Bankrupt’s claim against trustee in bankruptcy struck out; irrelevant that claimant was litigant in person (High Court)

Reynard v Fox [2018] EWHC 443 (Ch) (08 March 2018)

The High Court has struck out a claim by a Bankrupt against his trustee in bankruptcy for damages for breach of contract and negligence under CPR 3.4(2)(a) (disclosing no reasonable cause of action) on the basis that it was a common law claim that the Bankrupt had no standing to bring. There was no claim in contract as no contractual relationship existed, no basis for personal claims (the Trustee’s duty was to the creditors) and any claim for loss to the estate, for example by selling an asset at an undervalue, was subject to the requirement under section 304(2) of the Insolvency Act 1986 (misfeasance or misapplication of property by trustee) for the court’s permission first to be obtained.

It is also worth noting that the court rejected the Bankrupts argument that it would be unjust for his claim to be struck out because he was a litigant in person and did not have a detailed knowledge of insolvency regulations. The court noted the Supreme Court’s ruling in Barton v Wright Hassall LLP [2018] UKSC 12 that the fact that a litigant was acting in person was not in itself a reason to disapply procedural rules, orders, directions, or excuse non-compliance with them. Leniency applied to a litigant in person might only be justified where a rule was hard to find, difficult to understand, or arguably ambiguous. The judge did not consider that section 304 fell into any of those categories. In any event, if the court strikes out a claim under CPR 3.4(2), it does so because the claim is not sustainable or it is not fair in the circumstances to proceed with it.

The decision demonstrates how an application to strike out a claim can be a powerful tool to head off litigation and save money and costs.

Should you require assistance in this regard, our specialist lawyers in our Dispute Resolution and Insolvency teams at Chadwick Lawrence would be delighted to discuss matters with you in order to allow them to gain a complete understanding as to how they can assist you.

If you would like to receive some further information, please do not hesitate to call 0113 225 8811 or email zoeallen@chadlaw.co.uk