Challenge Trustee in Bankruptcy's Fees

How to challenge Trustee in Bankruptcy’s Fees and avoid appeal being refused

How to challenge Trustee in Bankruptcy’s Fees and avoid appeal being refused

How to challenge Trustee in Bankruptcy’s Fees and avoid appeal being refused is one of the points arising from the matter of Oyesanya v Jackson [2020] EWHC 542 (Ch).

This was a bankrupt’s application for permission to appeal against a District Judge’s decision ordering him to give up possession of his property.

The basis for the Trustee seeking an order for possession is highlighted by the position set out in Holtham v Kelmanson [2006] BPIR 1422… A trustee in Bankruptcy, although called a trustee, is not a trustee of the assets comprised in the estate for the creditors or the bankrupt. He holds the assets subject to statutory duties to liquidate them and distribute their proceeds in satisfaction of the debts pari passu and any surplus to the bankrupt. In my view the application fell to be made under Section 363(2) of the Insolvency Act 1986…“.

There were various grounds put forward in respect of the application. It was a not uncommon situation in which another property in Harrow, being sold by the mortgagee, was thought to release sufficient funds to discharge the bankruptcy.

This optimism did not seem to stand the test of time and in due course an order was made for the bankrupt’s property in Altrincham to be sold.

Three of the grounds put forward by the bankrupt to challenge the initial judge’s decision and to seek to stop the possesssion order proceeding were 1) the level of the Trustee in Bankruptcy’s fees and expenses 2) interest of the wife in the property in Altrincham 3) undervalue sale of the Harrow property.

Dealing with these issues the application appears to have reasonably comprehensively failed. It seems that arose because of the way in which the appeal was pursued. It seems doubful that it was going to succeed but the matter of the Trustee in Bankruptcy’s fees was notable.

Instead of issuing an application under Rule 18.35 of the Insolvency (England and Wales) Rules 2016, the bankrupt made submisssions at the hearing of permission to appeal, yet seemingly conspicuously appears to have overlooked that he needed to have such made an application to challenge these costs before he could raise it as an issue on a permission to appeal application. He had not done so.

The bankrupt’s wife asserted no interest in the Altrincham property so that seems to have knocked that ground for appeal out.

Finally the suggestion of the undervalue sale allegation as to the Harrow property was dealt with as follows given it had not been sold by the Trustee in Bankruptcy but by the mortgagee:

The lesson seems to be; get your applications right first time and do not introduce fresh applications on appeal that have not already been brought, as the Court is unlikely to be willing to in effect re-write history or allow them in after the event.

Disclaimer: this post on “How to challenge Trustee in Bankruptcy’s Fees and avoid appeal being refused” is not legal advice and not to be relied upon as such. Neither the author nor the author’s firm, Oliver Elliot Chartered Accountants accepts any liability for any reliance on the same. You should seek independent legal advice on the facts of your specific case.

Leave a Comment