Society of Lloyds v Waters
 BPIR 698
HEARING-DATES: 17 July 2000
17 July 2000
Bankruptcy – Annulment – Cross-claim – Sufficiency of evidence – Discretion – Relevant criteria – Insolvency Act 1986, s 282(1)(a)
W was a member of Lloyds. On 11 March 1998, Lloyds obtained judgment against W for £ 474,650.91. On 4 April 1998, Lloyds served a statutory demand. On 21 July 1998, the Court of Appeal refused W leave to appeal against the judgment. On 1 December 1998, Lloyds presented a bankruptcy petition upon which a bankruptcy order was made in the absence of W on 21 January 2000. W alleged that, along with many other Names, he had a cross-claim for damages for fraud. At the time when the bankruptcy petition was heard, W was one of the funders of litigation against Lloyds but he had asserted no cross-claim in answer to the petition. After the bankruptcy order had been made against W, Garrow v Society of Lloyds was decided with the result that Lloyds withdrew from all bankruptcy proceedings against Names until the outcome of preliminary issues to be determined in the main litigation was known but Lloyds refused to agree to the rescission or annulment of the bankruptcy order against W. On Ws application for an annulment, he failed to place before the registrar evidence of a cross-claim save bare assertions that he had a counterclaim which exceeded Lloyds judgment. A request by Ws solicitor for an adjournment to enable him to file further evidence was refused by the registrar on the grounds that, even if evidence of a cross-claim were adduced, he would refuse the application as a matter of discretion. Accordingly, the registrar dismissed the application for an annulment. W appealed to the judge.
Held – dismissing the appeal -
(1) In the absence of sufficient evidence to the effect that fraudulent representations had been made to W by Lloyds when he joined and that W relied on such representations, the registrar had been entitled to reach the conclusion which he did and the appeal court would not interfere with such a finding.
(2) The refusal of the adjournment had been a discretionary decision and the appeal court could not conclude that it had been wrong.
Per curiam: it had been open to the registrar on an application for an annulment to have regard to the fact that W had other creditors, that he would be unable to pay the trustees costs as a condition of an annulment and that there was uncontroverted evidence to the effect that W may have attempted to put assets beyond the reach of his creditors.
Statutory provisions considered
Insolvency Act 1986, ss 282(1)(a)(b), 375
Civil Procedure Rules 1998 (SI 1998/3132), r 52.11(2)
Cases referred to in judgment
Artman v Artman, Re a Bankrupt (No 622 of 1995)  BPIR 511, ChD
Coney (A Bankrupt), Re  BPIR 333, ChD
Garrow v Society of Lloyds  BPIR 668, ChD;  BPIR 885, CA
Gilmartin (A Bankrupt), Re  1 WLR 513, sub nom Gilmartin (A Bankrupt) ex parte the bankrupt, Re v International Agency and Supply Ltd  2 All ER 835, ChD
Ladd v Marshall  1 WLR 1489,  3 All ER 745, CA
Society of Lloyds v Jaffray (2000) unreported, 26 January, QBD
Society of Lloyds v Leighs and Others  CLC 759, QBD
Taylor, Ex parte Taylor, In re  1 QB 744, DC
COUNSEL: Lawrence Jones for the appellant; Barry Isaacs for the respondent
PANEL: Park J
JUDGMENTBY-1: PARK J
On 21 January 1999, Mr Waters was declared bankrupt on the petition of the Society of Lloyds. The order was made by Registrar James. Subsequently Mr Waters gave notice to Lloyds of an application for the bankruptcy order to be annulled under the Insolvency Act 1986, s 282(1)(a). The application was heard in April 2000, also as it happens by Registrar James. He dismissed the annulment application. Mr Waters now appeals to me. His case has been strenuously and powerfully argued by Mr Jones. However, for the reasons which I will give in this judgment, I have concluded that, sympathetic though I feel to anyone who suffers the disadvantages and, to a degree, the stigma of bankruptcy, I cannot allow this appeal.
I say something first about the nature of the appeal to me. This is a true appeal, not a rehearing. I refer in this connection to r 52.11 of the Civil Procedure Rules 1998. Alternatively, if, under the transitional provisions concerning the commencement of Part 52 of the Civil Procedure Rules 1998, this case should be governed by the old law (which, incidentally, I think it is probably not), the position would still be the same – see Re Gilmartin (A Bankrupt)  1 WLR 513.
Therefore, the question for me is not how would I decide the case if I had been at first instance. The question is, rather, whether Registrar James was wrong in his decision to refuse the order for annulment which was requested from him.
There are two further specific consequences of the nature of the appeal which I ought to mention. The first concerns evidence. The general principle, which I certainly intend to observe, is that, on an appeal which is not a rehearing, no new evidence should be admitted. That is expressly provided as a general principle in r 52.11(2) of the Civil Procedure Rules 1998. It is also the position under established case-law in connection with normal appeals. In particular I refer to the very well known case of Ladd v Marshall  1 WLR 1489. It may be worth my while making the point already, although I shall come back to it from time to time in this judgment, that the position about evidence is important. When Mr Waters annulment application was before Registrar James, the burden of making the case good rested squarely on Mr Waters. He had to put before the registrar the evidence needed to establish his case. If he did not put in the evidence which was needed, that was a deficiency which in principle he cannot cure now on appeal from the registrar to me. I was asked to allow further evidence to be adduced on the hearing before me. I believe that it would have been contrary to principle for me to accede to that request. I did not admit the further evidence.
The second specific consequence of the nature of this appeal concerns any aspects of the registrars decision which are properly characterised as exercises by him of a discretion. On an appeal from a discretionary decision the appellant cannot simply say that the appellate judge should himself consider how he would have exercised the same discretion. A discretionary decision by a lower court can only be reversed on appeal if the judge takes the view that the manner in which the first instance judge exercised the discretion was such that no reasonable judge properly instructed in the law could have proceeded as he did.
I return now to add a little more detail concerning the facts of Mr Waters case. There are two distinct sides to the rights and liabilities which subsist between him on the one hand, and Lloyds on the other. One side concerns his liability to Lloyds. The other side concerns a possible liability of Lloyds to him under what has been referred to in this and other cases as a counterclaim, but which would, I believe, be more accurately called a cross-claim.
First, I wish to say something about Mr Waters liability to Lloyds. There are seven brief points to make.
(1) Mr Waters was a member of Lloyds.
(2) On 11 March 1998, Lloyds obtained a judgment against him. Evidence is given about this by Mr Coldbeck of Lloyds. The evidence on this point is not in any way controversial and, for the record, I will read what Mr Coldbeck says.
'Lloyds obtained a judgment against Mr Waters on 11 March 1998 in the sum of £ 474,650.91 in proceedings which involved a large number of other Names against whom judgment was also given on that date. Following this, a number of those Names against whom judgment had been obtained, including Mr Waters, made an application to the Court of Appeal for leave to appeal the decision of Mr Justice Tuckey which led to the judgments. This application was refused and the Court of Appeal handed down its judgment on 21 July 1998.'
(3) Mr Waters did not pay the judgment debt, and Lloyds started to put the bankruptcy process into operation.
(4) On 4 April 1998, Lloyds served a statutory demand on Mr Waters. Mr Waters did not make any application to set the statutory demand aside.
(5) On 1 December 1998, Lloyds petitioned for Mr Waters to be declared bankrupt. The basis of the petition was (I assume) that Mr Waters had been served with a statutory demand which had not been set aside and had not complied with it. That was sufficient evidence to found a bankruptcy order. The petition, having been issued on 1 December 1998, was served on Mr Waters on 30 December 1998.
(6) On 21 January 2000, the petition was heard before Registrar James. Mr Waters did not attend. A lady who is a friend of his did attend. However, all that she said was that Mr Waters had no money with which to pay the judgment debt.
(7) In those circumstances, Registrar James made the bankruptcy order. On the basis of the material before him there can be no possible doubt that to make the order was the correct thing to do as the matter then stood.
I now turn from Mr Waters liability to Lloyds to the other side of their mutual rights and liabilities: Lloyds possible liability to Mr Waters under a cross-claim.
When this appeal was being heard before me, a long case in the Commercial Court called Society of Lloyds v Jaffray (2000) unreported, 26 January, was very close to its end. It may be that, as I deliver this judgment a few days later, that case has actually been completed and judgment has been reserved. The background to the Jaffray case is that, at some time a few years ago, and certainly not later than 1998, many Lloyds Names were alleging against Lloyds that they were entitled to sue it for damages for fraud. The essence of their case can be put in four short propositions:
(1) Fraudulent misrepresentations were made to them about Lloyds, and were made by Lloyds or on Lloyds behalf.
(2) They were induced by the fraudulent misrepresentations to become members of Lloyds.
(3) On account of their Lloyds memberships, they have suffered losses.
(4) In the circumstances, they are entitled to recover an amount equal to their losses as damages for fraud.
I do not doubt that, to someone who has been closely involved in the Jaffray case, there would be more to it than the four short propositions which I have set out, but I believe that they are broadly accurate.
Certain preliminary questions arising from these claims by Lloyds Names will be determined by Cresswell J in the Jaffray case. If the preliminary questions go against the Names, then, subject to any appeal from Cresswell J, I think it is right that all the Names actions will fail. If the preliminary questions go in favour of the Names, it does not follow that all the Names actions will succeed. In particular, any Name seeking damages from Lloyds for fraud will have to prove that representations were made to him or her, that they were made fraudulently (in the Derry v Peek sense) and that he or she relied on them. These are important planks in the case and, without them, the Lloyds Names cases will not be made out, however favourably the Jaffray judgment may turn out for the Names. It must be the case that many Lloyds Names who have lost large amounts of money in connection with their memberships joined Lloyds without being induced to do so by misrepresentations, fraudulent or otherwise, from anybody.
The other point which I should make about the Jaffray case is that it results from orders of Colman J and Cresswell J drawing together a number of separate lead cases and also, as it has been put, tieing in the persons who were funding them. Colman J directed a list to be prepared of all the funders of the lead cases. Mr Waters was included in the list. He will be bound by whatever preliminary questions are decided in the Jaffray case, and so will Lloyds be bound. Mr Waters is certainly tied in to the Jaffray litigation in that sense.
Despite a lot of discussion in the hearing, it is still not clear to me whether the order of Colman J by which Mr Waters and Lloyds will be tied in in that way, or indeed any other order of Colman J or Cresswell J, means that Mr Waters, as well as being on the record as someone who will be bound by questions decided in the Jaffray case, is also on the record as someone who has already commenced a damages claim against Lloyds. In my view, however, it does not greatly matter whether the tieing in goes to those lengths or not. If the Jaffray action goes in favour of the Names, Mr Waters will, in principle, be able either to pursue against Lloyds a damages claim which he has already commenced, or he will be able to commence one and then pursue it. He will not automatically win; he would have to establish that the facts of his case bring him within circumstances under which a Jaffray-type claimant wins his action.
When Lloyds bankruptcy petition against Mr Waters was heard in January 1999, I assume that Mr Waters knew about the possibility of his claiming fraud damages against Lloyds. His name was already on the tieing-in schedule. That schedule said that he was one of the funders of the lead litigation which became the Jaffray case. It would be surprising if Mr Waters did not understand what the case which he was (in part) funding might lead to for him. However, neither he nor his friend made any mention of it at the bankruptcy hearing in January 1999. Effectively, he submitted to the bankruptcy order without any reference to his possible fraud claim. He has given no evidence personally about this. The only evidence is from his solicitor, who says this:
The applicant erroneously believed that there was nothing he could do to prevent bankruptcy and failed to appreciate that having a bona fide counterclaim exceeding the amount of the debt is of itself a ground to apply to set aside the statutory demand.
I think that it would have been more exactly appropriate if the statement had said that the existence of a counterclaim exceeding the amount of the debt was of itself a ground to apply for the bankruptcy petition to be dismissed. The passage which I have just quoted is an extract from a statement of Mr Waters solicitor which was adduced at the annulment hearing before Registrar James. Mr Waters solicitor is Mr Michael Freeman, who acts for many of the Names who are engaged in litigation with Lloyds. It appears that the first direct contact between Mr Waters and Mr Freeman personally was on 19 October 1999, 9 months after the bankruptcy order.
I wish to mention a possible explanation of why Mr Waters did not at the time of his bankruptcy petition raise the matter of his possible damages claim. Of course the explanation may simply have been that, being a retired master mariner, he did not understand the financial and legal technicalities of the position in the remotest degree. There could, however, be more to it than that. Mr Waters debt to Lloyds, on which Lloyds obtained against him the judgment for £ 474,650.91, was for an Equitas reinsurance premium. The background to this is reported in the judgments of the Court of Appeal in Society of Lloyds v Leighs and Others  CLC 759. Mr Waters was bound by a clause in the reinsurance contract which has been called the pay-now-sue-later clause. The Leighs case decided that, by virtue of the clause, the contractual liability of Names was to pay their Equitas premiums in full; they had no right to withhold them in reliance on alleged set-offs or counterclaims. I do not know how much of this Mr Waters understood, but the pay-now-sue-later clause meant that, when Lloyds demanded his Equitas premium and he did not pay, he had no defence to Lloyds claim for judgment. The possibility of his having a cross-claim against Lloyds for fraud damages did not provide him with a defence. He may have thought that that possible cross-claim, as well as providing no defence to Lloyds claim for a judgment debt, could not provide a defence to Lloyds bankruptcy petition either when he did not pay the judgment debt.
However, we now know that it might have provided a defence to the bankruptcy petition. That is a result of another case, decided by Jacob J and the Court of Appeal in 1999, but after Mr Waters had been declared bankrupt. This was Garrow v Society of Lloyds  BPIR 668, ChD;  BPIR 885, CA. Mr Garrow owed a judgment debt to Lloyds for an unpaid Equitas premium, exactly as Mr Waters does. In Mr Garrows case, Lloyds were not so far advanced with enforcement via the bankruptcy process. Lloyds had served a statutory demand, which is, of course, a forerunner of a bankruptcy petition unless it is set aside. Mr Garrow, unlike Mr Waters some months earlier, applied to set the statutory demand aside on the ground that he had a cross-claim against Lloyds for damages for fraud. He put in evidence in support of his application. Jacob J set the statutory demand aside and the Court of Appeal upheld his decision. Lloyds had argued that the cross-claim was not genuine and serious or one of substance. Jacob J and the Court of Appeal did not accept Lloyds arguments in that respect. They also held that, notwithstanding the pay-now-sue-later clause, the cross-claim could be raised as a defence to a bankruptcy petition.
I now consider the effect of the Garrow decision on other Lloyds Names against whom there have been obtained judgments identical in principle to the judgments against Mr Waters and Mr Garrow. There were many such Names, but only two of them, of whom Mr Waters was one, had already been declared bankrupt at the time of the Garrow decisions. In the case of all the other Names, where Lloyds had got judgments but were still at earlier stages in the bankruptcy process, Lloyds agreed, in effect, to withdraw the bankruptcy process until the outcome of the Jaffray case was known. Any statutory demands were withdrawn or set aside. No new statutory demands were to be made for the time being. In any cases where bankruptcy petitions had been issued but not yet determined, Lloyds consented to the petitions being dismissed. That left only the two Names who were at the head of the queue, so to speak, and who had already been declared bankrupt. They were Mr Waters and a Mr Mendoza. There is evidence in the present case about what happened with Mr Mendoza. He invited Lloyds to agree to the rescission of his bankruptcy order. Lloyds did not agree, so he made preparations to apply to the court for a rescission. At a late stage, Lloyds wrote to say that it would not oppose his application. Mr Mendozas application came before the registrar in August 1999 and his earlier bankruptcy order was rescinded. That left Mr Waters alone. Lloyds would not agree to the rescission or the annulment of his bankruptcy. He now asks the court to annul it. Lloyds opposes the annulment.
On Mr Waters behalf Mr Jones says that there is no difference between him and Mr Mendoza. No very significant difference has been put to me by Mr Isaacs on behalf of Lloyds. The only real point seems to be that Mr Mendoza was several months quicker off the mark than Mr Waters in applying for a rescission or annulment after the Garrow decision.
I can well imagine that Mr Waters is bemused about why, out of all the Lloyds Names who are supporting the Jaffray decision and against whom Lloyds has judgments of the same sort as that which it has against Mr Garrow, he alone (that is Mr Waters alone) is in bankruptcy and Lloyds wants to keep him there. Mr Jones has eloquently urged on me the unfairness of Mr Waters being singled out in this way. I cannot be sure where the balance of fairness or unfairness lies, but I am willing to assume that it may be unfair for Lloyds to be persisting in upholding the bankruptcy of Mr Waters in contrast to what seems to be a more lenient attitude which Lloyds has adopted in the case of many other Names. But however sympathetic I may feel towards Mr Waters on this account, I cannot see that it is relevant to my decision in this case, or that it was relevant to the decision of Registrar James.
The legal question is not whether there is any difference between Mr Waters and Mr Mendoza. The question is whether, when Mr Waters application for annulment of his bankruptcy was before the registrar, Mr Waters met the statutory conditions and satisfied the registrar that his bankruptcy should have been annulled. If he did not, and if I consider that I cannot reverse the Registrars decision, Mr Waters bankruptcy order stays in place. He may feel intensely aggrieved that Mr Mendoza did not suffer the same adverse result, but that grievance, understandable though it may be, does not provide a reason why either the registrar or I should decide in his favour.
In this connection it may be relevant to observe that Lloyds is not a public authority. If it was there might have been some sort of judicial review argument which Mr Waters could have run to the effect that Lloyds had to treat all like cases alike. Without further research I could not say whether the argument would have been a good one. I do not profess to have a close understanding of that area of the law. The point which I make on the actual facts of the case is that, if Lloyds chooses to say that, whether Mr Waters was exactly comparable to Mr Mendoza or not, Lloyds opposes Mr Waters annulment application, it is entitled to do that. That is what Lloyds has done and the registrar and I have to consider Mr Waters' application on its own merits, taking account of points put in opposition to it by Lloyds.
Therefore, I turn now to the facts of this particular case.
The relevant statutory provision is s 282(1)(a) of the Insolvency Act 1986:
'The court may annul a bankruptcy order if it at any time appears to the court-
(a) that, on the grounds existing at the time the order was made, the order ought not to have been made ...'
The subsection requires the court to proceed in two stages. First, it must ask whether, at the time that the bankruptcy order was made (in this case at 21 January 1999) any grounds existed on the basis of which the order ought not to have been made. If it does not appear to the court that any such grounds existed, the bankruptcy order stays in place and the second stage is not reached. If, however, it does appear to the court that such grounds existed, the second stage is reached. At that stage the court has a discretion whether or not to annul the bankruptcy. It is only a discretion, not a duty; the word is may, not shall.
I have two comments to make about the first stage:
(1) It is sufficient for the applicant (here Mr Waters) to show at the time of his annulment application (here, in April 2000) that looking back to the time of the bankruptcy order (here, to 21 January 1999) it can now be seen that grounds existed then on which the bankruptcy order ought not to have been made. It does not matter that the debtor did not put the grounds before the court at the earlier hearing of the petition. It is enough for him to put them before the court at the later time of the hearing of the annulment application, provided that they did exist at the earlier time of the hearing of the bankruptcy petition.
(2) At the time of the annulment application the burden rests on the applicant. It is no good him saying to the court that at the earlier time of the bankruptcy petition grounds may have existed on which the bankruptcy order ought not to have been made. He has to cause it to appear to the court that at the earlier time grounds did exist on which the bankruptcy order ought not to have been made. As I will explain later, this is one of Mr Waters problems in this case.
I turn now to the decision of Registrar James which is under appeal before me. He decided against Mr Waters on both of the stages of s 282(1)(a). It did not appear to him that grounds existed on which the bankruptcy order ought not to have been made the previous January. So he could not annul the bankruptcy anyway. Even if he could have done that, in his discretion he would not have done it. He summarised his analysis on these two points as follows, in para 14 of his judgment:
'I refused the application to annul because:
(a) I was not satisfied that at the time when the order was made Mr Waters had either a serious counterclaim against Lloyds or any serious intention of pursuing a counterclaim.
(b) Even if I am wrong in respect of 14(a) above, then in the exercise of my discretion I should not have annulled the bankruptcy order because:
(i) Mr Waters is insolvent; and/or
(ii) there is strong prima facie evidence that the bankrupt has concealed his assets from his creditors by transactions which should properly be investigated by a trustee in bankruptcy.'
I now consider each of the two stages.
Registrar James, in support of his decision on the first stage, listed eight factors by reason of which he was not satisfied that at the time the bankruptcy order was made Mr Waters had a serious counterclaim or a serious intention of pursuing a counterclaim against Lloyds.
I am not going to go through the eight factors one by one. I can condense my reasoning for agreeing in the result with the registrar on this part of the case. The critical point is that Mr Waters did not place before the registrar the evidence which he needed to place in order to show that he did have a cross-claim for damages against Lloyds.
When the hearing before Registrar James began Mr Waters personally had put in no evidence. The only evidence on his behalf was two statements of Mr Freeman, his solicitor, who also appeared as his advocate before the registrar. The second statement was about Mr Mendoza. The statement which is relevant to the matter with which I am concerned now was the first one. Mr Freeman said this:
'The applicant has a counterclaim against the respondent for a sum which exceeds the amount of the debt.'
In support of that he said that, by an order of Colman J, Mr Waters counterclaim was joined with the counterclaim of Sir William Jaffray. (I am not sure that Colman Js order had quite that effect, but it is certainly the case that Mr Waters was tied into the Jaffray case to some extent.) In further support Mr Freeman gave evidence about the Garrow case. In my judgment what Mr Freeman said in his statement was not enough. The registrar needed more than evidence about the Jaffray case and the Garrow case and the bare assertion that Mr Waters was in the same position as Sir William Jaffray, Mr Garrow and the other Names who were listed as funders of the Jaffray litigation. He needed evidence that, on the facts of Mr Waters case as Mr Waters asserted them to be, false representations were made to Mr Waters when he joined Lloyds, that they were fraudulently false and that Mr Waters relied on them. He put in no such evidence. I have said earlier that there must be many Lloyds Names who have lost money through their membership but who cannot say, because it would not be true in their cases even if it might be true for others, that fraudulent representations were made to them when they joined.
Mr Jones says to me that Mr Waters is exactly the same as Mr Garrow. He might be. But on the evidence he equally might not. It is clear from the report of the Garrow case that Mr Garrow had put in affidavit evidence of his own, not just by his solicitor, and that he was asserting that Lloyds had made fraudulent misrepresentations to him and that he had relied on them. If I have it correctly, he did not go into as much detail as perhaps he might about when and where the fraudulent misrepresentations were made and what their precise content was. Nevertheless, he did give evidence that false statements had been made to him and he did give evidence that he had relied on them. There was nothing similar from Mr Waters put before Registrar James. The burden that lay on Mr Waters was of showing that, at the earlier time of the bankruptcy hearing, he did have a serious Jaffray-type claim against Lloyds. In those circumstances the registrar was, in my judgment, fully entitled to decide as he did. I cannot say that his decision was wrong.
There is one other matter with which I should deal on this part of the case.
It appears from the registrars judgment that a request was made for Mr Waters to be given an opportunity to file additional evidence and that the registrar refused it. Mr Isaacs, who was present before the registrar, has told me that the request was made by Mr Freeman in reply. It seems plain to me that the request would have required an adjournment if it was to be granted. The registrar refused the request. He added that it would not serve any useful purpose because of what he had said in para 14(b) of his decision (already quoted in this judgment), to the effect that, even if he did have a discretion to annul Mr Waters bankruptcy, he would not exercise it. The registrars decision to refuse this late request for an adjournment to allow further evidence to be adduced was a discretionary decision for him and I cannot possibly say that it was wrong in law.
What I have said so far is sufficient to dismiss this appeal. I cannot reverse the registrars decision that on the evidence before him s 282(1)(a) did not give him a discretion to annul Mr Waters' bankruptcy order. I shall, however, briefly follow the registrar and consider the reasons which he gives for saying that, even if he did have a discretion under s 282(1)(a), he would not exercise it in this case.
The registrars first reason is that, even disregarding Mr Waters judgment debt to Lloyds, Mr Waters was still insolvent. As a matter of law it is, in my view, open to a court, in deciding whether or not to annul a bankruptcy, to take account as a factor against doing so, the existence of other debts - see Artman v Artman, Re a Bankrupt (No 622 of 1995)  BPIR 511 at 517C and Re Coney (A Bankrupt)  BPIR 333 at 336C. There was evidence that Mr Waters, as well as owing money to Lloyds, owed money to the Revenue. I was told that he still does, but the amount of the tax debt is now believed to be lower and is something between £ 3,000 and £ 4,000 - admittedly a modest amount against the background of the judgment held by Lloyds.
Mr Isaacs submitted to me that Mr Waters would also owe a debt to his trustee in bankruptcy for the trustees costs. This would depend on a court order, but Mr Isaacs submitted - and I agree - that the court would assuredly make the order.
In those circumstances, I cannot see any basis upon which Registrar James would have erred in law if, had he had a discretion to annul Mr Waters bankruptcy, he would have declined to exercise it on the ground that Mr Waters had other debts by reason of which he was insolvent in the bankruptcy sense in any case (and even ignoring his judgment debt owed to Lloyds).
Mr Jones, towards the end of his submissions to me in reply suggested, I think, that the quantum of Mr Waters cross-claim against Lloyds would go beyond neutralising his judgment debt to Lloyds because it would include other money which Mr Waters had lost. This could mean that, if Mr Waters succeeded in a fraud action against Lloyds, he would have enough money to pay his other creditors as well as paying his judgment debt to Lloyds. This sounds to me as if it could be right. But the problem is that there is no evidence in support of it. There was evidence from Mr Waters' trustee in bankruptcy about Mr Waters liabilities and, apparently, negligible assets. The evidence was not disputed before the registrar. Mr Freeman's statement merely said that Mr Waters had a counterclaim against Lloyds for a sum which exceeded the amount of the debt. Mr Freeman did not say what the sum was or what its components were. The case proceeded before Registrar James, and before me for, I would estimate, at least the first 90% of the time, on the basis that it was factually correct that, even leaving out Mr Waters judgment debt to Lloyds, he was still insolvent. I cannot go behind that now.
The registrars second reason for saying that, even if he had a discretion to annul Mr Waters bankruptcy, he would not exercise it was (repeating a passage which I quoted earlier):
'There is strong prima facie evidence that the bankrupt has concealed his assets from his creditors by transactions which should properly be investigated by a trustee in bankruptcy.'
I read one further passage from the judgment - see para 17:
'In addition and in the alternative, I do not think it right to annul the order in this particular case because of the evidence provided by the trustee, Mr Dick, concerning his inquiries into the bankrupts estate. There is a strong prima facie case made out that Mr Waters has made several separate attempts to dispose of assets in such a manner as to put them beyond the reach of his trustee or of his creditors.'
The evidence which Mr Dick has adduced is not controverted. Mr Jones says that it is irrelevant. He says that, if Mr Waters is not bankrupt, the fact that he may have attempted to put assets beyond the reach of his trustee or creditors makes no difference. Mr Jones might be right if there was no bankruptcy order already in place, but where there is and the question is whether the registrar should or should not exercise a discretion to annul it, I do not agree that evidence of attempts to defeat the claims of creditors is irrelevant. See in particular, In re Taylor ex parte Taylor  1 QB 744 and also observations of Robert Walker J in Artman v Artman, Re a Bankrupt (No 622 of 1995)  BPIR 511.
I cannot find any error of law in what the registrar says about how this factor would affect the exercise by him of his discretion, if he had one.
For the foregoing reasons, I must dismiss this appeal. I would only add this. The decision in the Jaffray case is expected in a few months time. If it goes in favour of Sir William Jaffray, Mr Waters may be able to make an application that his bankruptcy order should, instead of being annulled under s 282, be reviewed and possibly rescinded under s 375. On that application he could put in evidence and, if the facts to justify it exist, the evidence which he puts in could fill some of the gaps in the evidence which he presented to the registrar in the present case. Under s 375 the court has power to rescind an earlier bankruptcy order. So my present judgment, disappointing though it will certainly be to Mr Waters and his advisors, is not necessarily the end of the road.
Freeman Goldberg for the appellant; Lloyds of London for the respondent