Good On Yer, Trustees - Great Decision in Brakes

Posted on Aug 08, 2023. by NTI

If you are from 'the Brakes' family you will be only too aware that there have been no fewer than 42 judgments in the space of three years about this 'let's not keep it in the family' Bankruptcy matter. In October 2022, the largest creditors in the Brakes’ Bankruptcies, Patley Wood Farm, wrote to the Trustees requesting that they apply to join the eviction claim specifically in order to oppose an order for possession of 'The Cottage' being made in favour of the Brakes.

The Trustees declined to join the matter, expressing concerns over their independence, noting that they had remained neutral in the proceedings to that date in accordance with legal advice, and that such an intervention would only increase costs in the Bankruptcy estates without any possibility of a return to creditors.

At 'first instance' (the first time the matter was before a court) it was held that a court will only intervene where the decision-making of a Trustee is not merely wrong, but can properly be characterised as 'perverse', or so unreasonable and absurd that no reasonable Trustee would have done it. The judge held that it was "difficult to see the downside to the Trustees in making an application to intervene", whereas the potential benefit would be at least £3,000 a month, being the licence fee proposed by the Chedington Court Estate, which owned The Cottage.

The Court of Appeal stamped all over this decision, holding that "the Trustees’ decision not to apply to join the eviction claim cannot possibly be stigmatised as perverse" and allowed the appeal.

So there.

In a thoroughly interesting judgment it held that the Trustees have a duty to act in the interests of the creditors, but it is not the Trustees’ duty to act in the interests of the creditors at all costs. Interestingly, they added that the only financial benefit of the joinder was the £3,000 monthly licence fee offered by the Chedington Court Estate, which would only have increased the sums available for payment of the Trustees’ own fees.

How decent is that?

The Court further held that the downsidesto the Trustees joing the case were obvious, and their concern about their exposure to costs and being embroiled in time-consuming litigation had been amply vindicated by subsequent events.

The case? Patley Wood Farm v Kicks

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