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Benjamin Gray obtains order for committal to prison of bankrupt for “extremely serious” breaches of the Insolvency Act 1986

Benjamin Gray appeared for the Trustee in Bankruptcy in the Divisional Court (Gloster LJ and Andrews J) in Simmonds v Pearce [2017] EWHC 3126 (Admin) in an application to commit Mr Albert Pearce, an undischarged bankrupt, to prison for contempt of court.

Mr Pearce had been declared bankrupt following a will being set aside as invalid because the testator, Julie Spalding, was not of sound mind when she made it. The Court upheld her previous wills leaving her estate to her nephew, Cecil Bray, who had been promised her estate and been at her beck and call for years as her primary carer, until a head injury caused a change of personality in Ms Spalding and she ostracised Mr Bray.

In the insolvency proceedings Mr Pearce suggested that he had been paid all the money under the will in cash and spent it all, before winning further sums in casinos and losing them to High Court Enforcement Officers. The Divisional Court found this was all untrue beyond a reasonable doubt.

In fact, Mr Pearce had paid the money into a bank account (despite claiming he did not have any) and sought to conceal its fate through a chain of transactions between him and his daughter.  These transactions were set aside earlier this year as being transactions at undervalue for the purpose of defrauding creditors.  He refused to answer questions at his public examination about what he had really done with the money.

A committal application was made for breaches of the bankrupt’s duties to the Trustee and the Court under sections 312, 333 and 363 of the Insolvency Act 1986.  Mr Pearce was found liable on all bar one set of allegations about provision of documents, on the basis that the Court could not be sure that he still had them.

This is understood to be the first case where a committal application was brought under the “Certification Procedure” of CPR Rule 81.15.  The Court held that this was the correct way to bring such applications for breaches of the Insolvency Act 1985.

Also of interest is that the case discusses the cross-admissibility of statements obtained in Public Examinations in subsequent proceedings.  The Court held that even though such statements were obtained by compulsion, they could properly be admitted in support of committal proceedings for breaches of the Insolvency Act, not least because without such evidence such applications may be difficult to pursue.

The case has been the subject of considerable media attention, attracting coverage in the national press on both the underlying probate case and the subsequent contempt proceedings. Click the links for the press coverage by the BBC and the Daily Mail.

Links to previous press coverage: Telegraph, Daily Mail


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