County court decision that trustee in bankruptcy had no interest in bankrupt's action against defendant - whether defendant entitled to challenge county court order in application to strike out

Mulkerrins v Pricewaterhouse- Coopers (a firm): HL (Lord Bingham of Cornhill, Lord Nicholls of Birkenhead, Lord Millett, Lord Scott of Foscote and Lord Walker of Gestingthorpe): 31 July 2003

The claimant, a bankrupt, alleged that her bankruptcy and loss of her business had been caused by the negligence of the defendants, a firm of insolvency practitioners who had been her professional advisers.

Prior to serving her claim for damages on the defendants, the claimant applied in the county court for a declaration that her trustee in bankruptcy had no interest in her right of action against the defendants.

The district judge made an order granting the declaration and the trustee in bankruptcy did not appeal against it.

The defendants applied to strike out the claimant's action on the ground that the right of action vested in the trustee and had not been assigned to the claimant and that therefore the claimant had no title to bring the action.

The deputy High Court judge refused to strike out the action but the Court of Appeal allowed the defendants' appeal.

The claimant appealed.

Ivan Krolick and Jeremy Gordon (instructed by Hewetts, Reading) for the claimant; Robin Knowles QC and John Briggs (instructed by Boyes Turner, Reading) for the defendants; Stephen Davies QC and Brian Watson (instructed by TLT Solicitors, Bristol) for the official received as intervener.

Held, allowing the appeal, that the issue as to entitlement to the right of action was a matter between the claimant and her trustee in bankruptcy, and the district judge's order was made in the exercise of the court's supervisory jurisdiction over the bankruptcy process; that the defendants were strangers to that process and had no right to be heard on the issue before the district judge or to challenge the order; that, irrespective of whether or not the district judge was correct in law, in the absence of an appeal, the order bound the trustee and through him the claimant's creditors; that the effect of the order was that the claimant's right of action formed no part of the bankrupt estate available to her creditors, and that she was at liberty to pursue the action for her own benefit; and that accordingly, the defendants were not entitled to object to the action being brought by the claimant.

(WLR)

Statutory demand - debtor seeking to set off counterclaim - court retaining discretion to set aside where demand based on costs order made in proceedings in which counterclaim being pursued

Popely v Popely: ChD (Mr Edward Bartley Jones QC): 25 July 2003

The claimant brought an action against the defendant.

At the same time, both parties were involved in related criminal proceedings.

The claimant applied to the Crown Court, seeking disclosure of documents for use in his civil action.

His application was dismissed and he was ordered to pay the defendant's costs.

The defendant served a statutory demand based on the order.

The claimant's application to set aside the demand was dismissed at the county court.

On appeal, the claimant submitted that the district judge was wrong in law not to conclude that he had a discretion to set aside the demand pursuant to rule 6.5(4)(a) of the Insolvency Rules 1986, which permitted the court to set aside a statutory demand where a counterclaim existed.

Jasbir Dhillon (instructed by Whitehead Monckton, Maidstone) for the claimant; Christopher Harrison (instructed by Herbert Smith) for the defendant.

Held, allowing the appeal, that it would be wrong to view the Crown Court costs order as in any way different from a costs order made in the civil proceedings; that the limitation on the extent of rule 6.5(4)(a) put forward by the defendant, that the rule did not extend to a counterclaim where the statutory demand was based on costs orders made in the proceedings in which the counterclaim was being pursued, should not be implied; that the district judge had been wrong in law in that his decision appeared to be based on the proposition that the court could not, as a matter of law, take account of the counterclaim; and that, accordingly, the court was entitled to set aside the decision and substitute its own.