Summary

The insolvency legislation contains an unusual provision pursuant to section 375(1) of the Insolvency Act 1986 enabling the court to review its own decision. The issue in this case was whether the High Court could review its own decision where that decision was an appeal of a bankruptcy order made by a District Judge in the County Court.

The Facts

The debtor appealed the bankruptcy order to the High Court on the grounds that he had made a reasonable offer to settle the debt. The debtor and petitioning creditor reached an agreement, which was transposed into an order made by the High Court discharging the bankruptcy order and disposing of the appeal (the Order).

In the meantime, a trustee in bankruptcy had been appointed. The trustee applied to the High Court for a review for the Order contending it was prejudicial to other creditors and should be rescinded.

The High Court refused the application. It held that it could not rescind an order made in that court on an appeal. The Court also proceeded to dismiss the application on its merits, and held that the trustee had no standing to rescind the Order as he was not a party to the application.

The Appeal Decision

The trustee appealed to the Court of Appeal who allowed the appeal in part holding that the High Court did have jurisdiction to review its decision on an appeal and that the trustee should have been added as a party. However, the Court of Appeal agreed with the High Court that even if the Trustee had been a party to the appeal, he would not have succeeded in opposing the application for an Order, save for it providing for his costs and expenses.

The Court of Appeal therefore allowed the appeal in part and remitted the matter back to the High Court to determine how the Trustee’s costs and expenses should be paid.

Sands v Layne and another [2016] EWCA Civ 1159