Bankrupt had no status to appeal

Power v Brown and ors [2009] EWHC 9 (Ch) 15 January

The debtor appealed against a decision dismissing his application to set aside an assignment of a cause of action made by the first respondent trustee in bankruptcy (T) in favour of the third respondent creditor (G). G had obtained a debt owed by the debtor’s wife. Thereafter, the wife was declared bankrupt and T was appointed her trustee in bankruptcy. G commenced proceedings against the debtor, his wife and others in relation to certain property. In order to comply with a court order, T assigned his cause of action in those proceedings to G. At trial, G succeeded in proving that the properties were, prior to her bankruptcy, held on a bare trust for the wife and subsequently for T, from whom G could derive title. Subsequently, G presented a bankruptcy petition against the debtor. The debtor applied to set aside T’s assignment to G. The judge refused that application on the grounds that T had appropriately exercised his powers and that the debtor should have contested the assignment at the trial. Before the bankruptcy order was made, the debtor purported to assign alleged causes of action he had against the wife and G to a company, of which he was a director and shareholder. The assignment was by a deed of assignment for consideration and a percentage of the ‘net realisable’. Once the bankruptcy order was made, the same rights were assigned back to the debtor by the company. The debtor then appealed against the dismissal of his application to set aside T’s assignment to G. The issue for determination was whether, by virtue of the invalidity of the debtor’s disposition to the company pursuant to the Insolvency Act 1986 s284, the debtor had standing to bring the appeal.