax when it was demanded. That opportunity lost, she could have paid the liability order made by the Magistrates Court within the time frame permitted. If she had missed the limitation period for appealing the liability order it would have been open to her to pay the debt and challenge it after payment.

She had another opportunity to pay the debt on the service of the statutory demand. She chose to dispute the debt in court by making an application to set aside the statutory demand. She was unsuccessful. She would have had another opportunity to pay the debt in the period between losing the application to set aside the statutory demand and the presentation of the bankruptcy petition. She could have asked for time to pay the debt at the first hearing of the petition, if she could pay within a reasonable period of time. She did not do so.

There would have been no need for a possession order in respect of the Bath Property if, as advised by the Trustee, Mrs Temblett had arranged to pay the bankruptcy debts and expenses in full in August 2022; there would have been no need for the possession action taken in respect of the London Property if Mrs Temblett had cooperated with the Trustee and assisted him to realise the value in the Bath Property as it is likely that the proceeds would have paid all creditors and expenses.

The failure to cooperate with the Trustee or accept the advice he provided, the mass of correspondence, threats, allegations, the applications made and the choice taken by Mr and Mrs Temblett to resist the bankruptcy proceedings alleging political conspiracies, corruption, forged documents, and judicial misconduct has impeded the Trustee from administering and winding up the bankruptcy estate in a cost effective and timely manner. These actions have increased the costs unnecessarily.