Insolvency practitioners will welcome the recent decision of the Supreme Court in BPE Solicitors & another \u2013v- Gabriel [2015] in which the Court held that if a Trustee in Bankruptcy proceeded with an appeal it would not be justifiable for the Trustee to be liable to pay any previous costs orders made against the Bankrupt.<\/p>\n
The general position in respect of litigation commenced or adopted by a Trustee in Bankruptcy is that the Trustee is treated as a party to those legal proceedings and is personally liable for any costs which may be awarded to the other side, subject to a right of indemnity against the insolvent estate to the full extent of the assets. Of course, a Trustee is not obliged to adopt and continue an action already started by or against the Bankrupt.<\/p>\n
In this case, Mr Gabriel commenced proceedings against his solicitors (BPE) and was awarded nominal damages in negligence but costs of approximately \u00a3470,000 were awarded against him. Consequently, Mr Gabriel subsequently petitioned for his own bankruptcy. On his appointment, his Trustee in Bankruptcy considered whether he should appeal the decision of the Court to award Mr Gabriel nominal damages and made an application to Court for directions as to whether he would be liable for the \u00a3470,000 costs awarded against Mr Gabriel prior to the bankruptcy if he adopted the litigation.<\/p>\n
The Supreme Court made the very sensible decision that there was no longer any absolute rule that, simply by adopting an action, a Trustee should become liable to pay the other side\u2019s costs incurred at a time when he was not a party to the action and the action was being conducted by the Bankrupt for his own account.<\/p>\n
Whilst the Court always has a discretion in respect of Orders made relating to costs, this decision is a good one for Insolvency Practitioners who may previously have declined to adopt an ongoing claim proceeding through the Courts because of the fear of becoming liable for costs incurred prior to their appointment as Trustee.<\/p>\n","protected":false},"excerpt":{"rendered":"
Insolvency practitioners will welcome the recent decision of the Supreme Court in BPE Solicitors & another \u2013v- Gabriel [2015] in which the Court held that if a Trustee in Bankruptcy proceeded with an appeal it would not be justifiable for the Trustee to be liable to pay any previous costs […]<\/p>\n","protected":false},"author":36,"featured_media":3803,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1495],"tags":[1551,1794,2035,2047,2048],"class_list":["post-971","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insolvency","tag-bpe-solicitors-another-v-gabriel","tag-litigation","tag-the-supreme-court","tag-trustee","tag-trustee-in-bankruptcy"],"yoast_head":"\n