Gwinnutt v George & Anor

Unpaid fees arising from a barrister’s express non-contractual, honorarium arrangement are not property vesting in the trustee in bankruptcy under the Insolvency Act 1986. A moral or honour-based expectation of payment is neither a debt nor an existing proprietary interest. The fact that payment may be encouraged by professional pressure, morality or reminders does not make the expectation property. The broad definition of property in section 436 does not convert every realisable asset or expectation into property. The trustee may instead need to rely on the statutory regimes governing after-acquired property or income payments orders, subject to their proper application.

The claimant was the trustee in bankruptcy of the first defendant, a barrister. Before his bankruptcy, the first defendant had undertaken work on terms expressly stated to be non-contractual. Some fees were later paid to him, but the trustee contended that the unpaid fees, or the expectation of receiving them, had vested in the bankruptcy estate.

The parties agreed that the court should determine the preliminary legal issue whether an expectation of fees arising from pre-bankruptcy work on a non-contractual basis constituted property within the meaning of the Insolvency Act 1986. The claim included allegations of conversion, breach of trust, conspiracy and unjust enrichment, but those substantive issues were not determined.

1. Preliminary issue. The court held that unpaid fees arising under an express non-contractual, honorarium engagement had not vested in the trustee in bankruptcy.
2. Nature of the expectation. The historical authorities established that a barrister engaged on a non-contractual basis had no contractual right to sue for fees. The expectation of payment was a moral or honour-based obligation, not a debt, chose in action or existing proprietary interest. The reasoning in Singh v Sinel was confined to circumstances where there was no express agreement that the engagement was non-contractual.
3. Construction of the insolvency legislation. Sections 306, 307 and 310 of the Insolvency Act 1986 formed a structured scheme. Property vesting under section 306 was distinct from after-acquired property and income subject to an income payments order. The fact that a fee might later be received did not establish that a proprietary interest existed at the commencement of bankruptcy.
4. Meaning of property. Section 436 provided a wide but non-exhaustive definition. It did not mean that every asset capable of being realised was property. The court adopted the reasoning in Re Rae and Re Campbell: a future possibility is distinguishable from an existing vested or contingent interest in existing property. The exception recognised in Re Rae depended on an interest arising out of or incidental to existing property.
5. Relevant distinctions. A legally existing but unenforceable contractual entitlement, such as the pension in Re Huggins, was materially different from a purely moral obligation where no contract existed. Non-assignability and lack of realisability were relevant indicators but were not decisive characteristics of property.
6. Conclusion and directions. Any unpaid fees outstanding at the commencement of the bankruptcy and arising under a non-contractual honorarium engagement did not vest in the trustee. Costs, consequential orders and permission to appeal were adjourned, and time for filing an appeal was extended.

First-instance decision. No prior appellate decision was stated in the judgment. The court adjourned costs, consequential matters and permission to appeal.