COURT OF APPEAL

 

In re TUCKER (R.C.) (A BANKRUPT), Ex parte TUCKER (K.R.)

 

Authoritative version at [1990] Ch. 148

 

 

COUNSEL: Jules Sher, Q.C. and Christopher Brougham for the appellant Tucker

Eben Hamilton, Q.C. and Elizabeth Gloster for the trustee

 

SOLICITORS: Roneys; Stephenson Harwood.

 

JUDGES: Sir Nicolas Browne-Wilkinson V.-C., Dillon and Lloyd L.JJ.

 

DATES: 1987 Oct. 12, 13, 14; Nov. 16

 

APPEAL from Scott J.  [*151]

 

Cur. adv. vult.

 

16 November. The following judgments were handed down.

 

DILLON L.J. This is an appeal against an order of Scott J. made on 14 January 1987. The appellant, Mr. Keith Tucker, is a brother of a bankrupt debtor, Roy Clifford Tucker, and the appeal raises issues under section 25 of the Bankruptcy Act 1914. That section provides:

 

“(1) The court may, on the application of the official receiver or trustee, at any time after a receiving order has been made against a debtor, summon before it the debtor or his wife, or any person known or suspected to have in his possession any of the estate or [*153] effects belonging to the debtor, or supposed to be indebted to the debtor, or any person whom the court may deem capable of giving information respecting the debtor, his dealings or property, and the court may require any such person to produce any documents in his custody or power relating to the debtor, his dealings or property. (2) If any person so summoned, after having been tendered a reasonable sum, refuses to come before the court at the time appointed, or refuses to produce any such document, having no lawful impediment made known to the court at the time of its sitting and allowed by it, the court may, by warrant, cause him to be apprehended and brought up for examination. (3) The court may examine on oath, either by word of mouth or by written interrogatories, any person so brought before it concerning the debtor, his dealings, or property. (4) If any person on examination before the court admits that he is indebted to the debtor, the court may, on the application of the official receiver or trustee, order him to pay to the official receiver or trustee, at such time and in such manner as to the court seems expedient, the amount admitted, or any part thereof, either in full discharge of the whole amount in question or not, as the court thinks fit, with or without costs of the examination. (5) If any person on examination before the court admits that he has in his possession any property belonging to the debtor, the court may, on the application of the official receiver or trustee, order him to deliver to the official receiver or trustee such property, or any part thereof, at such time, and in such manner, and on such terms, as to the court may seem just. (6) The court may, if it thinks fit, order that any person who if in England would be liable to be brought before it under this section shall be examined in Scotland or Ireland, or in any other place out of England.”

 

It is not in doubt that Mr. Tucker is indeed a person whom the court could fairly deem, and did deem, capable of giving information respecting the debtor, his dealings or property. The difficulty in the case arises because although Mr. Tucker is a British subject he does not live in England. For valid reasons of his own he ceased to live in England 15 years ago. For many years past he has lived in Belgium where he owns and runs a school of equitation.

 

At the time of the enactment of the Act of 1914, however, and until an amendment of the Bankruptcy Rules in 1962, there was no power to serve any process in bankruptcy proceedings on any person, other than the debtor himself, who was not in England. Rule 86 of the Bankruptcy Rules 1952 in its original form merely provided, as did its predecessors, for service of certain documents on the debtor where the debtor was not in England. The Rules of the Supreme Court do not apply to bankruptcy proceedings.

 

There were indeed provisions in the Act of 1914 for courts having jurisdiction in bankruptcy to make orders in aid to assist other courts having jurisdiction in bankruptcy and to enable warrants of courts having jurisdiction in bankruptcy in England to be enforced in certain [*154] other territories. These provisions are contained in sections 122 and 123(1):

 

“122. The High Court, the county courts, the courts having jurisdiction in bankruptcy in Scotland and Ireland, and every British court elsewhere having jurisdiction in bankruptcy or insolvency, and the officers of those courts respectively, shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy, and an order of the court seeking aid, with a request to another of the said courts, shall be deemed sufficient to enable the latter court to exercise, in regard to the matters directed by the order, such jurisdiction as either the court which made the request, or the court to which the request is made, could exercise in regard to similar matters within their respective jurisdictions.

 

“123(1) Any warrant of a court having jurisdiction in bankruptcy in England may be enforced in Scotland, Ireland, the Isle of Man, the Channel Islands, and elsewhere in His Majesty’s dominions, in the same manner and subject to the same privileges in and subject to which a warrant issued by any justice of the peace against a person for an indictable offence against the laws of England, may be executed in those parts of His Majesty’s dominions respectively, in pursuance of the Acts of Parliament in that behalf.”

 

Plainly these provisions could not have been used to obtain any order from the Belgian courts or to enforce in Belgium any warrant of an English court having jurisdiction in bankruptcy.

 

I should add as a matter of history that sections 25, 122 and 123(1) of the Act of 1914 repeated in the same wording provisions which had been contained in the Bankruptcy Act 1883, which was the immediate predecessor of the Act of 1914.

 

Whatever the construction of section 25 of the Act of 1914, therefore, it would not have been practicable, before 1962, to obtain the examination of Mr. Keith Tucker before the bankruptcy court in England under section 25 unless either (a) he was willing to come to be examined, or (b) the trustee in bankruptcy succeeded in serving him with a summons under section 25(1) when he happened to be in England on a visit.

 

In 1962, however, rule 86 of the Bankruptcy Rules 1952 was amended to read:

 

“Where any process or order of the court or other document is required by the Act or these Rules to be served on any person who is not in England, the court may order service on him of that process or order or other document to be effected within such time and in such manner as it thinks fit, and may also require such proof of the service of that process, order or other document, as it thinks fit.”

 

That amendment is basic to these proceedings.

 

The receiving order in bankruptcy was made against the debtor on 22 July 1985 and he was adjudicated bankrupt on 9 August 1985. His trustee in bankruptcy, a partner in a well-known firm of accountants, [*155] was appointed in September 1985. Because of the dates, the bankruptcy is governed by the Act of 1914, and not by the Insolvency Act 1986. The bankruptcy is now effectively a tax bankruptcy; the petitioning creditor’s debt, founded on a judgment in the Queen’s Bench Division for U.S. $412,176, has been assigned to a Panamanian company and been released, and virtually all other claims in the bankruptcy have been paid off by relatives of the debtor or been released, except for a claim by the Inland Revenue, not yet admitted for proof, for tax in excess of 18.5 million, which is the subject of assessments which are subject to appeal.

 

Against that background the trustee formed the view, which has never been disputed, and could not now be disputed, that Mr. Tucker is a very important examinee in this bankruptcy. Accordingly, on 9 May 1986 on ex parte application to a bankruptcy registrar in the High Court he obtained, first, the issue of a summons under section 25(1) requiring Mr. Tucker to attend for examination in the High Court on 2 June 1986 and to produce on that occasion documents relating to a large number of companies and trusts and certain properties named in the summons, and, secondly, leave, purportedly under the amended rule 86, to serve the summons on Mr. Tucker by post at his home in Belgium. It is accepted that the summons, purportedly served in pursuance of that leave, was in fact received by Mr. Tucker in Belgium on 13 May 1986. On that same date, 13 May, on a further ex parte application to the registrar, the trustee obtained the issue of an identical summons requiring Mr. Tucker to attend for examination and to produce documents in the High Court on 3 and 4 July 1986, together with a similar leave to serve that summons on Mr. Tucker by post at his home in Belgium. It is not in doubt that it was so served, though the precise date is not known. It was suggested to us that the reason why there were two summonses with different return dates was that someone discovered that 2 June 1986, the return date for the first summons, was a bank holiday. Nothing has turned on that, however, or on the fact that there were two summonses.

 

Mr. Tucker has never submitted to the jurisdiction of the English bankruptcy court and by a notice of motion dated 30 May 1986 he applied to the bankruptcy court for the rescission of the orders of 9 and 13 May which authorised the service of the summonses out of the jurisdiction. The basis of that application was a submission that the court had no jurisdiction to order service of such summonses out of the jurisdiction in Belgium. The notice of motion came in due course before Scott J. and on 14 January 1987 he gave a careful reserved judgment and dismissed Mr. Tucker’s application, holding that the registrar had had jurisdiction to order service by post in Belgium. That is the order against which Mr. Tucker now appeals, and the essential question which we have to consider on the appeal is whether there was jurisdiction to authorise service out of the jurisdiction.

 

In September 1986 the trustee obtained from the registrar the issue of yet another summons under section 25 in the same terms, save as to the return date, as the first two summonses, and on 22 October 1986 he obtained an order for the substituted service of this third summons, authorising it to be served by post addressed to Mr. Tucker at an [*156] address in Curzon Street, London W.1, which is the address of an office said to be frequented by associates of the debtor. That order for substituted service was challenged by Mr. Tucker by a further notice of motion which also came before Scott J. This challenge Scott J. upheld, holding, on authority, that there can be no substituted service of a writ or other process where the person concerned cannot be served directly because that person is, legitimately and without any question of evading service, out of the jurisdiction. The trustee has not appealed against this part of the judgment of Scott J. Accordingly, the third summons of September 1986 is spent, and can be ignored, as a summons which was never served requiring the attendance of Mr. Tucker for examination on a date now long past.

 

During the course of the hearing before Scott J., however, the trustee, by Miss Gloster, invited the judge to make an order under section 25(6) of the Act of 1914 directing the examination of Mr. Tucker, and the production of documents in Belgium if the judge felt constrained to set aside the orders for the service out of the jurisdiction of the first two section 25 summonses, which were for examination of Mr. Tucker in the High Court in England. The judge declined to make any order for Mr. Tucker’s examination in Belgium, partly because he held that the first two section 25 summonses were valid and had been validly served, and partly also because he held that he ought to follow the decision at first instance in In re Drucker (No. 2), Ex parte Basden [1902] 2 K.B. 210 in which it had been held by Wright J. that the provision for ordering examination in other countries in the statutory predecessor (in identical terms) of section 25(6) could only authorise an order for examination in a country within the jurisdiction of the British Crown. By a respondent’s notice to the present appeal, the trustee challenges the correctness of In re Drucker and asks that if the appeal be allowed and the first two section 25 summonses cannot proceed, the court should make an order under section 25(6) for the examination of Mr. Tucker in Belgium. In support of the respondent’s notice the trustee has undertaken to issue a pro forma summons, which sets out the precise relief sought. This summons we treat as before us, and I shall have to return to it later in this judgment.

 

On the essential question on the appeal the primary argument for the trustee has the merit of simplicity. Section 25(1) gives the bankruptcy court power to summon before it for examination “any person” who has the requisite connection with an English bankruptcy and, in particular, “any person” whom the court may deem capable of giving information respecting the debtor, his dealings or property. The words “any person” are, it is submitted, to be given their natural meaning and cover any person of any nationality in any part of the world. If that is right on the construction of section 25, then, in my judgment, it would follow that the amended rule 86 is merely providing machinery for service to implement the jurisdiction conferred by section 25, and the amended rule 86 could not therefore be held to be ultra vires as extending the jurisdiction of the court; vide the proviso to section 132(1) of the Act of 1914, which confers the rule-making power. The trustee’s advisers accept, however, that, in the light of the accepted practice of nations [*157] and comity in the field of international law and international relations, eyebrows might be raised at the notion that Parliament had in 1914 or 1883 given jurisdiction to any bankruptcy court, which might well be a county court, to summon anyone in the world before it to be examined and produce documents. Accordingly, by a second submission which Scott J. accepted, they submit that the jurisdiction at least extends to any British subject anywhere in the world.

 

In support of this second submission they refer to the decision of this court in Ex parte Blain (1879) 12 Ch. D. 522. In that case the court had to consider whether a bankruptcy petition could be served on some Chileans who had never been in England but were partners in a business carried on by other partners in England. James L.J. said, at p. 526:

 

“It appears to me that the whole question is governed by the broad, general, universal principle that English legislation, unless the contrary is expressly enacted or so plainly implied as to make it the duty of an English court to give effect to an English statute, is applicable only to English subjects or to foreigners who by coming into this country, whether for a long or a short time, have made themselves during that time subject to English jurisdiction.”

 

And later, at p. 527:

 

“It is not consistent with ordinary principles of justice or the comity of nations that the legislature of one country should call on the subject of another country to appear before its tribunals when he has never been within their jurisdiction.”

 

Brett L.J. said, at p. 528:

 

“But does it follow that, because a case is literally within the words of a statute of any country, therefore it is within the jurisdiction of the courts of that country? Certainly not. The governing principle is that all legislation is prima facie territorial, that is to say, that the legislation of any country binds its own subjects and the subjects of other countries who for the time being bring themselves within the allegiance of the legislating power. The English legislature has a right to make a bankruptcy statute which shall bind all its own subjects, and any foreigner who for the time is in England and does something there which the statute forbids.”

 

Cotton L.J. said, at pp. 531-532:

 

“All we have to do is to interpret an Act of Parliament which uses a general word, and we have to say how that word is to be limited, when of necessity there must be some limitation. I take it the limitation is this, that all laws of the English Parliament must be territorial - territorial in this sense, that they apply to bind all subjects of the Crown who come within the fair interpretation of them, and also all aliens who come to this country, and who, during the time they are here, do any act which, on a fair interpretation of the statute as regards them, comes within its provisions. . . . As regards an Englishman, a subject of the British Crown, it is not necessary that he should be here, if he has done that which the Act [*158] of Parliament says shall give jurisdiction, because he is bound by the Act by reason of his being a British subject, though, of course, in the case of a British subject not resident here, it may be a question on the construction of the Act of Parliament whether that which, if he had been resident here, would have brought him within the Act, has that effect when he is not resident here.”

 

These passages in Ex parte Blain were referred to by Lord Scarman and Lord Wilberforce in Clark v. Oceanic Contractors Inc. [1983] 2 A.C. 130. Lord Scarman, at p. 145, stated that the principle there referred to (which put into modern language he restated as being that “unless the contrary is expressly enacted or so plainly implied that the courts must give effect to it, United Kingdom legislation is applicable only to British subjects or to foreigners who by coming to the United Kingdom, whether for a short or a long time, have made themselves subject to British jurisdiction”) was a rule of construction only. Lord Wilberforce said, at p. 152, that the principle, which was really a rule of construction of statutes expressed in general terms, required an inquiry to be made as to the person with respect to whom Parliament was presumed, in the particular case, to be legislating.

 

I look, therefore, to see what section 25(1) is about, and I see that it is about summoning people to appear before an English court to be examined on oath and to produce documents. I note that the general practice in international law is that the courts of a country only have power to summon before them persons who accept service or are present within the territory of that country when served with the appropriate process. There are exceptions under R.S.C., Ord. 11, but even under those rules no general power has been conferred to serve process on British subjects resident abroad. Moreover, the English court has never had any general power to serve a subpoena ad testificandum or subpoena duces tecum out of the jurisdiction on a British subject resident outside the United Kingdom, so as to compel him to come and give evidence in an English court. Against this background I would not expect section 25(1) to have empowered the English court to haul before it persons who could not be served with the necessary summons within the jurisdiction of the English court.

 

I then find that an alternative procedure is provided by orders in aid under section 122 which could be used to secure the examination of persons resident in Scotland or Ireland or within the jurisdiction of other British courts before the bankruptcy courts of those countries. This procedure, while taking advantage of the jurisdictions of those other courts, also respects those jurisdictions.

 

Finally, and to my mind conclusively, by section 25(6) the court is given a power (the scope of which will have to be considered on the respondent’s notice) to order the examination out of England of “any person who if in England would be liable to be brought before it under this section.” This wording carries inevitably, in my judgment, the connotation that if the person is not in England he is not liable to be brought before the English court under the section. [*159]

 

Mr. Hamilton for the trustee submits that subsection (6) merely picks up the provisions of subsection (2) that the court may by warrant cause a person to be apprehended and brought up for examination if he has refused to comply with a summons under subsection (1). Mr. Hamilton submits that if such a person cannot be brought up by warrant under subsection (2) because he is out of England, then his examination out of England may be ordered under subsection (6). That does not, however, fit the wording “who if in England would be liable to be brought before it,” since subsection (6) refers expressly to Scotland and Ireland, and warrants of the English bankruptcy court are enforceable in Scotland and Ireland under section 123(1) of the Act of 1914. Beyond that, the words in subsection (6) “any person who if in England would be liable to be brought before it” echo, in my judgment, the words in subsection (3) “any person so brought before it,” and as subsection (3) gives the court power to examine on oath, those words must refer to persons brought before the court by summons under subsection (1) and not merely to defaulters apprehended by warrant under subsection (2) and brought up for examination.

 

Thus the words which I have quoted from subsection (6), “liable to be brought before it under this section,” must mean “liable to be brought before it by summons under this section.” Subsection (6) thus confirms that a person who is not at any relevant time in England, and so cannot be served with a summons of the English court in England, cannot be examined by that court under subsection (1). His period in England may be very brief, and if he is served in England with an appropriate summons during a brief visit, that will be enough, since, as Lord Esher M.R. observed in In re Bradbrook, Ex parte Hawkins (1889) 23 Q.B.D. 226, 227, in relation to the predecessor of section 25 in the Act of 1883, the moment the summons was served the requirements of the section would be fulfilled. If, however, he has never been in England at all at any relevant time, then he is outside section 25(1) and cannot be examined in England.

 

If that is the correct construction of section 25(1) in its context in the Act of 1914, then the jurisdiction of the court under the subsection cannot have been extended by the amendment of rule 86 in 1962, and the orders for service of the first two summonses on Mr. Keith Tucker out of the jurisdiction must have been bad.

 

Accordingly, differing with every respect from Scott J. in what I have not found an easy case, I would allow Mr. Tucker’s appeal and would set aside the orders for service outside the jurisdiction of 9 and 13 May 1986. The result will be that the two summonses of those dates must lapse, having been issued for dates long past, and never having been served.

 

I turn to the respondent’s notice and the trustee’s pro forma summons asking for an order under section 25(6) for the examination of Mr. Tucker in Belgium.

 

As I have stated, one of the reasons why Scott J. declined to make any such order was that he followed the decision of Wright J. in In re Drucker (No. 2), Ex parte Basden [1902] 2 K.B. 210, where Wright J. had held that the power of the court under the predecessor of section [*160] 25(6) in the Act of 1883 to order examination in places out of England did not extend to places not within the jurisdiction of the British Crown. Scott J., sitting at first instance, was, in my judgment, right to follow In re Drucker since the facts are indistinguishable and the decision, though only at first instance, has stood for over 80 years. We in this court have, however, to reconsider In re Drucker.

 

The judgment of Wright J. is short and was delivered on the hearing of an ex parte application, which he rejected, for the examination of certain persons in Zurich. As I read his judgment, he was perturbed at the notion that Parliament could have intended to empower the court to order the examination of persons in foreign countries, when the court, if it made the order, could not compel the persons concerned to come up for examination and could not punish them if they refused to come, or came and would not answer. He seems to have felt that an order for examination in a country within the jurisdiction of the British Crown was not open to those objections; whether he had in mind the predecessor in the Act of 1883 of section 122 of the Act of 1914 as to orders in aid he does not say, but he was a judge with great experience of bankruptcy law.

 

There have been established procedures since before 1883, let alone 1914, to obtain the taking in foreign countries of evidence in civil proceedings from witnesses who are resident in those countries: see, for example, In re Boyse, Crofton v. Crofton (1882) 20 Ch. D. 760 and the cases there mentioned. It would seem that this would normally have been done by the issue by the English court of a commission or letters of request to the judicial authorities of the country in question, but it might in an appropriate case have been done by appointing an English commission to go to the foreign country to take the evidence out of court. The present procedure is set out in R.S.C., Ord. 39, rr. 2 and 3, and it is to be noted that under Ord. 39, r. 2(1)(b) the procedure, as an alternative to the issue of letters of request, of appointing the English court’s special examiner to take the evidence of the foreign witness in the foreign country is only permissible “if the government of that country allows a person in that country to be examined before a person appointed by the court.”

 

In view of the procedures which were already established for the taking of evidence in foreign countries which were not within the British dominions, I could not myself reach, as a matter of construction of section 25(6), the conclusion which Wright J. reached, that the subsection must be construed as limited to places within the jurisdiction of the British Crown. Indeed the difference in wording between the words “every British court elsewhere” in section 122, the words “elsewhere in His Majesty’s dominions” in section 123(1) and the words “in any other place out of England” in section 25(6) (and in their respective predecessors in the Act of 1883) are against such a construction.

 

On the fundamental points, however, which Wright J. had in mind and which led him to the conclusion which he put on construction of the subsection, I have no doubt that Parliament did not intend to confer on the bankruptcy court any jurisdiction which could be exercised in breach of the established criteria of international law with regard to comity. I [*161] have no doubt also that the question whether any person ordered to attend for examination abroad could be compelled to come up for examination or could be punished if he refused to come, or came and would not answer, are highly material to the making of any order. So far as the facts of the case can be discerned from the report, I apprehend that the actual decision in In re Drucker was right.

 

If, therefore, what was sought under section 25(6) was examination of a person before a court of the foreign country through the machinery of letters of request, the English court would, before it could properly make any such order, have to be satisfied that the case was covered by available machinery. In the present case, though there is provision for taking evidence before the Belgian court in the Convention between the United Kingdom and Belgium respecting Legal Proceedings in Civil and Commercial Matters (Cmd. 2069) made on 21 June 1922, that procedure is not being invoked by the trustee, because of doubt in the light of the decision of Woolf J. in In re International Power Industries N.V. [1985] B.C.L.C. 128 whether the examination of a person in bankruptcy proceedings is the taking of evidence in civil or commercial matters within the meaning of the Convention. We are not called on to express any view on this doubt. I would add, however, that a further reason why it might not be right to involve the Belgian courts is that this is a tax bankruptcy and the ultimate reason of the trustee for proceeding with the examination must be to get in assets of the bankrupt to satisfy the United Kingdom Inland Revenue. From the point of view of the Belgian courts, however, that would be the enforcement of a - to them - foreign revenue law, and it would be contrary to established principles of international law for the Belgian courts to lend their assistance to that end: see the Irish case of Peter Buchanan Ltd. v. McVey (Note) [1955] A.C. 516, approved in and reported as a footnote to Government of India v. Taylor [1955] A.C. 491. What the trustee does seek, therefore, by the pro forma summons under section 25(6) is an order for the examination of the appellant at a place to be nominated in Belgium before an examiner appointed by the English court, being a member of the English Bar of appropriate standing.

 

So far as that is concerned, there is provision in the Convention made on 21 June 1922 which satisfies me that - to apply by analogy the wording of R.S.C., Ord. 39, r. 2(1)(b) - the Government of Belgium would allow a person in that country to be examined in Belgium before an examiner appointed by the English court. This court has, of course, no power to rule on the construction of a convention between governments, but it is not necessary to do that to reach this general conclusion. The Belgium Government would, however, only take this attitude provided the examiner has no compulsory powers, and any summons served on Mr. Tucker would have to state expressly that there was no compulsion on him to appear: see article 11(b) and (c) of the Convention.

 

In these circumstances, it is plain to me that the Belgian court would not compel Mr. Tucker to come up for examination and would not punish him if he refused to come or came and would not answer. The English court would have no means of compelling him to attend and [*162] would also have no means of punishing him if he did not attend because, so far from containing the usual penal notice, the summons for his attendance would have had to state that there was no compulsion on him to appear.

 

I have seen nothing to suggest that Mr. Tucker is willing to be examined and produce documents in Belgium if the court so orders; the whole history of these proceedings indicates a total unwillingness to co-operate with the trustee in providing information or documents. If, contrary to my present view, he is willing to provide information or produce documents in Belgium (or in Guernsey or anywhere else abroad) this can happen without any order of the court. For the present, however, I see so little prospect of an order against Mr. Tucker under section 25(6) being obeyed or serving any other useful purpose that I would not regard it as a proper exercise of discretion to make such an order. For my part, therefore, I would dismiss the pro forma summons.

 

LLOYD L.J. I agree.

 

SIR NICOLAS BROWNE-WILKINSON V.-C. I agree with the judgment of Dillon L.J. and cannot usefully add anything on the substance of the matter. However, in the hope of avoiding further confusion in the future I should say something about my decision in In re Jogia (A Bankrupt) [1988] 1 W.L.R. 484.

 

Scott J. [1987] 1 W.L.R. 928, 942-943 relied on my decision in In re Jogia in support of his conclusion that the 1962 amendment to rule 86 was not ultra vires. It was not argued in In re Jogia that the 1962 amendment was ultra vires and my attention was not drawn to section 132(1) of the Bankruptcy Act 1914. Accordingly, my decision in that case does not cast any light on the question whether the 1962 amendment was ultra vires.

 

The appeal will be allowed for the reasons contained in the judgments handed down.

 

Appeal allowed with costs in Court of Appeal and below.

 

Leave to appeal granted but not proceeded with.