Matters to be considered when applying for a private examination

Part 2

Matters to be considered when applying for a private examination

March 2011 

23.21 Introduction

In the majority of cases the official receiver will be able to obtain sufficient information for the purposes of fulfilling his/her statutory duties, either from the insolvent’s papers or by correspondence. In cases where a public examination is not possible, or is inappropriate, for example to obtain enforcement orders, see paragraph 14.1, the official receiver may consider applying to the court for a private examination.

 

23.22 Notice to the respondent

The official receiver should, generally, inform the respondent that if they do not cooperate he/she will be making an application to the court for a private examination. This may be sufficient to ensure the respondent provides the information required. There will be certain circumstances, for example where assets are in jeopardy, when prior notice to the respondent will not be appropriate and an immediate application for a private examination should be made.

 

23.23 Application for the production of documents 

The official receiver can apply to the court for an order that the respondent, (see paragraphs 23.8 to 23.10 for details of who can be examined) should produce any documents in his/her possession or under his/her control relating to the affairs of the insolvent [Note 1]. Such documents may include bank statements, solicitors’ files, documents of title, correspondence, etc.

 

23.24 The decision to apply for the production of documents

The court has absolute discretion in considering an application for the production of documents. The official receiver will need to convince the court that the production of the documents is necessary for him/her to fulfil his/her statutory duties to investigate the affairs of the insolvent [Note 2] and/or, where applicable, to administer the insolvent estate [Note 3]. Further information on preparing an application is provided in Part 3.

 

23.25 Documents from HM Revenue and Customs (HMRC)

The court, on the application of the official receiver [Note 4], may order HMRC to produce a bankrupt’s returns, accounts, assessments, correspondence and other tax documents [Note 5]. These documents would otherwise be confidential and the application can only be made where there a bankruptcy order has been made. See Chapter 13 part 10 for further information.

 

23.26 Legal professional privilege – bankruptcy

The bankrupt is under a duty to deliver to the official receiver all books, papers and other records which relate to his/her estate, and belong to, or are held by him/her, including any which would be privileged from disclosure in any proceedings [Note 6]. In addition the trustee shall take possession of all books, papers and other records which relate to the bankrupt’s estate and belong to, or are held by him/her, including those which would be privileged from disclosure in any proceedings [Note 7]. As a consequence solicitors who have acted for the bankrupt are unable to claim that they are cannot produce documents as they are subject to legal professional privilege arising from the solicitor/client relationship. This view is supported by the ruling in Re Konigsburg 1989 1 WLR 1257. Some solicitors may be unwilling to provide this information unless ordered to by the court.

 

23.27 Legal professional privilege – companies

Where a winding-up order has been made the liquidator, rather than the directors, will be in control of the company. The liquidator on behalf of the company can authorise the production of all documents held by the solicitors as legal professional privilege does not apply.

 

23.28 Witness statements

The official receiver can apply to the court for an order that the respondent (see paragraphs 23.8 to 23.10 for details of who can be examined) produces a witness statement verified by a statement of truth [Note 8] or where a debt relief order has been made, a written account of his/her dealings with the debtor [Note 9]. The bankrupt, the bankrupt’s spouse, former spouse, civil partner or former civil partner cannot be ordered to produce a witness statement unless they have or may have any property which may be part of the bankrupt’s estate, are indebted to the bankrupt or can provide information regarding the bankrupt’s dealings, affairs or property [Note 10].

 

23.29 The decision to apply for a witness statement

The court has absolute discretion in considering an application for the provision of a witness statement. The official receiver will need to convince the court that the provision of the statement is necessary for him/her to fulfil his/her statutory duties to investigate the affairs of the insolvent [Note 11] and/or, where applicable, to administer the insolvent estate [Note 12]. Further information on preparing an application is provided in Part 3. The official receiver should consider applying for a witness statement in those cases where the information he requires from the respondent can be provided in a written form without the need for a full court hearing.

 

23.30 Examination in court

The official receiver can apply for an order that the respondent (see paragraphs 23.8 to 23.10 for details of who can be examined) is brought before the court to be examined [Note 13].

 

23.31 The decision to apply for an examination in court

The court has absolute discretion in considering an application for the respondent to be brought before it and questioned. The official receiver will need to convince the court that the examination of the respondent is necessary for him/her to fulfil his/her statutory duties to investigate the affairs of the insolvent [Note 14] and/or, where applicable, to administer the insolvent estate [Note 15]. Further information on preparing an application is provided in Part 3. The official receiver may consider conducting an examination in court for example, in relation to preferences, transactions at an undervalue (see Chapter 31.4A for further details about preferences and transactions at an undervalue), book debts (see Chapter 31.1 for further information about book debts) and income payment agreements/orders (see paragraph 23.32 for further information).

 

23.32 Income payments agreements/orders

Where a bankrupt has ceased paying the agreed contributions and is not cooperating with the official receiver or trustee a private examination may be used to obtain the required information. If the bankrupt has not been discharged then a public examination may be more appropriate as the official receiver could make an application to suspend his/her discharge (see Chapter 14).  Where the bankrupt has obtained his/her discharge the official receiver, or trustee, can only make an application for a private examination. If the official receiver makes the application it must be made by the official receiver as trustee (see paragraph 23.25). Detailed guidance will be included in Chapter 31.7, Part 10 which will be issued shortly.

 

23.33  Disqualification and private examinations

The official receiver can make an application for a private examination even where the sole purpose is to obtain information for use in disqualification proceedings [Note 16] subject to the discretion of the court to allow the use of a private examination for this purpose (see paragraph 23.41 for further information). Such a use of an application for a private examination should be the exception, e.g. where a bank or solicitor would be willing to provide the information on the production of a court order. Where the official receiver is concerned that the application may be construed as being solely for disqualification proceedings, or disqualification proceedings have been issued, he/she should consult the Investigation and Enforcement Services Technical Team prior to making an application.

 

[Back to Part 1 Parties involved in private examinations] [On to Part 3 Private Examination – the application]