Fees which arose under a non-contractual engagement were outstanding at the date of the barrister’s bankruptcy. His trustee sought to realise the fees. Apparently the bankrupt barrister had received and held onto certain payments. The barrister was subsequently disciplined by the Bar Standards Board. (Gwinnutt –v- George and Ryan EWCA 656)
At first instance the Court held that where a barrister had only a moral expectation of payment, rather than a contractual right to payment, this was not property for the purposes of the Insolvency Act 1986 (even applying the wide definition of property in section 436 of the Act) and did not vest in the trustee in bankruptcy.
The trustee appealed.
The Court of Appeal disagreed.
The Court reviewed the statutory objective of the Insolvency Act 1986 and public policy to ensure that all of a debtor’s property capable of realisation should be vested in the trustee for to realise and distribute to creditors.
The Court considered that payment of barristers’ fees should not be regarded as voluntary for a number of reasons. Solicitors would consider themselves more than just morally obliged to pay a fee and would do so sooner or later. Notably the bar had no greater incidence of bad debts than other profession. Indeed, a solicitor’s failure to pay could be deemed to be professional misconduct. The barrister could invoke the Bar Council’s withdrawal of Credit scheme. The solicitor could sue his client for unpaid Counsel’s fees, and as agent the barrister had a right to reimbursement.
Accordingly non-contractual barristers fees were unique in nature, but the barrister had more than a moral claim or hope of payment. Barristers’ fees are capable of realisation. Therefore the Court of Appeal held such fees were “property” for the purposes of the Insolvency Act 1986.
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