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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Oraki & Anor v Bramston & Anor [2015] EWHC 2046 (Ch) (15 July 2015) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2015/2046.html Cite as: [2016] 2 All ER 1065, [2018] Ch 469, [2015] EWHC 2046 (Ch), [2015] BPIR 1238, [2016] 3 WLR 1231 |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
(1) SHEIDA ORAKI (2) ARDESHIR ORAKI |
Claimants |
|
- and - |
||
(1) TIMOTHY BRAMSTON (2) IAN DEFTY |
Defendants |
____________________
John Briggs (instructed by DAC Beachcroft LLP) for the Defendants
Hearing dates: 24/25/26/27/28/31 03 and 01/04 2015
____________________
Crown Copyright ©
Mrs Justice Proudman :
Background
"Other things being equal, the sooner the bankruptcies are brought to an end the better. Too muchjudicial
time has already been devoted to this matter."
"The proceedings represent a crude and unjustified attempt by the Orakis to reverse the effects of the Order of Mr Robert Ham QC (confirmed by the CoA) that they are liable for the bankruptcy costs and expenses."
"…This left the Orakis free to pursue the various challenges to the trustee's conduct, and to apply to the court for those findings to be taken into account to reduce their liability under the order….
[Under the heading "Should the judge have decided that the trustee should get nothing?"]
In my judgment this court should not embark on such a fact finding exercise for a number of reasons. Firstly, it seems to me that the right place for such arguments to be mounted is in the proceedings which the judge authorised and in which it is open to the Orakis to challenge the trustee's conduct either as a whole or from a particular date. Secondly, I was not in any event satisfied by the submissions of Mr Nicholls [for the trustee] that the position was not as plain as Mr Crystal [for the Orakis] maintained. It appears that the Orakis were maintaining at some stages that the money in the Insolvency service account was subject to a trust and was not available for the payment of their creditors. Whether or not this is so is a matter that can be investigated in the proceedings authorised by the judge. Thirdly, it seems to me to be unlikely that the trustee will not be able to demonstrate that he is entitled to at least some costs…
…He [the judge] allowed the Orakis to challenge the trustee's conduct and to apply to him for an adjustment of his order if necessary…"
The Orakis' case
"If a surplus remains after payment in full and with interest of all the bankrupt's creditors and the payment of the expenses of the bankruptcy, the bankrupt is entitled to the surplus."
"…get in, realise and distribute the bankrupt's estate in accordance with the following provisions of this Chapter; and in the carrying out of that function and in the management of the bankrupt's estate the trustee is entitled, subject to those provisions, to use his own discretion."
(a) give the trustee such information as to his affairs,
(b) attend on the trustee at such times and
(c) do such other things,
as the trustee may, for the purposes of carrying out his functions, reasonably require.
"The ground on which it is based is, that at law the Defendant is a trustee for the Plaintiff of his proportion of the assets in the liquidator's hands, and that the liquidator is liable in his capacity of trustee for negligence. In my judgment the liquidator is not a trustee in the strict sense, with such a liability affecting his position as has been contended for by the Plaintiff. The consequences would be very serious if such a doctrine were to be upheld. If a liquidator were held to be a trustee for each creditor or contributory of the company, his liability would indeed be onerous, and would render the position of a liquidator one which few persons would care to occupy."
"If Wedlake Bell's argument was correct and the applicants in this case had, for example, petitioned for a second bankruptcy based on the non-payment of the moneys which were out with the first bankruptcy, there would be a second bankruptcy. The applicants would prove in that second bankruptcy but on Wedlake Bell's arguments any surplus not then ascertained would not vest in the second trustee in bankruptcy because it is not trust property for the purposes of the section, so it cannot vest in the trustee in bankruptcy of the second bankruptcy. Then the second bankruptcy would be discharged and Mr Symes would then be released from the debt on which the second bankruptcy was based, and if a surplus was then found under the first bankruptcy he would then have that surplus (because it then vests in him) free from the claims in the second bankruptcy. It seems to me that it would be a bizarre result if that was the law.
…in …Bird v. Philpott…the same arguments were put up at the suggestion of a second bankruptcy, that the charge was ineffective because until ascertainment there was no interest that was capable of being charged in respect of the bankrupt's surplus. Farwell J dismissed those arguments…"
Should the defects in the Judgment have been apparent to the defendants?
"There is no basis in principle or policy for placing the trustee under a duty not to accept the successivejudicial
decisions confirming the legitimacy of the basis of his appointment."
"So far as the Official Receiver and the trustee are concerned the bankruptcy orders were regularly made…"
Were the Trustee's requirements reasonable?
Were there "readily available cash assets…sufficient to discharge the bankruptcy debt and costs"?
"1. 68 Gladstone Avenue was purchased in 1998 for £180,000. The deposit was 35%, with the remainder being financed by a mortgage from the Bradford Building Society. This is held by myself solely. I cannot estimate its present value. It is comprehensively insured, and is inhabited by myself and husband.
2. 26 Denehurst Gardens was purchased in 2003 for £230,000 approximately. The deposit on this was 25% with the balance being covered with a mortgage from Bradford Building Society. This is held by myself and my husband. It is
presently occupied by my sister, Mrs Yeganah, who is also paying the mortgage directly to the mortgage company. There is a written agreement between her and myself for the payment of the mortgage.
3. 375 Bury New Road was purchased in 1980, I cannot recall the purchase price. It was encumbered with a mortgage which has been fulfilled; and is presently unencumbered. This is owned partly with my brother, Mr Yeganah, and a split of interest based on 50% each represents our interest. It is presently being used as a kebab takeaway and is currently trading under the trading style "Me and You". I do not have an interest in the business…
I have no interest in any other property whether registered in my name or not."
"1. Mountford and Co, the[y] were the solicitors representing Mr Gill, who was the landlord of a post office which I was involved with…Ajudgement
was awarded against me for the unpaid rent. This is the basis of their claims in the bankruptcy. It remains disputed and I believe I have supporting evidence re: my arguments against them/Mr Gill; shows there is no
judgement
registered against me.
2. Dean and Dean Solicitors [the firm]. [She says at some length that the person whom she instructed was not a solicitor, that he had been negligent and that there were irregularities in his invoice.]
3. Bathurst Brown, Downie and Airey [("BBDA")], Solicitors. [She says that BBDA were negligent in pursuing a claim she had against Mr Singh/Birson Construction Limited]. A county court judgment has been registered against me by Mrs Airey in this regard, and I presently have an action in the Brentford county court to have this overturned.
4. Inland Revenue. This relates to an outstanding amount of approx £5000; I do not understand what this is for. "
"…From around 2003 I have not been employed per se. I have been assisting my father with his business (and my family), earning a salary."
"Dr Oraki rang to confirm that it was ok to send the list of creditors which were requested by Mr Harfitt, who is apparently acting for her. I told Dr Oraki that I would have to confirm with the Trustee that he was willing to do this.
Dr Oraki then was shouting down the phone, saying she wasn't insolvent, he [sic] should never have been made bankrupt, asked why she should have to make a meeting to see the trustee, the conversation which was all one sided, as I could not get a word in became louder and she was quite abusive. She told me not to interrupt and I could speak when she was finished but even after that she would not let me finish a conversation.
She was complaining saying that people were ripping her off and how much was this call and any meeting going to cost her, another £50!!
She said that Mr Harfitt was acting for her and we should go through him and she should not have to be involved.
After 10 minutes of constant argumentative, abusive conversation she said that she did not wish to speak to me any further and did not agree with what was going on and started shouting again. I said in that case then I think that we should finish this conversation as she was not listening and the call was ended."
"I called your office on Wednesday 3 May and spoke to Ms Christine Wilson asking for your email address to tell you of my intended instruction of Mr Harfitt, Insolvency Practitioner, to act for us. She refused to supply it. Unfortunately, we talked about the case and it ended with her threatening to take me to court and prison.
I am not insolvent. Please provide me with the figure required to pay the bankruptcy debts, costs and expenses for the case of Ardeshir Oraki and also for myself.
Mr Stephen Harfitt, licensed Insolvency Practitioner, of Haines Watts BRI Ltd… is authorised to act for us. Please forward the figure and correspondence to him so that he can supply a third party cheque to resolve this matter quickly."
"Our assets are far more than the alleged debt. You have the report showing this. All you need do is to calculate the interest of the alleged debt and give us the final figure. There is an application in court to annul the bankruptcy order on the basis that this order should not have been made as we had a good claim against [the firm] for professional negligence. If this application had failed we would have then paid the alleged debt under protest.
Please withdraw your application scheduled for 11.10.07 as I am not available on that date. If you agree to the withdrawal I will attend [the first defendant]'s office during the first week of October."
"We are being kept in bankruptcy unreasonably and we want to apply for annulment under section 282(1)(b) IA."
"The court may annul a bankruptcy order if it at any time appears to the court-
(a) that, on the grounds existing at the time the order was made, the order ought not to have been made, or
(b) that, to the extent required by the rules, the bankruptcy debts and the expenses of the bankruptcy have all, since the making of the order, either been paid or secured for to the satisfaction of the court."
"[57] I knew from the interview that Dr Oraki disputed the [firm's] debt and some of the other creditors. I did not think it was in the Orakis' interests for me to incur significant time and costs in investigating those matters. I could see that the dispute [with the firm] was very heated, and I considered that resolving it would be a lengthy and expensive issue. I explained to Dr Oraki that she could pay funds into court to secure the creditors, and then to resolve the dispute afterwards. I must emphasise that this would have allowed Dr Oraki to obtain annulment of the bankruptcies and then resolve the disputes. It is, in my view, to her detriment that she chose not to pursue that course of action.
[58] If Dr Oraki succeeded in her dispute with these creditors, the funds would have been returned to her. Essentially, going down the annulment route would allow her to "stop the clock" on the very expensive process that is bankruptcy. This reflected my overall approach in a surplus bankruptcy situation, having regard to the interests of the bankrupts. It was not for me to advise the Orakis on this process. I was aware that Dr Oraki had instructed insolvency practitioners, Haines Watts [Mr Harfitt's firm], in 2007…"
Property | Disclosed to OR? | Registered Owner | ||
1. | 26 Denehurst Gardens, Whitton | Yes | Dr and Mr Oraki | |
2. | 68 Gladstone Avenue, Whitton | Yes | Dr Oraki | |
3. | 375 Bury New Road, Manchester | No | Dr Oraki | |
4. | 13 Estridge Close, Hounslow | No | Dr Oraki | |
5. | 22 Simpson Road, Hounslow | No | Dr Oraki | |
6. | 3 Aylestone Walk, Moston | No | Dr and Mr Oraki | |
7. | 61 Norman Crescent, Heston | No | Dr and Mr Oraki | |
8. | 51 The Downs, Middleton | No | Dr and Mr Oraki |
"TB…You said you're a trustee on behalf of your family. Is there a formal trust? Is there a trust deed?
SO: It's in Persian. Yes, we have got a contract between [inaudible] bound to obey because I'm managing the estate for my family…
TB: …You've said that there's an Iranian Trust…
SO: Yes.
TB: …which those three properties [68 Gladstone Avenue, 13 Estridge Close and 22 Simpson Avenue] are part of, but you've separately informed the Official Receiver that [Bury New Road] was 50/50 between yourself and your brother.
SO: Yes, 50% belonged to my brother and 50% belonged to me, which I've also got because I was a partner in [it].
TB: Okay, I don't understand so we're going to try and ask. Who are the beneficiaries of the Trust?
SO: …one brother have got half of it and the other half it belong to three brother and one sister and me.
TB:……so it's five people.
SO: Yes. And my brother has got a wife and children. His share is with his wife, with her family, with his family.
TB: The others Estridge and Gladstone- who are the beneficiaries of those properties?
SO: Estridge is completely my father's actually. And Gladstone is for me and my family, and my father is paying, with my help, the mortgage of that house."
"It appears that the Orakis were maintaining at some stages that the money in the Insolvency Services account was subject to a trust and was not available for the payment of their creditors. Whether or not this is so is a matter that can be investigated in the proceedings authorised by the judge",
he was speaking of a trust in the legal sense, not the fluid arrangement advocated by Dr Oraki.
"The £152,530… are actually funds belonging to a Trust previously held in a bank account which was unfortunately only in her name. However I understand that she has already provided to you proof of this [she had not] and that as such some or all of those funds do not constitute an asset to be realised in her bankruptcy estate.
That said, because the funds belong to members of her family those members are prepared to allow you to retain the monies to apply them against Dr Oraki's liabilities and costs. Confirmation of this fact has already been provided to you. [It had not.]"
"I obtained affidavits [note: in the plural] from my siblings [again plural] which gave Mr Bramston authority to use the moneys held in the ISA account to settle both invalid bankruptcies. However knowing there was more money to be made he ignored both Mr Gaultier's letter and my offer and pressed on with possession proceedings supposedly on the advice of his Solicitors, Mr Varley of Salans."
"2. I have been given authority by my brothers, Iraj, Toraj, Farzad and Shahla Yeganeh, that the funds from our mother's estate £150,530.17 can be used to pay off Dr Sheida and Mr Ardeshir Oraki's bankruptcies.
3. I had understood that Dr Sheida Oraki had already informed the trustee that the money could be used for this purpose and was surprised to hear there was a delay in settling the issue."
"There is money held in [the Insolvency] Services account, approximately £150,000. When the trustee met with Dr Oraki in January he was told that those monies were trust monies. We are now told today that those monies, the beneficiaries of that trust, and the trustees, have no knowledge as [to] the trust or the terms of it, but apparently the beneficiaries are willing to agree that that money can go towards the bankruptcy debt and expenses, obviously thereby substantially reducing the amount needed?: That is only oral at the moment. There is no proof of the actual trust and no proof from any of the beneficiaries that they do indeed waive their rights. We have had a discussion, Mr Boardman [who was acting for Dr Oraki] and myself, outside the court and I believe that, subject to the court's assistance, we might be able to make some progress on that."
Mr Boardman said,
"…The funds in Barclays Bank amount to some £150,000. These are funds in which my client, Dr Oraki, has a beneficial entitlement to one-sixth. However, my instructions are that the trustees and the beneficiaries of that fund would be prepared to provide proper written authority…to use those funds to discharge all or substantially all, if it was not sufficient, of the sum owed."
How clear was the position of the Orakis?
The firm
BBDA
"I have discussed this matter [Dr Oraki's claims against the firm] with you previously and explained the difficulties you face, so far as evidence is concerned. A significant amount of work would be required and no guarantee of success could be given. I would require a minimum payment on account of £5,000.
In addition I am aware of the extent of your indebtedness to this firm in relation to two other matters, namely your claim against Mr Rupinder Singh and your claim against Birson Contractors Limited."
"It is absolutely clear that you were asked to provide funds of £500 before they would issue the charging order….We therefore need your instructions on your response to this letter and why you failed to pay the funds."
HMRC
Gill and Gill
"According to our records at this court we can confirm that there is no judgment registered on this matter against you."
Birson Contractors Limited/Singh
"I am aware that in these proceedings the Orakis allege that I should have sought to enforce a judgment from 2004 against Rupinder Singh in Dr Oraki's favour. I was not advised of this judgment at my meeting with Dr Oraki in January 2008. The detailed questionnaire which Dr Oraki provided to the Official Receiver did not make any reference to the judgment…I do not recall having been provided with a copy of the judgment. As such it was not something of which I was aware or could have been aware."
"If I had been provided with a copy of the judgment, I would have sent a letter to Mr Singh requesting payment. However, given the length of time for which the judgment remained outstanding, in my experience, it is unlikely that I would have received a response let alone recovered funds. At that stage I expect that given the illiquid nature of the estate I would have been extremely reluctant to exercise my discretion to formally enforce the judgment. By the time of the meeting almost four years had passed since the judgment had been obtained and the Orakis themselves had failed in their attempts to enforce the judgment prior to their bankruptcies."
"Choosing to commit funds to pursuing litigation is not a step which a trustee in bankruptcy should ever take lightly, and he will need to satisfy himself that there are reasonable chances of making a recovery, and that the risks of not making a recovery and incurring an adverse costs order warrant making the investment. This is particularly the case when the estate is not liquid."
"SO: There is a judgment in my favour…The bill for renovating another house, he took the money and he ran away, he'd been convicted. And I got aJudgement
in my favour for £100,000, but I couldn't enforce this
Judgement
because I'm bankrupt. And you didn't help me to recover that money, or Official Receiver didn't do anything to recover that money. And all this could have been recovered because I put application for Negligence against Dean & Dean and once I get all my rights back by annulling this bankruptcy, I will recover all my losses from the Dean & Dean, there's no doubt.
TB: Okay. So what I'm going to do next is go through the list of creditors…Bathurst Brown Downie.
SO: He [inaudible] from the solicitors. This is the one who has…was dealing for me in the builder's case. I won the case against the builder, she was in fact, [inaudible] to recover her money from the builders. She didn't put a charge on the builder's [inaudible], made the Application for professional negligence against this solicitor. This is a DefaultJudgement
. When Dean & Dean was pressing me for bankruptcy, they were working for me as a solicitor against that builder. And I was seeking help from them to build the bankruptcy petition and this crook solicitor also, as soon as she came to know that I am in trouble, she joined the Dean & Dean and while she was [an income] from me, was taking money from me, she wrote to Dean & Dean and put her [inaudible]…
TB: Your judgment was against Burson [sic] Contractors Limited?
SO: That's right, yes.
TB: And tell me about them, that company, what happened to them?
SO: They are, this I mean he was a builder who was supposed to renovate our house. We paid him money and he didn't do his job. He tried to steal the [inaudible]. He's been arrested, he'd been convicted by the police. And in the civil proceeding it was brought down it was representing me, which as a result of her negligence she's been put in charge on builder's properties and the builders sold the property and I didn't get my money. I have got £100 over £150,000Judgement in my favour, which I cannot enforce it because I'm bankrupt. [She then goes on to discuss BBDA and the firm]."
General
- He had no funds for litigation.
- The litigation would have been speculative, particularly because of the Trustee's state of knowledge owing to Dr Oraki's contradictory information.
- Litigation would very likely be defended.
In such circumstances the bankruptcy court is slow to direct a trustee to embark on such litigation: see per Chadwick LJ at [14] of James v. Rutherford-Hodge.
Did the Trustee fail to proceed with the bankruptcies expeditiously?
- The first defendant made very many requests for a meeting with Dr Oraki to which she did not respond until she eventually met him on 4 January 2008.
- Dr Oraki wanted no money to be paid to the firm until her negligence action was heard.
- In a letter of 8 January 2008 the Trustee said he would give the Orakis two months to proceed with the annulment application after which he reserved the right to proceed to realise their property.
- The hearing of 19 August 2008 for possession of 68 Gladstone Avenue was adjourned for five weeks giving the parties an opportunity to deal with matters by agreement.
- At the hearing on 20 October 2008 Dr Oraki again opposed the application for possession on the basis that the judgment on which the bankruptcy orders were made was defective and the orders for possession were suspended for four weeks to enable Dr Oraki to show cause under s. 282(1)(a) IA why the judgment should not have been made.
- In October 2008 Dr Oraki sought the Trustee's personal cooperation for an expedited application to annul. The Trustee replied through Salans on 4 November 2008 that he was neutral to an application which concerned Dr Oraki and the petitioning creditor. He said that his duty was to realise assets and in the absence of the promised documents and consents he must do so.
- Dr Oraki instructed Ellis Taylor solicitors to annul the bankruptcies. By letter dated 19 November 2008 Ellis Taylor asked the Trustee to abstain from taking actual possession until the hearing in January 2009.
- After the hearing on 19 January 2009 Ellis Taylor and Salans negotiated an appropriate deed of assignment to enable the Orakis to apply to set aside the judgment. The Trustee was concerned (see Salans' letter of 22 January 2009) that the bankruptcies would be stayed indefinitely.
- At a meeting between Dr Oraki and the Trustee on 25 February 2009 the second defendant said that he would not go to court with Dr Oraki to annul the bankruptcies by consent. She required the Trustee to support her application.
- In about March 2009 Dr Oraki dispensed with the services of Ellis Taylor and by letter dated 31 March 2009 she asked the Trustee to vacate the enforcement proceedings and stay the bankruptcy proceedings in view of her annulment proceedings.
- In April 2009 Dr Oraki appointed another firm of solicitors, Ronald Fletcher. The case was listed for hearing at Brentford County Court on 30 July 2009. The Trustee wrote to Dr Oraki on 6 April 2009 saying that his duty was to progress the bankruptcy and matters should not be allowed to stall. The court adjourned the possession proceedings generally.
- As a result of various orders dismissing applications and appeals by the Orakis, the Trustee applied on 18 January 2010 to restore his possession proceedings, for a declaration as to his entitlement to the alleged trust moneys in the Insolvency Services account and for the listing of Dr Oraki's application to annul.
- On 5 April 2010 Dr Oraki wrote to the senior partner of Salans, saying that it was not fair or reasonable for him to allow bankruptcy proceedings to continue while Mr Mireskandari was under investigation by the Law Society and suggested that he discuss the matter with his firm's professional negligence department.
- On 6 April 2010 Dr Oraki wrote to the Trustee asking him to agree to all proceedings being adjourned until the Solicitors Disciplinary Tribunal hearing had been concluded.
- On 9 April 2010 Dr Oraki asked Deputy Registrar Cheryl Jones for an adjournment pending the Orakis' appeal to the Court of Appeal.
- In view of Dr Oraki's stay applications and appeals it was impossible for the Trustee to progress the bankruptcies and directions were given by Registrar Barber on 30 April 2010.
- Applications for permission to appeal Cheryl Jones's Order were dismissed by Newey J and Henderson J. In July 2011 Peter Smith J gave permission to appeal but suggested at [11] that the Orakis seek annulment under s. 282(1)(b) in the alternative.
- By letters dated 4 August 2011 and 18 October 2011 the Orakis' new solicitors, Hines & Co, said that the Orakis wished to explore the s. 282(1)(b) route. It was said that the applications to enforce the possession orders and the declaration as to ownership of the trust moneys could not go forward pending the appeal.
- On 21 October 2011 Salans wrote to Hines & Co confirming that the Trustee would agree to his three applications listed for directions on 27 October 2011 being adjourned generally with liberty to restore. However, they also say,
"…it is our client's position that the Applications due to be heard have now been extant for some three years and there is a very real need for the matters to be progressed to closure. The Applications were listed for hearing at a time when we had been informed by the Court that both of your clients' Appeals had been dismissed, and it was only under cover of your letter of 18 October 2010 that we were finally fully informed as to what had actually transpired."
"the Defendants failed to cooperate with three insolvency practitioners appointed by the [Orakis] to liaise with them. This had the effect of precluding the possibility of the bankruptcies is [sic] being resolved under section 282(1)(b) of the [IA] at an early stage."
"…it appearing from the submissions of the First Respondent [there was only one Respondent, namely Mrs Hall. I am told by Mr Briggs that this is a mistake for the First Applicant, Dr Oraki] that (a) the debts owed by each Applicant to [HMRC] claimed in their bankruptcies were paid by a third party today (b) [BBDA] who have submitted a proof in the bankruptcies as an unsecured creditor now claim as secured creditors which security the Applicants accept subject to their dispute as to the existence of the debt so secured and (c) the debt of [Gill and Gill] assigned to "PAM.com" as proved concerns a judgment debt for which there is evidence that an application to set aside that judgment may have been granted and that any surviving extant claim (if any) has passed to the Crown as bona vacantia".
Delay in assignment of causes of action to the bankrupt
"…trustees should exercise their power to take such a step with great circumspection. It must not be forgotten that by doing so they are enabling the bankrupt to conduct possibly vexatious litigation against third parties who will have no effective remedy in costs against him…in general the policy of the bankruptcy legislation is for the trustee –and not anyone else- to get in the assets of the bankrupt and for that purpose to decide what causes of action should be pursued, if necessary with funds provided for that purpose by the creditors in the bankruptcy. Before abdicating this responsibility by putting the bankrupt back in the saddle, the trustee should bear in mind the consequences to the other parties in the litigation…"
Realisation of the Properties
"My point, and I think you have already picked up on it, sir, is that this is a bit of a sledgehammer to crack a nut, this application, because it is going after far more property than the trustee appears to require…."
Tenants' actions etc
Remortgage
Instructions to Counsel to oppose annulment
"Even after he and Mr Bramston had expressed the view that they would be neutral on any annulment application, Mr Defty proceeded to be completely non-neutral and opposing the Orakis' annulment applications.
Mr Defty continued with this view in April 2010 suggesting that he would not be a party to the annulment application, it being purely a matter between the Orakis, Dean & Dean and the Court in respect of which he could have no involvement.
Yet, on the hearing of the Orakis' annulment application on 9 April 2010, Mr Defty appeared by Counsel, who (having filed a skeleton argument setting out the grounds upon which the Court would be invited to dismiss the application, thereby enabling Mr Defty to proceed with his administration of the bankrupts' estates for the benefit of the creditors who had been kept out of their money for over 4 years) proceeded to act effectively for Dean & Dean (in the guise of Mr Tehrani)."
"The court is invited to dismiss the application, thereby enabling T to proceed with his administration of the bankrupts' estates for the benefit of the creditors who have been kept out of their money for over 4 years."
and then, in conclusion says (at [20]),
"T is anxious to progress matters because until the annulment application has been determined, T is prevented from obtaining permission to enforce possession orders…made in this court on 20 October 2008. T is thereby prevented from administering the estates further for the benefit of the creditors."
Excessive Fees
Mr Oraki's health issues
"The Second Claimant's health issues as a result of wrongfully being kept bankrupt by the Trustee led to him leaving his post as a Post Office Area Manager in 2010 where he was earning roughly £35,000 per annum."
Claim for legal fees
The estimated outcome statements
"…the above is an estimate of the funds required to clear the bankruptcy debts and liabilities in full and is based on information in the Trustee's possession and is subject to change."
Mental distress etc.
"I also disagree with the deputy master's view that there is no realistic prospect of success for the claim for damages for mental distress. There is no authority, either way, on whether such a claim can be based on the negligent conduct of a bankruptcy leading to the bankrupt being left in that unfortunate condition for longer than necessary, and the point seems to me to be arguable. The discussion of the subject in McGregor on Damages (Sweet & Maxwell, 18th edn, 2009) at 5-013, 5-5023 et seq suggests that, in cases of tort causing economic loss, the court will apply a contractual analogy. The question may therefore be, would contractual liability for negligently looking after the claimant's personal financial affairs be one of the exceptional cases in which liability for mental distress would be allowable?"
Effect of Releases by the Secretary of State
"Where the official receiver or the trustee has his release under this section, he shall, with effect from the time specified…be discharged from all liability both in respect of acts or omissions of his in the administration of the estate and otherwise in relation to his conduct as trustee.
But nothing in this section prevents the exercise, in relation to a person who has had his release under this section, of the court's powers under section 304."
S. 304(1) IA provides,
"Where under an application under this section the court is satisfied-
(a) that the trustee of a bankrupt's estate has misapplied or retained, or become accountable for, any money or other property comprised in the bankrupt's estate, or
(b) that a bankrupt's estate has suffered any loss in consequence of any misfeasance or breach of fiduciary or other duty by a trustee of the estate in the carrying out of his functions,
the court may order the trustee, for the benefit of the estate, to repay, restore or account for money or other property (together with interest at such rate as the court thinks just) or, as the case may require, to pay such sum by way of compensation in respect of the misfeasance or breach of fiduciary or other duty as the court thinks just.
This is without prejudice to any liability arising apart from this section."
Other claims
Conclusions