Part 7 - Procedure at hearing
April 2000
14.33 Requirement to answer questions
Note: [r4.215(1) or 6.175(1)] [r7.51A]
The examinee will be examined on oath and must answer all the questions that the court may put, or allow to be put, to him. Refusal to answer will be a contempt of court and punishable accordingly (see chapter 13 - part 3).
There is no strict requirement, statutory or otherwise for disclosure of material or of the questions to be asked prior to a public examination. It is possible that an application to disclose material could be made under the Civil Procedure Rules (CPR) as the overriding objective of the CPR is to enable the court to deal with a case justly, including so far as is practicable ensuring that the parties are on an equal footing. The provisions of the CPR apply to insolvency proceedings to the extent that they are consistent with the Insolvency Rules, and as the overriding objective is consistent with the Rules, there may be scope to argue for prior disclosure in the interests of equality and fairness.
If criminal proceedings have been instituted against the examinee, the court may adjourn the examination where it considers that to continue may prejudice a fair trial of the criminal proceedings.
Notes: [r4.215(6) or 6.175(6)]
The principle has been affirmed in a series of modern cases with reference to both individual and corporate insolvency, that under English law the long-established privilege against self-incrimination is not an absolute right, but is one which is capable of being removed in specific situations if Parliament so intends. In the case of the Insolvency Act 1986, among other legislative enactments, the courts have concluded that Parliament did so intend, and in consequence it is not open to an examinee undergoing public examination to invoke the plea of self-incrimination as a ground for refusing to answer a question properly put in the course of the insolvency proceedings.
[Re Jeffrey S Levitt Ltd [1992] 2 WLR 975; [1992] BCLC 250; [1992] BCC137; Re London United Investments Ltd [1992] All ER 842; [1992] BCLC 285;[1992] BCC 202, CA; Bishopsgate Investment Management Ltd v Maxwell; Cooper v Maxwell [1992] BCC 214; [1992] 2 All ER 856, CA.]
In a winding up or partnership cases where two or more persons are to be examined, they may be examined together. All examinees should in these circumstances take the oath at the beginning of the examination. The official receiver should then question the examinee, after asking the other or others to listen carefully to the answers given by the first. Other examinees may subsequently be questioned. Examinees already questioned may then be re-examined in the light of answers given by others.
14.37 Representation of examinee
The examinee may at his own expense, employ a solicitor, with or without counsel, who may question him, as the court allows, to enable him to explain or qualify any answers he gives, and who may make representations on his behalf.
Notes: [r4.215(3) or 6.175(3)]
14.38 Persons who may put questions
Note: [r4.215(2) or 6.175(2)]
The following, in addition to the official receiver, may question the examinee and, with the approval of the court, appear by solicitor or counsel, or may in writing authorise another person to question the examinee on their behalf:
Note: [s133(4)(b) or 290(4)(b)] [s133(4)(c) or 290(4)(c)] [s133(4)(d) or 290(4)(d)] [s133(4)(e)]
14.39 Official receiver to take lead
As an officer of the court the official receiver is answerable to the court; and as a statutory office holder in individual cases he has responsibilities to the creditors, shareholders or the bankrupt for the administration of the estate. It is therefore his duty to see that the examination does not degenerate into a mere formality. For these reasons and because of the knowledge of the examinee’s involvement in the insolvency which the official receiver will acquire from his inquiries it will be his duty to take the lead in the public examination, whether or not he is the liquidator or trustee.
14.40 Requisitioned examinations
Where a public examination is held as a result of a requisition, the official receiver should still take the lead, although he should limit his questions to matters he considers relevant, which may nevertheless include points raised by the requisitionists.
14.41 Matters to be dealt with
After a few questions identifying the examinee with the proceedings, reference to his activities which have no direct bearing on the insolvency proceedings should be very brief. Generally, it is advisable to deal with events in chronological order so that the facts appear in perspective. It will be easier to clarify disputed points and the evidence may clearly refute an examinee’s continued denial of early insolvency or knowledge of it. In this connection dates of legal proceedings, long outstanding debts, continued borrowings, staving-off of creditors, etc., may be material.
The official receiver should ensure that if the examination is being held for a particular purpose the relevant points are fully explored and dealt with to his satisfaction.
Few examinees are able, or likely, to answer precisely and succinctly. It is important that the public examination should not be unnecessarily long (one reason is the cost) and questions should mainly be so framed that the examinee can clearly and correctly answer yes or no. Leading questions, i.e. questions framed in such a manner as to suggest to the examinee the answers required or expected of him, should be avoided. Where the examinee has been interviewed in the proceedings it will be proper for the official receiver’s questions to be framed to keep the examinee’s answers very short. There will be occasions, however, when, subject to the court’s direction, the examinee should be allowed or required to give an explanation. Where the examinee has not previously surrendered to or fully co-operated in the proceedings it is more likely that such explanations will be required.
If a practitioner, acting as liquidator or trustee attends or is represented at the hearing, the official receiver should ensure, so far as possible, that he leaves to the practitioner such questions as that person may properly wish to put (e.g. about assets), so as to avoid duplication and perhaps a reduction in the effectiveness of the practitioner’s questions. Where there is a special manager the official receiver may wish him to put questions directly to the examinee. The official receiver, himself, should normally deal with matters arising from transactions with individual creditors, even if they are present or represented and have intimated that they may wish to ask questions.
The official receiver should grant every facility and assistance to creditors and contributories or their representatives who want to take part in the examination, as their personal knowledge of the examinee and his business and dealings may occasionally enable them to elicit valuable information. Wherever possible, the official receiver should offer to pose questions on their behalf, to avoid creditors using the public examination to verbally attack the examinee. If a questioner insists, he should be allowed to ask his questions. If he makes a statement instead of putting questions (as persons inexperienced in such matters may do), the official receiver may, with the permission of the court, intervene to give such questions an interrogative form and to ensure that the examinee returns a clear answer. When any third parties have finished their questioning, the official receiver may find it advisable to put some further questions to clarify particular points or to obtain dates or other omitted details.
14.44 Undertakings or court orders regarding compliance
Where an examination is being held to enforce surrender to the proceedings or co-operation generally it may be sufficient to obtain undertakings from an examinee as regards future co-operation, the submission of a statement of affairs, etc. In county court cases where the examinee is present, such undertakings should be recorded on intranet form PEGUTC and the court asked to direct that the examinee sign the form before leaving court. It may be more satisfactory, depending on the circumstances of the case, if the court makes specific orders in relation to those matters.
In company cases, care should be taken to avoid conflict with the judgment in the case of Wallace Smith Trust Co Ltd [1992] BCC 707 - see paragraph 14.1.
Should it be essential, because of possible civil or criminal proceedings, any important document which is put to the examinee on his public examination may be handed to the registrar or district judge to be marked as an exhibit to the notes of the examination and returned to the official receiver for safe custody. If the document is produced by a third party it should be similarly marked and the official receiver should ask the court to require the producer either to hand over the marked document to him or to give an undertaking to the court to lend or produce it to him on request. Where an examinee is asked to agree with figures or other information contained in accounts or other documents, it is preferable to let the examinee have sight of copies of the relevant documents, so as to avoid vague or deliberately evasive answers.
Press reporters may be present at a public examination. Where a member of the press contacts the official receiver, only such information as is publicly available should be given.
In Friederich v Herald and Weekly Times (1990) 8 ACLC 109, the Full Court of the Supreme Court of Victoria held that only in the most exceptional circumstances should a public examination be made subject to reporting restrictions. The object of the procedure was to give a public airing of the affairs of the company concerned in order to expose suspected frauds or concealment of material facts and it was desirable that a public examination should be given as much publicity as it deserved. This decision is persuasive but not binding in the United Kingdom. Nevertheless, the same principles would appear to apply.
Where an examinee is unable either to speak or to understand English the official receiver should employ an interpreter to attend at the public examination to translate the questions and answers - see also chapter 32.3 - Auctioneers, shorthand writers, interpreters and others.
There are no provisions that would enable the official receiver to recover the costs of a public examination from the examinee and accordingly these costs should be paid from the estate. An exception is where the public examination was requisitioned by creditors (or, additionally in a winding up, contributories), in which case the court may order that they pay for the examination (see paragraph 14.17). There is also no provision for the examinee to be reimbursed any expenses incurred in attending a public examination and any claim for such expenses should be rejected.
14.49 Examination as a continuing weapon
Note: [r4.216(1) and Form 4.66 or r6.176(1) and Form 6.59]
Where an examinee has given undertakings to the court the official receiver should normally in such circumstances ask for the examination to be adjourned so that its potential reinstatement remains as a continuing weapon against the examinee should he subsequently fail to fulfil his obligations. The official receiver may feel that he has sufficient information from his other inquiries to enable him to carry out a full examination at the first hearing without having to adjourn the public examination.
[Back to Part 6 - Examinee unfit to be examined] [Onto Part 8 - Adjournments]