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Welcome / Blog Archive / English / 2022-11-doc1 COMI, habitual residence, England or Bulgaria?

2022-11-doc1 COMI, habitual residence, England or Bulgaria?

The case of Kooter v The Official Receiver & Ors [2022] EWHC 2683 (Ch) (24 October 2022) is a colourful case concerning the international jurisdiction of the courts in England and Wales. It is interesting reading material (i) about English procedural law and practice concerning a hearing for the annulment of a bankruptcy order from March 2019, and (ii) the courts’ international jurisdiction.

Adjournment of a hearing. On the first point, the respondent, Ms Radeva, seeks for an adjournment of the hearing (due to COVID-19), later based on the fact that she was hospitalised with pneumonia ‘… and could not dial in as the Wifi held only for 15 minutes than it cut off’, then later seeking an adjournment on vague, unsubstantiated medical grounds (e tutti quanti). In all, a fine example of a patient, careful judge.

COMI. Then there is the debate about her COMI. Is it in England? The judge doubts: ‘Although Ms Radeva asserts in many places in her statements that her COMI is in England, her statements are bare assertions, subject only to certain modest utility bills, dental and doctors’ appointments and voter registration, … Her statements lack any detail relating to how she funds her life in England, details of her earnings and any evidence of paying tax. … the bank statements she has produced provide little evidence of earnings coming into the accounts. They show, …, modest sums and spending. By way of example, they show no evidence of rental payments being made’. It does not surprise that the judge concludes that the evidence points to mr Radeva not exercising any business or profession in England and Wales.

Habitual residence. Then the logical next step is taken: ‘Put simply, her evidence fails to demonstrate the exercise by her of a business or profession. Accordingly, the relevant test is one of habitual residence as a rebuttable presumption. The emphasis on the creditors is therefore somewhat different. For the purposes of habitual residence, the types of creditors would be those relating to her residency rather than creditors arising from any trade or profession. I should add for the avoidance of doubt that the existence of the utility and other bills relied upon by Ms Radeva in relation to her assertion that her COMI was at the time in England and Wales is a factor and therefore relevant to determining her habitual residence.’ The judge is right in considering – as to the condition regarding ‘ascertainability’- a rather different view in relation the creditors is to be applied.

Legal basis? Then, diving into the ‘habitual residence’ question, I am uncertain why the court did not refer to case law concerning the old Insolvency Regulation (1346/2000) and/or using the method of anticipatory interpretation (although the UK not a member state of the EU anymore) of Article 3(1) EIR 2015 (the habitual residence of ‘an individual not exercising an independent business or professional activity’). The court refers to Regulation No 987/2009 of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security system.

Evidence. Based on all evidence before him, the judge finds that Ms Radeva’s habitual residence remained in Bulgaria: ‘The evidence does not support a genuine change of habitual residence. The evidence demonstrates an attempt by her to create an illusion of habitual residence in England and Wales. Her evidence fails to deal with the close and strong ties she has in Bulgaria. Indeed, the evidence was rather shammary: a non genuine university diploma, having followed various marketing and other courses in the UK without any evidence as to how she funds her studies or her lifestyle in England and Wales. No clear evidence where she lived, no evidence relating to security of tenure, or any licence agreement, or even that she pays any rent: ‘As I have held on the evidence, she did not exercise any economic activity in England and Wales at the relevant time. The court considers this the time of the initial bankruptcy order, not the time decides about the annulment of the order’.

What about Bulgaria? The judge continues: ‘Her activities in Bulgaria have meant that she has provided sworn statements and also expressly declared what is her permanent residence in Bulgaria. A change of habitual residence needs to be, in my judgment, genuine. I reject the evidence presented by Ms Radeva that her change of habitual residence is genuine. Accordingly, I am satisfied that at the time that Ms Radeva sought to apply for a bankruptcy order, the Court had no jurisdiction to make such an order by reason of her COMI being in Bulgaria’.

Judicial authority of the English court? As this (COMI) was the only ground in the bankruptcy order, I am uncertain why the court is strolling along details which may be relevant for the decision of Ms Radeva’s habitual residence. In the case at hand there seems not need to consider ‘habitual residence’ in the UK. And if it would be in Bulgaria, it would be for the Bulgarian courts to decide. As a surprise comes the finish: ‘I have held that her COMI was in Bulgaria and not in England and Wales at the relevant time and therefore the bankruptcy order is set aside as of right …’ The determination of COMI being in Bulgaria clearly is beyond the international jurisdiction of any English court.