Simmonds v Pearce

This is an application to commit the Respondent to prison for breaches of various provisions of the Insolvency Act which are said to constitute deliberate, repeated, and serious contempt of court. At the hearing on 23 November 2017, the Court decided that it would hear evidence and submissions on procedural issues and on liability, and deliver judgment on those matters before proceeding, if necessary, to consider submissions on sanction. This is the judgment of the Court on those issues.

The Applicant (“the Trustee”) is the Trustee in Bankruptcy of the Respondent (“Mr Pearce”). Mr Pearce, who was born on 20 September 1934, was the sole beneficiary under the final Will of Miss Julie Spalding, who died aged 98 on 1 September 2008. He was a window cleaner who had befriended Miss Spalding and looked after her in her final years. Her estate was distributed and wound up on 5 May 2009. Miss Spalding’s nephew, Cecil Bray, who had previously been the sole beneficiary of the estate, contested the Will (and the two preceding Wills under which Miss Spalding had left her home to Mr Pearce).

In a judgment dated 6 March 2014, Mr Murray Rosen QC, sitting as a Deputy Judge of the Chancery Division, held that Miss Spalding lacked testamentary capacity, declared all three of the disputed Wills invalid, and ordered Mr Pearce to repay all that he had received from Miss Spalding’s estate. Mr Pearce was also held liable to pay the costs of those proceedings. When he failed to do so, the personal representatives of Mr Bray (who had died in the interim) presented a bankruptcy petition against him, and a Bankruptcy Order was made on 27 April 2015.

The Applicant, a licensed insolvency practitioner, succeeded the Official Receiver as Mr Pearce’s Trustee in Bankruptcy on 2 July 2015. Mr Pearce’s dealings with the Official Receiver and the Trustee are set out in more detail later in this judgment, but in summary the Trustee contends that Mr Pearce has done whatever he could to prevent him from finding out what had become of the money Mr Pearce had obtained from Miss Spalding’s estate. It is the Trustee’s case that Mr Pearce’s failure to comply with his obligations to deliver up records and provide information to the Trustee relating to his affairs, together with the taking of active steps to conceal his assets, telling lies (including on affirmation), and refusal to answer questions put to him in breach of directions given by the District Judge presiding over his two public examinations, collectively amount to very serious repeated contempt of court which merits condign punishment.

Mr Pearce’s lack of cooperation led to the Official Receiver making a successful application for the suspension of the automatic discharge of the Bankruptcy Order, in consequence of which Mr Pearce remains an undischarged bankrupt. There is also a proprietary freezing injunction in place, which was granted by Arnold J on a without notice application by the Trustee on 21 June 2016, shortly before the second of Mr Pearce’s public examinations, and renewed by Snowden J on the return date of 28 June 2016, until further order. We were told by Mr Gray, who represented the Trustee before us, that efforts to recover the money are still ongoing.

On 7 July 2017 the Trustee issued the present application in the Administrative Court pursuant to CPR 81.15 certifying Mr Pearce’s conduct as being in breach of sections 312(4), 333(4) and/or 363(4) of the Insolvency Act 1986, and seeking his committal to prison for contempt of court. The application is supported by a substantial Affidavit sworn by the Trustee exhibiting relevant documents, including transcripts of both Mr Pearce’s public examinations, which took place on 21 April 2016 and 23 June 2016 respectively. In that Affidavit, the Trustee said that this was “one of the worst cases I have seen of a bankrupt’s failure to cooperate with his trustee and to have actively taken steps to conceal property”.

Mr Gray divided Mr Pearce’s conduct into four categories:

Failure to disclose any meaningful or truthful information about or documents pertaining to his financial affairs;

Lying about his financial affairs, and in particular, giving a dishonest account of what happened to a sum of approximately £279,698 he received from Miss Spalding’s estate (“the inheritance money”);

Attempting to conceal from the Trustee that he had passed the inheritance money through a chain of transactions involving his daughter, Jemma Pearce;

General lack of co-operation with the Trustee’s inquiries, in particular giving dishonest evidence, and refusing to participate in or answer further questions at his adjourned public examination on 23 June 2016.

This case raises important issues of more general application regarding the correct procedure to be adopted when an application is made by a Trustee in Bankruptcy to commit a person for contempt of court, where the behaviour complained of consists of breaches by a bankrupt of the statutory obligations imposed on him or her under sections 312, 333 and 363 of the Insolvency Act 1986. As this is apparently the first time that an application for committal has been lodged with the Administrative Court in respect of breaches of these statutory provisions, using the procedure set out in CPR 81.15, the matter was listed before a Divisional Court comprising judges with experience of insolvency law and practice, so that guidance could be given. We will address the question of the correct procedure first.

The Insolvency Act 1986 provides, so far as material, as follows:

Every bankruptcy is under the general control of the court and, subject to the provisions in this Group of Parts, the court has full power to decide all questions of priorities and all other questions, whether of law or fact, arising in any bankruptcy.

Without prejudice to any other provision in this Group of Parts, an undischarged bankrupt or a discharged bankrupt whose estate is still being administered under Chapter IV of this Part shall do all such things as he may be directed to do by the court for the purposes of his bankruptcy or, as the case may be, the administration of that estate.

The official receiver or the trustee of a bankrupt’s estate may at any time apply to the court for a direction under subsection (2).

If any person without reasonable excuse fails to comply with any obligation imposed on him by subsection (2), he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).”

Sections 312(4), 333(4) and 363(4) are not the only provisions of the Insolvency Act which deem a breach without reasonable excuse to be a contempt of court and punishable as such; other examples are s.134(1) and s.290(5), which deal with culpable failures by a person connected with an insolvent company, or by a bankrupt, to attend a public examination. These provisions are expressed in similar language to sections 312(4), 333(4) and 363(4).

CPR Part 81, together with its accompanying Practice Direction, were intended to provide a comprehensive statement of the rules governing applications and proceedings in relation to contempt of court in the High Court and in the County Court. The Rule is divided into sections. Section 2 (CPR 81.4 - 81.11) deals with breaches of judgments, orders or undertakings; Section 3 (CPR 81.12 – 81.14) deals with behaviour amounting to interference with the due administration of justice; Section 5 (CPR 81.16) with contempt in the face of the court, and Section 6 (CPR 81.18) with making a false statement of truth or disclosure statement.

Section 4, (CPR 81.15), the provision under which these proceedings were initiated, applies where, by virtue of any enactment, the High Court has power to punish or take steps for the punishment of any person charged with having done or omitted to do anything in relation to a court, tribunal, body or person which, if it had been an act or omission in relation to the High Court, would have been a contempt of that Court. A Trustee in Bankruptcy plainly falls within the expression “person”.

CPR 81.15 contains no requirement for an applicant to obtain permission. Instead, it stipulates that the application must be made on a specified form annexed to the Practice Direction, which must be served personally on the respondent (as must any evidence in support). The respondent has 14 days in which to acknowledge service, again in a stipulated form, and to file and serve any evidence upon which he relies. We are satisfied on the evidence of the process server, John Andrew Ingram, whose witness statement is dated 17 July 2017, that those requirements have been complied with in the present case, and that all the relevant documents, including the penal notice, were served on Mr Pearce personally on 11 July 2017. Mr Pearce did not seek to contend otherwise. Indeed, he filed an Acknowledgment of Service.

Paragraph 3 of the Practice Direction to CPR 81 sets out a non-exhaustive list of statutory powers of the High Court to commit a person for contempt which fall under Section 4. These include s.336 of the Charities Act 2011, which provides for the Charities Commission to apply to the High Court for an order that disobedience to certain orders made by the Commission pursuant to that statute be treated as if it were disobedience to an order made by the High Court. However, there is no mention in the list of any provision of the Insolvency Act 1986 which specifically treats non-compliance with its requirements (without reasonable excuse) as a contempt of court.

The editors of Arlidge, Eady & Smith on Contempt, (5^th Edition, 2017) express the view that the procedure under CPR 81.15 applies to breaches of sections 134(1) and 290(5) of the Insolvency Act, but those are the only sections of the Insolvency Act that they specifically address.

The closest analogy between the provisions of this nature in the Insolvency Act and provisions of a statute expressly mentioned in the list in the Practice Direction appears to be with sections 436 and 453C of the Companies Act 1985, which empower the High Court to punish as contempt non-cooperation with statutory inspections of or investigations into the affairs of a company, including failures to provide information requested by an inspector or investigator.

In principle there appears to be no good reason for requiring a different procedure to be adopted for committal in respect of a contempt comprising a bankrupt’s failure without reasonable excuse to attend his public examination, from the procedure to be adopted if he does attend, but then fails to answer questions, or answers them dishonestly. Likewise, there is no obvious justification for requiring the procedure for committal to be different, depending on whether the bankrupt has or has not been specifically required by the court to co-operate with his trustee or to answer questions put to him, by a direction given under s.363(2). The statute makes it clear that deliberate and inexcusable non-cooperation with the reasonable requirements of a trustee in bankruptcy is punishable as a contempt of court irrespective of whether such a direction is sought or obtained. Ideally, there should be one procedure for bringing any application for committal of a bankrupt for breaches of any of the requirements of the Insolvency Act that are punishable as contempt of court.

As the commentary on CPR Part 81 in the White Book frankly acknowledges, there is potential for confusion as to which procedure should be adopted when the behaviour complained of can be characterised as falling under more than one of the sections of that Rule. The problems are exacerbated by the fact that applications to commit under certain sections of CPR Part 81 require prior permission to be granted, whereas others do not. In the present case, the behaviour of the bankrupt of which complaint is made goes beyond simple non-cooperation and failure to disclose information to his trustee: it extends to taking active steps to conceal assets, and perjury. That behaviour, if proved, would undoubtedly constitute interference with the due administration of justice. Where, as in the present case, a direction was given under section 363(2), the behaviour could also be characterised as breach of a court order. CPR 81.17 tries to address some of the situations in which there is such an overlap, but it is by no means comprehensive. It does not address the situation in a case such as this.

Although there are numerous reported examples of bankrupts who have failed to co-operate with their trustee in bankruptcy being punished for contempt of court, there is scant authority on the procedure to be adopted by the trustee when seeking the committal of such a person. In theory the procedure ought to be a simple one which enables the trustee in bankruptcy to bring the matter back before the court swiftly and without expending unnecessary costs.

The question of what procedure should be adopted in a case of breach of s.333 alone was addressed by Norris VC as a preliminary issue in the unreported case of Re Hinchcliffe (a Bankrupt), Hedger and Roberts v Hinchcliffe, Case No 1170 of 2013, decided on 21 February 2014. It can be inferred that the trustee in bankruptcy in that case had issued a Part 23 application in the insolvency proceedings. The Vice Chancellor rightly observed that a contempt of court arising under the Insolvency Act 1986 does not fit easily into either CPR 81.4 or 81.12. He said that it would hardly be an appropriate step in insolvency proceedings to expect the trustee to have to issue a separate part 8 claim form. He concluded that the closer analogy was with CPR 81.4, and that there was no requirement for trustees to seek from the court, whose officers they are, permission to enforce the sanctions imposed in the 1986 Act itself. It appears that no-one turned their mind to the possibility of using the procedure set out in CPR 81.15, which is not mentioned in the judgment.

We agree with the observations of the Vice Chancellor that there should be no requirement for permission to be obtained in cases such as this, and that in principle a trustee in bankruptcy should not be required to launch fresh proceedings under CPR Part 8 in order to ensure that the bankrupt is punished for non-compliance with his statutory duties (save possibly in those rare cases where a bankrupt’s dishonesty is only discovered after he has been discharged from bankruptcy and the administration of his estate has been completed).

It would obviously be most desirable if all species of failure by a bankrupt to co-operate with the trustee in bankruptcy could be dealt with by way of an application to commit for contempt brought in the context of the insolvency proceedings themselves, irrespective of whether the contempt consists of disobedience to a direction made under s.363(2) and irrespective of whether any such direction has been encapsulated in a formal court order. This would ensure that the application was dealt with by a judge who was best equipped to evaluate whether there was any reasonable excuse for the bankrupt’s behaviour, and if there was not, the seriousness of the contempt, the genuineness of any apology for it, and the appropriate sanction. However, CPR 81 does not expressly provide for such an application.

Whilst it would be possible to treat a direction given by a judge orally in the course of a bankruptcy examination as an “order” falling within CPR 81.4, thereby enabling the trustee to use the procedure set out under CPR 81.10, that procedure requires personal service of the court order (endorsed with a penal notice) on the Respondent unless the court dispenses with that requirement under CPR 81.8(1). Even though the Court would be likely to grant dispensation in a case of disobedience to a direction given by the Court to the bankrupt at his public examination, the trustee would still have to make an application for dispensation, supported by evidence proving that the bankrupt was aware of the Court’s direction and that he or she also knew of the potential consequences of non-compliance. That would add an unnecessary layer of cost and complexity to the procedure.

Moreover, as currently expressed, the language of CPR 81.4 and 81.10 does not extend to a case in which no such direction has been given, and there is nothing that could be characterised as an “order” of the court but simply disobedience to the requirements of s.312 and/or 333 of the Insolvency Act. That scenario fits more comfortably within the language and procedure set out in CPR 81.15 than with CPR 81.4, even though an application under Part 23 in the existing proceedings might be regarded as a far more sensible means of bringing the matter before the Court.

CPR 81.15(2) provides that:

It is odd that applications under the Charities Act should be singled out in this way, if the intention behind paragraph (3) was to ensure that applications to commit for breaches of statutory obligations that are treated as contempt of court should be made in the division of the High Court which had the most appropriate experience of the relevant legislation and legal background. The Companies Court is part of the Chancery Division, and matters pertaining to company investigations and inspections are generally dealt with in that Division. It would therefore make just as much sense for any applications under sections 436 and 453C of the Companies Act to be heard by a Judge of the Chancery Division rather than by a Judge of the Administrative Court.

Likewise, if they are dealt with in the High Court, insolvency proceedings are assigned to the Chancery Division, and Judges of that Division are plainly in the best position to evaluate the seriousness of any failure by a bankrupt to co-operate with their trustee in bankruptcy, and whether there is any legitimate excuse, irrespective of the form that the non-cooperation may take. The Practice Direction – Insolvency Proceedings specifically provides, in paragraph 3.3, that all applications for committal for contempt in relation to an insolvent individual should always be listed before a judge. It is to be inferred that the draftsman had in mind a judge of the court that was already seized with jurisdiction over matters relating to that individual’s insolvency. That was the judge to whom such applications were invariably made in the days prior to the CPR.

The current state of the rules is unsatisfactory and unclear, and we consider that the question of the appropriate procedure to be adopted in contempt cases falling under the Insolvency Act would benefit from specific consideration by the Rules Committee as soon as is practicable. For the time being, we take the view that the procedure under CPR 81.15 should be adopted in preference to trying to shoehorn such applications into the procedure under CPR 81.10, or devising a special procedure that is not expressly catered for in CPR 81. CPR 81.15 is couched in wide enough terms to encompass all instances of non-cooperation with a trustee in bankruptcy, irrespective of whether a direction has been given under s.363(2).

We are therefore satisfied that the correct procedure was used in this case, although if it had not been, we would have waived any procedural defects, as they would have caused no unfairness. Mr Pearce was personally served with all the evidence and supporting material on which the Trustee relies, he knows the case against him, and the Penal Notice was explained to him by the process server.

In future, such applications should be issued in the Chancery Division and dealt with by a Judge of that Division. There is nothing in CPR 81.15 that mandates that such an application be issued in the Administrative Court. CPR 81.15(2) is permissive, although we can understand why there might have been some hesitation in interpreting it in that way. Any such applications that are issued in the Administrative Court should be transferred administratively to the Chancery Division as a matter of course.

There is one further potential complication to which we should refer. CPR 81.15 is expressly confined to the situation where the statutory power to punish for contempt is conferred on the High Court. It therefore envisages that a High Court judge should hear the application, and in London, at least, the practice is not to list committal applications before Deputy High Court Judges save in exceptional circumstances. We are conscious that the use of this procedure could give rise to practical difficulties and delays in court centres outside London, where it may be difficult to list the application before a High Court judge, or even a Deputy High Court judge, but there may be other judges with the appropriate knowledge and experience to hear such a committal application. This is another reason why the matter would benefit from early consideration by the Rules Committee.

At one time, we considered directing that this case be transferred to a single judge of the Chancery Division, but concluded that this would cause unnecessary delay. Accordingly, we heard evidence and argument on the merits, to which we now turn.

On the first two occasions when this matter was listed for hearing, the Court granted adjournments to enable Mr Pearce to obtain legal aid. Although he made a successful application for legal aid, and appeared by solicitors and counsel on the next occasion, 13 October 2017, the Court was informed by counsel at the onset of the hearing (and it was confirmed by Mr Pearce) that the relationship of trust and confidence between them had completely broken down, and accordingly his legal team withdrew. The Court therefore adjourned the matter to enable Mr Pearce to obtain the transfer of the legal aid certificate to fresh solicitors and counsel.

When the matter came back before us on 23 November 2017, Mr Pearce told the Court that despite making inquiries as far afield as Birmingham, he had been unable to find another firm of solicitors that was willing to represent him in legally aided proceedings for contempt of court unless it was a family law case. He said he was not going to ask the Court to adjourn the case again, because there was no point. The hearing therefore went ahead with Mr Pearce representing himself.

Mr Pearce, who is now 83 years old, produced a doctor’s letter evidencing that tests have confirmed that he has problems with his eyesight, for which he is due to receive treatment in hospital. He also told the Court that he has had several strokes. The Court took all these matters into account and made due allowance for them. Mr Pearce could not be expected to argue points of law or legal procedure. However, we find that he was sufficiently astute and articulate to be able to understand the allegations made by the Trustee and to challenge their factual basis if he so wished, and to provide the Court with any explanation for his previous behaviour and statements that was called for on the evidence.

The Trustee gave evidence on affirmation and was cross-examined by Mr Pearce. Although Mr Pearce had served no evidence in response to the application, the Court gave him the opportunity to give evidence from the witness box. He was told by the Court that he was under no obligation to do so, but that Counsel for the Trustee might ask us to draw an adverse inference if he decided not to give evidence and subject himself to cross-examination. Mr Pearce confirmed that he understood this, but said that he had decided that he was not going to give evidence. Instead he made an unsworn statement from the well of the court. He was also given a fair opportunity to address the Court in response to Counsel’s submissions about each of the acts and omissions that were relied on as being in contempt of court.

The Trustee sought to place reliance on answers given by Mr Pearce to questions asked by the Official Receiver and by Counsel respectively in the course of his two public examinations, and on his refusal to answer questions on the second of those occasions, despite being told by the District Judge that he was obliged to answer them. Mindful of the privilege against self-incrimination, the Court was concerned to establish whether the answers that he gave were admissible in evidence in proceedings for contempt of court, and whether the District Judge was correct when she told Mr Pearce that he had to answer the questions put to him.

Mr Gray referred the Court to Kansai v United Kingdom (2004) 39 EHRR 31, in which the European Court of Human Rights ruled that it was an infringement of the right not to incriminate oneself for answers given by a bankrupt under compulsion in his examination by the official receiver to be admitted in evidence at his criminal trial, where they had been a prominent feature of the prosecution case. For that reason, the applicant had been deprived of a fair hearing in violation of Article 6(1) of the European Convention on Human Rights. The Court held that the case was indistinguishable from the earlier case of Saunders v United Kingdom [1997] BCC 872 in which the same conclusion was reached in respect of statements made by a defendant to Department of Trade inspectors exercising compulsory powers.

The issue only arose in Kansai v United Kingdom because an amendment to s.433 of the Insolvency Act to make it compliant with the Human Rights Act 1998, which came into force after the trial of Mr Kansai, was held by the House of Lords not to have retrospective effect. If the criminal trial had taken place after s.433 was amended, the objectionable evidence would not have been admitted at the trial.

The relevant provisions of s.433 state as follows:

In any proceedings (whether or not under this Act) –

a statement of affairs prepared for the purposes of any provision of this Act which is derived from the Insolvency Act 1985 ,

any other statement made in pursuance of a requirement imposed by or under any such provision or by or under rules made under this Act,

However, in criminal proceedings in which any such person is charged with an offence to which this subsection applies –

no evidence relating to the statement may be adduced, and

no question relating to it may be asked

Mr Gray submitted that proceedings for committal for contempt of court are not criminal proceedings, although the burden of proof must be discharged by the applicant to the criminal standard. Section 433(2) refers specifically to “the prosecution” and to “criminal proceedings” and the exceptions set out in s.433(3) are all criminal offences falling under Chapter 6 of the Insolvency Act. This is not a prosecution. The position, therefore, is that s.433(1) enables evidence of statements made under compulsion in a bankruptcy examination to be adduced in proceedings for contempt of court without infringing the privilege against self-incrimination, but s.433(2) would preclude that evidence from being adduced or relied on in criminal proceedings by the prosecution, subject to the specific exceptions in s.433(3). The District Judge was therefore correct to tell Mr Pearce that he was obliged to answer the questions put to him, and he was not entitled to claim privilege against self-incrimination, even when he was being asked questions on the second occasion about evidence that the Trustee was claiming showed Mr Pearce’s previous answers on affirmation to have been untruthful.

Mr Gray also submitted that even if the Court treated any of the evidence given at the public examinations as inadmissible, there was ample evidence that Mr Pearce was in contempt of court. He relied on the evidence given by the Trustee as to the fruits of his other inquiries, and on the answers given to the Preliminary Information Questionnaire which was signed by Mr Pearce on 12 May 2015, and the Bankruptcy Questionnaire, which was completed and signed by Mr Pearce on 1 August 2015.

The Court asked Mr Pearce if he wished to make any observations about this matter of law, but he declined, on the basis that he had insufficient understanding of legal matters to be able to make a meaningful contribution to the discussion.

We are satisfied that Mr Gray has correctly described the position regarding the admissibility of the evidence of Mr Pearce’s answers to the questions put to him at the two public examinations, and his refusal to answer further questions, upon which the Trustee relies. Were the position otherwise, it would be well-nigh impossible for a trustee in bankruptcy to adduce evidence in contempt proceedings of the very behaviour that Parliament has specified shall be treated as a contempt of court and punishable accordingly. That would deprive those provisions of the Insolvency Act on which the Trustee relies of much of their force.

We turn to consideration of the evidence and our fact findings on any factual matters in dispute, bearing in mind that the burden of proof of each of the alleged acts of contempt of court rests on the Trustee and that he must prove his case to the criminal standard, that is, we must be sure. Mr Pearce did not challenge the evidence given by the Trustee as to the background history, except in respect of what happened when his car was repossessed and what occurred at the second public examination when that topic was raised. The contemporaneous transcripts of the two public examinations speak for themselves.

On 12 May 2015 Mr Pearce filled in a Preliminary Information Questionnaire for the Official Receiver. He signed the section on the form confirming that he had read or had read to him section 5 of the Perjury Act 1911 and that he understood it. He stated that he had no bank, building society, National Savings or similar accounts in his own name or jointly with anyone else in the past 2 years, that he had no assets of any value, other than a Vauxhall Astra car worth £5,000 which had already been seized by High Court enforcement officers (who we shall call “the bailiffs” because that is how Mr Pearce has referred to them), and no cash in hand. He also ticked a box confirming that he had not transferred, sold or given away any of his personal possessions or business assets at less than their value within the past 5 years (i.e. since 12 May 2010).

On 27 May 2015, Mr Pearce was interviewed by the Official Receiver over the telephone. A record of that interview, which was prepared by the Official Receiver, indicated that Mr Pearce said the following:

he did not have any bank accounts;

his car had been seized by the bailiffs whilst he was not at home. His wife had given the bailiffs the car keys.

at the time the car was removed by the bailiffs there was £300,000 in cash in it, together with two sets of golf clubs, a pair of golf shoes, tools, a spare tyre. One of the sets of clubs and the golf shoes belonged to a friend. His wife was unaware that the cash was in the car at the time.

he had won the £300,000 in casinos over a period of time.

he intended to use the £300,000 to pay the petitioning creditors;

he had spent all the money he received from Miss Spalding’s will on three world cruises, the dates of which he could not recall (around £50,000 on each) and on gambling in casinos and racetracks (amounts and dates unknown) and on other holidays in Scotland and the Midlands.

He had purchased no extraordinary items.

He had no documentary evidence of any of this.

This was the first time that Mr Pearce made any reference to a substantial sum of money being in the car when it was removed, although the bailiffs had seized the vehicle 6 months previously. We will consider that version of events later in this judgment. In that interview, Mr Pearce was vague as to how much he had received from Miss Spalding’s estate or from the sale of her property. He said he could not remember how he received those funds, given that he had no bank account, and he did not remember who represented him.

After the Applicant was appointed as Mr Pearce’s Trustee he sent him a Bankruptcy Questionnaire. Mr Pearce filled in the Questionnaire and signed it on 1 August 2015. The section in that document requiring the bankrupt to list all known bank accounts in the last three years remained blank. Mr Pearce answered “no” in response to both the questions “have you disposed of any property by way of gift within the five years prior to your bankruptcy?” and “have you sold any property for less than its fair value within the five years prior to your bankruptcy?” In answer to a question on page 9, he confirmed that he had delivered up to the Official Receiver or the Trustee all books, papers and other records relating to his estate affairs. On the last page, Mr Pearce signed a declaration that he understood his obligation to assist the Trustee in carrying out his duties and to make full disclosure of his affairs and confirmed that the answers he had given were correct and complete.

Mr Pearce failed to respond to the Trustee’s request to contact his office as soon as possible to arrange a meeting to discuss his bankruptcy. On 17 August 2015 the Trustee wrote a letter to Mr Pearce setting out the provisions of s.333 of the Bankruptcy Act (including s.333(4)) and warning him that failure to attend upon the Trustee at such times as are reasonably required could result in his discharge from bankruptcy being suspended. A further letter from the Trustee dated 28 August 2015 asking for details of the Post Office card account into which his weekly state pension was paid, received no response. Those details have never been provided by Mr Pearce, who told the Court on 23 September 2017 that he has no Post Office account, and that his pension is paid over the counter. That might have been an accurate description of what happened in the days when pensioners were issued with a booklet of weekly payment slips to be encashed at the Post Office, but that system ceased some years ago, certainly before 2015, and pensioners now either withdraw their state pension from a Post Office account using a card, or have the money paid directly into a bank account. The Department of Work and Pensions had advised the Trustee that Mr Pearce’s weekly state pension was paid into a Post Office card account, which is why he wrote the letter on 28 August 2015 in the terms that he did.

The Trustee wrote to the bailiffs, Burlington High Court Enforcement Group, on 7 August 2015, to find out what items were in the Vauxhall Astra when they seized it. He informed them of Mr Pearce’s claim that there was £300,000 in cash in the car at the time of its seizure, together with two sets of golf clubs and other items. The bailiffs responded by letter dated 11 August 2015 stating that they had attended and seized the vehicle on 28 November 2014 (which the Court has ascertained was a Friday). None of the items listed by Mr Pearce were noted as being within the vehicle and had they been in it, they would have been recorded. They said that Mr Pearce’s wife had told them that her relationship with her husband had broken down some weeks previously, that he had vacated the marital home, and that she had no idea where he was. She also failed to hand over the car keys until it was being loaded onto the recovery truck, at which point it was checked over and found to be empty. They confirmed that Mr Pearce had made no contact with them in the 9 months that had elapsed since the vehicle was recovered to claim that any items had gone missing from the car, and expressed profound scepticism about his claim to have left such items in a car which they said he had effectively abandoned. They also said that if such items had been left in the vehicle they would not have fitted in the boot of the car and therefore would have been visible from the exterior. Mr Pearce disputes this.

At the hearing before us, Mr Pearce disputed the authenticity of the bailiffs’ letter, which was exhibited to the Trustee’s Affidavit together with his letter of 7 August to which it was a response, and the contemporaneous vehicle inspection report from Bud Rescue & Recovery Ltd. The copy of the letter from the bailiffs exhibited to the Trustee’s Affidavit is on headed letter paper and has a date stamp on its face “RECEIVED 12 August 2015”. We are satisfied beyond any doubt that the letter and its enclosure are genuine documents, and that they were sent by the bailiffs to the Trustee in response to his letter and received by him on 12 August 2015.

Mr Pearce attended the first session of his public examination before District Judge Hart on 21 April 2016. He was questioned by the Official Receiver; the Trustee was neither present nor represented. The transcript of that hearing reveals that he elected to affirm instead of taking the oath. The District Judge explained that this meant that he was promising that the evidence he gave was true. Mr Pearce then said he had no wish to be questioned. The judge explained that if he was not cooperative with the Official Receiver he may be held to be in contempt of court. She also explained that the Official Receiver had a duty to investigate Mr Pearce’s affairs and the Court had a duty to ensure that that happened. Mr Pearce said that he understood. The judge assured him that she would intervene if any questions were inappropriate. On that basis, Mr Pearce said that he would answer some questions.

Mr Pearce said he inherited some money in 2008. When asked how much, he said “between £300,000 and £350,000”. When asked how was that money received by him, was it paid into a bank account, he responded “paid into a bank account.” When asked at which bank, he said he could not recall, it was done through solicitors whose name he had forgotten, he thought it was Rhodes, and they received the money into their account. After that, he said twice that he had no bank account at the time when the inheritance money was paid out. He said that so far as he recalled the money was paid to him in cash by the solicitors at an address somewhere in Northway in Hendon whose details he could not remember. He was paid by a man from the solicitors, whose name he could not recall. This was obviously far-fetched. The idea that a solicitor would pay such a large sum in cash to a client is absurd, especially given the stringent requirements of the money-laundering legislation. The truth about how Mr Pearce received the money, when, and what he did with it, is set out in Paragraph 57 below.

Mr Pearce said he spent over £200,000 of the money on three round the world cruises with his wife, and that he also gambled. No children inherited any of the money from him, and he had no car apart from his Vauxhall Astra. He repeated his claim that there was £300,000 in that car, which he got from gaming, and said that he had put it in the car to give to the bailiffs. When asked where he got the money from so that he could gamble, he said he “started with a tenner, like the Lottery.” In answer to the next question “but you didn’t win the Lottery?” he replied “no, no”. Yet, at the hearing before this Court on 23 September 2017, Mr Pearce told the Court that he did win £20,000 on the Lottery in 2015 and that he still had the cheque. One of those statements must be untrue.

After he had asked his questions, the Official Receiver sought and obtained an adjournment of the public examination and an interim suspension of Mr Pearce’s discharge from bankruptcy on the basis that further information needed to be obtained by the Trustee from Mr Pearce, who was refusing to cooperate with him. The answers to the Bankruptcy Questionnaire had provided no relevant information as to what had become of the inheritance money, which was a substantial sum. Mr Pearce then refused to give an undertaking to attend upon the Trustee at an agreed appointment in London. The District Judge ruled that he was failing to cooperate with the Court and that it was appropriate to suspend the discharge period and adjourn the public examination until 23 June 2016.

Before the resumed public examination took place, the Trustee carried out his own investigations (assisted by court orders for third party disclosure) which revealed the following:

Mr Pearce had received the bulk of the inheritance money in two cheques, one from the solicitors administering Miss Spalding’s estate, Ambrose Applebe, whose offices were in Lincoln’s Inn, and one from solicitors instructed on the sale of the property, Bude & Storz, whose offices were in Stamford Hill.

All communications between Mr Pearce and those firms in respect of those matters were with female solicitors, a Ms Sleeman and a Ms Renshaw, and nobody with a name like Rhodes appears to have been involved.

Mr Pearce received an interim payment from the estate of £40,000 under cover of a letter dated 6 January 2009 and a payment of £239,698 following the sale of Miss Spalding’s property which had been transferred into his name. The estate accounts also indicate that there was also an interim distribution of £945 to Mr Pearce relating to some Banco Santander shares, and that there may have been a final balance of around £4,000 when the estate was wound up.

The cheque for £239,698 was dated 26 October 2009 and made out to Mr Pearce. It was paid into an interest-bearing account with Nationwide Building Society with a number ending in 753, in Mr Pearce’s sole name, on 28 October 2009. On 1 April 2010 a further sum of £22,000 was transferred into that account from another Nationwide account ending 957 which was also in the sole name of Mr Pearce.

On 3 August 2010, £19,303 was paid out of the 753 account to Thomas Cook Retail Ltd, which was consistent with it being a payment for a holiday. (There are other smaller payments to travel companies, but nothing corroborating Mr Pearce’s claim to have spent over £50,000 on any world cruise).

Mr Pearce had a current account with Barclay’s Bank (ending 271) which was opened in 2007, originally in the joint names of Mr Pearce and his wife, but later held solely in his name. £10,000 was transferred out of that account into an account with Barclays Bank in his daughter’s name ending in 843, on 28 April 2011.

Earlier in April 2011, Mr Pearce transferred £251,672.12 from the 753 account into an account ending 645 which was a child’s account held in the name of Mr Pearce, ostensibly a trust account for the benefit of his grandson, J. The 753 account from which the money had come was closed on 15 April 2011. Mr Gray drew the Court’s attention to the fact that despite the ostensible trust for J, around two weeks after the money was transferred into the 645 account, £25,000 was withdrawn from it and deposited into the current account at Barclay’s Bank (ending 271).

£241,954.74 was subsequently withdrawn from the child’s account (645) and used to open a similar account in the name of Mr Pearce’s daughter, with a number ending 484, again ostensibly for the benefit of J, less than a month later, on 6 May 2011. However, £220,000 was withdrawn from that account by cheque made payable to Mr Pearce on 25 November 2011. These funds were paid into another Nationwide account in the sole name of Mr Pearce, ending in 811. At some point thereafter, his daughter’s name was added to that account.

On 25 July 2012 £10,000 was transferred from the 811 account to another account in Mr Pearce’s name ending in 504, which was either closed or changed its number on 26 September 2012. £8945.67 was transferred from that account into another account ending in 409, which was held by Mr Pearce until 10 March 2014.

On 21 September 2012, £217,285.97 was transferred from the 811 account into another Nationwide account held by his daughter in her own name. That account was subsequently renumbered. It later transpired that Mr Pearce’s daughter had emptied that account around a week before the Trustee obtained the interim injunction freezing that account and the funds in it, pending his successful application to set aside the chain of transactions described above as transactions at an undervalue.

Mr Pearce transferred £20,000 on 30 September 2014 from an unknown source into a joint account at Barclays Bank ending 534, in the name of Mr Pearce and his daughter, which appeared on its face to be a trust account for Mr Pearce’s other grandson, A.

The Barclays 271 account remained open at all material times until Mr Pearce was declared bankrupt, though there was very little money left in it from late 2011 onwards. It was closed on 27 April 2015, the date of the bankruptcy.

At the resumed hearing of the public examination, in answer to a question by Mr Gray, and prior to being confronted with the unequivocal evidence about what really happened to the inheritance money, Mr Pearce confirmed that it was his position that he had no bank accounts at the time when he received the money from Miss Spalding’s estate and that he had “nothing to declare” by way of bank accounts in the period from August 2012 – April 2015. He was then shown a bank statement for the 271 account at Barclays and it was pointed out to him that the account was active until 27 April 2015. He said: “I never had that money”. When asked “would you have declared that amount to the Trustee? he answered, “why should I?” When asked for an explanation, he said that it [the money] was taken “and the Bank of Scotland closed my account like that”. He then changed the subject and complained at length of a failure by the bailiffs to give him a receipt and reiterated that he had left £300,000 in the car which was seized by the bailiffs. Mr Gray asked “did you ask…” and Mr Pearce cut across him and said “I did not see them. They pulled up, a lorry, put it on top and went”.

Mr Pearce subsequently failed to engage with any further questions. In response to a question from counsel that began by asking him to look at a page in his bank statements he said: “I refuse to turn to that on the principle that I don’t think it is right for this man to ask these questions”. The District Judge asked: “are you refusing to answer any more questions?” to which he replied, “I have not sworn on the Bible”. He then sought to question why an affirmation has equal status with an oath, thereby revealing that his decision not to take an oath at his previous examination and to affirm instead was taken to enable him to tell lies, as he mistakenly thought, with impunity. The District Judge correctly informed Mr Pearce that he had an obligation to answer the questions under the Insolvency Act, at which point Mr Pearce said he had had four strokes, he was on medication and “I have no recollection what he is asking me to answer”. The judge responded by observing that the impression Mr Pearce had made that morning was that he was perfectly capable of engaging with questions and that there was no medical reason why he should not answer them. Despite this, Mr Pearce refused to answer any further questions on the basis that what counsel was putting to him were “lies”.

After hearing submissions from Mr Gray and from the Official Receiver, the District Judge adjourned the public examination and suspended the discharge period until Mr Pearce cooperated to the satisfaction of the Trustee and the Official Receiver. She was satisfied, as are we, that Mr Pearce was deliberately refusing to cooperate.

On 26 January 2017 District Judge Alan Johns QC made an order setting aside those transactions described in paragraph 57 above that transferred money to accounts in the name of Mr Pearce’s daughter or into trust accounts for the benefit of his grandchildren as transactions at an undervalue and as transactions that had been entered into for the purposes of putting assets beyond the reach of Mr Pearce’s creditors. Mr Pearce did not seek to appeal against that order.

At the committal hearing before us, the Trustee confirmed on affirmation that the contents of his Affidavit (which set out the above history) were true, and we find that they are true. His evidence is credible on its face and is based on contemporaneous records of Mr Pearce’s own statements and the documents of neutral third parties, including solicitors and banks. In any event, apart from the truth of what the bailiffs told the Trustee, that evidence was not challenged by Mr Pearce.

In cross-examination, Mr Pearce asked the Trustee whether he (Mr Pearce) was entitled to a receipt from the bailiffs. The Trustee said that he assumed that Mr Pearce would have been entitled to a receipt, but that was a matter that Mr Pearce should have taken up with the bailiffs. Mr Pearce then put it to the Trustee that at the second public examination, the Trustee had made a telephone call to the bailiffs on his mobile phone from the courtroom, and had reported back that they said the car was “as clean as a whistle”. The Trustee denied making any such call. Mr Pearce told the Court in his unsworn statement that this was untrue, that the lady judge had allowed the call to be made and that he, Mr Pearce, was present in court when it was. He said that the Trustee said: “I’ve made a call and the bailiff says the car was as clean as a whistle”.

In his unsworn statement Mr Pearce told the Court that he lived in a council flat at 9 Fouracres, Holden Road, North Finchley. The flat had been burgled several times. On the Friday, Saturday and Sunday before the bailiffs called, Mr Pearce had visited the Victoria Sporting Club in Edgware Road and Crockfords in Mayfair and he had won £300,000 in £50 notes which he had put in a black holdall in the boot of the car because he thought it was safer than keeping it in the flat. The boot also contained two sets of golf clubs, some golf shoes and the car tools. The money was kept in the car for “a couple of days”. He said he remembered the bailiff coming to the flat, because the bailiff did not believe Mr Pearce when he told him that it was a council flat and he (the bailiff) made a phone call to the council offices to confirm it. After that call, the bailiffs had to bring the contents of the flat, such as the furniture, which they had already taken out, back into the flat. By then, the car had been repossessed. Mr Pearce was in the flat and his neighbour phoned him up and said: “they took your car”. The bailiffs gave him no receipt.

Mr Pearce volunteered the information that he had been left money in other Wills. When asked by the Court why there was no mention of this other money in his answers to the Bankruptcy Questionnaire he responded: “why should I answer questions about money that isn’t their money?” He went on to indicate that “they” (by which he appeared to mean Miss Spalding’s family) were only interested in the money that she left him. At the very least, that demonstrates beyond any reasonable doubt that Mr Pearce knew that he was obliged to tell the Trustee the truth about what he had done with the inheritance money. He then said (in direct contradiction to the answers he had given in his first public examination) that he had won £20,000 on the Lottery in 2015. If that is true, he should have declared it to the Trustee.

There was nothing in the transcript of the second bankruptcy examination (or indeed the first) to support Mr Pearce’s account of the telephone call to the bailiffs. It would have been highly irregular to have made such a call from the courtroom itself, and even if the call had been made from outside the court and its contents reported to the District Judge, the report of the bailiffs saying that the car was “as clean as a whistle” or something akin to it would have appeared on the transcript. One would also expect the District Judge to have made some remark about it, if she had given her express permission for the call to be made, and the exchange in which her permission was sought and granted would also have been transcribed. However, there was no reason for anyone to have contacted the bailiffs by telephone on that occasion. Mr Pearce was asked questions by Mr Gray about the exchange of letters between the Trustee and the bailiffs in August 2015. The bailiffs’ version of events is plain from the letter. There is nothing more that they could have usefully added.

Although it was clear that the Trustee was not present at the first public examination, the transcript did not indicate whether he was present at the second. The Court asked Mr Gray to take instructions about this and, on being informed on instructions that the Trustee was not present, we invited the Trustee to return to the witness box, where he formally confirmed this on affirmation. At that point, Mr Pearce withdrew the allegation that it was the Trustee who made the alleged phone call, and said it must have been “the other gentleman”, i.e. the Official Receiver, Mr Stewart. He apologised to the Trustee for being mistaken. There was even less reason for the Official Receiver to have made a call to the bailiffs from the court than there was for the Trustee to have done so. If such a call had been made, irrespective of who made it, there would have been a record of it or some reference to it on the transcript of the hearing. We are satisfied that there was no such call.

We reject Mr Pearce’s account of what happened when the bailiffs came and took away the car, including the elaborate story about the telephone call to the council offices to ascertain that the flat was council property. We are satisfied that he was not in the flat at that time, and had not been living there for a few weeks, as his wife said to the bailiffs at the time. His wife had the car keys. There is no evidence that there was more than one set, and if Mr Pearce had vacated the marital home some weeks previously, and his wife had no idea where he was, it is a mystery how he could have gained access to the boot to put the holdall in it and leave it secured. On Mr Pearce’s own account to the Official Receiver, his wife was unaware that £300,000 was kept in the boot of the car. Mr Pearce told the Official Receiver in his telephone interview in May 2015 that he was “not at home,” when the bailiffs came, and that tallied with the bailiffs’ written account of what his wife had said to them. Although Mr Pearce disputed it, that would have been an odd story for the bailiffs to have made up. We have had no evidence from Mrs Pearce to contradict it, and even on his latest account, Mr Pearce was not present when the conversation took place. There was no reason for his wife to have told the bailiffs a tale about marital disharmony if it was untrue. Moreover, if the bailiffs visited the flat in the mistaken belief that they could remove the furniture from it, they would have known that Mr Pearce was there. Indeed, on his latest version of events, he was present when one of them phoned the council and he was in the flat when the car was towed away. If Mr Pearce had been in the flat, and the bailiffs had spoken to him, their letter to the Trustee would have been in very different terms. It would have strengthened their position if Mr Pearce was present or in the vicinity when the car was towed away.

If, as we find to have been the case, the only person living in the flat on the day when the car was taken away was Mr Pearce’s wife, she would have been the person to whom any receipt was given. If for any reason the bailiffs or their removal agents departed without leaving any paperwork with Mrs Pearce, even a copy of the vehicle inspection report (which seems highly unlikely), Mr Pearce could have got in touch with them to ask for a receipt – and to insist that they documented the removal of the money and the golf clubs and other items. Instead, he made no effort to do so at any time during the five months before he was made bankrupt, or at any time thereafter. The first time that there was any suggestion that Mr Pearce had won £300,000 which had been left in the car was after Mr Pearce filled in the preliminary information questionnaire (in which no mention was made of the money or the other items, though he did identify the car as an asset and put a value on it at the time of its removal).

Irrespective of the chances of the supposedly impecunious Mr Pearce having had an amazing streak of luck in the casinos over the previous weekend, for an initial stake of only £10, it is wholly implausible that Mr Pearce would have left such a large sum of money in a holdall in the boot of his car, especially when he had at least one bank account into which he could have deposited it on any weekday prior to the Friday when the bailiffs called. Mr Pearce is by no means stupid; a car left parked outside a block of flats is easy to steal or break into, even if the thief is an opportunist who has no knowledge of what is in the boot, and a holdall full of £50 notes would have been no safer in the boot of a car than it would in a council flat if the area is one that burglars frequent. If he had left the money there, as he said he did, he would have complained to the police and/or the bailiffs as soon as he found out the car had been taken. Nobody would lose £300,000 in that way without making some effort to get it back. Irrespective of the money, if one of the sets of golf clubs was not Mr Pearce’s, but belonged to a friend, as he told the Official Receiver, the owner is unlikely to have been happy about its going missing (especially as the bailiffs would not have been entitled to take someone else’s property). We find it inconceivable that a complaint would not have been made at the time, or as soon as Mr and Mrs Pearce were reconciled and he returned to the marital home, if this story had any truth in it.

We reject Mr Pearce’s explanation for why he failed to report the loss, which was that there was no point in doing so, because the bailiffs were bound to have been believed if they denied that the money was there. The car was taken in November 2014. The bankruptcy petition was not served until March the following year, and the money would have gone a long way towards clearing his debt to Miss Spalding’s family, which was the purpose for which he said he intended to use it. It beggars belief that he would have just accepted that it had gone missing and there was nothing he could do about it. The reason that the loss was not reported, and that no complaint was made about it, was because it did not happen. The story about the £300,000 was something that Mr Pearce made up at the time of his telephone interview by the Official Receiver, and he has persisted in that lie ever since, to try to divert attention from what really happened to the inheritance money. Unfortunately for him, he was unable to recollect the detail of what he had said on previous occasions and so his attempts to embroider the fiction by pretending that he was in the flat when the bailiffs called, when he told the Official Receiver he was not at home, were easily demonstrated to be further lies.

There is the additional problem for Mr Pearce that if he had truly intended to pay the money back, he had the means of doing so, or at least the means of paying back the greater part of it, from the accounts into which he had paid it and to which he had transferred it. He did spend some of the inheritance money before he was made bankrupt, but by no means all of it. The fact that he did not pay it back, but instead went to great lengths to conceal what had happened to it, demonstrates that he cannot have intended to pay back his creditors from gambling winnings or from any other source.

Mr Pearce has had every opportunity to explain why he failed to disclose what really happened to the money he received from Miss Spalding and why he went to such elaborate lengths to pass it through members of his family in different bank accounts. These were not innocent mistakes, and there could be no reasonable excuse for them. Mr Pearce could not have forgotten that the proceeds of sale of Miss Spalding’s bungalow were paid by cheque into his bank account, or the elaborate sequence of transfers of money in and out of the so-called trust accounts. The number and extent of those accounts, some of which were operative until shortly before his bankruptcy, makes the failure to disclose them inconsistent with an honest error. Moreover, Mr Pearce chose not to give an explanation for failing to reveal them. On more than one occasion during the hearing before us he remarked “I’ve already said too much”. His refusal to swear an oath, his surprise that an affirmation was of equal status and his repeatedly expressed desire not to answer the questions put to him at his public examinations demonstrate that he had no intention of giving an honest account to the Trustee or to the Court.

In these circumstances we hardly need to draw an adverse inference from the fact that Mr Pearce decided not to give evidence and subject himself to cross-examination before us. We remind ourselves that we cannot find Mr Pearce has committed contempt of court merely because he chose not to give evidence. However, if there are matters raised by the Trustee which called for an answer, (as there are) and he chose not to give an explanation on oath or affirmation, we are entitled to draw the inference that he has no honest explanation to give, and to weigh that with all the other evidence in deciding whether the Trustee has proved his case. By choosing to tell further lies to the Court at the committal hearing, as we are sure he did, Mr Pearce only made matters worse for himself.

It appeared to us from some of the things he said at the hearing that Mr Pearce was deeply aggrieved about Mr Bray making the claim he did some years after her death, and succeeding in getting the Wills set aside, when he had been Miss Spalding’s sole carer in her final years. Mr Gray told the Court on instructions that Miss Spalding’s family were unaware that she had died, because Mr Pearce kept that information from them. However, if they had kept in touch with Miss Spalding in her declining years they would not have needed Mr Pearce to tell them of her passing. Mr Rosen QC made a finding in his judgment that Miss Spalding had fallen out with Mr Bray in the summer of 2005. Mr Pearce may feel that he has a moral entitlement to keep the inheritance money, but unfortunately for him, the Court has ruled that he has no legal right to it. He resents this. He lied when he claimed that he had spent it all or gambled it away, and he went to great lengths to conceal what he had really done with it, because he feels that Mr Bray’s personal representatives should not have it.

In summary, the Trustee has established a clear pattern of deliberate non-cooperation with the Trustee and of steps being taken by Mr Pearce to make it difficult for the money to be traced and recovered. Contrary to what he had said to the Official Receiver and the Trustee and confirmed to the Court on affirmation at his public examinations, Mr Pearce owned and operated several bank or building society accounts in the periods about which he was questioned, as well as the Post Office card account whose details he has never supplied to the Trustee. The statement that he had not disposed of any property at an undervalue within the five years prior to his bankruptcy was untrue and Mr Pearce knew it to be untrue. He had made complex arrangements to put the inheritance money well beyond the reach of his creditors. Mr Pearce lied in the first public examination about receiving the inheritance money in cash from a solicitors’ firm whose name he could not remember. He also lied about spending all the inheritance money on holidays and gambling, as the documents disclosed by Nationwide and Barclays demonstrated beyond any reasonable doubt. The bulk of the money had been transferred into and out of accounts set up for that purpose, some of which appeared on their face to be gifts to members of his family although they did not stay permanently in the trust accounts. Mr Pearce also lied at both public examinations and at the committal hearing about leaving £300,000 in cash in the car which the bailiffs took away. He persisted in giving that false account at the committal hearing. At that hearing, he made up the story about the Trustee, telephoning the bailiffs from the court, and when it was demonstrated that the Trustee was not even present he tried to get around this by pretending that he had got the wrong man. He falsely stated that he was at home in the flat when the bailiffs called. Unlike the position at the public examinations, he was not prepared to tell those further lies on affirmation. These further lies shed light on Mr Pearce’s state of mind. He is plainly unabashed, and he is not prepared to mend his ways.

We find that the alleged breaches of sections 333 and 363 of the Insolvency Act have been proved to the criminal standard and that each of those breaches was intentional. The information sought by the Trustee about Mr Pearce’s financial affairs, bank accounts and, in particular, the fate of the inheritance money, was necessary for the Trustee to achieve his function of getting in realising and distributing the bankrupt’s estate under s.305(2), Bankruptcy questionnaires and asking questions in public examinations are a means to that end. This was the clearest possible case of deliberate and calculated non-cooperation with the Trustee and of calculated attempts to obstruct him in his functions. The Court directed Mr Pearce to answer questions and to co-operate with the Official Receiver and the Trustee, but he failed to obey the Court’s directions and persisted in telling lies at both his public examinations despite making a solemn and binding promise to tell the truth, the whole truth and nothing but the truth.

However, we do not find the alleged breach of section 312 proved. We are not satisfied to the criminal standard that Mr Pearce had documentation or records such as passbooks or bank statements pertaining to the various bank accounts which he failed to deliver up to the Trustee. Whilst it may appear implausible that he had no bank statements relating to the Barclays account ending 271, which closed on the date of his bankruptcy, there was only a small sum (around £22) left in that account since £300 was withdrawn in 2011. Banks do not always send out statements if an account appears to be dormant. Mr Pearce would have had no specific reason to keep bank statements relating to accounts that were closed years before. He may have had statements sent to him in respect of the Post Office account, but there was no evidence about this, and we cannot draw any conclusions as to whether he would have kept them.

This is an extremely serious case of contempt of court covering a wide range of reprehensible conduct. Mr Pearce was aware of his obligations under the Insolvency Act and the risk of imprisonment for breach of those obligations. The guidance notes at the front of the Bankruptcy Questionnaire reminded him of those obligations and warned him that it would be a criminal offence if he failed to disclose property, made a material omission or false representation or concealed property. He signed a declaration that he had read those guidance notes and confirmed that he understood that he must assist the Trustee in carrying out his duties and make full disclosure of his affairs. Despite those warnings, we find that his deliberate attempts to mislead and obstruct the Trustee and to conceal the truth about what happened to the inheritance money from the Official Receiver, the Trustee and the Court were calculated attempts to interfere with the administration of justice.

We therefore accede to the application to endorse the Trustee’s certification that Mr Pearce, without reasonable excuse, has failed to comply with his obligations under s.333(1)(a), s.333(1)(c) and 363(2) of the Insolvency Act and find that each of his many breaches of those obligations set out in this judgment amounts to a criminal contempt of court. We will now hear submissions on the question of sanction.