Donaldson v O'Sullivan

The Appellant, Mrs Donaldson, was made bankrupt in 1990, in proceedings in the Swansea County Court, and was discharged from bankruptcy in 1993, but with liabilities still outstanding in the bankruptcy. Her trustee in bankruptcy was a Mr Gilderthorp. It seems that in the autumn of 2004 Mr Gilderthorp published a notice of intended dividend in the Gazette, and that, by November 2005, his position was that no more than some £5,300 odd needed to be raised in order to clear all outstanding matters in the bankruptcy. Mr and Mrs Donaldson, who live in a house near Swansea of which they are jointly the freehold owners, sought to raise the necessary money, and proposed an instalment arrangement to Mr Gilderthorp. No binding agreement had been reached in respect of that proposal by the time of the order which lies at the heart of this appeal.

In 2006 Mr Gilderthorp applied in the Bristol District Registry of the High Court for an order which would have the effect of removing him from office as, among other things, trustee in bankruptcy of Mrs Donaldson, and appointing Mr Jeremiah O’Sullivan in his place. The order sought was made on 18 May 2006 by His Honour Judge Havelock-Allan Q.C. sitting as a judge of the High Court, Chancery Division. We have not seen the evidence on which it was based, but it appears from the order that Mr Gilderthorp was preparing for retirement from practice as a licensed insolvency practitioner. I take it that by making the application he sought to ensure an orderly transition as regards those offices which he held, as trustee in bankruptcy, liquidator, or supervisor of individual voluntary arrangements, where the proceedings were not likely to have been concluded by the time of his planned retirement. I will come back shortly to the details of the order, to which I will refer as the Block Transfer Order.

It seems that Mr O’Sullivan was not willing to proceed, as regards Mrs Donaldson’s bankruptcy, on the same basis as had been discussed with Mr Gilderthorp, that he required a sum which was beyond the capacity of Mr and Mrs Donaldson to raise, and that in order to ensure that the larger sum was realised, he applied to the county court for an order for sale of the matrimonial home. By virtue of section 261 of the Enterprise Act 2002, if he had not done so by 1 April 2007, Mrs Donaldson’s interest in the house would have ceased on that date to be comprised in the bankrupt estate and would have re-vested in her.

In order to avoid the threat which that application presented to Mr and Mrs Donaldson’s continued residence in their home, Mrs Donaldson applied, on Counsel’s advice, to set aside the Block Transfer Order so far as concerned her bankruptcy. That application came on for hearing before Judge Havelock-Allan Q.C., in Bristol, on 17 January 2008. He gave judgment on 29 February, [2008] EWHC 387 (Ch), [2008] BPIR 288, by which he dismissed the application, but he granted permission to appeal. This is the appeal from that order, on which we heard Mr Littman for Mrs Donaldson and Mr Brockman for Mr O’Sullivan, who had both argued the case below, and also Mr Ritchie for the Official Receiver as Intervener.

The Block Transfer Order was in a form which has become familiar over recent years, as a result of a series of decisions in the Chancery Division since the Insolvency Act 1986, and the promulgation of a Practice Direction and appropriate forms: see paragraph 1.6 of the Practice Direction: Insolvency Proceedings. The order identifies in schedules the relevant offices held by Mr Gilderthorp. There are some 87 bankruptcies, 19 creditors’ voluntary liquidations, 3 members’ voluntary liquidations, 2 compulsory liquidations, and 12 individual voluntary arrangements. In each case Mr Gilderthorp was removed from the relevant office and Mr O’Sullivan was appointed to the office in his place. In the case of the bankruptcies, this was expressed to be under section 298(1) and, as regards the appointment, under rule 6.132(5) of the Insolvency Rules 1986. The order required that notice be given to all creditors in each insolvency by advertisement in the London Gazette and in The Times newspaper. Creditors were allowed 28 days in which to apply for reconsideration of the removal and of the appointment, any such application to be made on reasonable grounds. The costs of the application were to be borne by all the relevant estates; in principle each was to bear an equal share, but no estate was to bear an amount exceeding 10% of the available funds in that estate.

Mrs Donaldson is not, of course, within the scope of the liberty to apply for reconsideration expressly provided for by the order, which applied only to creditors. However, she is plainly affected by the order, and since her contention is that there was no power to appoint the new trustee in bankruptcy, rather than that a power was wrongly exercised, she is entitled to raise the point that Mr O’Sullivan is not her trustee in bankruptcy, having been invalidly appointed. The judge commented on the delay in making the application, not that running from when Mrs Donaldson first knew of the new appointment, but from the time when she first had reason to complain about Mr O’Sullivan’s attitude. It seems to me that the judge was generous to Mrs Donaldson in allowing her to apply so late, and in calculating the relevant period of delay from a date later than that on which she became aware of the new appointment, but that is not an issue on the appeal. As he said at paragraph 8, the jurisdiction point is too important for the application to be dismissed on grounds of delay. I agree that the point is important. I also agree with the judge’s conclusion on the point, for reasons which I will explain.

Block Transfer Orders were developed, starting in about 1993, in order to cope with a variety of situations in which a licensed insolvency practitioner had ceased to hold office, or wished to do so, or it was desired that he or she should do so, in respect of a number of insolvent estates, and it was sought to achieve this by a court order rather than by the holding of a series of creditors’ meetings in each estate. In some cases there was a need for urgent action, but in most cases the predominant motive was to save time and money. As a result of a series of decisions, the first of which, unreported, was in 1993, a practice developed, held by successive judges to be soundly based as a matter of jurisdiction and proper as a matter of procedure and discretion, which is now reflected, as regards procedure, in the Practice Direction mentioned above. These orders were made on applications which were not on notice to creditors or others affected by the insolvency proceedings, apart from the actual or former office-holder and the proposed new appointee, and so the court did not have the advantage of full and considered argument. There is only one reported example of an application by a creditor for the reconsideration of the appointment, and that turned on the identity of the appointee, not on the jurisdiction to make the appointment. Accordingly, so far as I am aware, these proceedings are the first in which the jurisdiction has been considered with the benefit of contested argument.

The present case relates directly only to bankruptcy, but the Block Transfer Order also relates to several types of liquidation, and to individual voluntary arrangements. There could also be other forms of insolvency proceedings, in particular administrations, to which such an order might relate. In the course of argument we were referred to the corresponding provisions for the various forms of insolvency proceedings.

I must however start with bankruptcy, and therefore with Part IX in the Second Group of Parts of the Insolvency Act 1986, which deals with bankruptcy. To begin with some elementary propositions, bankruptcy can only arise from court proceedings; a person becomes bankrupt by virtue of a bankruptcy order, made on a bankruptcy petition: section 264. The bankruptcy starts on the day on which the order is made, and continues until discharge under the Act: section 278. Immediately, the official receiver is the receiver and manager of the bankrupt’s estate, until the estate vests in a trustee in bankruptcy: section 287.

Chapter III of Part IX relates to trustees in bankruptcy, and starts with section 292, “Power to make appointments”, of which subsection (1) is as follows:

Section 297 is headed “Special cases”. Only sub-sections (4) and (5) relate to appointments by the court:

By virtue of the definition of the circumstances in which an appointment can be made under these provisions, they can only be initial appointments, not replacements.

I will mention later one of the cases in which the Secretary of State can make the appointment, as referred to in section 292(1)(b). The others do not require separate attention.

Section 298 deals with removal from office:

Section 299 deals with the release of the trustee in bankruptcy. Section 300 governs the situation in which there is a vacancy in the office of trustee in bankruptcy:

The last of the provisions of this Chapter to which I must refer is section 303(1) and (2), headed “General control of trustee by the court”:

Reference was also made in the course of argument to section 363, which is in Chapter VII, headed “Powers of court in bankruptcy”. Subsection (1) is as follows:

The corresponding rules in the Insolvency Rules 1986 are in Part 6, Chapter 10. Rule 6.121 deals with appointment by the court under section 297(4) and (5). Rule 6.126 provides for resignation. A trustee in bankruptcy who wishes to resign must call a meeting of creditors for the purpose of receiving his resignation, if he wishes to resign on grounds of ill health, or because he intends to cease to be in practice as a licensed insolvency practitioner, or because there is some conflict of interest or change in personal circumstances which precludes or makes impracticable the further discharge by him of the duties of trustee. If the meeting is held, those present will decide whether or not to accept the resignation, and to grant the trustee’s release. Presumably, if the resignation is accepted, a further resolution would normally be passed appointing a new trustee. The resignation is effective when notice of it is given to the court. If the meeting is not quorate, the resignation is deemed to be accepted, but no new trustee would be appointed. If the resignation is not accepted, the trustee can apply to the court for leave to resign, under rule 6.128.

Rule 6.132 deals with removal by the court. Paragraph (5) is as follows:

As the judge said, this rule assumes that the court can appoint a new trustee when removing a trustee, but it does not purport to give the court such a power, which must therefore be found elsewhere. I agree with the view he expressed at paragraph 51 that the cross-reference to rule 6.121 imports only the procedure under that rule, with any necessary modifications. It does not import the limitation in that rule to cases under section 297(4) and (5); that would make no sense.

Mr Littman’s submission is simple. Section 292 deals with appointment of a trustee in bankruptcy, and provides three methods of appointment, in different circumstances. The court can appoint, in the cases mentioned in section 297(4) and (5). The Secretary of State can appoint, as mentioned in other specific provisions. Otherwise it is only the general meeting of creditors that can appoint. If a trustee in bankruptcy wishes to resign, because he intends to cease to practice as a licensed insolvency practitioner, he must call a meeting of creditors, and may no doubt propose, in the notice of the same meeting, the appointment of a replacement trustee. It is up to the creditors to decide whether or not to accept his resignation, though I note that, if they do not, he may apply to the court under section 298(7) and rule 6.128. As for his replacement, that is up to the creditors, though if he ceases to be trustee in bankruptcy, and no replacement is appointed by the creditors, so that there is a vacancy in the office, the official receiver becomes the trustee under section 300. He may then decide whether or not to convene a meeting of creditors, and if he does not he must refer to the Secretary of State the question whether to make an appointment, as to which the Secretary of State has a choice. The court may remove a trustee, under section 298, but it has no power to appoint a new trustee except in the special cases referred to in section 297(4) and (5). Those do not apply to replacing a trustee who has resigned or been removed. Accordingly the court could remove Mr Gilderthorp (though the better course would have been for his resignation to have been considered by meetings of the creditors in each bankruptcy) but it could not appoint Mr O’Sullivan in his place.

The basis on which jurisdiction was found in those cases in which the point was addressed was the general provision in section 303(2). Mr Littman submitted that this was not a legitimate construction, because it could not override the express provision in section 292(1)(c) conferring jurisdiction on the court only in the two specific cases dealt with by section 297. Reference had also been made to section 363(1), and in particular the phrase “under the general control of the court”, but he submitted that this argument suffered from the same defect: the court’s general control was limited by the specific provisions of the Act.

The Insolvency Act 1986 deals, of course, with other types of insolvency proceeding as well, having gathered into the one Act matters previously dealt with in separate legislation, in particular the Bankruptcy Act 1914 and parts of the Companies Act 1948, together with new provisions including administrations and voluntary arrangements. There are similarities between some of these procedures as they apply to individuals and to companies, but there are also differences, some of which may be attributable to legislative history as much as to anything else. It is appropriate, in any event, to examine how this point is dealt with in relation to other forms of insolvency proceeding.

The provisions for compulsory liquidation are the most similar to those governing bankruptcy. I need not set them out in so much detail as for the bankruptcy provisions above, but the official receiver becomes the liquidator on the making of a winding-up order, and may either convene meetings of creditors (and contributories) to appoint a liquidator, or apply to the Secretary of State for the purpose. The court may appoint a liquidator if a winding-up order is made immediately on the appointment of an administrator coming to an end, or where there is a supervisor of a voluntary arrangement: section 140, which is to an extent analogous to section 297(4) and (5). Section 172 provides for the removal of a liquidator from office in a compulsory liquidation: this may be done either by the court or by a meeting of creditors convened specially for the purpose. It does not refer to appointing a new liquidator to replace the person removed from office. The Act includes provisions equivalent to section 303 as regards compulsory liquidations, in section 168(3) and (5):

There is no direct equivalent of section 363(1), but reliance was placed on section 148(1), which imposes a duty on the court:

On the basis of those provisions, Mr Littman submitted that the position as regards compulsory liquidations is the same as that for bankruptcy: the court can remove a liquidator but cannot appoint a new liquidator any more than it can a new trustee in bankruptcy.

Mr Littman relied also on the contrast between these two regimes and the express provisions in other cases. Thus, for voluntary liquidations (whether members’ or creditors’), which are not brought into being by any court procedure, section 108 is short, simple and clear:

Administrations are governed now by Schedule B1 to the Insolvency Act 1986. Administrators may be appointed in various ways: by the court, by the company or its directors, or by the holder of a floating charge. The court may remove an administrator (paragraph 88) and, if the administrator was appointed by the court in an administration order, the court may fill a vacancy (paragraph 90 and 91). Otherwise it is for the original appointor to fill the vacancy.

The court has power to replace the nominee under a corporate voluntary arrangement, in certain circumstances (Schedule A1, paragraph 28) and also power to replace the supervisor of an individual voluntary arrangement under section 263(5):

That is a sufficient review, for present purposes, of the various legislative provisions. Mr Littman relied on the contrast between the express provisions in relation to voluntary liquidations, voluntary arrangements and administrations, on the one hand, and the conspicuous silence of the legislation as regards compulsory liquidation and bankruptcy. He submitted that the express provisions in the former cases underline the force of the argument in the case of the latter that the court cannot appoint except in the limited cases expressly provided for. It would have been so easy, with the precedent of the express provisions in some cases, to have included an express provision in the others; the decision not to do so must be taken to be deliberate and to be intended not to allow the court to appoint a replacement trustee in bankruptcy or liquidator in a compulsory liquidation. This submission was further reinforced by the observation that, when the Companies Act 1985 was first enacted, section 536 provided not only for the removal of a liquidator by the court but, in sub-section (3), for the court to be able to fill the vacancy, whereas that latter provision did not survive the amendment of the 1985 Act by the Insolvency Act 1985 and its consolidation into the Insolvency Act 1986. No such provision appeared in the parts of the Insolvency Act 1985 relating to bankruptcy. The relevant provisions are in virtually identical terms: section 139 (1985) is the source of section 292 (1986), sections 144(4) and (5) are the derivation of sections 297(4) and (5), section 145 had the same provisions for removal as are now in section 298, section 150 set out the same provisions as now appear in section 303(1) and (2), and section 193 corresponded to section 363.

The first known case concerned with block transfer orders is Re Parkdawn Ltd, an unreported decision of Harman J dated 15 June 1993. No transcript was available to us, but Knox J cited from a transcript in Re Bullard & Taplin Ltd [1996] BCC 973. From that judgment, it can be seen that Harman J was concerned with a licensed insolvency practitioner who held office as trustee in bankruptcy, liquidator under compulsory liquidations, and supervisor under individual voluntary arrangements. Harman J held that the court had power to remove and also to appoint, in the case of compulsory liquidations under section 168(3) (despite his being aware of the repeal of the express provision originally contained in section 536(3) of the Companies Act 1985), and as regards trustees in bankruptcy under section 303(2). Knox J followed Harman J on these points. In Re Sankey Furniture Ltd [1995] 2 BCLC 594, Chadwick J also had access to a transcript of the judgment in Re Parkdawn Ltd, and quoted other passages from it. The points which he had to decide were, however, different and nothing turns on them for present purposes. The court’s ability to make block transfer orders has been considered, from a number of different points of view, in a sequence of reported cases, which were made available to us. In Re A & C Supplies Ltd [1998] 1 BCLC 603 the problem arose from the resignation of the relevant office-holder from the partnership in a firm of accountants, and there was contested argument between the firm and him, though (I assume) not on the question of jurisdiction. Blackburne J reviewed the jurisdiction to remove and to appoint, again (it seems) with the benefit of a transcript of Re Parkdawn Ltd. He said at page 608:

In Re Equity Nominees Ltd [1999] 2 BCLC 19 Neuberger J proceeded on the basis of the earlier decisions as regards jurisdiction, but he also considered the normal procedure (as Mr Littman would have it, the only available procedure) namely by way of creditors’ meetings, supplemented, if necessary, by the intervention of the Secretary of State. He did so in the context of the court’s decision, as a matter of discretion, to allow a shortcut by way of an application to the court for a block transfer order. He summarised the cases as proceeding on the basis that the court would be prepared to make a block order if it is satisfied that the convening of the meetings required by the rules would not serve any useful purpose, or is unlikely to serve any useful purpose, so that the short-cut of a court application is practical and sensible in terms of avoiding the expense of the statutory resignation procedure. He said at page 25:

I should refer to two other cases in this sequence. In Clements v Udal [2002] 2 BCLC 606 Neuberger J made a most unusual order appointing, on a very limited interim basis, two new office-holders in addition to the office-holder intended to be replaced, relying, so far as bankruptcies were concerned, on the general opening words of section 363(1) as giving “power in appropriate cases to the court to appoint temporary additional trustees in bankruptcy”. In HM Customs & Excise v Allen [2003] BPIR 830 block transfer orders had been made removing one office-holder and replacing him with one or other of three other licensed insolvency practitioners. HMCE applied as creditor in many of the relevant estates for the order to be reviewed, but only so far as concerned the identity of the new appointees. The case is the only reported example of such an application. His Honour Judge Gilliland Q.C. said nothing relevant to the issue of jurisdiction. We were also shown a Scottish case, Geddes Petitioner, Re AGM Casualwear Ltd [2006] SLT 664, in which the example of the English cases was followed, but I do not propose to cite from that because the Scottish legislation is different in material respects.

The sequence of English cases, starting with a decision of Harman J, a judge of great experience in matters concerning companies and insolvency, must carry a good deal of weight. Nevertheless, Mr Littman is entitled to submit that the point about jurisdiction has never been argued on a contested basis until the present case, that assumptions are not always correct, and that the issue of jurisdiction must be faced squarely when a challenge is made. As I have indicated, his argument is short and fairly simple: there is a limited express power for the court to appoint a trustee in bankruptcy under section 297, and no other such power can be found consistently with (a) the other provisions relating to trustees in bankruptcy which provide for a new trustee in bankruptcy to be appointed in a different manner or (b) the comparable provisions in respect of voluntary liquidations, administrators and supervisors of voluntary arrangements which give the court an express power to appoint.

Judge Havelock-Allan, in his full, careful and clear judgment, held that the court’s power to appoint a new trustee in bankruptcy (to be exercised in these cases following an order removing a trustee under section 298) was based on section 303(2) and could also be found in section 363(1) or the court’s inherent jurisdiction. Mr Brockman submitted, in a Respondent’s Notice, that the court also had an inherent power to appoint, a trustee in bankruptcy being an officer of the court. Both he and Mr Ritchie relied on 19^th and early 20^th century cases as relevant in setting the context in which the process of statutory construction is to be carried out.

The first of the older cases is Ex parte James, in re Condon (1874) 9 Ch App 609, the famous case in which the Court of Appeal in Chancery held that “the court of bankruptcy ought to be as honest as other people”. The question was whether a trustee in bankruptcy should repay money demanded by and paid to him under a mistake of law, which would not have been repayable under the common law as it then stood. James LJ said at page 614:

The principle was held to be of more general application by the Court of Appeal in Re Tyler, ex parte the Official Receiver [1907] 1 KB 865. In that case Farwell LJ said at page 871:

Farwell LJ there drew out a distinction of great importance. In the majority of cases, litigation arises between two (or more) litigants, each asserting individual rights, and acting only for the sake of the individual litigant. By contrast, even today, many cases in the Chancery Division, and within the corresponding jurisdiction of the county court, are concerned with the administration of a fund or an estate, with the realisation of the assets and their distribution among those entitled to it, whether creditors only or both creditors and beneficiaries. That is still sometimes true of the estates of deceased persons or of funds the subject of a trust; it is more often true of an insolvent estate, whether of an individual (or a deceased’s estate) in bankruptcy, or of a company in liquidation. Not all such insolvency procedures require or depend on court procedures. In particular, voluntary liquidations may proceed entirely without reference to the court, and administrations may do so with no more than the giving of notice of the appointment of the administrator to the court. A bankruptcy, however, and a compulsory winding-up, are wholly dependent on the court, and correspondingly are controlled and administered by the court. In this respect the opening words of section 363(1) reflect the essence and reality of the bankruptcy process, and section 148(1), albeit in less general terms, is based on the same underlying proposition, namely that it is for the court to oversee the realisation of the assets of the insolvent company and their distribution, on the correct principles, among creditors and, where relevant, members. We were shown a passage in Lord Diplock’s speech in Ayerst (HMIT) v C & K (Construction) Ltd [1976] AC 167, at 176 to 180, in which he analysed the processes both of compulsory liquidation and of bankruptcy, entirely consistently with this underlying proposition.

I would not myself base any part of my decision on the proposition that a trustee in bankruptcy, like a liquidator under a compulsory winding-up, is an officer of the court. Rather, I would see that status as an aspect of the fact that these two particular insolvency processes are in their nature dependent on, and controlled by, the court, in a way and to an extent which is not true of some other insolvency processes, above all voluntary liquidations. I see that distinction as relevant to the issue of the interpretation of the relevant parts of the legislation. I also see it as relevant that the Insolvency Act 1986, as a consolidating enactment, contains, under one legislative roof so to speak, a great diversity of different provisions with different histories and different natures. The law about winding-up of companies had been in the Companies Act 1948 and previous Companies Acts. It was developed more, in 1986, by the introduction of the regulation of insolvency practitioners than by much in the way of substantive law changes. Bankruptcy law was substantially changed by the Insolvency Act 1985, in the first major overhaul of the legislation since 1914. Administration was created for the first time in the Insolvency Act 1985 as a new regime. Individual voluntary arrangements also constituted, largely, a new regime. It is not surprising, as it seems to me, that there should be differences in the legislative treatment of the different regimes, even within the one Act, which may just as well be accounted for by their different history and provenance as by an intention that they should have a different meaning or effect.

Mr Ritchie relied on the two cases already cited not only for the proposition which I have already discussed, but also as examples of the court directing that the bankrupt’s estate should be distributed on a basis which did not correspond with or reflect the strict legal rights and obligations of those concerned, because in strict law the sums ordered to be repaid in each case were not payable, and could not have been sued for successfully. He also showed us several cases in which the court’s power to control the bankruptcy or winding-up process had been exercised, notwithstanding an apparent conflict with the express provisions of the relevant Act. One was Ex parte Sayer, in re Mansel (1887) LR 19 QBD 679, where the then relevant provision, similar to section 363(1), was held to enable the court to restrain, for a time, the holding of a meeting of creditors which, on the face of it, had been validly requisitioned and convened. I need not go into why it was appropriate to do so. Another was In re Burn, ex parte Dawson [1932] 1 Ch 247 where, again, a meeting had been requisitioned by a resolution of a creditors’ meeting, but the trustee in bankruptcy refused to convene it and the court refused to order him to do so, on the ground that to hold the meeting would serve no useful purpose and would only result in a waste of the assets in the bankrupt estate. Mr Brockman relied also on Engel v Peri [2002] EWHC Ch 799, [2002] BPIR 961, where Ferris J held that section 363(1) (though not section 303(1)) enabled the court to fix the remuneration of the trustee in bankruptcy, despite the fact that the relevant provisions of the Insolvency Rules 1986 appeared to create a comprehensive code for the purpose. We were also shown Hardy v Pallen [1997] BCC 815, where Robert Walker J held that the court had power, by virtue of section 363, to make an order of its own motion securing cash in the possession of a bankrupt albeit that it was, at best, after-acquired property which would not become part of the estate until a notice was served by the trustee in bankruptcy, which had not yet been done.

All of those cases seem to me to support the thesis that bankruptcy is a court-controlled process in relation to which the court has wide powers, exercisable for the purpose of the insolvency process as a whole, which are not limited to those conferred expressly by the relevant legislation. There are non-statutory elements in the law of bankruptcy, such as the principle in Ex parte James, even though these may result in an application of assets which is not strictly in accordance with legal rights and obligations. There is also scope for the court to direct that things be done (or not done) in apparent conflict with express provisions of the legislation. Clearly if the Act said in terms that the court could make a certain kind of order only in given circumstances, it would be a very strong construction to hold that it could do so in other circumstances as well. That is not the present case. The Act provides for the court to appoint in certain specific circumstances, and to be able to remove in any circumstances, but is silent about replacement by the court of a removed trustee. It does include exclusive provisions in certain cases, for example section 298(1), quoted above, which defines the ways in which a trustee in bankruptcy may be removed. The provisions with which this case is concerned are not of that nature.

Mr Littman took issue with the use of section 303(2) not only on the general ground that it would be inconsistent with the specific terms of section 292 and 297 but also on the specific ground that the appointment of a new trustee in bankruptcy was not within the terms of the sub-section, even if the application is made by the existing office-holder. He argued that to apply for an order for the appointment of a new trustee is not within the ambit of what the sub-section permits, namely an application for directions in relation to any particular matter arising under the bankruptcy. In my judgment the replacement of a trustee in bankruptcy removed under section 298 is plainly capable of being a “particular matter arising under the bankruptcy”. The nub of his argument was that the application would not be for directions but for a particular order. It seems to me that this submission is excessively literal as a reading of a facultative provision which is designed to enable the office-holder to seek the assistance of the court in any relevant respect. The fact that the application is for a particular order rather than (as it would normally be) for directions as to whether the trustee in bankruptcy should take one or another of certain possible courses of action, is not, in my judgment, a proper reason for holding that this section does not permit an application for the appointment of a replacement trustee.

As the judge said, Mr Littman’s argument led to an extraordinary anomaly, namely that the court has less power in relation to trustees in bankruptcy and liquidators under compulsory liquidations than it has in relation to liquidators under voluntary liquidations and other office-holders in insolvency proceedings, despite the fact that the former are regarded as officers of the court and, more importantly in my view, that the former processes are entirely court-administered whereas not all the others are. I agree with the judge that it would be counter-intuitive to find that the court had less power in relation to the appointment of a new office-holder in bankruptcy or a compulsory winding-up than it does in relation to a voluntary liquidation, an administration or a voluntary arrangement. In my judgment Harman J was right to come to the conclusion, 15 years ago, that section 303(2) confers power on the court to appoint a new trustee in bankruptcy, which it can exercise so as to replace a trustee removed under section 298. It follows that he was also right in relation to compulsory liquidations, under section 168(3). Whether or not he considered the provisions of section 292 and 297, I have no doubt that those provisions (and their equivalents in relation to compulsory winding-up) ought not to be construed so as to preclude the court from using its general powers in relation to bankruptcy or, as the case may be, compulsory liquidation to appoint a new trustee in bankruptcy or liquidator upon removing such an office holder under section 298 or section 172. Those are the reasons for which I would dismiss this appeal.

I agree.

I also agree.