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24-03-2020

Goyal v Florence Care Limited – Continuing claims or appeals against a bankrupt

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The decision of Morgan J handed down on 19th March 2020 had to consider whether it was permitted to continue an appeal against a bankrupt party. The claim was connected with a joint venture that the claimant and respondents entered into with monies advanced. There was a side issue as to whether there was a claim against the firm of solicitors who had received money the claimant.

At first instance, the claimant was denied relief of an account of profits against the bankrupt on equitable principles such as delay. The claimant wanted to appeal against the decision in favour of the now bankrupt respondent. The court held that there had been no request to stay proceedings under section 285(1) Insolvency Act 1986 and it was not minded to grant that stay of its own initiative. The prohibition contained in section 285(3) against proceedings being commenced did not apply to an appeal. The proceedings had been commenced before the making of the bankruptcy order.

It was appropriate to continue to deal with the appeal because the claimant was making a proprietary claim and so that would have a bearing on the status of assets within the bankrupt’s estate. The claimant was entitled to an account of the profits made from a breach of fiduciary duty. Monies had been advanced for one purpose but used contrary to that purpose.

As a separate issue, the claimant sought to bring a claim against solicitors based on an email sent to their general “contact us” email address. That email made it clear that monies were being sent to their client account only to be used for a specific purpose. The payer was not himself the client.

The evidence showed that the email address was monitored by the Practice Manager. There was no evidence that the solicitor dealing with the matter had seen the email at all. On this basis, the claimant was not allowed to rely upon the email have been sent to the firm as fixing them with the knowledge of the limited purpose for which the monies were remitted to their client account.

The issue of the appeal being able to continue is consistent, arguably, with previous authority but the case shows that, in these days of electronic communications and ease of contact, it is still essential to have actual evidence of receipt by the person concerned if that is vital and not to rely upon assumptions to that effect.

 

About the author:

Graham McPhie is a Partner at Moon Beever LLP.

If you have any questions regarding the article or would like some advice, please contact Graham on gmcphie@moonbeever.com.  

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