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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Legal Services Commission v Leonard [2002] EWCA Civ 744 (01 May 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/744.html Cite as: [2002] BPIR 994, [2002] EWCA Civ 744

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IN THE SUPREME COURT OF JUDICATURE
CIVIL DIVISION
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
BANKRUPTCY COURT
(Mr P Smith QC
sitting as a Deputy Judge)

		The Royal Courts of Justice The Strand London
		1 May 2002

1. LORD JUSTICE SIMON BROWN: The appellant is a registered osteopath. His appeal today is brought by permission of Carnwath LJ, given on 20 February 2002, against a costs order made against him on 18 October 2001 by Mr Smith QC (as he then was), sitting as a Deputy Judge of the Chancery Division in bankruptcy proceedings. The appellant appears in person before us, as indeed he had before the deputy judge.
2. The deputy judge's order was made in favour of the respondent, the Legal Services Commission (formerly the Legal Aid Board) who were the petitioning creditors, the bankruptcy proceedings having been brought in the Commission's own name pursuant to regulation 91(1) of the Civil Legal Aid (General) Regulations 1989, to enforce a judgment in favour of a legally-aided claimant, Keith John Woolnough, in civil proceedings brought by Mr Woolnough against the appellant in the Central London County Court in 1999. The deputy judge was himself sitting on the appellant's appeal from an order of Mr Registrar Baister sitting in the Bankruptcy Court on 2 May 2001, by which the respondent's bankruptcy petition had been adjourned on terms.
3. When I indicate that by his order the deputy judge allowed the appellant's appeal and dismissed the bankruptcy petition, and yet nevertheless made the adverse costs order:

"that the Appellant do pay the Petitioning Creditors costs down to including 11 October 2001, such costs to include brief fee and to be subject to a detailed assessment",

it will readily be appreciated that there is something of a background to the order.

4. Let me now seek to summarise that background as briefly as may be. This I shall do largely by reference to the helpful chronology prepared by the respondent, although I take note of Mr Leonard's objection to certain features of it.
5. The story begins with the Central London County Court action to which I have already referred, brought by the legally-aided Mr Woolnough against the appellant, at that time also acting in person. I need say nothing of those proceedings, save only to note that Mr Woolnough and the appellant were neighbours and to record the terms of the eventual order made by Judge Butter QC on 26 March 1999:

"1. Judgment for the Plaintiff in the sum of £2,500 plus interest assessed at £536.75.

2. Judgment for the Defendant on the Counterclaim in the sum of £1,500 plus interest assessed at £322.05.

3. The Plaintiff to pay the Defendant's costs of Counterclaim to be taxed on Scale 1 if not agreed and as a litigant in person from the date of withdrawing instructions from his Solicitor.

4. The Defendant to pay the Plaintiff's costs to be taxed on Scale 1 if not agreed. Legal Aid Taxation of the Plaintiff's costs.

There be a stay of execution of Judgment for the Plaintiff and

Judgment for the Defendant on the Counterclaim until the conclusion of the taxation of costs. The District Judge to deal with the question of stay."

6. The crucial importance of that fifth paragraph and the stay it imposed will shortly become apparent.
7. On 25 May 1999 Mr Woolnough's solicitors, Elton & Co, sent to the appellant a notice of commencement of detailed assessment of their client's costs. This was wrongly sent to 108A Haverstock Hill, the appellant having by that date moved to number 106B. As we shall see, however, it was subsequently adjudged that the appellant had nevertheless received it. This indeed was the substance of the hearing before Mr Registrar Baister to which I have already briefly referred. The appellant not having responded to the commencement notice, Elton & Co on 28 June 1999 issued a default costs certificate in the sum of £12,477.05. Following that, on 22 March 2000 the respondent made upon the applicant a statutory demand for the amount of the default costs plus interest, plus the judgment entered for Mr Woolnough on the claim, in the total sum of £16,764.13.
8. On 2 May 2000 the appellant applied in the bankruptcy court to have that statutory demand set aside; one ground of that application being, I should perhaps note at this stage, the stay imposed by Judge Butter in paragraph 5 of his order. On 25 May 2000 Mr Registrar Simmonds gave directions on that application. The appellant, however, having failed to comply with those directions and, more significantly, having failed to attend the hearing of the application on 8 August 2000, it was that day dismissed with costs of £800.
9. The following month, on 26 September 2000, a bankruptcy petition was served, asserting that the appellant was "justly and truly indebted" to the Commission in the sum of £16,764.13. On 8 November 2000 Mr Registrar Baister made an order for substituted service of the bankruptcy petition by first-class post and fixed its hearing for 12 December. At the first hearing of the petition on 12 December it was adjourned. The appellant at that stage paid the Commission £500 toward the costs of his failed application to set aside the statutory demand. On 23 January 2001 the hearing of the petition was further adjourned for three weeks on an application made by the appellant's representatives, in particular to await the transcript of Judge Butter's judgment. On 14 February the petition was again adjourned. It had been listed for only a five-minute appointment and that was plainly insufficient.
10. There then followed correspondence between the parties' solicitors in which the appellant made it plain that he would be seeking to have the petition dismissed on two grounds, first because the commencement notice had not been served upon him and secondly because of the stay imposed in paragraph 5 of Judge Butter's order. As to the stay, the appellant's solicitor's letter of 9 March 2001 quoted from the transcript of the hearing before Judge Butter as follows:

"The Plaintiff financially may be unable to pay the Defendant the sum awarded, the Defendant presumably is able to pay the Plaintiff; it seems to me unjust that the Plaintiff should simply be unable to enforce his judgment, if the Defendant cannot enforce his judgment on the counterclaim. This is not a case where there seems to me to be a true set-off, but I think that the right answer is that I should grant a stay on execution of the judgment, in relation to both the Plaintiff's claim and the Defendant on his counterclaim, until after taxation of costs; the District Judge to determine then, in the light of that taxation, how much money is due from whom and to whom."

11. The letter then continued:

"It appears from the default costs certificate that the issues of set off and stay were not raised before a District Judge on the assessment of costs, either in writing or at a hearing. We would be grateful if you would confirm whether or not this is the case.

Accordingly a petition based on the judgment or costs order obtained against Mr Leonard should never have been presented and Mr Leonard is seeking the dismissal of the petition with an order for costs."

12. The respondents replied on the same day. With regard to the stay they said this:

"Our Counsel's Opinion endorses the view of this firm. Your client had a strict time limit within which to commence assessment proceedings. [It was later suggested in oral argument that this was three months.] His failure to do so, coupled with the assessment of the costs by the Plaintiff, concluded the assessment process. The conclusion of the assessment process operated to lift the stay. If your client wishes to make an application for an assessment of his own costs out of time (and we are still not aware that such steps have been taken notwithstanding the length of these proceedings) he may make an application to have the stay reinstated. However, until such time the stay remains lifted. We are not able to comment on what may or may not have been told to the District Judge on the request for the Default Costs Certificate as this is a matter purely within the knowledge of Elton & Co. However, we are not quite sure we understand the relevance of your point. We do not agree that the Bankruptcy Petition should not have been presented. It was based on an unsatisfied Statutory Demand the setting aside of which your client abandoned."

13. Three days later, on 12 March 2001, the petition was listed for hearing before Mr Registrar Jaques, each party on that occasion being represented by counsel. There is no dispute that counsel then appearing for the appellant mentioned both his arguments to the court, namely both the alleged non-service of the commencement notice and Judge Butter's order for a stay. Again, however, the hearing was largely ineffective for want of adequate time and it was adjourned to 2 May 2001 with directions given. Those directions included that all deponents to the written evidence filed on each side should attend for cross-examination. On 2 May 2001 the petition came before Mr Registrar Baister, when again both parties were represented by counsel albeit, unfortunately, different counsel for the appellant because his previous counsel was now on honeymoon. In the result, the only issue dealt with by Mr Registrar Baister on this occasion was the question of the service of the commencement notice. As to this, extensive oral evidence was given on both sides. Having heard it, the registrar, although describing the matter as "very finely balanced", for a number of reasons preferred the respondent's evidence to that of the appellant and reached the conclusion that he had received the notice. In fairness to the appellant, however, I should just read this brief passage from the registrar's judgment:

"I will not go so far as to say that he has sought to mislead anybody about this. I believe that he has simply become confused over a period of time as a result of a number of difficulties, wholly understandable, which he has experienced as a result of his protracted and unhappy relationship with Mr Woolnough and other tenants, and has overlooked the fact that he was properly served."

14. In the result the registrar decided that the petition could proceed and he made the following order:

"1. the further hearing of this petition be adjourned generally with liberty to restore on terms that by 16.30 hours on the 31st May 2001, the Debtor files in the County Court and serves on the Petitioning Creditor's Solicitors all papers necessary for the assessment of his costs pursuant to the Order of HHJ Butter QC dated 26th March 1999 and thereafter prosecutes such assessment diligently. [I may interpose that the appellant still took no action towards the assessment of his costs.]

2. the Petitioning Creditor's costs of and incidental to today's hearing and the determination of the issue as to the service of Notice of commencement of assessment by the Petitioning Creditor be paid by the Debtor to the Petitioning Creditor in any event, such costs to be assessed if not agreed."

15. On 16 May 2001 the appellant appealed against that order, making no reference whatever to his second argument with regard to the stay. The notice of appeal was directed solely to the registrar's finding that he had received the notice of commencement. That, of course, was the appeal which ultimately came before Judge Smith and to which I shall shortly return. Meanwhile, however, on 30 May 2001 the appellant applied in the Central London County Court to set aside the default costs certificate on the basis that he had not been served with the notice of commencement. The respondent to this application was Mr Woolnough, not the Commission, and regrettably, through oversight, Mr Woolnough's solicitors failed to attend. The application came before District Judge Brafield and, the appellant having told him nothing whatever of the earlier hearing before Mr Registrar Baister and the adverse finding against him on the facts, the district judge set aside the default certificate.
16. Following an abortive hearing before another district judge, the matter came by way of appeal from District Judge Brafield's order before Judge Green QC, who accepted that the certificate should not have been set aside on the grounds of non-service, Mr Registrar Baister having already decided that issue against the appellant. Judge Green, however, expressed concern that Elton & Co's bill appeared to claim their costs on both the claim and the counterclaim, whereas under Judge Butter's order it should have been limited to their costs on the claim. Having indicated that he considered that this was itself good reason for setting aside the default certificate, he then encouraged the parties to reach agreement as to the amount of Elton & Co's costs on the claim, and in the result a compromise figure of £8,000 was arrived at. That figure, of course, did not take into account the appellant's costs on the counterclaim.
17. That then was the background against which the appellant's appeal against Mr Registrar Baister's order came before Judge Smith on 18 October 2001. Having stated that:

"The hearing before Registrar Baister was designed solely -- and I emphasise that in my view -- to decide the question of service",

the deputy judge, perhaps not surprisingly, made it plain that he would have dismissed the appellant's appeal on that issue. The registrar had after all, as the deputy judge pointed out, heard extensive oral evidence on the issue as to service and he had delivered a careful reasoned judgment. The deputy judge also remarked that the appellant had misled two earlier courts, one in a letter in which he had been seeking an adjournment of his application to set aside the statutory demand, and a second time when failing to tell District Judge Brafield about Mr Registrar Baister's adverse finding on the issue of service. The deputy judge then noted that the £8,000 compromise reached with regard to Elton & Co's costs would in any event have made it academic to adjudicate on the issue of the service of the commencement notice, so there were in fact two quite separate reasons why the appeal on the basis advanced would inevitably have failed.

18. Then, however, he turned to the quite separate argument raised by the appellant as to the stay, an argument canvassed at various earlier stages of the dispute but never previously the subject of a substantive hearing or adjudication. It was certainly not an argument that had been raised before Mr Registrar Baister and it did not feature in the appellant's notice of appeal from the registrar's order. Indeed it first surfaced in the appeal proceedings in the appellant's skeleton argument served on 11 October 2001, hence the reference to that date in the judge's costs order to which I have already referred.
19. Having noted the very late appearance of the argument in the proceedings, the deputy judge then continued as follows:

"Mr Leonard submits that the purpose of the order was that any method of enforcement of monies due under the order or any method of recovery, whether by action or otherwise, was intended to be stayed until both parties' assessment procedure had been finally determined and the net sum due either way ascertained. The stay could then be lifted on the wording of the order by the District Judge.

This construction is firmly resisted by Miss Rushton. She pointed out compellingly that the construction enabled the matter to be delayed by one party not proceeding within the statutory three months to serve his notice and not proceeding for his own purposes for the assessment of his own costs. Mr Leonard has done precisely that. Indeed, even now some two and a half years after Judge Butter's order he has not issued an effective notice to start the assessment of his own costs .... I have little doubt that Mr Leonard was motivated not to activate his own assessment procedure because he knew full well that when the assessment was completed he would be a net payer ... For present purposes it seems to me that he will have a net liability on the costs of some £4,000, ignoring of course the question of damages which was the subject matter of paragraphs 1 and 2 of Judge Butter's order.

Despite Miss Rushton's arguments, it is clear to me, as I have already indicated in this judgment, that the order was intended and did have the effect now contended for by Mr Leonard."

20. I can pass over the next section of the judgment, which deals with two authorities which Miss Rushton had sought to pray in aid shortly before judgment was given on the second day, having conducted further research into the law overnight. Frankly, there was, in my judgment, nothing in either of them to assist her. The judgment then continued:

"Miss Rushton did point out that the construction could be abused by somebody like Mr Leonard, who has plainly abused it, because it requires action on both parts, namely on the part of the LSC to have their costs assessed and on the part of Mr Leonard to have his costs assessed. The short answer to that is that there is an order for a stay of the nature that I have already adjudicated on, and non-actions by parties with an attempt to prevent the ascertainment of the net amount can be dealt with quite simply. They are not dealt with by the presentation of a bankruptcy petition. They are dealt with by the innocent party going back to court, pointing out the default of the other party and inviting the District Judge as identified in paragraph 5 of the order to lift the stay. As I have said, Mr Leonard has clearly exploited this aspect and I can well understand the frustration of the LSC in this respect. He was given a final opportunity to present his own figures for taxation by Registrar Baister (see paragraph 2 of his order) [that I think must have been intended to be a reference to the second limb of paragraph 1 of the registrar's order] but he failed to do that either. However, as I have said, the remedy is to apply back to the court to have the stay lifted. I, sitting in the Chancery Division, have no jurisdiction to lift that stay. If I had I would undoubtedly have done so.

The result is that I accept Mr Leonard's submissions as to construction of paragraph 5 of Judge Butter's order. To that extent his appeal is successful. To that extent in my judgment the petition was premature in that there was no present debt which could be the subject matter of a petition against an individual. However, Mr Leonard has won on a point which was first notified to the LSC when he served the documents in this appeal on 11th October. To say that is rather late is to understate the position. Clearly the LSC had already prepared for the trial and incurred costs and retained counsel. But for the late raising of this argument the appeal, for the reasons I have set out in this judgment, would have been dismissed. Mr Leonard referred on a number of occasions to the overriding objective which is one of the matters which I must have regard to in the Civil Procedure Rules. One of the objectives is to ensure fairness as between parties. It is not necessary for a party to anticipate arguments which might have been raised but which are not raised. The LSC fought an argument before Mr Registrar Baister solely on the service point and won. Mr Leonard appealed solely on the service point. He has not produced any formal amended appeal notice, but I would not have required that from him as he was a litigant in person. Nevertheless the appeal has been won solely on the basis of a late produced point which has never been argued before. It is not fair in those circumstances that while Mr Leonard is successful and has the petition dismissed that he should have any costs of the Petitioners incurred in this petition up to and including 11th October, because all of those costs were incurred unnecessarily had Mr Leonard chosen to raise and run the argument which he has won this appeal on today."

21. In the result the deputy judge made the order already indicated by which he allowed the appeal and dismissed the petition, but ordered Mr Leonard to pay the petitioner's costs up to and including 11 October.
22. Much of the argument which the appellant, for his part, seeks to direct against that order focuses on the judge having apparently failed to appreciate, so it is suggested, that the question of the stay had indeed been raised on a number of past occasions during the course of this dispute. It had been raised in the appellant's application in May 2000 to set aside the statutory demand, an application which in the event failed for his non-attendance. It was raised again in correspondence shortly before the hearing before Mr Registrar Jaques on 12 March 2001 and indeed it was raised at that hearing itself. As it seems to me, however, there was no question of the deputy judge having failed to appreciate all that. Rather, as his judgment makes plain, he took the point that the stay had not actually been argued at any substantive court hearing, and in particular not before Mr Registrar Baister at the only effective hearing of the petition to date. That argument, accordingly, I find unpersuasive.
23. An altogether better point, however, and indeed in my judgment a compelling point, is that once it was recognised that the argument upon the stay was sound, it necessarily followed that the petition was bound to fail and indeed that it had been misconceived from the start. The judge in those circumstances rightly allowed the appellant's appeal against the registrar's order which had allowed the petition to proceed, and himself dismissed the petition. Although principally the hearing before Judge Smith had been directed at Mr Registrar Baister's finding on the issue of service, it is noteworthy that the respondent was in fact asking not only for that appeal to be dismissed but also for the court actually to make a bankruptcy order on the petition. (I should perhaps add that the respondent was also seeking an amendment to the petition to reduce the petition debt to £11,573.31 to take account of the compromise earlier reached before Judge Green, but even that figure, as I apprehend, continued to include the judgment sum on the claim without taking account of the judgment sum on the counterclaim.)
24. Inevitably, therefore, the issue of the stay was before the deputy judge, since it had not previously been determined. In any event, as the judge himself observed, if the stay argument was a good one (which at that stage in the argument he had not yet decided) he could dismiss the petition under his inherent jurisdiction:

"You cannot present the petition until the stay is lifted. The petition would be dismissed as an abuse if that was the case, because there is no debt due until the stay is lifted. It is the whole purpose of having a stay."

25. There is this point too to be made. Even had the judge refused to allow the stay argument to be advanced at the appeal hearing and declined to take the point himself, the result would simply have been this. The appeal before the deputy judge would, it is true, have failed, doubtless with the appellant having to pay the costs of that hearing, but the petition would have been left in being and there would then have had to be a subsequent substantive hearing (with or without a later appeal) at which the stay argument would have been determined ultimately in the appellant's favour; and with regard to the costs of that hearing, and indeed the costs of the petition as a whole (save insofar as these had otherwise been expressly provided for) the respondent would have been ordered to pay them. The deputy judge's costs order here appears to me to have overlooked those very important considerations.
26. Because of the stay, which remained in force, the petition should never have been brought, least of all by a public body. Whatever criticisms therefore fall to be made against the appellant (notably for his conduct in twice misleading courts in the ways already described; for somewhat cynically, as it appears, employing the stay provision by never applying for taxation of his own costs; by wrongly -- although, as the registrar had concluded, not dishonestly -- asserting that he had never received the commencement notice; by failing to take the stay point instead of, or at any rate alongside, the argument advanced about the issue of service) they cannot in my judgment justify not merely refusing the appellant his costs but actually requiring him to pay the respondent's costs. However the matter had proceeded, the respondent would inevitably have failed at the substantive hearing on the stay issue and would have been liable then for the costs of the petition.
27. In these circumstances, I have no doubt whatever that, reluctant though this court always is to interfere with a costs order, which is beyond all others an order made in the exercise of the court's discretion, we are not only entitled but indeed bound to do so here. It is one thing to deny a successful appellant his costs, quite another to require him to pay his unsuccessful opponent's costs. In my judgment, whilst certainly the former was justified here, the latter was not.
28. I for my part would vary the costs order below to make no order as to the costs of the appeal before Deputy Judge Smith and of the petition. That would simply leave in place the adverse costs order made against the appellant by Mr Registrar Baister with regard to that particular hearing. Those costs, it seems to me, he must undoubtedly pay. But no others. To that extent I would allow this appeal.
29. LORD JUSTICE LAWS: I would allow this appeal for the reasons given by my Lord and I agree with the order as proposed by him.
30. LADY JUSTICE ARDEN: I also agree. As this is a bankruptcy matter I would like to add some observations about the bankruptcy aspects of this case. The appeal before the judge, then Mr Peter Smith QC, began on 18 October. It lasted, it appears, all day and went into 19 October, when there was further argument as a result of counsel's researches overnight. The judge then gave judgment.
31. The petition which was before the judge stated in paragraph 2 as follows (page 31 of the supplemental bundle):

"The debtor is justly and truly indebted to us in the aggregate sum of £16,764.13 in respect of monies outstanding to Mr Keith John Woolnough pursuant to a Judgment dated 26th March 1999 and an Order for taxed costs dated 28th June 1999 together with statutory interest to 14th September and continuing at 8% per annum on a principal debt of £16,331.80. The sum above includes further statutory interest from the date of the Statutory Demand and costs ordered on the dismissal of his application to set aside the Statutory Demand, in the sum of £800. Mr Keith John Woolnough is an Assisted Person under the Legal Aid Act and Regulations and pursuant to the said Act and Regulations the Petitioner claims this sum from the Debtor in respect of those monies due to the Assisted Person and the Petitioner."

32. The aggregate sum was clearly incorrect for the reason that Simon Brown LJ has given, namely that it gave no credit for the judgment debt awarded in favour of Mr Leonard. It also contained no reference to the terms of the order of His Honour Judge Butter and in particular his order for a stay.
33. Paragraph 3 of the petition states:

"The above-mentioned debt is for a liquidated sum payable immediately and the debtor appears to be unable to pay it."

34. So there was an allegation in the petition that the debt was immediately due.
35. There would have been an affidavit verifying the content of the petition. We have not been shown this. However, there is a standard form for this provided by the Insolvency Rules, and the Insolvency Rules require it to be stated on the petitioning creditor's behalf that the statements in the petition are true to the best of the deponent's knowledge, information and belief. Since we do not have the affidavit, we do not know whether or not that particular affidavit set out Judge Butter's order so that the stay for which it provided could have been seen immediately by the Bankruptcy Court. These forms are to be used with such variations as the circumstances may require, and in my judgment it would have been appropriate, at the very least, if the order had been referred to in that affidavit. Had that been done, much of the trouble which has happened in his litigation might have been prevented.
36. We have a full transcript of the hearing before the judge on the first day of the hearing of the appeal before him, and he took the point that the petition was premature as soon as he saw Judge Butter's order. The construction placed on that order by the Legal Services Commission seems to me to have been far from obvious. It requires a gloss to be placed on the words of an order of the court which was in full force and effect. Indeed, the judge described the petition more than once as an abuse of the process of the court and in any event premature. In my judgment that characterisation of the petition was clearly correct. If authority is needed for that, it is stated, for instance, in Muir Hunter, Personal Insolvency, chapter 3-418, as follows, that:

"The bankruptcy court which finds that the petition debt, however ostensibly 'liquidated', is genuinely disputed to the knowledge of the creditor, may characterise the petition as an abuse of the process and dismiss it with costs."

37. What applies to a dispute about a debt which is ostensibly liquidated must also apply where there is a dispute as to whether the debt is subject to a stay. I note also that the commentary correctly states that the fact that the petition may be dismissed with costs is a consequence which may follow but which need not follow. It all depends on the circumstances of the case and in this case, as Simon Brown LJ has explained, there are other factors and considerations which the court has to take into account.
38. On the appeal before the judge, the Legal Services Commission sought a bankruptcy order against Mr Leonard. It is instructive to note what Insolvency Rule 6.25 provides about such an application. I go first to sub-rule(2) before going to sub-rule (1). Sub-rule (2) states that:

"If the petition is brought in respect of a judgment debt, or a sum ordered by any court to be paid, the court may stay or dismiss the petition on the ground that an appeal is pending from the judgment or order, or that execution of the judgment has been stayed."

39. That rule makes it clear, if it is not otherwise clear, that if the debt on which the petition is based as a presently payable debt is a judgment which has been stayed the court could not make an order on it. It would either have to stay or dismiss the petition. Indeed, that construction is borne out by the commentary in Muir Hunter at paragraph 7-312, which also gives the historical reason for that provision.
40. I return to rule 6.25(1). That states:

"On the hearing of the petition, the court may make a bankruptcy order if satisfied that the statements in the petition are true, and that the debt on which it is founded has not been paid, or secured or compounded for."

41. The commentary in Muir Hunter, paragraph 7-309 says this:

"Duties of court on hearing of petition

The effect of this paragraph seems to be to require the court to 'investigate' the statements contained in the petition, and also to enquire of the creditor, if the debtor does not attend, whether the debt on which the petition has been founded has been paid or secured or compounded for. If a debtor attends and disputes the petition, the court's enquiry into the matters stated in the petition must be more far-reaching than it would otherwise be."

42. A number of observations may be made about this. First of all, although the commentary refers only to enquiries as to whether the debt has been paid or secured or compounded for (as indeed does the rule) it does not mean that there must not also be some enquiry as to whether a judgment debt has in fact been stayed. Of course there was nothing to put the court on notice of that, so far as I am aware, in the case of this petition. In any event, as I see it, if the court does not expressly make an enquiry as to whether the statements in the petition are true or remain true, it is the duty of the advocate for the petitioning creditor to treat that enquiry as made. If there is serious argument on the issue, it is a matter to be brought to the attention of the court by the advocate for the petitioning creditor. Clearly where the debtor attends it may be that the debtor will raise those points of his own initiative, but where the debtor, as here, was unrepresented, it seems to me that it is the duty of the advocate for the petitioning creditor to draw to the attention of the court the fact that there was a serious argument on the question of stay.
43. Accordingly, although the judge states in his judgment that "it is not necessary for a party to anticipate arguments which might be raised which are not raised", that statement should in the context of a bankruptcy petition be treated with some caution for the reasons that I have explained. I accept, of course, that in this instance the Legal Services Commission, having considered the matter, considered in good faith that the debt was immediately due, but I have already explained that in my judgment that argument was a difficult one and not obvious on the face of the relvant court order. Hence, as I see it, that matter ought to have been raised spontaneously with the Bankruptcy Court at an early point in the proceedings. The judge held -- and there has been no appeal from his decision on this point -- that it was quite clear in the present case that no bankruptcy order could be made.
44. I would conclude with these observations. The presentation of a bankruptcy petition should not be treated by an creditor as mere debt collection exercise. The presentation of a bankruptcy petition is the invocation of a collective remedy for the administration of the debtor's affairs. It is a very serious matter for the debtor. Other debtors will come to know of the petition and notice will be sent to the Chief Land Registrar who places it on the Register of pending actions. All these consequences of the presentation of a bankruptcy petition are well known. Moreover, as Simon Brown LJ has observed, the Legal Services Commission is a public body. When it is a petitioning creditor the court is entitled to expect that it will, as a minimum, observe the standards required of other petitioning creditors in the Bankruptcy Court.
ORDER: Appeal allowed to the extent indicated in the judgment, with costs. (Order not part of approved judgment)