Gwinnutt v George & Anor

This appeal concerned whether unpaid fees due to a barrister for work done on a non-contractual, honorarium basis before a bankruptcy vest in the trustee in bankruptcy under section 306 of the Insolvency Act 1986. The High Court (Davis-White J) answered the preliminary issue in the negative. The Court of Appeal allowed the appeal and held that such unpaid non‑contractual barristers’ fees amount to "property" for the purposes of the Insolvency Act 1986 and therefore vest in the trustee on appointment.

The court relied on the wide, context‑sensitive meaning of "property" in section 436, the analogy with Ex parte Huggins (where a pension or annuity was treated as property), and the practical and regulatory features unique to barristers’ fees: the real expectation of payment, the Bar Council Withdrawal of Credit Scheme, potential professional misconduct consequences for non‑payment, and the insolvency/agency authorities (including Rhodes v Fielder) showing that solicitors cannot simply revoke authority to pay counsel and may be liable to reimburse agents. Those factors led the Court of Appeal to conclude unpaid non‑contractual fees are more than a mere hope and are capable of vesting in the trustee.

Background and procedural history:

• The first respondent, Mr Nicholas George, a barrister adjudged bankrupt on 21 March 2012, had performed pre‑bankruptcy work for which fees had been charged on an honorarium (non‑contractual) basis.
• The appellant, Mr Simon Gwinnutt, the trustee in bankruptcy, sought a declaration that any expectation or payment in respect of those unpaid pre‑bankruptcy fees vested in him under section 306 Insolvency Act 1986. The preliminary issue was decided in favour of the respondent by His Honour Judge Davis‑White QC ([2018] EWHC 2169 (Ch)). The appellant appealed to the Court of Appeal ([2019] EWCA Civ 656).

Nature of the issue and relief sought:

• The question was whether unpaid fees arising from non‑contractual engagements (honoraria) constituted "property" or an interest capable of vesting in the trustee on his appointment under the Insolvency Act 1986 (in particular section 306 read with section 283 and the definition in section 436).

Issues framed by the court:

1. Does the concept of "property" in the Insolvency Act 1986 encompass unpaid non‑contractual barristers’ fees?
2. If so, do such fees vest in the trustee in bankruptcy on appointment under section 306?
3. What is the significance of historical authority (for example Ex parte Huggins) and the special features of barristers’ remuneration?

Arguments:

• The trustee/appellant argued that the statutory concept of "property" is wide, unpaid fees are capable of realisation and that Huggins provided an apt analogy: pensions and similar entitlements can be property even if not judicially enforceable.
• The respondent argued that, historically, a barrister had no contractual right to fees and only an honorarium or moral expectation existed; such an expectation could not amount to "property" capable of vesting.

Court’s reasoning and subsidiary findings:

• The Court of Appeal concluded that the statutory language of section 436 is inclusive and context‑sensitive and that Huggins demonstrates the concept of "property" extends beyond conventional choses in action to enforceable or unenforceable expectations of payment.
• The court identified distinctive practical and regulatory features supporting property status for non‑contractual barristers’ fees: the widespread and normal payment of such fees, the Bar Council Withdrawal of Credit Scheme which provides an enforcement mechanism, the potential for professional misconduct consequences for non‑payment, and agency/indemnity principles (as in Rhodes v Fielder) which prevent a client or principal simply revoking authority to have fees paid.
• The court rejected the view that lack of a contractual remedy necessarily precludes a legal interest capable of vesting. It found unpaid non‑contractual fees are more than a mere spes or moral claim and are capable of realisation for the benefit of creditors.
• Judge Singh added a concurring observation that Article 1 of the First Protocol to the European Convention on Human Rights (right to peaceful enjoyment of possessions) pointed to the protection of legitimate expectations and that the Human Rights Act 1998 required a broad interpretive approach, but full argument on human rights was not heard.

Disposition: The Court of Appeal allowed the appeal and answered the preliminary question in the affirmative: unpaid fees arising from non‑contractual, honorarium engagements vest in the trustee in bankruptcy.

This was an appellate decision. The Court of Appeal allowed the appeal. It held that unpaid fees due to a barrister for pre‑bankruptcy non‑contractual (honorarium) work amount to "property" within the meaning of the Insolvency Act 1986 (see section 436) and therefore vest in the trustee in bankruptcy on appointment under section 306. The court relied on the broad statutory scope of "property", the analogy of Ex parte Huggins, and practical and regulatory factors (including enforcement mechanisms, professional consequences and agency principles) demonstrating that such fees are more than mere expectancies and are capable of realisation.

Appeal from the High Court of Justice, Business and Property Courts in Leeds (ChD), His Honour Judge Davis‑White QC, [2018] EWHC 2169 (Ch), to the Court of Appeal ([2019] EWCA Civ 656).