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The purpose behind Section 366 of the Insolvency Act 1986 is so that Trustees In Bankruptcy can have maximum information about the bankruptcy estate.

In the case of Brake v Guy & Ors [2021] EWHC 671 (Ch) there was a discussion about information supplied to the Trustee in Bankruptcy.

Purpose of Section 366 Of The Insolvency Act 1986

The purpose of Section 366 of the Insolvency Act 1986 is so that Trustees In Bankruptcy have maximum information on the bankruptcy estate.

Relevant Judgment Extracts

It will be seen that this section does not confer a power on the trustee in bankruptcy directly to require third parties to produce information in their possession. Instead, it empowers the court on the application of the trustee to require third parties to produce such information. However, typically, trustees in bankruptcy have limited resources for making court applications, and prefer to operate where possible by agreement. Moreover, an informal and friendly approach is often more productive than a formal and antagonistic one. So it is hardly surprising that in this case Mr Swift made informal requests to the defendants by reference to section 366, without actually making formal applications to the court. If the trustee had made an application to the court, and the court had made an order under the section, the claimants could not complain at the defendants’ compliance with it. (I should say that it is not an objection that the claimants have been discharged from bankruptcy. The word ‘bankrupt’ in the section includes a bankrupt once discharged, and so the jurisdiction continues to exist: Oakes v Simms [1997] BPIR 499, CA. Nor is it an objection that the information concerned came into existence after the discharge: the section requires only that it concerns “the bankrupt or the bankrupt’s dealings, affairs or property”. The bankrupt is now a discharged rather than an undischarged bankrupt, but Oakes shows that the section applies to discharged as to undischarged bankrupts.)

On the other hand, it does not follow from this that a failure to obtain an order means that compliance with a request properly made must be a breach of privacy or confidence. The claimants say in closing that a failure to obtain an order means that, if the court does not make an order, the exception in article 8(2) cannot apply. However, for this purpose “the law” includes the common law, and not just the statute law. Consistently with the policy behind section 366, that trustees in bankruptcy should have the maximum available information about the bankrupt’s estate, in order to protect the interests of creditors in the bankruptcy, and taking a realistic view of the resources available to trustees in bankruptcy, I hold that it is not a breach of privacy or confidence for third parties on request from a trustee in bankruptcy to supply that information which the court would have ordered to be supplied if an application had been made (I am not now dealing with privileged information, to which different considerations may apply).

On the information available to me in this case, and taking into account the detailed submissions made to me on behalf of the claimants, I have no doubt that the information supplied in relation to the requests made would have been ordered to be supplied. The fact that some emails were sent to Mr Swift’s office after his removal from office does not change matters. They were not sent to Mr Swift personally, for his own amusement. They were sent for the benefit of the bankrupt estate, to be passed on to the new trustees.

The claimants make an argument in closing submissions (at [30]) that the defendants should not have had these documents in the first place, and refer to a passage in Toulson & Phipps, Confidentiality, [5-053], who in turn rely on a dictum in Hilton v Barker Booth and Eastwood [2005] 1 WLR 567. This is a dictum of Lord Walker of Gestinghorpe (at [35]) in the context of a vendor entering into two irreconcilable contracts of sale. Lord Walker said:

“35. If a house owner contracts to sell his house to one purchaser for £240,000 and then a week later contracts to sell it to another purchaser for £250,000, he assumes two contractual duties which are on the face of it irreconcilable, unless the seller has grounds for rescinding either contract, or can persuade one or other purchaser to release him from his obligation. That is so whether he enters into the second contract with his eyes open, in the hopes of making a larger profit, or whether (rather improbably) he does so inadvertently. It is no answer for him to say to either purchaser: I am sorry, I am obligated to another. His dilemma is his own fault (the phrase used by Lord Cozens-Hardy MR in Moody v Cox [1917] 2 Ch 71, 81, a case to which I shall return).”

This is a different context from our case, and in my judgment the analogy is inexact. Nevertheless, if applied to the present case, it would mean that the defendants cannot excuse an initial wrong of breach of privacy or confidence by saying that they subsequently acquired an obligation to pass the emails to the relevant insolvency office holder, or (as here) are otherwise justified in responding positively to a request from such an office holder. But that does not mean that the defendants commit a further wrong in passing the emails to the insolvency office holder. The office holder can ask whoever has the information to supply it.

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