Cassanova v Cockerton

• Published date: 29 June 2021
• Subject Matter: Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy
• Law Firm: Moon Beever
• Author: Frances Coulson

Cassanova v Cockerton [2021] EWHC 1688 (Ch) was an unsuccessful attempt by the former bankrupt to obtain the permission of the court to bring proceedings against her trustee. The administration of the bankruptcy had not been straightforward by the time the application came before Deputy ICC Judge Addy QC: the former bankrupt had not disclosed a property but had tried to sell it, she could not provide the registration number of a motor vehicle nor the number of the leasing agreement relating to it, she had re-entered a property in respect of which the trustee had an order for possession and sale; and she had previously made three applications in the bankruptcy which had been found to be totally without merit.

The permission sought was "to bring a claim against the Respondent as the trustee of the bankruptcy estate on the basis that she has misapplied or retained or become accountable for some money or other property comprised in the bankrupt's estate, and/or that the bankrupt's estate has suffered loss in consequence of the misfeasance or breach of fiduciary or other duty by the trustee in the carrying out of her functions," and relied on ss 303(1) and 304(1)(a)(b) Insolvency Act 1986. More particularly, the applicant claimed that:

(a) the trustee should have obtained '7,500.00 more than she did for the sale of a property and should have sold it more quickly than she did;

(b) the proceeds of sale of and the rental income from the property should have been sufficient to discharge all the debts and expenses of the bankruptcy, such that the trustee has therefore misapplied them;

(c) the trustee's fees and expenses were exorbitant;

(d) the trustee had allowed the estate to "accumulate debts;" and

(e) the trustee had included four false claims in the list of creditors.

The deputy judge, in line with the judgment of Hart J in Brown v Beat [2002] BPIR 421, found that s 304 Insolvency Act with its prescriptive gateway was what she had to consider; s 303 was not the appropriate jurisdiction in the context of the relief sought.

Having regard to Brown v Beat, Borodzicz v Horton [2016] BPIR 24 and McGuire v Rose [2013] EWCA Civ 429 she found the following principles to be applicable:

(a) The Applicant has a high hurdle to overcome to obtain permission to challenge decisions of the Respondent;

(b) The Court must be satisfied that the Applicant has a reasonably meritorious cause of action and that the proposed Substantive Application is reasonably likely to result in...