In re Fraser ex parte Central Bank of London (1892) it was held that judgment debtor, the Court of Bankruptcy has power, at the insistence of the debtor himself, to go behind the judgment and to inquire into the validity of the debt, even though the debtor has previously applied in the action to set aside the judgment, and his application has been refused, and the refusal affirmed by the Court of Appeal.

Analysis of the judgment in re Fraser ex parte Central Bank of London

Fraser was a judgment debtor, who had exhaustively challenged the imposition of a judgment debt upon him, but without success. Fraser’s application to set aside the judgment debt had failed before a Master (twice), Judge (once), Divisional Court (once) and Court of Appeal (once), yet this presented no bar in the Bankruptcy Court.

Background

A partnership having been dissolved by mutual consent, and proper notices of the dissolution given, the mere fact that the retiring partner allows the continuing partner to carry on business in the old firm name is not such a ” holding out” of the former as a partner as will render him liable for a debt of the firm contracted after the dissolution with a person who had not dealt with the old firm, and who had no knowledge of the dissolution.

The bankruptcy petition was presented by the Central Bank of London, who were the holders for value of a bill of exchange for 500, due December 5, 1890, which was accepted in the name of a partnership firm of VV. & J. Fraser. The bank had discounted the bill on November 20,1890. The firm had consisted of John Fraser and his brother William Fraser. On December 6, 1890, the bank issued a specially indorsed writ in an action in the Queen’s Bench Division against W. & J. Fraser upon the bill, which had been
dishonoured. On December 16 an appearance to the writ was entered for ” William Fraser and John Fraser, sued as W. & J. Fraser, carrying on business as W. & J. Fraser.”


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The full PDF judgment – re Fraser ex parte Central Bank of London [1892] 2 QB 633 CA

9.______Re_Fraser_ex_parte_Central_Bank_of_London_1892_2_QB_633_CA

Related case law

The authority is useful in cases which seek to establish that there is no res judicata in the jurisdiction of the insolvency court and the doctrine of inquiry applies in all insolvency cases. More recently, in Dawodo [2001], Etherton M.R held that in order to exercise the duty of inquiry all that is necessary is that the Court be shown that:

“…had there been a properly conducted judicial process it would have been found, or very likely would have been found, that nothing was in fact due to the Claimant. It is clear that in those circumstances the Court can enquire into the judgment and the judgment debt, even though the debtor himself has previously applied to have the judgment set aside, and even though that application has been refused and that refusal has been affirmed by the Court of Appeal

Re Hawkins (1865) 1 QB 404

“…the Court of Bankruptcy is not bound by a judgment at law, but is entitled to investigate all the facts of the case whenever, but not before, a prima facie case impeaching the judgment is made out. Otherwise a man might defeat all his just creditors by allowing judgment to be taken by default or consent”

McCourt v. Baron Meats Limited (1997) BPIR 114

(1) A court exercising the bankruptcy jurisdiction (“a bankruptcy court”), although it can treat a judgment for a sum of money as prima facie evidence that the judgment debtor is indebted to the judgment creditor for that sum, may, in appropriate circumstances, go behind the judgment, that is to say inquire into the circumstances in which the judgment was obtained and, if satisfied that those circumstances warrant such a course, treat it as not creating or evidencing any debt enforceable in bankruptcy proceedings.

Further reading

(1) Going behind a judgment in bankruptcy / insolvency proceedings

(2) Insolvency set off – A mandatory duty without exception

(3) Set aside an order or judgment on the basis of fraud