Key points

The court has discretion to allow an insolvency practitioner to recover fees and costs from work done in realising assets for the benefit of a third party but it cannot be exercised where an insolvency practitioner takes action in relation to assets outside in the insolvency estate of his own accord.

The facts

The bankrupt was a solicitor. The trustee in bankruptcy accepted that funds held in twelve client accounts were exclusively client monies. The trustee arranged for the bankrupt's files and papers to be securely stored. The Solicitors Regulation Authority ("SRA") intervened into the practice, the effect of which was that the client account monies vested in the Law Society on statutory trusts. The trustee applied for an order that his costs and expenses of dealing with the accounts and files up to the date of the SRA's intervention be paid out of the client account monies.

Decision

The court dismissed the application.

Comments

The court held obiter that even if it had jurisdiction to exercise its discretion, it would have still refused to make the order sought on the basis that there was no need for the trustee to incur costs of reconciliation - all he needed to do was report the risk to the SRA who would have decided whether or not an intervention was necessary.

Bell v Birchall and others