Standing to challenge decisions of office holder

This case is one of a number arising from the bankruptcies of Mr and Mrs Brake and the liquidation of a partnership in which they had an interest.

Section 168(5) is as follows:

“(5) If any person is aggrieved by an act or omission of the liquidator that person may apply to the court; and the court may confirm, reverse or modify the act of decision complained of, and make such order in the case as it thinks just.”

Section 303(1) is in substantially the same terms but the word “dissatisfied” is used instead of “aggrieved”.

The Brakes raised a number of complaints and in summary:

  • The Brakes complaint against the trustee in bankruptcy failed where the complaint was made by them in their capacity as trustees of a settlement bidding to purchase a residential property from the trustee as in that capacity they were ‘strangers’ to the insolvency estate (not being either the debtor or creditors for these purposes) and so had no standing to challenge the sale process.
  • While a bankrupt cannot seek to interfere in the everyday conduct of a bankruptcy or in the exercise of commercial judgement by a trustee, the test of whether a bankrupt has the standing to challenge a decision is not determined solely by the potential existence of a surplus in the bankruptcy estate. In this case on the pleaded facts the Brakes did have standing to bring a complaint under s 303(1).
  • Similarly in bidding as trustees of a settlement the Brakes were strangers to the liquidation of the partnership and the denial of an opportunity to acquire an asset from a liquidation is not a legitimate interest to establish standing under s168(5).

 Brake v Swift [2020]EWCA Civ 1491

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