A trustee looking after the affairs of a bankrupt law firm has been refused permission to claim costs from the client accounts of the practice.
John Bell said he was entitled to an unspecified amount for acting as trustee for one of the two partners of closed Cheshire firm Birchall Ryan.
He was engaged by solicitor Anthony Birchall in the role when Birchall was declared bankrupt in August 2013.
Bell made an order for the time, costs and expenses incurred in preserving the files and records of the firm, as well as reconciling the client accounts.
By August 2013 the practice possessed files filling 25 pallet boxes and 210 large sacks, and held sums totalling around £250,000 in client accounts.
Bell told a hearing of the High Court last month that the costs he had incurred from proceedings should be deducted pro rata from the client accounts of the practice.
He argued that following his appointment, the Solicitors Regulation Authority decided not to intervene and it was necessary for him to make arrangements for files to be held securely. He said he had ‘no choice’ but to act by storing files and reconciling client accounts.
The SRA, which eventually intervened in the firm in March 2015, said the application was wrong and in any case the court had no discretion to make the order.
The court heard that Bell was unable to identify what sums he was claiming and in respect of which services.
In Bell v Birchall & Ors, His Honour Judge Pelling QC (pictured) ruled there was ‘no need’ for the trustee to incur any costs either in relation to the storage of client files or in relation to client accounts.
If he was concerned about safeguarding client money, the judge said, he should have informed the SRA in ‘clear and unequivocal terms’.
Pelling said the files were not trust property, and it would be unfair to charge for dealing with them against the client account monies.
‘It is inappropriate as a matter of discretion to permit the trustee to recover of any of his costs of this work from sums held on client account,’ said Pelling, who also ruled that the court did not have jurisdiction to make the order in any case.
The application failed and was dismissed.