A Case Analysis
Becker v (1) Ford (2) O’Connell (3) Official Receiver
Darian Murray-Griffiths writes about the recently concluded Insolvency Law case in the ongoing bankruptcy saga of the famed professional tennis player, Boris Becker. This judgment of February 2024 discharged Mr Becker from bankruptcy. The judge interestingly considered the extent to which trustees might rely upon ‘past conduct’ and behaviour as a reason for enforcing a continuing state of bankruptcy on an individual. The judgment also discussed what might be the appropriate teleological purpose of the court’s powers to prevent the discharge of bankruptcy.
Background
Mr Becker declared bankruptcy in the United Kingdom in June 2017. In April 2022, he was convicted of hiding assets and loans that the court had required him to disclose to creditors and the bankruptcy trustee, and he served a prison sentence in the UK
Under Section 279 of the Insolvency Act 1986, a bankrupt in England and Wales is automatically discharged after a period of one year has elapsed, beginning with the date on which the bankruptcy started. However, under Section 279(3) of the 1986 Act, the running of time of this period can be stopped via application from the joint trustees of the bankruptcy (“the joint trustees”).
The joint trustees applied for an interim order under section 279(3), due to Mr Becker’s failure to comply with his obligations under the 1986 Act. These obligations include the truthful disclosure of financial assets to creditors and trustees.
The order was successfully granted by the court in June 2018. Until February 2024, Mr Becker’s running of time remained suspended.
Decision of the High Court – Chancery Division
In February 2024, Mr Becker applied to discharge the suspension of time running. In this case, Mr Ford and Mr O’Connell were the joint trustees of the bankruptcy estate of Mr Becker.
Chief Insolvency and Companies Court Judge Briggs ruled that Mr Becker was discharged from bankruptcy from 27 April 2024 onwards.
Points the judge took issue with
The judge ruled that he found a statement of the joint trustees to be ‘curious’. In their witness evidence, the joint trustees had stated that they were ‘not aware of any specific outstanding issues in terms of his (Mr Becker’s) statutory obligations to the Trustees’.
The judge appeared to dislike the air of imprecision and ambiguity in this statement and seemed to prefer a more unambiguous and precise statement of the joint trustees’ knowledge. The judge directed that in the future, the joint trustees must rely upon strict criteria rather than the hedging of bets. That strict criterion is contained in section 333 of the 1986 Act.
The judge also ruled that:
‘the fact that [Mr Becker’s] past conduct led to a term in prison is not a relevant factor to take into account when deciding if Mr Becker has complied with his obligations’.
One thinks that this aspect of the ruling is of great significance, as it maintains the Insolvency Court’s mindset as being one that is future-focused, rather than one that considers the future in the shadow of past conduct. It holds that good behaviour and cooperation with the court, via the joint trustees, shall be sufficient to release a bankrupt from their state of bankruptcy, and allow a resumption of normal life, financially speaking.
The importance of this future-focused aspect of the judge’s ruling is that the judge provided a strict reminder to joint trustees to act impartially. Joint trustees ought to ‘objectively view the current state of affairs’. Objectivity starts from the first principles of the statutory criteria for the discharge of bankruptcy.
This ruling upholds the importance of (a) diminishing the subjectivity of joint trustees, (b) of rewarding (or at least judicially acknowledging) changed present conduct from the bankrupt, and (c) of the constant re-evaluation of an ever-evolving situation. Thus, the static view of 2018 is quite changed in the evolved situation of February 2024. In the words of Briggs J in paragraph 25:
‘There is no doubt that Mr Becker made poor choices in the past, but Mr Becker’s past conduct should not be held against him indefinitely’.
This acts, to the law student, as a small yet significant example of how justice is achieved through a process of emergent advocacy, as an end result, rather than as a first principle. Passions and pride cease under the cold, impartial light of the courts. Guided by the evidence put forth, justice here acts as a guiding light, but not an ideological ideal. The court thus has regard to all constituent parties of a case, constantly balancing fairness of what is due to creditor and bankrupt alike.
Points of Interest for Law students
In the judgment, the judge observed the question raised by Morritt C in Shierson and Birch v Rastogi (A Bankrupt) [2007] EWHC 1266 (Ch) [2007] BPIR 891 about the explicit end purpose of the power to suspend the discharge of bankruptcy (“the power”). An element of ambiguity in the law exists here from the silence of Parliament, allotting a certain degree of discretion to the Insolvency courts.
Judge Briggs offered his opinion that ‘the authorities demonstrate that the purpose of the power is primarily to achieve compliance, and compliance is in the public interest’. However, he did not give an explicit ruling on the question, leaving that to be considered ‘on another day’ when the issue directly arises in argument.
What the law student can perhaps draw from the extended discussion of the authorities on paragraphs 29 to 41 of Briggs’ judgment is that, as ever, context is hugely important in guiding judicial discretion when considering whether to postpone the discharge of a bankrupt. As compliance is the essential purpose of the power, it may be that complex bankruptcies of large estates require more time and more restraints upon the uncooperative bankrupt. This was plainly an issue in Mr Becker’s case, given the location of missing prize trophies that might realise a commercial value. However, the court must act only according to what is before them. In these types of cases, one imagines that much hinges upon primary questions of trust, cooperation and honesty. If a bankrupt is found, as Mr Becker initially was, to be dishonest, untrustworthy, and uncooperative, then the court will act to retain the penal powers that are within its grasp in order to achieve a just outcome. If the disabilities of bankruptcy act as an incentive to full compliance, then that is welcome.
But, in relation to incentivising the bankrupt before full compliance is achieved, the tone of Morritt C and Briggs J appears to be one of cautious reserve. The priority is simply to ensure the emergence of the desired result, rather than optimistically hoping that the bankrupt will be incentivised towards full compliance. Where a bankrupt has acted dishonestly or uncooperatively, the court appears loath to rashly discard the tools and penal powers at its disposal, in order to ensure full compliance demanded by the public interest.
It is important to bear in mind that this judgment acts not as a termination of an entire process but as a milestone in the continuation of a longer process. The judge cited Morritt C in Shierson and Birch. Pointedly, the discharge from bankruptcy is not a discharge from outstanding responsibilities or obligations.
Therefore, the Insolvency Court pays due regard to all elements of a bankruptcy situation, from trustees, to the bankrupt, creditors and the overarching supervision of the courts. It is a small example of the vital role, using carrots and sticks, that the courts play in the supervision of the wider social fabric and the maintenance of relations within human societies. It is a silent but fundamental public service that provides, within wider society, an element of stable order and continuity, but also of mutually agreeable change.
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