Power v Godfrey [2013] EWHC 4359 (Ch) (05 December 2013)

Power v Godfrey [2013] EWHC 4359 (Ch) (05 December 2013)

The existence of a default judgment in favour of Mr Power for a sum exceeding the petition debt constituted a bona fide cross-claim on substantial grounds. The Deputy Registrar erred by going behind the default judgment without considering whether there was a prompt application to set it aside. In the absence of such an application, the bankruptcy order should be set aside and the petition dismissed.

Citation
[2013] EWHC 4359 (Ch)
Parties
Applicant/claimant: Lawrence Power; Respondent/defendant: Godfrey
Jurisdiction
England and Wales
Judgment Date
05 December 2013
Procedural Posture
Bankruptcy Appeal / Appeal From Bankruptcy Order
Outcome
Appeal allowed; bankruptcy petition dismissed
Legal Topics
Bankruptcy Petition, Default Judgment, Cross Claim, Set Off, Permission to Appeal
Insolvency Civil Procedure Bankruptcy Petition Default Judgment Cross Claim Set Off Permission to Appeal

Case Brief

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Parties

Lawrence Power

Applicant/claimant

Godfrey

Respondent/defendant

Procedural Posture

Bankruptcy Appeal / Appeal From Bankruptcy Order

Legal Issues

  1. 1 Whether a bankruptcy order should stand where the debtor has obtained a default judgment exceeding the petition debt
  2. 2 Whether the Deputy Registrar erred in going behind a default judgment not set aside
  3. 3 Whether the existence of a default judgment constitutes a bona fide cross-claim on substantial grounds

Ratio Decidendi

The existence of a default judgment in favour of Mr Power for a sum exceeding the petition debt constituted a bona fide cross-claim on substantial grounds. The Deputy Registrar erred by going behind the default judgment without considering whether there was a prompt application to set it aside. In the absence of such an application, the bankruptcy order should be set aside and the petition dismissed.

Court Disposition

Appeal allowed; bankruptcy petition dismissed

Orders

  • Permission to appeal granted
  • Bankruptcy order set aside