Gwinnutt v George & Anor

For the purposes of the Insolvency Act 1986, unpaid non-contractual barristers’ fees are capable of being property which vests in a trustee in bankruptcy. The statutory conception of property is deliberately wide and inclusive, although it does not encompass a mere hope or spes.

A pre-2013 barrister had more than a moral expectation of payment. Payment was supported by professional obligations and regulatory mechanisms. A client could not revoke a solicitor’s authority to pay counsel’s fees, and the solicitor could obtain reimbursement. Those features meant that payment was not voluntary and that the fees were capable of realisation.

The first respondent was a barrister who became bankrupt in 2012. The appellant, his trustee in bankruptcy, claimed that fees for work performed before the bankruptcy vested in him, despite the absence of a contractual entitlement to payment.

At first instance, the High Court answered that preliminary issue negatively: [2018] EWHC 2169 (Ch). The trustee appealed. The central issue was whether unpaid non-contractual barristers’ fees, or payments later received for pre-bankruptcy work, constituted property vesting automatically under section 306 of the Insolvency Act 1986.

1. Appeal allowed. The court answered the preliminary issue affirmatively. Unpaid fees due to a barrister under a non-contractual, honorarium engagement were property for the purposes of the Insolvency Act 1986. Accordingly, fees owing at the commencement of bankruptcy vested in the trustee under section 306.

2. The statutory objective was, subject to defined exceptions, to place a debtor’s realisable property in the trustee’s hands for creditors. Section 436 was expressed in exceptionally wide and inclusive terms, but property remained a contextual concept. A realisable possibility did not invariably amount to property: a mere hope or spes remained outside the estate.

3. The court held that a non-contractual barrister’s fee was materially different from a mere moral claim. In practice, solicitors normally paid such fees. Non-payment could expose a solicitor to professional consequences, and a barrister could use the Bar Council’s Withdrawal of Credit Scheme. The client could not revoke the solicitor’s authority to pay counsel, and the solicitor could seek reimbursement from the client for payment properly made.

4. Those characteristics meant that payment was not voluntary. The expectation of payment was capable of realisation and analogous to the interest treated as property in Ex parte Huggins, In re Huggins. The absence of an enforceable contract did not prevent the fee from being property.

5. Singh LJ agreed with the result. He added, without deciding the issue after full argument, that pre-2013 barristers’ aged debts were at least strongly arguable legitimate expectations protected by Article 1 of the First Protocol to the European Convention on Human Rights. Baker LJ also agreed with Newey LJ.

• Court of Appeal (Civil Division): Allowed the trustee’s appeal and held that unpaid non-contractual barristers’ fees vested in the trustee in bankruptcy: [2019] EWCA Civ 656 .
• High Court, Business and Property Courts in Leeds: Held that such unpaid fees did not vest in the trustee and answered the preliminary issue negatively: [2018] EWHC 2169 (Ch) .