Remedy for void disposition of bankrupt’s property is an account of money had and received
In the recent High Court decision of Thomas and another v D’eye and others (Re D’Eye) (22 April 2016) it was held that where payments are made out of a bank account belonging to a bankrupt in the periods after the presentation of a bankruptcy petition and after the making of the bankruptcy order, the remedy available to the trustee in bankruptcy is the same: an account of money had and received.
Section 284 of the Insolvency Act 1986 (“the Act”) provides that any disposition of property made by a bankrupt during the period from the date the bankruptcy petition is presented (or a debtor’s bankruptcy application is made) until the bankrupt’s estate vests in the trustee in bankruptcy on appointment is void.
Whilst this is nothing new this case provides welcome clarity on the remedy available to trustees seeking to recover monies paid away under void dispositions upon which the Act is silent.
The court noted that, despite the trustees’ arguments, it was necessary to look to the general law to find the remedy appropriate to an action under Section 284 of the Act. Equally, the court held that the remedy available is not wholly determined by the equitable principles of restitution, as the trustee does not have to establish any unjustness. Instead, the court held that Section 284 of the Act creates a statutory obligation to account for monies had and received.
The court considered that this approach applied the fundamental pari passu principle pervading insolvency. It was also consistent with the earlier decision in Pettit v Novakovic  BCC 462 and the bankrupt’s statutory obligation to deliver up his estate to the official receiver (Section 291(1) of the Act).
This appears to be the first express judicial consideration of the appropriate remedy for action taken by a trustee in bankruptcy under Section 284 of the Act and it carries significant weight, as the presiding judge in the High Court was Chief Bankruptcy Registrar Baister.
For further information on the decision in this case or for any insolvency enquiry please contact Associate Solicitor, Lauren Hartigan-Pritchard on 01905 677051 or firstname.lastname@example.org