Insolvency Update: Review 2016

Enforcement of loans continues to be a challenge, particularly, enforcement by the purchasers of debt. Equally, there have been helpful developments for secured and unsecured lenders and receivers appointed by them.

Key developments during 2016 include:

Increased judicial restraint on repeat litigation and the narrowing of issues in appeals Greater clarity in relation to jurisdiction in possession proceedings Procedural changes in relation to substitution applications The introduction of rent control in certain areas Restraint on repeat litigation and limitation of issues in appeals

The trend for vexatious litigation continued during the course of the year. The courts' increased willingness to appropriately address litigants in these types of cases is a positive development.

In that regard, to limit repeated litigation of the same issues and to limit the issues in appeals, parties typically rely on the rule in Henderson v Henderson1 and the principles set out in Hay v O'Grady2, respectively.

It is illustrative to note that the past two years have seen a steep rise in the number of judgments which reference those cases.3

Repeat litigation - the rule in Henderson v Henderson

This rule, with limited exceptions, prevents:

the same parties (or slight variations in parties - for instance by adding a company controlled by the original parties4 or adding a defendant5); from re-litigating issues in new proceedings; where the grounds on which they propose to contest the issues could have been pleaded in earlier proceedings; even where the issues were not pleaded in error. Appeals - the principles in Hay v O'Grady

These principles may be summarised as follows:

were the findings of fact made by the trial judge supported by credible evidence? If so, the appellate court is bound by the findings, however voluminous and apparently weighty the testimony against them? did the inferences of fact depend on oral evidence of recollection of fact? If so, the appeal court should be slow to substitute its own different inference? in regard to inferences from circumstantial evidence, an appellate court is in as good a position as the trial judge in that regard. Did the judge draw erroneous inferences? was the conclusion of law drawn by the trial judge from a combination of primary fact and proper inference erroneous? If so, the appeal should be allowed. Helpfully, during 2016, the Court of Appeal made it clear that these principles also apply to findings made by the...