Reynard v Fox

A trustee in bankruptcy’s duties are primarily owed to the creditors and the bankruptcy estate. Loss suffered by the estate must be pursued through Insolvency Act 1986, section 304; a bankrupt cannot reframe such a claim as a common-law negligence action. A personal claim may, in principle, fall outside section 304, but it must identify a legally sustainable duty. A trustee does not owe the bankrupt a duty to transfer valuable claims to him where doing so would conflict with the creditors’ interests. A litigant in person remains subject to procedural rules and orders. Claims which seek to reopen issues decided in earlier proceedings, or which should have been raised then, may be struck out as an abuse of process.

The claimant, a bankrupt, brought proceedings against the defendant, his former trustee in bankruptcy, alleging breach of contract and negligence. The claim concerned the trustee’s refusal to pursue or assign claims against former professional advisers and complaints concerning the sale of property. The claim was issued through the County Court Money Claims Centre despite an earlier direction that further proceedings connected with the bankruptcy be dealt with at Bristol.

The court considered whether the direction applied to the new claim, whether the claim should be transferred to the High Court, and whether the pleaded contractual and negligence claims should be struck out under CPR rule 3.4(2)(a), (b) or (c). The central issues were whether the losses were estate losses governed by section 304 of the Insolvency Act 1986, whether any personal duty was arguable, and whether the proceedings re-litigated matters previously determined.

1. The matter was transferred to the High Court. The direction in paragraph 188 of the earlier judgment was treated as an effective order despite its omission from the formal order. In context, the word “application” included new claims arising out of or connected with the bankruptcy. The present claim fell within that description.

2. The claim was not struck out merely for having been issued in breach of that direction. The claimant had been advised by court staff to issue the claim at the CCMCC; the direction imposed no permission requirement; and the claim had subsequently been transferred to Bristol.

3. The contractual claim was unsustainable. There were no adequate particulars of the alleged contract, and a contract governing the trustee’s performance of statutory functions was inherently unlikely and potentially inconsistent with the statutory scheme. It was struck out under CPR rule 3.4(2)(a).

4. Following Oraki v Bramston [2017] EWCA Civ 403, the relevant distinction was between loss suffered by the bankruptcy estate and loss suffered personally by the bankrupt. Estate losses fell within section 304 of the Insolvency Act 1986; the present common-law claim could not be used to pursue them. Most pleaded heads concerned alleged estate loss and were struck out.

5. The potentially personal claims were also unsustainable. The trustee’s duties primarily served the creditors. It was unarguable that the trustee owed a duty to procure for the claimant, at the creditors’ expense, the benefit of claims allegedly worth millions.

6. The claimant’s status as a litigant in person did not justify disapplying procedural rules or orders. The earlier proceedings had finally determined, subject to appeal, the material issues concerning the merits and assignment of the claims. Re-litigation was an abuse of process, and the claims also arose from the same circumstances and should have been brought earlier under the rule in Henderson v Henderson.

7. The claim was struck out in its entirety. The application to transfer it back to the CCMCC therefore did not arise.

Not an appeal. The judgment determined applications arising from proceedings previously considered by the County Court and Bristol County Court, including decisions of DJ Watkins and HHJ McCahill QC.