Carry On Business (Oh, Matron!)

Posted on Jul 25, 2023. by NTI

Talking law (so tune out now if you know it all), section 265 of the Insolvency Act 1986 states that a Bankruptcy petition cannot be presented to the court unless the debtor is domiciled or is personally present in England and Wales on the day on which the petition is presented, or at any time in the period of 3 years ending with that day.

Hang around, this is where it gets interesting. Later in that same section it says that being 'personally present' includes 'the carrying on of business' ... by an agent or manager for the individual. Which brings us to the steps of the High Court yesterday (Monday 24 July).

Mr Jones, the debtor in Durkan v Jones, left the UK in 2018 to live in the States. The sole issue before the High Court was whether it had jurisdiction to make a Bankruptcy Order, and whether in the period of three years ending with the date of presentation of the petition, the debtor had had a ‘place of residence’ in England within the meaning of section 265, because there was no doubt that Mr Jones was in America on the date the petition was filed.

Mr and Mrs Jones had purchased 'The Grange in their joint names as their residential property. From March 2019 to January 2022, The Grange was let out to a set of tenants under a written tenancy agreement. The court was left with the conundrum that the phrase 'carried on business', as argued by Durkan, the petitioner, included acting as landlord of The Grange and letting out that property to the tenants.

Unsurprisingly the court rejected the premise that The Grange was the Jones's 'place of residence' ... because it wasn't; they were living in the States. However, in relation to ‘carried on business’, the Judge accepted the petitioners’ argument. As long as he didn't start talking about 'magic touchstones' we can follow his argument. He observed that what constitutes carrying on business is hard to define, and that the authorities failed to provide a ‘magic touchstone’.


But then he did decide that, as a matter of ordinary sense, the debtor’s letting of The Grange amounted to 'carrying on business', given that it involved ‘the provision of goods or services for profit or gain’. This suggests that there would be jurisdiction over debtors on the basis of even modest income-generating activities within England.

The implications of this? Well, foreign residents who conduct any sort of investment activity in England (for example, letting out a property, or even owning shares and bonds), even on a very small scale, could well be sufficient for the English courts to accept Bankruptcy jurisdiction over them.

How interesting is THAT?

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