BankruptcyStatutory demand claiming costs awarded in family proceedings - capable of forming basis of bankruptcy petition only in exceptional circumstance - statutory demand set aside in the absence of special circumstancesLevy v Legal Services Commission (formerly Legal Aid Board): CA (Peter Gibson, Waller and Jonathan Parker LJJ): 10 November 2000The Legal Aid Board, to which the benefit of a costs order was made in family proceedings against the debtor in favour of his estranged wife had been assigned by reg 91(1)(b) of the Civil Legal Aid (General) Regulations 1989, served a statutory demand on the debtor in a sum representing the assessed costs in the earlier proceedings together with interest.

The district judge refused the debtor's application for the statutory demand to be set aside.Evans-Lombe J [2000] Gazette, 24 February 35, dismissed the debtor's appeal on the grounds that, even if the costs were not provable in a bankruptcy petition by virtue of r.12.3(2)(a) of the Insolvency Rules 1986 (which excluded 'any obligation arising under an order made in family proceedings') it would be premature to set aside the statutory demand before the hearing of the petition lodged by the Legal Aid Board.

The debtor appealed.Marcia Shekerdemian (instructed by Rosenblatt Solicitors) for the debtor.

Nicola Rushton (instructed by Cawdery Kaye Fireman & Taylor) for the commission.Held, allowing the appeal, that costs, like other obligations arising in family proceedings, were not provable in bankruptcy, but a non-provable debt might nevertheless be a 'bankruptcy debt' as defined by s.382(1) of the Insolvency Act 1986; that the court therefore had jurisdiction to make a bankruptcy order on the basis of a non-provable debt, but would do so only in wholly exceptional circumstances; that there were no special circumstances here and no reason to allow the statutory demand to stand pending the hearing of the petition, which had no realistic prospect of succeeding.