BankruptcyDischarged bankrupt - bankrupt's claim against advisers of pre-bankruptcy negligence - cause of action vested in trustee in bankruptcy and bankrupt lacking locus to sueMulkerrins v PriceWaterhouseCoopers: CA (Kennedy, Laws and Jonathan Parker LJJ): 13 December 2000The claimant, a discharged bankrupt, proposed to claim damages for loss of status and business reputation against the defendant, her former insolvency adviser, on the basis that its alleged pre-bankruptcy negligence had resulted in a bankruptcy order being made against her.

In county court proceedings to which the defendant was not party the claimant obtained a declaration that the trustee of her estate in bankruptcy had no interest in a right of her action against the defendant.

She subsequently brought a claim of negligence against the defendant in the High Court.

The defendant contended that the cause of action was vested in the claimant's trustee and she therefore had no locus.

The judge held that the trustee held the cause of action on a bare trust for the claimant and the county court judgment was in effect equivalent to an equitable assignment of the cause of action to the bankrupt.

The defendant appealed.John Briggs (instructed by Boyes Turner & Burrows, Reading) for the defendant.

Ivan Krolick (instructed by Hewetts, Reading) for the claimant.

Held, allowing the appeal, that a declaratory judgment of the county court was not a judgment in rem and was not, in effect, equivalent to an equitable assignment of the cause of action to the bankrupt; that the trustee held the legal title to a cause of action for loss to personal reputation and status of the bankrupt, in respect of which he was accountable to the bankrupt, and a claim for financial loss, in respect of which he was accountable to the bankrupt's creditors; and that since the defendant had not been given notice of the county court proceedings, it was not estopped by the county court judgment from challenging the claimant's locus.