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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Lockston Group Inc v Wood  EWHC 2962 (Ch) (27 October 2015)
Cite as:  WLR 2091,  EWHC 2962 (Ch),  WLR(D) 429,  1 WLR 2091,  BPIR 94
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London, EC4A 1NL
B e f o r e :
| IN THE MATTER OF THE ESTATE OF PLATON ELENIN (ALSO KNOWN AS BORIS ABRAMOVICH BEREZOVSKY) AND IN THE MATTER OF THE INSOLVENCY ACT 1986 as modified by THE ADMINISTRATION OF INSOLVENT ESTATES OF DECEASED PERSONS ORDER 1986
LOCKSTON GROUP INC
|- and -
|NICHOLAS STEWART WOOD
(instructed by Enyo Law LLP and Stephenson Harwood LLP)
for the Applicant and JSC Baltic International Bank
Stephen Atherton QC and Donald Lilly
(instructed by Holman Fenwick Willan LLP) for
the Respondent and Nicholas Stewart Wood, Kevin John Hellard and
Michael Thomas Leeds
Simon Davenport QC and Aidan Casey (instructed by Pinsent Masons LLP) for
JSC Aeroflot Russian Airlines and
The Government of the Samara Region of the Russian Federation
Hearing dates: 28, 29 and 30 April 2015
Crown Copyright ©
Mr Justice David Richards:
Administration of insolvent estates of deceased persons: the legal framework
"… the same provisions as may be in force for the time being under the law of bankruptcy with respect to the assets of individuals adjudged bankrupt shall apply to the administration of the estate with respect to the respective rights of secured and unsecured creditors, to debts and liabilities provable, to the valuation of future and contingent liabilities and to the priorities of debts and other payments."
"The provisions of the Act specified in Parts II and III of Schedule 1 to this Order shall apply to the administration in bankruptcy of the insolvent estates of deceased persons dying before presentation of a bankruptcy petition with the modifications specified in those Parts and with any further such modifications as may be necessary to render them applicable to the estate of a deceased person and in particular with the modifications specified in Part I of that Schedule, and the provisions of the Rules, the Insolvency Regulations 1986 and any order made under section 415 of the Act (fees and deposits) shall apply accordingly."
Relevant provisions applying in the bankruptcy of a living individual
"(1) "Bankruptcy debt", in relation to a bankrupt, means (subject to the next subsection) any of the following —
(a) any debt or liability to which he is subject at the commencement of the bankruptcy,
(b) any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy,
(c) any amount specified in pursuance of section 39(3)(c) of the Powers of Criminal Courts Act 1973 in any criminal bankruptcy order made against him before the commencement of the bankruptcy, and
(d) any interest provable as mentioned in section 322(2) in Chapter IV of Part IX."
All debts and liabilities, whether present or future, certain or contingent, fixed or ascertained or capable of being ascertained by fixed rules or as a matter of opinion fall within this definition: section 382(3). The effect of section 382(2) is that a liability in tort is a bankruptcy debt if the cause of action accrued before the commencement of the bankruptcy.
"(4) Any surplus remaining after the payment of the debts that are preferential or rank equally under subsection (3) shall be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the commencement of the bankruptcy; and interest on preferential debts ranks equally with interest on debts other than preferential debts.
(5) The rate of interest payable under subsection (4) in respect of any debt is whichever is the greater of the following—
(a) the rate specified in section 17 of the Judgments Act 1838 at the commencement of the bankruptcy, and
(b) the rate applicable to that debt apart from the bankruptcy."
"For the purpose of proving a debt incurred or payable in a currency other than sterling, the amount of the debt shall be converted into sterling at the official exchange rate prevailing on the date of the bankruptcy order."
This gave effect to judicial decisions made after the decision of the House of Lords in Miliangos v George Frank (Textiles) Ltd  AC 443 but before any statutory provision was made for the conversion of foreign currency debts for the purposes of proof: see In re Dynamics Corporation of America  1 WLR 757 and In re Lines Bros Ltd  Ch 1.
"I take it to be well established that the purpose of both the Bankruptcy Act 1914 and its predecessors, and of the winding up provisions of the Companies Act 1948 and its predecessors, was to ascertain the liabilities of the bankrupt or of the company, as the case may be, as at the date of the bankruptcy or liquidation, and to secure the division of the debtor's property among the claimants pro rata according to the value of their claims at that date."
"The provisions of both the Companies Act 1948 and the Bankruptcy Act 1914 with regard to the submission of proof are I think all directed to this end, that is to say, to ascertaining what, at the relevant date, were the liabilities of the company or the bankrupt as the case may be, in order to determine what at that date is the denominator in the fraction of which the numerator will be the net realised value of the property available for distribution. It is only in this way that a rateable, or pari passu, distribution of the available property can be achieved, and it is, as I see it, axiomatic that the claims of the creditors amongst whom the division is to be effected must all be crystallised at the same date, even though the actual ascertainment may not be possible at that date, for otherwise one is not comparing like with like; and, indeed, this, as it seems to me, is implicit in the provisions of section 302 of the Act of 1948, which provides: "Subject to the provisions of this Act as to preferential payments, the property of a company shall, on its winding up, be applied in satisfaction of its liabilities pari passu, …"
Application of bankruptcy provisions to the insolvent estates of deceased persons
"(a) any debt or liability to which he is subject at the commencement of the bankruptcy.
(b) any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy."
"The overall aim is that the unsatisfied creditors of a deceased insolvent should be enabled to receive such payment as might have been forthcoming to them by way of dividend if the debtor's adjudication had preceded his death."