“. . . (5) If any person is aggrieved by an act or decision of the liquidator, that person may apply to the court; and the court may confirm, reverse or modify the act or decision complained of, and make such order in the case as it thinks just.”
“If a bankrupt or any of his creditors or any other person is dissatisfied by any act, omission or decision of a trustee of the bankrupt’s estate, he may apply to the court; and on such an application the court may confirm, reverse or modify any act or decision of the trustee, may give him directions or may make such other order it thinks fit.”
“19. . . . As trustees of the family settlement, the Brakes are essentially outside the insolvency process, because they are the trustees of property for the benefit of other people. It is a matter of chance that the same persons happen to be trustees of the settlement as happen to be the bankrupts themselves.”
“35. As a public authority and given its role in society, the court is expected to apply standards to its own conduct which may go beyond bare legal rights and duties. A specific example is a sale of property made by the court in accordance with its powers: Else v Else (1872) LR 13 Eq 196. Trustees in bankruptcy, liquidators in compulsory liquidations and administrators are all officers of the court. In the case of administrators, this is expressly provided by paragraph 5 of Schedule B1. As such, they are acting on behalf of the court and they will accordingly be held to these standards by the court. . . . 68. While the formulation of the test in the authorities, involving so many phrases with perhaps different shades of meaning, has something of the quality of dancing on pinheads, resolution of this issue lies in going back to the fundamental principle underlying the jurisdiction. The court will not permit its officers to act in a way that it would be clearly wrong for the court itself to act. That is to be judged by the standard of the rightthinking person, representing the current view of society. If one were to pose the question “would it be proper for the court to act unfairly?”, only one answer is possible. It is interesting to note that fairness was introduced by some judges in the cases dealing with Ex p James at a comparatively early stage, but in general “fairness” as a test in substantive, as opposed to procedural, law has grown significantly since many of those cases were decided. In so far as it involves a broader test than, say, dishonourable, it reflects a development in the standards of conduct to be expected of the court and its officers. 69. The application of the principle in Ex p James in any case will critically turn on the particular facts of that case. . . . 81. The office of administrator is a statutory creation. An administrator is empowered to take only those steps for which there is express or implied statutory authority. If, therefore, an administrator acted in a manner for which there was no such authority, he would be acting unlawfully and an aggrieved creditor would not need to rely on paragraph 74 [of Schedule B1]. Equally, if an administrator exercised a power in bad faith or for an improper purpose, it would be an unlawful exercise of the power. By contrast, paragraph 74(5) provides that a claim may be made under paragraph 74(1) whether or not the action in question is within the administrator's powers under Schedule B1.”
“It is neither necessary nor desirable to attempt a classification of those who may be a person aggrieved by an act or decision of a liquidator in a compulsory winding up. On the footing that the claims of secured creditors have been or will be satisfied, it is perfectly clear that unless and until there proves to be a surplus available for contributories (a most improbable event), ‘persons aggrieved’ must include the company’s unsecured creditors. If the liquidator disposes of an asset of the company at an undervalue, their interests are prejudiced and each of them can claim to be a person aggrieved by his act. Such was the position of the applicants here. Mr Rayner James submitted that they brought the application not as creditors but as persons who had not been given an opportunity to make an offer for the asset. In the latter capacity alone, like any other outsider to the liquidation, they would not have had the locus standi to apply under section 168(5). But even if that were wrong, they would still have been able to apply in a dual capacity.”
“(fraud and bad faith apart) that the court will only interfere with the act of a liquidator if he has done something so utterly unreasonable and absurd that no reasonable man would have done it. . . .”
“8. The usual test is that laid down in Re Edennote Ltd, Tottenham Hotspur plc and Others v Ryman and Another[1996] 2 BCLC 389 , which concerned the actions of the liquidator of a company. It is common ground that the same test applies in relation to the actions of a trustee in bankruptcy in a case of personal insolvency. The test for intervention by the court was put in this way by the Court of Appeal, as summarised in the head note: “Fraud and bad faith apart, the court will only interfere with the act of a liquidator if he has done something so utterly unreasonable and absurd that no reasonable person would have done it.”
“6. In my judgment the words of s 303 of the 1986 Act ought indeed to be construed widely . . . Mrs Woodbridge clearly satisfies the test and can demonstrate a substantial interest in the bankruptcy, the conduct of which may not as yet have affected her adversely but will certainly do so if Mr Smith applies to sell the house in which she is living. 7. I do not accept Mr Hanham's submission that the trustee's fees are not Mrs Woodbridge's concern. In circumstances such as these it is artificial to draw too fine a distinction between husband and wife. . . . Mr Woodbridge's apparent obligation to pay the trustee's fees in the sum being claimed and the consequential danger to the property which is Mrs Woodbridge's home are, in my view, factors which give her a substantial interest in the conduct of the bankruptcy and which adversely affect her enjoyment of that property now or will do so in the future.”
“Where the bankrupt or any of the creditors or any other person is aggrieved by an act or decision of the trustee, he may apply to the court and the court may confirm, reverse or modify the act or decision complained of and make such order in the premises as it thinks just.”
“Where the allegation relates entirely to the acts of the trustee within the Act, generally it would be inappropriate to grant leave to commence an action in the regular course. The appropriate remedy is for the moving party to apply for a trial of an issue within the bankruptcy court.”
“46. I deal first with the position of Mr Fakhry who, like Mr Grattan, is a member of each Company. Section 1029(2) sets out eleven categories of person who may apply for a restoration order, including a former member of the company ("former" because the company has been dissolved). In addition, it permits the application to be made by "any other person appearing to the court to have an interest in the matter" (emphasis added). A former member is, by virtue of that status alone, considered to be a person with a sufficient interest in the restoration of the company to be designated as a person who may make the application. If a restoration order is made, it will directly affect all the members. The company of which they were members will be revived and, if they were members at the date of dissolution, their status as such will also be revived. They will become again the owners of an asset, their shares in the company. . . They may indeed have many legitimate reasons to support or to oppose restoration. For the same reasons, it is clear that they are "directly affected" by a restoration order for the purposes ofCPR 40.9 and so have standing to apply to the court to vary or set aside a restoration order.”
“. . . to what extent, if any can the bankrupt call the trustee in his bankruptcy to account for his management and disposition of the estate. The point, of course, can only arise where the bankrupt can show that there is, or will, or might (but for the trustee’s action or inaction), be a surplus in the trustee’s hands after satisfying in full all the claims of the creditors. Where, as in the vast majority of cases, the estate is insolvent, the bankrupt has clearly no interest in it and it matters not to him how it is administered, but the bankrupt has a statutory right to any surplus under s. 69 of the Act, and is, therefore, clearly concerned to increase, if he can, its amount. . . . there must be circumstances in which the court can interfere at the instance of a bankrupt to control the actions of the trustee: . . . I need not, I think, attempt to define what these circumstances are. They cannot, I think (in the absence of fraud) justify interference in the day-to-day administration of the estate, nor entitle the bankrupt to question the exercise by the trustee in good faith of his discretion, nor to hold him accountable for an error of judgment. . . .”
“Where the court is asked to exercise a statutory power therefore, the applicant must show that he is a person qualified to make the application. But this does not conclude the question. He must also show that he is a proper person to make the application. This does not mean, as the plaintiff submits, that he “has an interest in making the application or may be affected by its outcome.”
“As liquidators of the company the liquidators are officers of the court. The court's inherent jurisdiction to control the conduct of its own officers is beyond dispute. But it does not follow that the plaintiff is a proper person to invoke that jurisdiction. It says that the liquidators are behaving unconscionably by reason of their conflict of interest. But it cannot say that the liquidators are acting unconscionably to it. It does not plead any such duty. It alleges that the liquidators have an interest which conflicts with their duty to the company and its creditors. If such a conflict exists, it is for the creditors alone to decide what if anything to do about it.”
“18. While this decision will obviously be applicable in the great majority of cases where a bankrupt seeks to interfere with the day-to-day administration of his estate in the course of the bankruptcy, I do not think [Dodwell] can be regarded as laying down a universal requirement that a bankrupt must show that there will or may be a surplus before he has a standing to apply under section 303. What he has to show is that he has “some substantial interest which has been adversely affected by whatever is complained of” (see Port v Auger at 874A). 19. Whether the bankrupt can do this must depend on the facts of the particular case. In the context of an application for annulment under s 282(1)(b) the amount of the trustee’s remuneration and expenses may be a matter of considerable significance, because it affects the amount of money required to be paid in order to satisfy the court of the matters referred to in the subsection. In my view the bankrupt had a clear interest in this, for he will want the annulment to be obtained as cheaply as possible. This will clearly be the case where the bankrupt is persuading a third party to lend him the money or intends to enter into an obligation to indemnify a third party who puts up the necessary funds. I consider that it will also be so even where there is to be no formal obligation as between the bankrupt and the third party. The prospects of the third party making funds available are likely to be increased if the amount required is kept to a minimum. Further the bankrupt is likely to feel under a moral obligation to indemnify the third party even where he is under no legal obligation.”
“57. Mr Sutcliffe’s fallback submission was that a member or former liquidator does not have standing to apply to vary or set aside orders restoring a company to the register and appointing new liquidators, if their purpose is to prevent investigations into their conduct or proceedings against them. This appears to me to confuse standing with the submissions which the court will permit a person to advance.”
“It is true that the applicants are creditors, and would have locus standi if acting as such; but this is irrelevant, since they are in fact seeking to advance the interests of possible debtors, which are adverse to those to those of the creditors.”