21. Private examinations
Guidance on who may be called before the court for a private examination and the procedures involved.
21.1 Introduction
In addition to the provisions allowing for the public examination of bankrupts, company officers, and others, the Insolvency Act 1986 allows a person to be summoned to appear before the court, produce a witness statement or to produce various documents, by an office-holder. Such an application to court is commonly referred to as a private examination. For the remainder of the chapter the term private examination will be used as a shorthand to describe any application for a person to be summoned before the court to provide information, to provide a witness statement or to produce various documents in their possession.
21.2 Application for a private examination
The official receiver, may apply to the court for a private examination in a compulsory liquidation or a bankruptcy whether or not they are liquidator or trustee [section 236(1); 366(1)]. The official receiver, as statutory office-holder, can apply to the court for a private examination where a debt relief order has been made [section 251N(1)], a company is in provisional liquidation [sections 234 and 236] or the court appoints an interim receiver [section 368]. An insolvency practitioner who holds office as liquidator, trustee, provisional liquidator or interim receiver may also apply for a private examination.
21.3 Interim receiver
Where the application is made by an interim receiver, any references in this chapter to the bankrupt and their estate should be taken as referring to the debtor and their property [section 368]
21.4 Administrative receivers and private examinations
An administrative receiver of a company may apply to the court for a private examination. Where a company is in liquidation and in administrative receivership the administrative receiver may apply to the court for a private examination to assist asset recovery [sections 236(2); 234(1)]
21.5 Who can be examined – companies
On the application of the official receiver, or relevant office-holder, the court can summon to appear before it
- any officer of the company
- any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company or
- any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company [section 236(2)].
21.6 Who can be examined – bankruptcy
On the application of the official receiver, or relevant office-holder, the court can summon to appear before it;
- the bankrupt
- the bankrupt’s spouse/civil partner
- the bankrupt’s former spouse/civil partner
- any person known or believed to have in his possession any property comprised in the bankrupt’s estate
- any person known or believed to be indebted to the bankrupt or
- any person whom the court thinks capable of providing information about the bankrupt or the bankrupt’s dealings, affairs or property [section 366(1)]
21.7 Who can be examined – debt relief orders
On the application of the official receiver, or relevant office-holder, the court can summon to appear before it;
- the debtor,
- the debtor’s spouse/civil partner,
- the debtor’s former spouse/civil partner, or
- any person appearing to the court to be able to give information or assistance concerning the debtor or the debtor’s dealings, affairs or property [section 251N(2)]
21.8 Private examination – partnership winding up
Where a partnership has been wound up as an unregistered company the official receiver or relevant office-holder can apply to the court for a private examination of a person mentioned in paragraph 21.5. If individual bankruptcy orders are also made against at least one of the partners then the official receiver or relevant office-holder can apply to the court in the bankruptcy proceedings for the production of documents by, or a private examination of, a person mentioned in paragraph 21.6.
21.9 Private examination – partnership members bankruptcy petition
If a joint bankruptcy petition by the members is presented without winding-up the partnership as an unregistered company, the official receiver or relevant office-holder can apply to the court for a private examination of, a person mentioned in paragraph 21.6.
21.10 Definition of property
The term “property” has a wide meaning and includes money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property [section 436(1)]
21.11 Things in action
Mozley & Whitely’s Law dictionary states that things in action “are not immediately available to the owner without the consent of another person, whose refusal will give a right of action.” Examples of things in action are a debt, a right arising under a trust, a right to overdraw a bank account etc.
21.12 Respondents outside the court’s jurisdiction
Where the respondent to an application for private examination is resident outside the jurisdiction of the court in England and Wales but lives within another part of the United Kingdom an order that the respondent be examined in that part of the UK may be made. The order may be enforced by the court in the relevant part of the UK as if it were made by that court [sections 237(3); 367(3); 426(1)].
21.13 Respondents outside the United Kingdom
Where the respondent is residing outside the UK the court may make an order that the respondent be examined in any part of the UK where they may be, or in a place outside the UK [section 237(3); 367(3)]. It was held in Re Tucker (a bankrupt), ex parte Tucker [1988] 2 W.L.R. 748 and Re Seagull Manufacturing Co Ltd [1991] BCC 550 that an order for a private examination of a respondent outside of the jurisdiction of the court may be made, but an order will only be made where there is likely to be co-operation from the foreign court. This is generally referred to as partial extra-territoriality.
21.14 Private examinations outside the United Kingdom
The number of countries where it may be possible to hold a private examination increased due to The EC Regulation on Insolvency Proceedings 2000, which covers the European Union and The UNCITRAL Model Law on Cross-Border Insolvency However, the holding of a private examination outside the United Kingdom is not straightforward and will be influenced by the local legal system.
21.15 ORS.Advice’s agreement required
In order to hold a private examination outside of the United Kingdom the official receiver will need specialist legal advice and will have to take into account the practical consequences and costs of conducting an examination in a foreign country. The circumstances in which a private examination outside the United Kingdom will be held are limited and as a consequence contact should be made by email with ORS.Advice before making such an application.
21.16 Current legal position
The judge in Re Casterbridge Properties Ltd (in liquidation) Jeeves v Official Receiver [2002] B.C.C. 453 stated in passing that an application for a private examination may have full extra-territoriality enabling courts to summon a respondent residing outside the United Kingdom to appear before it and the court cases referred to above were not binding. An application for a private examination may be held by the court to have full extra-territoriality at sometime in the future.
21.17 Introduction
In the majority of cases the official receiver will be able to obtain sufficient information for the purposes of fulfilling their statutory duties, either from the insolvent’s papers or by correspondence. In cases where a public examination is not possible, or is inappropriate, for example to obtain enforcement orders, the official receiver may consider applying to the court for a private examination.
21.18 Notice to the respondent
The official receiver should, generally, inform the respondent that if they do not cooperate they will be making an application to the court for a private examination. This may be sufficient to ensure the respondent provides the information required. There will be certain circumstances, for example where assets are in jeopardy, when prior notice to the respondent will not be appropriate and an immediate application for a private examination should be made.
21.19 Application for the production of documents
The official receiver can apply to the court for an order that the respondent, should produce any documents in their possession or under their control relating to the affairs of the insolvent. Such documents may include bank statements, solicitors’ files, documents of title, correspondence, etc. [section 236(3); 251N(3)(b); 366(1)]
21.20 The decision to apply for the production of documents
The court has absolute discretion in considering an application for the production of documents. The official receiver will need to convince the court that the production of the documents is necessary for them to fulfil their statutory duties to investigate the affairs of the insolvent [section 132; 251K; 289] and/or, where applicable, to administer the insolvent estate [sections 167; 305].
21.21 Documents from HM Revenue and Customs (HMRC)
The court, on the application of the official receiver, may order HMRC to produce a bankrupt’s returns, accounts, assessments, correspondence and other tax documents [section 369]. These documents would otherwise be confidential and the application can only be made for the purpose of enquiries in the bankrupt’s dealings and property [section 366].
21.22 Legal professional privilege – Bankruptcy
The bankrupt is under a duty to deliver to the official receiver all books, papers and other records which relate to their estate, and belong to, or are held by them, including any which would be privileged from disclosure in any proceedings [section 291(1)]. In addition the trustee shall take possession of all books, papers and other records which relate to the bankrupt’s estate and belong to, or are held by them, including those which would be privileged from disclosure in any proceedings [section 311(1)]. As a consequence solicitors who have acted for the bankrupt are unable to claim that they cannot produce documents as they are subject to legal professional privilege arising from the solicitor/client relationship. This view is supported by the ruling in Re Konigsburg 1989 1 WLR 1257. Some solicitors may be unwilling to provide this information unless ordered to by the court.
21.23 Legal professional privilege – Companies
Where a winding-up order has been made the liquidator, rather than the directors, will be in control of the company. The liquidator on behalf of the company can authorise the production of all documents held by the solicitors as legal professional privilege does not apply.
21.24 Witness statements
The official receiver can apply to the court for an order that the respondent produces a witness statement verified by a statement of truth [sections 236(3); 236(3A); 366(1)] or where a debt relief order has been made, a written account of their dealings with the debtor [section 251N(3)(a)]. The bankrupt, the bankrupt’s spouse, former spouse, civil partner or former civil partner cannot be ordered to produce a witness statement unless they have or may have any property which may be part of the bankrupt’s estate, are indebted to the bankrupt or can provide information regarding the bankrupt’s dealings, affairs or property [section 366(1)].
21.25 The decision to apply for a witness statement
The court has absolute discretion in considering an application for the provision of a witness statement. The official receiver will need to convince the court that the provision of the statement is necessary for them to fulfil their statutory duties to investigate the affairs of the insolvent [sections 132; 251K; 289] and/or, where applicable, to administer the insolvent estate [sections 167; 305]. The official receiver should consider applying for a witness statement in those cases where the information he requires from the respondent can be provided in a written form without the need for a full court hearing.
21.26 Examination in court
The official receiver can apply for an order that the respondent is brought before the court to be examined [sections 236(2); 251N(2); 366(1)].
21.27 The decision to apply for an examination in court
The court has absolute discretion in considering an application for the respondent to be brought before it and questioned. The official receiver will need to convince the court that the examination of the respondent is necessary for them to fulfil their statutory duties to investigate the affairs of the insolvent [sections 132; 251K; 289] and/or, where applicable, to administer the insolvent estate [sections 167; 305]. The official receiver may consider conducting an examination in court for example, in relation to preferences, transactions at an undervalue, book debts and income payment agreements/orders.
21.28 Income payments agreements/orders
Where a bankrupt has ceased paying the agreed contributions and is not cooperating with the official receiver or trustee a private examination may be used to obtain the required information. If the bankrupt has not been discharged then a public examination may be more appropriate as the official receiver could make an application to suspend their discharge. Where the bankrupt has obtained their discharge the official receiver, or trustee, can only make an application for a private examination. If the official receiver makes the application it must be made by the official receiver as trustee.
21.29 Disqualification and private examinations
The official receiver can make an application for a private examination even where the sole purpose is to obtain information for use in disqualification proceedings [Re Pantmaenog Timber Company Limited et al (2003) UKHL] subject to the discretion of the court to allow the use of a private examination for this purpose. Such a use of an application for a private examination should be the exception, e.g. where a bank or solicitor would be willing to provide the information on the production of a court order. Where the official receiver is concerned that the application may be construed as being solely for disqualification proceedings, or disqualification proceedings have been issued, they should consult the Investigation and Enforcement Services Technical Team prior to making an application.
21.30 The format of the application
The official receiver’s application to the court shall be in writing and must specify the grounds on which it is being made1. The application must also specify the name of the respondent [rule 12.18].
21.31 Official receiver’s liability for costs
The official receiver may be made personally liable for costs if they make an application for the production of documents or a private examination as a liquidator or trustee. To avoid this possibility the official receiver should ensure that the reasons for the application are related to the official receiver’s statutory office, or that of provisional liquidator or interim receiver, if acting in that capacity [rule 12.22].
21.32 Purpose of the application
The official receiver’s application must specify whether the respondent is required to do any of the following:
- to appear before the court;
- to clarify any matter which is in dispute in the proceedings or give additional information in relation to any such matter (the court may direct that the information provided must not be used for any purpose except for that of the proceedings in which it is given);
- to submit witness statements; particulars should be given of the matters to be included; or,
- to produce books, papers and other records; the relevant records should be specified [Civil Procedure Rules 1998, Part 18].
The application may specify two or more of the above actions [rule 12.18].
21.33 Notice of the application
The official receiver’s application may, and normally should, be made without notice to any other party [rule 12.18(2)].
21.34 The contents of the application
The official receiver’s application must be made on Form PVTEXO and will include the grounds on which the private examination is being sought, for example, to ask a bank to produce copies of statements on a bankrupt’s bank account. The application is open to inspection by the respondent [rule 12.39(4)].
21.35 Where the grounds for the application are not considered confidential
If the official receiver believes there is no need for the grounds of the application to remain confidential they should set out the full grounds for the application and consider disclosing it voluntarily to the respondent.
21.36 Where aspects of the application are considered confidential
Following the advice provided in the ruling in Re British & Commonwealth Holdings plc (Nos. 1 and 2) [1992] Ch. 342 the official receiver should include in the application a brief summary of the grounds for their application excluding any information considered confidential. The information considered confidential should be set out in an annex to the application together with the reasons why the official receiver considers that this material should remain confidential. The official receiver should request the court not to place the annex on the court file.
21.37 The court’s decision
An order for the production of documents or a private examination is a matter for the court’s discretion. The official receiver should provide sufficient information in their application (and any annexes) to satisfy the court that it is appropriate to make the order. The court is unlikely to make an order where it appears to be vexatious or oppressive (i.e. excessively harsh or burdensome) to the respondent. The court must also balance the importance to the applicant of obtaining the information against the degree of oppression placed on the respondent [Re British & Commonwealth Holdings plc (Nos. 1 and 2) [1992] Ch. 342]
21.38 Other matters that will be considered by the court
British & Commonwealth Holdings plc (Nos. 1 and 2) provided some guidelines to the court in exercising its discretion. The court in making its decision should consider the following matters:
- the case for making an order against an officer or former officer of a company will usually stronger than it would be against a third party. Company officers owe a fiduciary duty to the company and are under a statutory duty to assist the insolvency officer-holder1 (bankrupts, and debtors who have applied for a debt relief order [section 235], have a similar statutory duty to the official receiver [sections 291; 251J]);
- whether the respondent, by giving the information sought, risks exposing themselves to liability involving an element of oppression;
- whether an order for an oral examination is more oppressive than an order for the production of documents; and
- if the respondent is suspected of wrongdoing, especially fraud, it will be oppressive to require them to prove the case against themselves on oath before any criminal or disqualification proceedings are brought.
If criminal proceedings have started or are about to start against the respondent the court may still make an order. To enable the court to reach a decision in this instance the official receiver should provide a list of topics to the court upon which they wish to question the respondent [Arrows Ltd (No2) [1992] B.C.C 446].
21.39 Where the court makes an order
After considering the official receiver’s application if the court makes an order for a private examination it will specify the time and date of the private examination, which will be at least 14 days from the date of the order, and the place where it will be held [rule 12.19(2)]. If the respondent is ordered to submit witness statements, it will specify what must be covered in those witness statements and when they must be submitted to the court [rule 12.19(3)]. If the order is to produce books, papers or other records, it will specify the time and manner in which they are to be produced [rule 12.19(4)].
21.40 Service of the order
Any order which the court makes on the official receiver’s application must be served on the respondent as soon as practicable [rule 12.19(5)]. The official receiver after service must also complete a certificate of service.
21.41 Shorthand writer
Where the official receiver applies for an oral examination they should also apply for the appointment of a shorthand writer to take down the evidence.
21.42 Withdrawal of the official receiver’s application
In certain instances the threat of an application for the production of documents or a private examination may result in the requested information being supplied before the application is made. Where this occurs the official receiver should inform the court and seek permission to withdraw the application.
21.43 Rescission of the court order
In certain instances when an order for a private examination is served on the respondent, the requested information may be supplied, for example a bank will normally allow inspection of accounts on production of the court order. Where the information sought is given, or the required documents are surrendered, or there is an admission of indebtedness due to the insolvent, the official receiver should ask the court to rescind the order [rule 12.65]. The shorthand writer should also be informed that the examination will not proceed.
21.44 The official receiver and the hearing
Where the official receiver is the applicant they, or the deputy official receiver, should attend at court in person. The official receiver may be represented by a solicitor, with or without counsel [rule 12.20]. The official receiver should normally only employ counsel where the assets in the estate are sufficient to cover the cost of doing so or adequate funds are provided by a third party. Where the official receiver considers that the exceptional circumstances of the case require the employment of counsel and there are no or insufficient funds, these circumstances should be reported to Senior Official Receiver’s office before a debit balance is incurred.
21.45 The respondent’s legal representation
The respondent may be accompanied by a solicitor, with or without counsel. The respondent is responsible for meeting the costs of their legal representatives [rule 12.20].
21.46 Other attendees
In addition to the official receiver and the respondent any person who was also able to make the application and a creditor who has provided information on which the application was based may also attend unless the applicant objects. Although the official receiver may object to their attendance they should not do so [rule 12.20].
21.47 The applicant’s expenses
The applicant’s expenses shall be paid out of the estate account, unless the court otherwise directs [rule 12.22].
21.48 The respondent’s travelling expenses
The respondent must be offered a reasonable sum in respect of their travelling expenses incurred in enabling them to attend the hearing [rule 12.22]. A debit balance may be incurred in this instance. The respondent should be asked whether they require an advance for this purpose well before the hearing.
21.49 Other expenses of the respondent
The respondent may, at the court’s discretion, be able to claim for other expenses incurred in attending the hearing, for example, a witness fee, compensation for loss of earnings, etc. [rule 12.22]. The Council of the Law Society has advised its members that if they attend for a hearing in either the High Court or the County Court they should make a claim for their conduct money and professional witness allowance under the Rules of the Supreme Court.
21.50 The costs of the hearing
The court may order the respondent to pay the costs of the hearing where, in its opinion, they have unjustifiably failed to provide the required information. The court may order the respondent to pay the costs of an application to deliver up property in their possession or to repay any debt [rule 12.22]. The applicant, including in certain circumstances the official receiver as liquidator or trustee, may be ordered by the court to pay the costs of the application.
21.51 The hearing – The official receiver
The official receiver or their legal representative, as the applicant, may put such questions to the respondent as the court may allow [rule 12.20(1)]. The official receiver may wish to consider providing a list of questions to the court prior to the hearing to assist the court in deciding which questions to allow.
21.52 The hearing – The respondent
If the respondent is legally represented his solicitor, or counsel, may put such questions to them as the court allows. The respondent’s solicitor or counsel may also make representations on their behalf [rule 12.20(4)]. The court may order the respondent to clarify any matter or provide additional information. The court will direct which of the questions they are required to answer and in what form, for example by way of a witness statement [rule 12.20(3)]. If the respondent is examined on oath they may not refuse to answer any question allowed to be put by the court on the ground of self-incrimination [sections 237(4); 367(4) & Arrows Ltd (No2) [1992] B.C.C 446].
21.53 The hearing – Other attendees
Any person who, is allowed to attend the hearing, may put questions to the respondent through the official receiver with the permission of the court [rule 12.20(2)]. The official receiver should not discourage such questions which may elicit further information from the respondent. The official receiver should, however, obtain details of the substance of any questions before the hearing to ensure their relevance.
21.54 Record of the hearing
The shorthand writer will take a written record of the hearing. The written record will, either, be read over either to, or by the respondent and signed by them at a venue fixed by the court [rule 12.20(5)]. Unlike the record of a public examination, there is no need for verification by a statement of truth.
21.55 Written record as evidence
The written record may be used as evidence against the respondent in any proceedings under the Insolvency Act 1986 and any other Act of Parliament [rule 12.20(6)]. This includes any proceedings under the Directors Disqualification Act 1986. The wide use to which the written record can be put may influence the conditions imposed by the court under which the hearing takes place.
21.56 Access to the written record and other documents
The written record of the examination and any witness statements submitted by the respondent in order to comply with the application will not be placed on the court file unless the court directs otherwise [rule 12.21(1)]. The only persons who are entitled, without an order of the court, to inspect the written record, copies of the questions put to the respondent, or proposed to be put to them together with any answers are the applicant for the examination or anyone who could have made an application [rule 12.21(2),(3)]. The court may from time to time give directions as to the custody and inspection of any of the above documents or the provision of copies or extracts from them [rule 12.21(4)].
21.57 Enforcement powers arising from the application
The court has additional powers to make orders covering matters which come to light as a result of an application for the production of documents or a private examination. In particular the court, on application by the applicant, can order the delivery of property or the repayment of a debt [sections 237; 367].
21.58 County court - Undertakings to provide further information
In the County Court as an alternative to obtaining additional court orders the respondent may agree, by way of an undertaking, to provide information, deliver up property within a specified period, or provide another such undertaking on the General Form of Undertaking (Form N117). The official receiver should ask the court to make an order for the respondent to complete and sign the undertaking form before leaving. The respondent by signing the form accepts that a failure to fulfill the undertaking could result in them being sent to prison for contempt of court.
21.59 Respondent absconding before the hearing
If the official receiver believes the respondent has absconded or is about to abscond in order to avoid being examined, an application to the court may be made for a warrant for their arrest to be issued and/or an order for the seizure of records, property, etc. in their possession [sections 236(4); 236(5); 251N(4),(5); 366(2),(3)].
21.60 Applications available where attendance unlikely
When the official receiver becomes aware that attendance is unlikely [sections 236(4); 366(2)], an application, without notice to any other party, should be made to the court for an order that the respondent should surrender their passport or, in exceptional circumstances, that a warrant of arrest be issued and/or for the seizure of records, property, etc. [sections 236(5); 366(4)]. The application should show that service of the application was properly effected, that a reasonable sum was offered for expenses and clearly set out the grounds for their belief that the respondent is unlikely to attend. The official receiver should also request that any records or property seized should be delivered to them or otherwise dealt with according to their instructions [sections 236(5); 366(4)].
21.61 Debt Relief orders – Attendance unlikely
The official receiver may suspect that a debtor is unlikely to attend a private examination however they do not have the powers mentioned above. A warrant for the debtor’s arrest can only be issued if they fail to attend court for the hearing [section 251N(4),(5)].
21.62 The Senior Courts Act 1981
Where a private examination has been fixed in the High Court, it has power to restrain the respondent from leaving the jurisdiction. Where the official receiver has grounds to believe that the respondent will not attend the examination, or where the examinee has been abroad and has returned to the jurisdiction, they should consider making an application to the court without notice to any other party for such a restraining order [sections 251N(4),(5)].
21.63 Failure to attend for private examination
Where the respondent fails to attend for a private examination, the court on the application of the applicant may issue a warrant for their arrest [sections 236(4),(5); 251N(4),(5); 366(2),(3)]. In cases where a warrant for arrest is to be issued and the petition was presented prior to 6 April 2010 the form PEWA (Warrant for failure to attend examination) should be used. The warrant should ask that the respondent be delivered to the court rather than to prison. In cases where the petition was presented after 6 April 2010 the County Court Civil Form N40A should be obtained from the court and used. In this instance the warrant specifies that the respondent be delivered to the court.
21.64 Arrest of the respondent
Where the respondent is arrested, a court official or a police officer should bring them before the relevant court immediately for examination. In practice this may not always be possible. In this instance the arrested person will be taken into prison custody and the applicant should apply to the court for an early hearing and for the respondent to be brought from prison at the relevant time. If the court is willing to consider releasing the respondent prior to the hearing after receiving appropriate undertakings they should be brought before the court earlier [rule 12.55]. In cases where the respondent has been arrested and the petition was presented prior to 6 April 2010 the appropriate version of form WARPD should be used. In cases where the petition was presented after 6 April 2010 the County Court Civil Form N288 should be obtained from the court and used.