The High Court of England and Wales has recently grappled with a lacuna in United Kingdom bankruptcy law, namely how the expenses of a trustee in bankruptcy should be dealt with where the bankruptcy order from which he derives his title is successfully overturned on an appeal of which he was not notified? The Court ultimately found that it was within its inherent jurisdiction to hold the bankrupt liable to pay the trustee's reasonable expenses. However the case highlights the gap in the United Kingdom's bankruptcy laws in failing to provide adequate guidelines in this scenario.

With no guidance offered in the Insolvency Act 1986 (UK), His Lordship Briggs J relied on the Court's inherent jurisdiction to find that of a trustee who had acted properly and innocently of any wrongdoing could expect to obtain payment of his reasonable expenses. Further, His Lordship found that this expectation prevailed over the respondent's right to enjoy her full estate upon its re-vesting in her as a result of the setting aside of the bankruptcy order. Consequently, the respondent's property was to be charged with payment of the trustee's reasonable expenses incurred up until the date upon which he was notified that the bankruptcy order had been set aside.

By way of postscript, Briggs J suggested that to the extent that the Insolvency Rules fail to address the need for a trustee in bankruptcy's expenses to be dealt with on an appeal against a bankruptcy order, amendment may be necessary. The equivalent provision of New Zealand's Insolvency Act 2006, section 309, requires that the Official Assignee must be served with a copy of any application for annulment and provides for payment of the Assignee's services. His Lordship's dicta supports bringing United Kingdom's bankruptcy law closer into line with its New Zealand counterpart.

See Court decision here.