McGann v Bisping

A contract forms part of a bankrupt’s estate where it has value capable of vesting in the trustee. The exception for contracts requiring the bankrupt’s personal services must be construed narrowly and applies only where performance requires those personal services. An assignment clause is relevant because it may enable performance by another person; the trustee’s own skills are immaterial if performance can be arranged through a third party. Rights to payment accrued before bankruptcy also vest in the estate. A claimant therefore cannot enforce contractual rights which vested in the trustee.

The claimant, a sports agent, sued the defendant professional mixed martial arts fighter for breach of a management agreement. A previous judgment had determined part of the claim and ordered an account and enquiry, which remained incomplete.

The claimant had been declared bankrupt before issuing the claim. The defendant applied to strike out the proceedings, arguing that the management agreement and any related rights formed part of the claimant’s bankrupt estate under the Insolvency Act 1986. The claimant relied on the exception for contracts of personal service. The central issue was whether the management agreement vested in the trustee in bankruptcy.

1. Application granted. The claim was struck out because the claimant had no enforceable claim under the management agreement; any such claim belonged to the trustee in bankruptcy.
2. The statutory objective of the Insolvency Act 1986 is relevant to construction, but cannot justify distorting the statutory language. Property is defined broadly and generally includes contracts and contractual rights.
3. The exception for contracts of purely personal service must be interpreted narrowly. It applies only where compliance requires the personal services of the bankrupt. The management agreement was not such a contract because it expressly permitted assignment and its obligations could, in principle, be performed by another person.
4. The trustee’s lack of relevant skills did not alter the legal analysis. The trustee could arrange for another person to perform the agreement, and a question of law could not depend on the trustee’s qualifications. The assignment provision facilitated, rather than defeated, the statutory vesting of property.
5. Rights to payment which had accrued before bankruptcy formed part of the estate. Rights arising under the management agreement after bankruptcy also vested because the agreement itself formed part of the estate. The claimant’s continued performance and the possible harshness of the result could not change the legal effect of bankruptcy. A possible restitutionary claim was not before the court.

The judgment was a first-instance decision on the defendant’s strike-out application. It referred to an earlier partial determination by a Deputy High Court Judge in [2017] EWHC 2951 (Comm), followed by an unresolved account and enquiry.