This case concerns an application from Mr Lueshing's trustees in bankruptcy to commit Mr Lueshing to prison for contempt of Court for failure to comply with an order of the Court.
Mr Lueshing was declared bankrupt pursuant to a bankruptcy order which was made in the County Court at Croyden on 7 May 2019. Due to his bankrupt status, Mr Lueshing was ordered not to collect or attempt to collect any rents payable for any of his rental properties. However, Mr Lueshing failed to comply with this, and his other duties, and continued to approach tenants and personally accept rental payments from his tenants. Mr Lueshing regarded himself as not subject to the insolvency legislation, nor by orders of the Court. The Trustees sought to obtain his compliance with his duties and with court orders on a number of occasions, but Mr Lueshing continually failed to do so. Eventually, the Trustees made an application to commit him to prison for contempt.
Before the Court could consider whether Mr Lueshing was guilty of contempt of Court, Mr Justice Morgan considered whether Mr Lueshing had the mental capacity to deal with litigation. Mr Lueshing's mental capacity was called into question when his niece expressed concerns about Mr Lueshing's health, namely problems with his memory and alleged cognitive dissonance and lack of understanding.
Mr Justice Morgan referred to the key principles contained in the Mental Capacity Act 2005 and well as the decision of the Court of Appeal in the case of Masterman-Lister v Brutton & Co [2003] 1 WLR 1511 which were to be applied to the question of Mr Lueshing's mental capacity.
To assist the Court with this analysis, various letters and emails between Mr Lueshing and the Court throughout the duration of his bankruptcy proceedings were presented before Mr Justice Morgan. Mr Lueshing was clear in his communications that he is not bound by statues passed in this jurisdiction or by orders of the Court and consequently, he can ignore the bankruptcy order and the orders following, as well as the the committal application, because they do not bind him. Mr Justice Morgan's stance on the assertion that a person was not bound by the law or orders of the Court was clear and firm, he regarded the suggestion otherwise as "arrant nonsense". Noting that this is not the first time, or likely to be the last, that this has been claimed by a respondent to litigation proceedings, "it would not be right… to infer that everyone who says these things has lost mental capacity either in general or in connection with litigation".
When considering the appropriate sentence upon being found guilty of contempt of Court, Mr Justice Morgan placed considerable weight on Mr Lueshing's assertions that he is not bound by the rulings of the Courts or the law in general, and the fact there was absolutely no suggestion that compliance was likely to occur. The appropriate sentence was therefore something necessary to meet the objectives of (i) punishing Mr Lueshing for his contempt, and (ii) to compel him to comply with the earlier court order(s). Mr Morgan decided that a custodial sentence was appropriate. Further consideration was given as to whether this should be a suspended sentence. The Judge noted that Mr Lueshing has "persisted in asserting for some years that he is not bound by court orders… He has ignored the orders of the Crown Court. He has ignored the orders in the Bankruptcy Court. I think it is unlikely that he would comply with the earlier court order if I passed a suspended custodial sentence only".
This judgment highlights that allegations of a respondent's lack of mental capacity will be carefully considered, but holding views which a Judge describes as "arrant nonsense" is not sufficient on its own constitute mental incapacity. Importantly, the Court has made it unequivocally clear that a bankrupt cannot opt out of bankruptcy proceedings, or more generally the jurisdiction of the Court, on the "entirely wrongheaded stance" that they are not bound by the law or orders of the Court as an attempt to evade their obligation to comply with orders of the Court. If debtors do take this wrongheaded stance leading to a finding of contempt, this case serves as a cautionary reminder of the firm approach adopted by the Court when it comes to considering the appropriate sentence.