Ebele Muorah v Secretary of State for Housing Communities and Local Government & Anor
[2023] EWHC 285 (Admin)
Brake and another v The Chedington Court Estate Ltd
10 August 2023
[2023] UKSC 29
Supreme Court
Two people went bankrupt. Their trustee helped get them evicted from a house. They tried to sue the trustee, but the court said they couldn't because their problem wasn't about being bankrupt – it was about someone taking their house, which anyone could do, not just a bankruptcy trustee.
Key Facts
- •Mr and Mrs Brake were made bankrupt.
- •Their trustee facilitated their eviction from a property.
- •The Brakes challenged the trustee's actions under section 303(1) of the Insolvency Act 1986.
- •The issue was whether the Brakes had standing to bring the challenge.
- •The property in question was not their principal residence.
- •The trustee entered into various contractual arrangements with a third party (Chedington) concerning the property, allegedly without informing or inviting bids from the Brakes.
- •The Brakes alleged the trustee acted unlawfully in facilitating the eviction and sale of the property.
Legal Principles
A bankrupt must show a surplus of assets or a likely surplus to challenge a trustee's actions under section 303(1).
Various cases, including Heath v Tang, James v Rutherford-Hodge, In re A Debtor, Ex p The Debtor v Dodwell.
Creditors only have standing to challenge a trustee's actions if those actions affect their interests as creditors.
In re Edennote Ltd, In re Edengate Homes (Butley Hall) Ltd.
Bankrupts may have standing even without a likely surplus if they have a substantial interest adversely affected by the trustee's conduct and a direct interest in the sought relief.
Engel v Peri
Third parties may have standing if their rights or interests arise specifically from the bankruptcy and are directly affected by the trustee's actions.
In re Hans Place Ltd, Woodbridge v Smith, In re Cook.
A person cannot challenge a trustee's actions simply because their rights were wrongfully interfered with unless it is connected to the bankruptcy itself.
This judgment.
Outcomes
The appeal was allowed.
The Brakes lacked standing to challenge the trustee's actions because their possessory rights in the Cottage were unconnected to their bankruptcy. Their challenge was based on their possessory rights as occupants, not on their status as bankrupts, and the trustee's actions were not unique to his role as a trustee in bankruptcy.
Similar Cases
Kamran Malik & Ors v Farida Messalti
[2024] EWHC 2713 (Ch)
Daniel McAteer v Hat & Mitre Plc (in creditors’ voluntary liquidation) & Ors
[2024] EWHC 1601 (Ch)
Ramesh Philippe Dusoruth v Orca Finance UK Limited (in liquidation)
[2023] EWHC 1050 (Ch)
Arvindar Singh (as trustee in bankruptcy of Mrs Angela Garcha) v Angela Garcha & Ors
[2024] EWHC 1844 (Ch)