Introduction¹

In order to obtain a bankruptcy order upon either a creditors', or a bankrupt's own, bankruptcy application, it must be shown that a debtor:

• is domiciled in England and Wales; or
• at any time within the immediately preceding three years (i) has been ordinarily resident; (ii) has had a place of residence; or (iii) has carried on business in, England and Wales² (emphasis added).

In this regard, in the case of Lakatamia Shipping Company Ltd v Hsin Chi Su [2021] EWHC 1866, the Chancery Division considered the meaning of "has had a place of residence".

Background

Nobu Su (also known as Hsin Chi Su) is a dual citizen of Japan and Taiwan. Amongst amounts owed to other creditors he owes the Lakatamia Shipping Company over USD60 million. 

In January 2019, upon arriving at Heathrow, Mr Su had his passport confiscated. He accordingly stayed at different hotels and serviced apartments in London before being committed to Pentonville prison at the end of March 2019, for contempt of court. Having been released in April 2020 Mr Su lived in two different properties, with the permission of two different friends.

In the meantime in January 2020 an order was made preventing Mr Su from leaving the jurisdiction on his release from prison until he had given evidence regarding his assets pursuant to CPR 71.³

In this regard it must be noted that, from the moment when Mr Su arrived in England to the moment when he applied for a bankruptcy order to be made against him, he was either subject to restrictions that prevented him from leaving the jurisdiction, or was physically incarcerated in prison. At the same time Mr Su had attempted to leave the jurisdiction both by attempting to get on a ferry to Belfast; and subsequently by unsuccessfully applying to Court to lift the restrictions keeping him in the jurisdiction.

On 8 July 2020 Mr Su was made bankrupt upon his own application. 

In September 2020 Lakatamia applied for an order annulling the bankruptcy order and in February 2021 Lakatamia applied for summary judgment on its annulment application. Lakatamia's application was unsuccessful at first instance, because whilst the judge found that Mr Su was not ordinarily resident in England and Wales, he did consider that Mr Su had a place of residence at one or more of the locations at which he had stayed since January 2019.

Lakatamia accordingly appealed on the place of residence point, with the appeal heard by Mrs Justice Bacon in the Chancery Division on 1 July 2021.

Findings

As Mr Su made himself bankrupt the Court considered the provisions of s263I of the Act. However, given that s265 (relevant if a creditor seeks to make a debtor bankrupt) contains the same wording, the decision is presumably relevant both to s263I and s265.

Taking the above facts into account, the Court reached the following conclusions:

• the place of residence for the purposes of s263I (or s265) has to be a residence of the debtor (and not the residence of someone else). The residence of a third party which the debtor is temporarily occupying with the permission of that party will not count for these purposes.
• A residence was "one's settled or usual home"; with "some degree of permanence, some degree of continuity or some expectation of continuity".
• As part of an assessment as to whether someone has a place of residence in the jurisdiction it will be relevant to consider whether that person is in the jurisdiction voluntarily. But whether or not the debtor's presence is voluntary will only be on the facts relevant to an assessment in determining residence. It will not be determinative in itself.

• That said, the Court noted the decision of the first instance judge in relation to the "ordinarily resident" test, namely that being in England and Wales involuntarily could not constitute being ordinarily resident. In this regard Mrs Justice Bacon noted that the "ordinarily resident" and "has had a place of residence" tests are two separate tests, albeit it may be that the same facts or factors are relevant to both tests.

Accordingly Mrs Justice Bacon concluded that Mr Su had not met the jurisdictional test for the purposes of s263I of the Act. Therefore his bankruptcy should be annulled.

Conclusion

As she indeed noted, Mrs Justice Bacon's conclusion ensures that a fleeting or transient occupation of premises in this jurisdiction will not be sufficient to found bankruptcy jurisdiction. 

Rather, in order to be made bankrupt in this jurisdiction one needs to have lived here permanently for a material (or perhaps considerable) amount of time. However, what might qualify as sufficient time for these purposes will presumably depend upon the facts. 

Postscript

Mr Su is currently seeking permission to appeal the decision to annul his bankruptcy.

¹ With apologies to Marvin Gaye and Paul Young
² See ss263I and 265 Insolvency Act 1986
³ This CPR deals with orders to obtain information from judgment debtors