Erwood v Maxted

Robert Erwood, the appellant, brought proceedings against his sister, Janet Maxted, in her personal capacity and against her and Alexander Glasgow as trustees of Edward Erwood's estate. After the proceedings were unsuccessful, Mr Erwood was required to pay costs to the respondents. When he failed to do so, the respondents brought bankruptcy proceedings against him. Mr Erwood applied to set aside the proceedings, but was unsuccessful. The Court of Appeal dismissed Mr Erwood's appeal against that decision.

Mr Erwood applied for leave to appeal to the Supreme Court, arguing that two issues were of general and public importance. Firstly, whether someone with a history of incapacity and known difficulties in understanding the full implications of legal process should have been provided with legal assistance when that person is the subject of bankruptcy proceedings. Secondly, whether the Court can set aside a bankruptcy notice when the debtor is clearly solvent and there are means of execution readily available and known to the judgment creditors.

The Supreme Court found that the first issue could not arise because the Court of Appeal had concluded that Mr Erwood was not incapacitated and had a good understanding of the issues and the nature of the proceedings. The Court also found that the second issue did not meet the statutory test as it was unclear what Mr Erwood's financial position was due to his attempts to hide his assets, and a debtor's solvency is not a ground on which a bankruptcy notice must necessarily be set aside if a debtor unreasonably refuses to pay a debt plainly owed.

The Supreme Court dismissed the application for leave to appeal and ordered Mr Erwood to pay costs of $5,000 to the respondents, plus all reasonable disbursements.