Reynard v Fox

Permission for a bankrupt to bring proceedings under section 304 of the Insolvency Act 1986 requires more than a potentially arguable complaint. The court must consider whether there is a reasonably meritorious cause of action and whether prosecution is reasonably likely to benefit the estate. Those are central, but not exhaustive, considerations. Relevant additional factors may include delay, the likelihood of success, costs risks, abuse of process, issue estoppel and the trustee’s release. A bankrupt acting in person is generally subject to the same procedural rules as a represented party. Permission should be refused where the proposed claim is vague, unsupported by evidence, seeks to relitigate matters already decided, concerns personal rather than estate loss, or has no realistic prospect of benefiting the estate.

The claimant, a bankrupt, sought permission under section 304 of the Insolvency Act 1986 to bring proceedings against his former trustee in bankruptcy. The proposed claims alleged contractual and negligent conduct in the administration of the bankrupt estate, including failures to pursue claims against a mortgagee and former advisers.

The proposed allegations followed earlier proceedings under section 303 of the Act and a later common-law claim, parts of which had been struck out as personally pleaded, meritless, or abusive relitigation. The central issues were whether any proposed claim was within section 304, whether it disclosed a reasonably meritorious cause of action, whether it was reasonably likely to benefit the estate, and whether issue estoppel or abuse of process prevented it.

1. Application dismissed. Permission was refused for every part of the proposed section 304 claim.
2. The governing approach was that the court should consider whether a reasonably meritorious cause of action had been shown and whether permission was reasonably likely to benefit the estate. Those criteria were central but not exhaustive. Other relevant matters included delay, likelihood of success, costs risks, the trustee’s release under section 299, and the risk of vexatious or abusive litigation: [2013] EWCA Civ 429.
3. The proposed contractual claim was essentially personal and therefore outside section 304. In any event, the alleged contract was inadequately particularised, unsupported by evidence and incapable of success.
4. The negligence allegations concerning the mortgagee and former advisers had already been raised and rejected in the earlier section 303 proceedings. Bringing them again under section 304 would constitute issue estoppel or abuse of process. The same conclusion applied to allegations that should have been litigated with the earlier proceedings under the rule in Henderson v Henderson.
5. The remaining allegations were vague, lacked particulars and evidence, and did not demonstrate loss to the estate or a reasonably meritorious claim. Rhetorical criticisms of correspondence and alleged misleading statements did not establish that the trustee had caused estate loss.
6. The court was not required to search files from earlier proceedings for evidence. An applicant seeking permission for a new claim had to provide the evidence relied upon with the application.
7. A litigant in person was not entitled to special indulgence merely because he lacked legal expertise. The ordinary procedural rules applied, subject only to exceptional cases involving rules that were difficult to find, understand or interpret.

The judgment records earlier proceedings between the parties, including section 303 applications and a later common-law claim, but this was a first-instance determination of the claimant’s separate application for permission under section 304.