Chu v Price

LADY JUSTICE ARDEN: This is an appeal against the order of Mr John McDonnell QC sitting as a Deputy Judge of the Chancery Division dated 19 June 2003 allowing an appeal against the order of District Judge Cernik sitting in the Northampton County Court in Bankruptcy dated 21 October 2002. District Judge Cernik made an order that the bankruptcy order dated 5 October 2001 against Michael Yee Cam Chu be amended to add six aliases, that is to read "also known as Michael Yee Fun Chu, also known as Yee Fun Chu, also known as Yee Cam Chu, also known as Michael Chu, also known as Michael Cam Chu, also known as Michael Fun Chu." The deputy judge not only allowed the appeal but proceeded to dismiss the application which had been before the district judge. The respondent to this appeal named in the appellant's notice is Michael Yee Cam Chu with those six aliases. The respondent appeared by solicitors and counsel before the judge and by his solicitor, Mr Peake, before the district judge. However, Mr Peake has made an application on behalf of his firm today to come off the record principally because he is without funds. At the opening of this appeal, the court has acceded to that application of Mr Peake. The name of another firm of solicitors, Harringtons, has been inserted on the record in place of Mr Peake's firm and the respondent is represented today, as before the judge, by Mr Mark Watson-Gandy. The appellant, the trustee in bankruptcy of the respondent, is represented by Mr Peter Shaw and while the court has not called on him to make oral submissions, we have had regard to his excellent written skeleton argument.

It is common ground that the district judge had jurisdiction to make the order that he did under Insolvency Rule 6.35(1) which provides that:

The only bankruptcy authority to which we have been referred is Re Myles (1891) 8 Mor 255. In this case, the appellant, Stephen Myles, carried on business and issued bills for goods in the name of James Myles. Proceedings were taken against him on such a bill in the name of James Myles. It happened that Stephen's brother was called James. However, the proceedings were served on Stephen. A bankruptcy notice and bankruptcy warrant named the debtor as "James Myles otherwise Stephen Myles trading as James Myles". The Divisional Court (Cave and A L Smith JJ), in enviably brief judgments, refused to set aside the order. Stephen had chosen to take the name of James, the petitioning creditor had intended to proceed against Stephen and Stephen knew all about the proceedings.

Likewise, in this case, Mr Watson-Gandy properly accepts that if the petitioning creditor made a genuine mistake as to the name of the debtor and the debtor had been aware that the petitioner intended to proceed against him, it would be appropriate for the court to exercise its discretion in the manner sought by the trustee. He accepts that an analogy can be drawn here with the circumstances in which the court will correct the name of a party even after the limitation period has expired: see CPR 17.4(3) and Singh v Atombrook Ltd [1989] 1 WLR 810. The issue he submits is whether there is a triable issue as to the identity of the party bound by the loan agreement of 22 October 1992, which forms the basis for the petition debt.

The district judge considered the evidence and concluded that it was appropriate to make his order on a summary basis. On appeal to the High Court, the judge likewise considered the evidence and came to the opposite conclusion. I will refer to their reasoning in greater detail below. However, before I do so I must set out the material events.

The petitioning creditor, Independent Trust and Finance Ltd ("ITF"), entered into a transaction of loan with Michael Yee Cam Chu. For this purpose Michael Yee Fun Chu of 4 Stamford Drive, Groby, Leicester, completed an application form on 8 May 2001. This stated, among other things, that the applicant had two children aged 8 and 11. On 22 October 1992, ITF entered into a Consumer Credit Act agreement with "Mr Michael Yee Cam Chu" of 4 Stamford Drive. The signature on this document appears to be the same as that on the application form and the respondent accepts in effect that he is the person who signed both documents. Accordingly, the agreement, but not the application form, was in the name of the person adjudicated bankrupt. By letter dated 7 October 1993, Mr R H M Mitchell, a director of ITF, wrote to Mr M Y C Chu at 4 Stamford Drive. In the letter he stated that although the payments would be made by Maureen Chan, Mr Chu's responsibility for payment would remain. There was no response to this letter. On 30 September 1996, ITF sent Mr M Y C Chu at 4 Stamford Drive a statement of the amount outstanding. ITF received no response to this. On 1 October 1996 ITF gave notice of default and determination of the agreement to Mr M Y C Chu of 4 Stamford Drive. Again, no response was received to this document. There is no evidence that anyone other than the respondent and his wife and children lived at 4 Stamford Drive.

ITF then proceeded to obtain judgment for the amount outstanding against Mr Yee Cam Chu. The judgment is not in evidence, but it appears that the judgment was in the name of Mr Michael Yee Cam Chu.

On 28 June 2000, Mr Y F Chu wrote to ITF's solicitors as follows:

It is significant that in that letter, Mr Y K Chu accepts liability under the loan agreement and confirms that he previously resided at 4 Stamford Street (sic). He gave as his new address 1 Victoria Promenade, Northampton. He also offered to pay the outstanding balance. I do not consider that the first sentence can properly be read as an assertion that Michael Yee Cam Chu is a separate person, still less that he is the primary obligor for the debt owed to ITF.

The respondent appeared on an application for his oral examination in the Northampton County Court on 3 October 2000. He is recorded as stating that his full name was "Mr Michael Yee Cam Chu". He gave as his address 1 Victoria Promenade, Northampton. He stated that he had two children, 21 and 18 (ages which tied in with the ages given on the application form in 1991). He stated that 1 Victoria Promenade was jointly owned by himself and his wife. He stated that Maureen Chan owed the debt owed to ITF, not himself, and that he would apply to have the judgment set aside. He then referred to agreement number 4200 with ITF.

At about this time the respondent instructed Hewitson, Becke & Shaw, solicitors. They opened a file in the name of Michael Yee Cam Chu on the basis that that was the name used in the proceedings and for that reason that name is given by them in inter-solicitor correspondence. But according to information obtained by the trustee since the bankruptcy order, the respondent gave no instructions that he was not the borrower. His ground of resistance to the judgment debt was that Maureen Chan had agreed to take over the payments.

On 7 August 2000, Mr Y F Chu wrote to ITF's solicitors offering to pay £5,000 in discharge of the judgment debt. There followed considerable correspondence between his solicitors and ITF's solicitors. There was no mention, however, of a dispute as to the judgment which had been obtained. On 5 October 2000, Hewitson, Becke & Shaw wrote to ITF's solicitors. They confirmed that Mr Chu, their client, had attended the oral examination.

In the ensuing months the respondent instructed new solicitors, D Peake & Co. On 2 May 2001, they wrote to ITF's solicitors stating that:

Mr Chan was the manager of the Happy Gathering Restaurant and was accepted by D Peake & Co as their client. On his instructions, there was the suggestion of a denial that the respondent was the person who attended the oral examination. This was an extraordinary assertion in the circumstances.

In August 2001 or thereabouts, the respondent wrote a handwritten letter to the Northampton County Court, in which he said that there was another person called Michael Yee Cam Chu at the Happy Gathering Restaurant. The respondent produced his credit cards to show the name shown on those cards was Yee Fun Chu. This too was an extraordinary turn of events since it is accepted by Mr Watson-Gandy that this is the first time the respondent had ever asserted that Michael Yee Cam Chu was a different person.

This letter was sent to ITF's solicitors who on 7 September 2001 asked for further proof to show that Michael Yee Cam Chu was a different person. They expressed their view that he and Michael Yee Fun Chu were the same person. The evidence sought was not forthcoming and they served a statutory demand and subsequently bankruptcy petition in the name of Michael Yee Cam Chu. These documents came to the knowledge of the respondent. In his witness statement of 13 December 2001, he refers to the statutory demand as served on him. He knew about the hearing of the petition. He could not be present but gave a friend a cheque for part of the amount due in the hope that the petition could be compromised at the hearing. That did not happen.

On 13 December 2001 the respondent made an application for the annulment of the bankruptcy order. The application was made in the name of Michael Yee Fun Chu. The basis of the application was that the order had been made in the name of Michael Yee Cam Chu, which was not the respondent's name. He said that there was a person called Michael Yee Cam Chu, who was involved with a mobile Chinese takeaway food business under the name or style "Magic Wok". He stated that he agreed to stand as guarantor under the loan finance agreement. His liability was taken over by Maureen Chan. He accepted that he might well have signed the agreement in the name of Michael Yee Cam Chu. However, he signed in his belief that he was simply a guarantor of the indebtedness of Michael Yee Cam Chu. As I see it, this is the first time that this point is made. Even so, there is no allegation here or elsewhere that ITF had the same belief, which would indeed be contrary to the loan documentation.

The respondent's witness statement referred to three defences: failure to comply with the Consumer Credit Act, failure to exhaust remedies against Michael Yee Cam Chu and time bar. He said that he attended the oral examination:

He further stated in his witness statement that if the proceedings had been in his name he would have responsibility for the costs of the proceedings. He said that he was willing to raise the necessary monies to pay off the debt which he had been adjudicated bankrupt and that he was not insolvent. On 21 January 2002, District Judge McHale dismissed this application as those representing the respondent stated that they wished to withdraw it.

As I have already explained, it is established in Re Myles (1891) 8 Mor 255, that if A holds himself out as B to C, and C is induced to extend credit to A in the name of B, C can obtain a bankruptcy order against A in the name of B otherwise A. There can be no dispute, therefore, that if Mr Michael Yee Fun Chu held himself out to ITF as Mr Michael Yee Cam Chu the bankruptcy order was not only correctly made but ought to have added to it the aliases of the respondent. The question is whether the requirements for the exercise of the jurisdiction are fulfilled.

The district judge held that it was open to him to amend the order by adding the various aliases of the respondent. The district judge took the view on the documents that the two names were used by the same person. He referred to the agreement and the fact that it was signed in the same handwriting as the loan application, which used the name Michael Yee Fun Chu. He also referred to the fact that there was an acknowledgement of liability and an offer of settlement. He was satisfied that the contemporaneous evidence showed that the respondent could understand and write English. (There is no suggestion that the district judge was incorrect in this). He also took into account that the evidence given by the respondent at the oral examination showed that the ages of his children were 21 and 18 which tallied with their ages as given in the application form. The district judge considered affidavit evidence filed by the respondent. This consisted of affidavits of Mr Poon, Mr Gohill and Maureen Chan. He took the view that the evidence of Mr Poon could not help as he had not known the respondent prior to 1999. So far as Mr Gohill was concerned, he could not remember clearly what had happened in 1991. So far as Maureen Chan was concerned, he held that her evidence was not reliable in the face of the contemporaneous documentary evidence. Her evidence stated that there was another individual, Michael Yee Cam Chu and like Mr Poon and Mr Gohill she said that the respondent never called himself Michael Yee Cam Chu.

The judge took entirely the opposite view. He held:

Mr Peter Shaw, for the trustee, submits in his skeleton argument as follows:

Next, Mr Shaw submits that ITF were induced or permitted to believe that the respondent was the borrower and further that it was the respondent who they intended to bankrupt. He relies on the application form and agreement, the admission by the respondent of liability, his attendance at the oral examination, his statement that we would apply to set aside the judgment and his offer of compromise. Moreover, he submits that the respondent at no stage prior to making his witness statement suggested that he was not the borrower. In that witness statement he did not dispute that he signed the document but suggested for the first time that he did so only as guarantor.

Mr Shaw submits that ITF intended to bankrupt the respondent. There is no evidence that they had dealings with anyone other than the respondent. Again, he had corresponded with them and admitted liability and made an offer of compromise. Moreover, in the inter-solicitor correspondence, ITF's solicitors had made it clear that their view was that the respondent was using the name Michael Yee Cam Chu and that it was the respondent they were intending to bankrupt.

Accordingly, Mr Shaw submits that the decision in Re Myles is indistinguishable.

Mr Shaw further submits that there is no substance in any of the three defences which the respondent raised in the annulment proceedings. These include his reliance on the Consumer Credit Act 1974, his defence that he was merely a guarantor and time bar. This court is not concerned with those defences as they are not the subject of a respondent's notice. They have not been fully argued. Even if there had been a respondent's notice, it is difficult to see that there could be any substance to them unless there is a real issue as to identity, in which case, that issue would have to be tried before any order could have been made by the district judge. There is no appeal from the bankruptcy order. If the name in the judgment is incorrect, then jurisdiction to amend it will be available under CPR 17.4 on the same basis as it is accepted that the court has a discretion on this application.

Mr Watson-Gandy has made a number of submissions. He submits that ITF would have known about the issue of identity prior to the bankruptcy order. The bankruptcy petition ought to have set out the respondent's alleged aliases: Insolvency Rule 6.7. I do not, however, consider that that irregularity prevents the court acceding to this application. There is no appeal against the bankruptcy order. When the statutory demand was served, the allegation that there was another individual called Michael Yee Cam Chu had only just been made and was under investigation: ITF's solicitors adhered to their view that there was only one person, the person whose name appeared in the loan agreement and judgment.

Mr Watson-Gandy submits that the respondent believes that he is only liable as guarantor and that Mrs Chan is primarily liable. But that is contrary to the documents, and does not explain why the point was never raised until August 2001. It is possible that the respondent was doing a favour for a friend or association but the fact is that he signed the documents imposing personal liability. It is not sufficient that he has some private belief to the contrary. There is no evidence that ITF shared his belief or even knew of it.

Mr Watson-Gandy seeks to uphold the judge's judgment. He has taken us through the evidence which I have already summarised above.

I now turn to my conclusions.

The judge was sitting on appeal from the district judge. The district judge came to his conclusion effectively on the basis that there was no real prospect of a successful defence to the application. He, therefore, felt entitled to deal with it summarily. He reached his conclusion by reference to the evidence. The question for the judge was whether the district judge was entitled to form the view that he did. The judge, of course, went much further than this by dismissing the application itself.

In my judgment, it is clear from the facts that there was no real prospect of a successful defence on the basis that the respondent had not used the name Michael Yee Cam Chu or on the basis that ITF had not been induced to lend money to the respondent on that basis. The respondent accepts that it was he who signed the agreement giving the name which he says is incorrect. Moreover, if Michael Yee Cam Chu and Michael Yee Fun Chu were not the same person, there would have been no reason for the respondent to accept liability or to make an offer of settlement or to attend the oral examination without raising the case he ultimately and belatedly raised in August 2001. The respondent has not come forward with any credible explanation as to why he should not have asserted that some other person was liable long before he did.

As regards the specific points made by the judge:

Accordingly, I conclude that the district judge was entitled to conclude there was no real prospect of success in meeting the trustee's case that there the bankruptcy order should be amended by the inclusion of the various aliases of the respondent and was right to do so. In my judgment, for the reasons given above, the judge was in error in allowing the appeal and dismissing the trustee's application. Accordingly, I would allow the appeal and make the order sought.

LORD JUSTICE LAWS: For my part I have of course read the draft of Lady Justice Arden's judgment. For the reasons she gives, I agree that the appeal should be allowed.

LORD JUSTICE SIMON BROWN: Lady Justice Arden's judgment, with which I entirely agree, enables me to express my own concurring view very briefly indeed.

I shall distinguish between the two names Michael Yee Cam Chu and Michael Yee Fun Chu solely by reference solely to that part of the respective names which is different, namely Cam and Fun.

Quite how the agreement of 1992 came to refer to Cam is unclear. What, however, to my mind is clear beyond argument is that the lenders, ITF, believed that they were contracting with the self-same person as in 1991, namely the respondent Fun, whose signature appears on both agreements. It is no less plain that ITF intended to sue and believed that it was suing Fun, and similarly that it was Fun against whom they were petitioning for bankruptcy. To conclude otherwise would, having regard to the contemporary documents, be quite absurd, given not least that it was not until August 2001 that Fun for the very first time gave any hint of there being another person, namely Cam, anywhere in the frame at all.

In my judgment, the justification for an order in the terms made by the district judge here is just as clear as that in the case of In Re Myles (1881) 8 Mor 255, if not indeed clearer. The two judgments there each occupy precisely eight lines of the law report. I think that this court would have been justified in giving equally succinct and robust judgments here. However that may be, this appeal must certainly succeed with the result indicated by Lady Justice Arden in her judgment.