Mr Mikki is a photographer (‘the Bankrupt’). Bankruptcy was 2010 when pertinently he had a bank account with £1,500 in it and a car.

The £1,500 was spent, but £3,000 was subsequently paid in. When the account was frozen it again had £1,500 in it. After investigations it was determined that this money derived from post-bankruptcy income and was returned. Those investigations took some time and the Bankrupt demanded penal interest.

The car was held under an HP agreement, but unusually that car was more valuable than the amount outstanding under the agreement. The agreement was terminated (for bankruptcy) and the HP company sought repossession. The Bankrupt wanted to pay the amount outstanding but the Trustee refused – allowing possession and realisation of the equity (£2,500) for the estate. Three years later the Bankrupt argued that the vehicle was a tool of his trade and should not have vested. The second issue was whether the rights giving a hirer a right to possession of a vehicle (which would be exempted as a tool were it owned by the bankrupt) could be a tool of the trade.

Interest: the Trustee offered what was earnt in the ISA (0.5%). The court reviewed that decision and applying and affirming Bramston v Haut [2012] EWCA Civ 1637, determined that the decision was not perverse and did not interfere with it.

Car: this turned on the interpretation of the statute. The Trustee argued that the statute was plain – tools were physical items used for trade, not a bundle of rights giving rise to a right to possession of a tool. The Bankrupt argued that the statute should be construed so as to include that bundle of rights (which shouldthen be exempt).


The court held that the statute should not be so construed and that the proper interpretation was the Trustee’s restricted interpretation – the tools of the trade exemption only applied to physical assets owned by the bankrupt at the time of the bankruptcy. This is an important case for trustees dealing with assets held on HP agreements