Miles & Ors v Price & Ors

A number of Applications are before the Court by which certain creditors in the bankruptcy of Mr Kuldip Singh Birdi seek the removal of Mr Birdi’s Bankruptcy Trustee.

Although originally there were four Applicants, the proceedings by Mr Antoniades were compromised shortly before the matter came on for hearing. His application was dismissed by consent and he agreed to pay a sum of £12,000 towards the Respondents’ costs.

Consequently, applications have been pursued by only three Applicants ("the Applicants"), namely Mr Andrew Miles, Mr Pierre Noah and Mrs Gurdip Birdi (the wife of Mr Birdi). They have all submitted proofs of debt in Mr Birdi’s bankruptcy, and claim they alone are the “legitimate proven” creditors of Mr Birdi. Together their claims total £189,983, broken down as follows: Mr Miles, £49,772; Mr Noah, £16,580; and Mrs Birdi, £123,631.

Mr Birdi was made bankrupt as long ago as 21 March 2012, on the Petition of HM Revenue & Customs. After a period of suspension his Bankruptcy was discharged on 4 July 2013, but on 21 January 2015 a Bankruptcy Restriction Order was made against him for a period of nine years beginning on 4 September 2014.

The First Respondent to the present Applications, Mr Price, was appointed as Mr Birdi’s Trustee in Bankruptcy at a meeting of creditors held on 20 July 2012. In January 2014, Mr Price retired from practice, and by means of a Block Transfer Order dated 22 May 2014 he was removed as Trustee and the Second Respondent, Mr Pettit, was appointed in his place. Mr Pettit is a director of the Fourth Respondent, PBC Business Recovery and Insolvency Limited ("PBC").

The business of realising the Bankrupt’s estate has been a long and difficult one. Current figures show there are no funds available for distribution to creditors. What seems to be at the heart of the Applicants' complaints is the belief that the length and difficulty of the process, and the resultant cost, are all the fault of the two Trustees, Mr Price and Mr Pettit. Various complaints of dishonesty and mismanagement are made, both in relation to the process for appointment of the two Trustees and in relation to their conduct of the Bankruptcy proceedings. These include the allegation that some or all of the other creditors who have submitted proofs in the Bankruptcy are “bogus creditors”. The upshot is that the Applicants say they have been cheated out of their distributions, in the sense that if the Trustees had done their work properly, the three of them as “legitimate proven” creditors would have been paid out long ago, whereas now they stand to get nothing.

The Applicants’ complaints are advanced in a series of Application Notices, issued between 20 August 2018 and 24 September 2018, and in the Applicants’ witness statements. The precise forms of relief sought have been put forward in a number of different ways in different documents. I will not attempt a close analysis of the different formulations. Ultimately, it seems to me that aside from one point which is specific to Mrs Birdi, the Applicants are all pursuing the same criticisms of both Mr Price and Mr Pettit, and all wish to achieve the same basic objectives, which are either:

The specific point which affects Mrs Birdi is that in her Application Notice dated 10 September 2018, she seeks “a declaration that the order to pay the Trustee £300,000 in Trustee’s possession action against Gurdip Burdi be rescinded/revoked”. I will explain this further below.

In summary, therefore, the principal issues I have to decide are as follows:

It is useful to describe some features of the bankruptcy proceedings so far.

The Bankrupt, Mr Birdi is a skilled motor technician. He specialised in work on Italian supercars, particularly Ferraris. He owned premises at units 2, 8, 9 and 10 Hayes Metro Centre, Springfield Road, Hayes from which he carried on business as a

To complicate matters further, from late 2011 or early 2012, Precision Engineering Auto Ltd (“Precision”) also began trading from units 9 and 10 of the premises at Springfield Road, Hayes. The nature of the relationship between Mr Birdi and Precision has been the matter of considerable dispute, including as regards the use by Precision of certain equipment owned by Mr Birdi (“the Equipment”), particularly an MOT testing station and diagnostic equipment.

The initial meeting of creditors on 20 July 2012 which resulted in Mr Price's appointment was chaired by Janet Hallamore, Assistant Official Receiver. The documents supplied for these Applications include a "List of Proofs & Proxies" considered at that meeting, bearing certain handwritten annotations. This shows that at the time, along with Mr Price, "S Grant and K Stevens of Wilkins Kennedy" were also considered for appointment as Mr Birdi's trustee.

A further document has also been produced relating to this meeting, namely a set of handwritten notes, which Mr Pettit in his First Witness Statement says he and Mr Price consider may have been produced by Ms Hallamore. Both the handwritten notes and the annotations on the "List of Proofs & Proxies" indicate that Mr Antoniades, originally one of the Applicants in this matter, supported the appointment of Mr Price.

Overall six creditors voted for Mr Price, and six for Messrs Grant and Stevens; but the majority by value were for Mr Price - £240,996, versus £221,472 for Grant and Stevens. According to Mr Pettit's evidence, there was also an issue as to whether representatives of Wilkins Kennedy could consent to act as Trustee, given that Wilkins Kennedy had acted for Mr Birdi and are one of his creditors. In any event, on 20 July 2012, Ms Hallamore served a Notice under Rule 6.120 of the then Insolvency Rules, confirming that Mr Price had been appointed as Trustee of Mr Birdi's estate.

Among those creditors whose votes were counted in favour of Mr Price were Max Donnelly, Randal Hockey, Sean Downes and Craig Swenden (or Sweden). The present Applicants complain about their claims (and possibly others) having been brought into account for voting purposes, because they say they are false or bogus creditors. I will return to this point below.

The Trustees' evidence is that on 29 May 2013, Mr Price sent an initial report to the then known creditors, and by the same letter gave notice of a meeting of creditors to be held on 26 June 2013, to consider the basis of the Trustee’s remuneration and disbursements. The meeting was held on 26 June 2013, and the proposed resolutions were duly passed, as follows:

On 4 July 2012, Mr Birdi completed a Bankruptcy Preliminary Information Questionnaire. The Trustees' position is that this was materially deficient, but the Applicants say it identified a number of assets which were sufficient to enable distributions to be made to them as "legitimate proven" creditors, including in particular Mr Birdi's interest in the matrimonial home he shared with Mrs Birdi, namely 81 Shaftesbury Avenue, Norwood Green, Southall.

The Trustees’ position is that in the early stages of the Bankruptcy Mr Birdi did not co-operate with either the Official Receiver or Mr Price. Orders were made for Mr Birdi to be publicly examined. Four hearings took place, on 29 March 2013, 16 May 2013, 26 June 2013 and 28 August 2013, the first two of which were adjourned to enable Mr Birdi to provide further information.

Precision was a particular focus of attention. The sole registered shareholder in

The Trustees' evidence is that on 18 September 2013, Mr Price circulated the first of a series of Annual Updates to creditors, covering the period to 19 July 2013. The present Applicants dispute having seen this or any subsequent Annual Updates. I will return to this point below.

As to other assets falling within Mr Birdi’s estate, after Mr Price was replaced by Mr Pettit in May 2014, Mr Pettit applied for an Order for sale and possession of Mr Birdi’s matrimonial home, which was owned in equal shares by Mr and Mrs Birdi. The trial of those proceedings (“the Possession Proceedings”) was listed for 6 and 7 April 2016. Shortly before that, on 8 March 2016, Mr Birdi issued an application for an injunction in the Chancery Division against 8 Respondents, including Mr Price, Mr Pettit, PBC and the Official Receiver (“the Injunction Proceedings”).

On 7 April 2016, after the hearing in the Possession Proceedings but before judgment was given, a Tomlin Order was agreed between Mr Pettit and Mrs Birdi. Mrs Birdi was given until 31 January 2017 to pay the Trustee £120,000 plus interest. In the event, that sum was not paid and subsequently, in order to prevent the trustee from enforcing possession and sale, Mrs Birdi paid the sum of £300,000 (which was about the market value of Mr Birdi’s interest in the matrimonial home at the time). It is this transfer which Mrs Birdi now says in her Application Notice should be rescinded or revoked.

In the meantime, the hearing in the Injunction Proceedings took place on 16 June 2016. Mr Birdi was given permission to withdraw his application on the basis that he paid the Respondents’ costs.

Then in November and December 2016, yet further litigation developed. This was in the form of two sets of proceedings brought by Mr Birdi himself, and by a Mr Raj Pal Senna. Their first claim form was issued on 2 November 2016, naming as Defendants Mr Price, Mr Pettit, PBC, Janet Hallamore, and a Mr Awde of HMRC. Among the matters covered by the first set of proceedings were complaints about the sale and seizure of the Equipment held by Precision and seised on July 2013. Their second claim form was issued on 19 December 2016, and named as Defendants Ashwin Mody and Charlotte Clarke of Ashteds (solicitors acting for Mr Price and Mr Pettit), Jessica Rajakuma (counsel who had formerly acted for Mr Pettit), and Mr Kevin McAndrew of Eddisons (who had sold the Equipment at auction).

Mr Birdi and Mr Senna subsequently issued an application in their first action for permission to bring committal proceedings, to strike out the Defendants’ defence and/or for summary judgment.

In the event, at a hearing on 14 March 2017, Newey J. struck out (1) all Mr Birdi’s and Mr Senna’s claims made in the second set of proceedings, and (2) their claims in the first set of proceedings against Ms Hallamore and Mr Awde. Newey J. further expressed the view that those various claims were totally without merit.

That left outstanding Mr Birdi’s and Mr Senna’s claims against Mr Price and Mr Pettit in the first set of proceedings in relation to the Equipment. These were put forward on a number of wide-ranging bases. After hearing further from the parties on 16 March and 22 May 2017, Newey J. in his Judgment dated 20 July 2017 ([2017] EWHC 1859 (Ch)) determined that only certain, limited claims by Mr Birdi in relation to the Equipment should be permitted to continue, but no other claims. As regards Mr Senna, Newey J. held that he had “no real prospect of proving that he has or had any material interest in any of the equipment at issue” (Judgment at [37]), and therefore granted summary judgment against him and recorded his view that Mr Senna's claims were totally without merit. Newey J. at [15] also referred to two other relevant occasions, in March and December 2016, when applications in the context of Mr Birdi's Bankruptcy had been marked as totally without merit. Newey J. made an ECRO against Mr Senna (but not Mr Birdi).

The upshot was that Mr Birdi’s remaining claims in relation to the Equipment proceeded to trial before HHJ Eyre QC on 8, 9, 10 and 11 October 2018. These were claims that the Equipment seised from Precision and sold at auction in September 2013 did not form part of the bankruptcy estate of Mr Birdi, because it fell within the exception in section 283(2)(a) Insolvency Act 1986 as regards: “such tools, books, vehicles and other items of equipment as are necessary to the bankrupt for use personally by him in his employment, business or vocation”.

The trial of Mr Birdi’s claims involved detailed investigation of a number of matters, including in particular investigation of the nature of Mr Birdi’s relationship with Precision and of the circumstances surrounding the seizure and sale of the Equipment in 2013. HH Judge Eyre QC gave a comprehensive judgment on 30 November 2018:

As to the current position overall in the Bankruptcy:

On this evidence, it follows that the estate is an insolvent estate and that there will be no distributions to creditors.

The present Applications have their genesis in a series of complaint letters sent to Mr Price and Mr Pettit by the Applicants in August and September 2018, shortly before the trial in front of HHJ Eyre QC mentioned above. Mr Miles sent an initial letter dated 20 August 2018, making many of the same allegations of dishonesty, in particular in relation to Precision and the Equipment, which still feature in the present Applications. His letter also purported to give notice to Mr Pettit under IA section 298(4)(c), requiring Mr Pettit to convene a meeting of creditors within 21 days to sanction removing Mr Pettit as Trustee. Mr Antoniades sent a similar letter on 28 August, Mr Noah on 31 August, and Mrs Birdi on 7 September 2018.

The relevant Applications were issued in August and September 2018. It seems that initially there was a desire to pursue them urgently. Relatedly, on 28 September 2018 the Applicants (including Mr Antoniades) purported to hold a meeting of creditors, at which they resolved to remove Mr Pettit and to replace him with the Official Receiver. The Applicants had no proper standing to hold such a meeting, and it was obviously ineffective. The perceived urgency may have been connected with the pending trial in relation to the Equipment, which was due to be heard in early October 2018.

At a hearing before Zacaroli J. on 3 October 2018, directions were given for evidence to be exchanged in the Applications in October and November, and the Applications listed to come on with a 1.5 day time estimate on the first available date after 30 November 2018. This seems not to have satisfied Mr Noah, however, who made a further application, seeking a hearing on 30 October 2018. That separate application, which in fact only came on for hearing on 1 November 2018, was dismissed by Fancourt J. and marked totally without merit.

The matter came on before me on 22 January 2019. At the start of the Court day at 10.30am, however, none of the Applicants was present. I adjourned for a short period to allow inquiries to be made by the Respondents' solicitors. When the hearing reconvened at about 11am, only one of the Applicants, Mr Noah, had appeared. His position was that he was expecting Mr Miles to present the Applicants' submissions, and that he (Mr Noah) had not prepared to do so. Mr Noah indicated that he had been in contact with Mr Miles in the few days prior to the hearing, and he had assumed Mr Miles would be present, although Mr Miles had apparently said he "felt rough". In any event, he had been trying to speak to Mr Miles that morning but his phone was not on. I decided to adjourn the hearing again for approximately one hour, to allow further inquiries to be made, and asked Mr Noah and the Respondents to make efforts to contact Mr Miles and Mrs Birdi, and to indicate that I intended to resume the hearing at 12.15pm.

When the hearing reconvened, I was shown two emails from Mrs Birdi to the

In her second email Mrs Birdi said:

Consistent with this, Mr Noah also asked me to adjourn the hearing, in light of Mr Miles being unavailable. Ms Kyriakides urged me not to. She said the revelation that Mr Miles was ill was somewhat suspicious, in particular given that he had been well enough to finalise and serve a further Witness Statement (his Fourth) the previous day: it had been sent to the Respondents at about 5pm. She also said, looking at Mrs Birdi's emails, that it was unclear when precisely she had been told that Mr Miles was indisposed, and that in any event it was surprising there had been no earlier communication with the Respondents' solicitors. She said that the Applications involved serious but entirely baseless allegations of wrongdoing and fraud against professional men, and that it would be wrong to let them drift. She described the Applications as hopeless.

I asked Ms Kyriakides to address me further on the latter point, before deciding how to proceed. My initial impression was that the Applications faced some very serious difficulties, but I was conscious of the long and detailed history and wished to have some of the background explained to me. Ms Kyriakides developed her submissions, largely by reference to the points in her Skeleton. I then invited Mr Noah to respond, which he briefly did.

At the end of the afternoon, I indicated that in all the circumstances I was not minded to adjourn disposing of the Applications, despite the absence of Mr Miles and Mrs Birdi, and proposed to reconvene the following morning at 10.30am, with a view to concluding the hearing then. My reasons in summary were:

I therefore adjourned the hearing until the morning of 23 January 2019. I invited the parties present to communicate with Mr Miles and Mrs Birdi, to indicate that that was my intention, but also that I would be open to further representations being made to me the following day, if supported by proper evidence (including if necessary medical evidence).

On the afternoon of 22 January, I received an email from Mr Miles via the Court. This became available to me only after the end of the day's sitting. It was sent to Chancery Listing at 15.45. In it Mr Miles said that he had had personal complications and had had to attend A&E, and had only just left hospital. He said the hospital had advised he should not continue to cause himself any stress as his blood pressure was extremely high. He said he would "forward on proof from where I have been today, which I can obtain from the Doctor as needed". He concluded by saying: "I am unsure as to what position this now puts me in – the doctors (sic.) recommendation was to make my health a priority".

In fact, no further proof from a Doctor as to Mr Miles' condition has been provided.

In the event, on the morning of 23 January Mr Miles was present in Court, together with Mr Noah. Mr Miles said he had been in A&E the day before, and complained of

Mr Miles then made an application to nominate Mr Raj Pal Senna as his McKenzie Friend. This was the same Raj Pal Senna who had pursued his own claims against Mr Price and Mr Pettit in relation to the Equipment, and who had been made subject to an ECRO by Mr Justice Newey. Mr Miles' application was made on the basis that he was "unwell and was admitted to A&E yesterday". His Application Notice went on to say: "I am extremely stressed out by this case and I cannot cope".

I declined to allow Mr Senna to exercise any rights of audience. That seemed to me incompatible with his ECRO. In light of Mr Miles' claims about his state of health, however, I agreed (with some reluctance) to permit Mr Senna to provide the more limited support appropriate for a McKenzie Friend, including helping with case papers and quietly giving advice to Mr Miles. In the event, it became clear during the hearing that Mr Miles was heavily dependent on Mr Senna in presenting his case, and on a number of occasions was simply repeating to the Court what Mr Senna told him to say. In any event, I am satisfied that Mr Miles was given a full opportunity during the morning of 23 January of making all the points he wished to make, following which Ms Kyriakides briefly responded.

I made it clear to Mr Miles that he was entitled to reply to Ms Kyriakides' submissions after the lunch adjournment, but in the event Mr Miles did not reappear in Court (I received an email from him later that afternoon, apologising and saying he had had to leave because of a recurrence of his severe chest pains). I therefore made a direction enabling Mr Miles to make further submissions in writing if he wished to, such submissions to be provided by Friday 1 February 2019. In the meantime, since Mr Miles had not been present in Court during Ms Kyriakides' submissions the previous day, I directed her to provide a note summarising as best she was able the points she had made which were not reflected in her Skeleton. Ms Kyriakides duly produced her Note on Friday 25 January 2019, and Mr Miles provided his on Friday 1 February 2019.

Mrs Birdi was not present in Court for any part of the hearing, but in the circumstances it seemed to me fair to continue without her. She plainly knew the hearing was taking place, and had made a deliberate decision not to attend. In any event, her two emails of 22 January 2019 indicated she was content to allow Mr Miles to make submissions on her behalf.

The starting point is section 298 IA, which provides:

“Subject as follows, the trustee of a bankrupt’s estate may be removed from office only by an order of the court or by a decision of the bankrupt’s creditors made by a creditors’ decision procedure instigated specially for that purpose in accordance with the rules.”

There is limited direct guidance in the authorities on the operation of this provision. I have been referred to Smedley v. Brittain [2008] BPIR 219, a decision of Registrar Nicholls, and also to Doffman & Isaacs v. Wood & Hellard [2011] EWHC 4008 (Ch) [2012] BPIR 972, a decision of Proudman J. In those cases, inspiration was drawn from cases under ss108(2) and 172(2) IA, dealing with the removal from office of liquidators: see for example Re Keypack Homecare Ltd [1987] BCLC 409; Re Buildhead Ltd (In Liquidation) No. 2 [2004] EWHC 2443 (Ch), [2004] BPIR 1139; Re Edennote Ltd; Tottenham Hotspur plc & Ors v. Ryman & Anor [1996] 2 BCLC 389; and AMP Music Box Enterprises Ltd v. Hoffman [2002] EWHC 1989 (Ch), [2003] 1 BCLC 319.

In Doffman & Isaacs v. Wood & Hellard [2011] EWHC 4008 (Ch) [2012] BPIR 972, Proudman J. at [13] summarised the position as follows:

At [14], Proudman J. went on to say that:

At [23], Proudman J. went on to quote the following, taken again from Re Edennote Ltd; Tottenham Hotspur plc & Ors v. Ryman & Anor [1996] 2 BCLC 389, per Nourse LJ at 398:

These passages suggest to me that the power is a broad one; that the conduct of the office holder is of course material; but that ultimately the assessment is whether removal of the office holder is in the interests of the bankruptcy process as a whole. That view is supported by the comments of Neuberger J. (as he then was) in AMP Music Box Enterprises Ltd v. Hoffman [2002] EWHC 1899 (Ch), [2003] 1 BCLC 319, who at [23] spoke of the court having to "carry out a difficult balancing exercise". He went on (at [23] and [27]):

The Applicant's case for removal of the Trustee (which in context has to mean the current Trustee, Mr Pettit) is put forward under the following headings, which I take from Mr Miles' Skeleton Argument:

As to the Trustees, they deny all such allegations of wrongdoing, however they are put. Their position, broadly speaking, is that in managing the Bankruptcy in the way they did, they were doing no more than they were properly required to do based on the information they had available. They say that Mr Birdi was evasive and that this is the true reason why costs were incurred. They say that in any event, they provided regular progress reports on the conduct of the Bankruptcy, and no-one complained at the time about how matters were being handled and about the costs incurred. They reject the idea that there was any irregularity in the way either of them was appointed, and say in any event it is now too late to complain about it. They say it is inaccurate and wrong for the Applicants to describe themselves as the only “legitimate proven” creditors. Other proofs of debt have been submitted totalling £1,048,373, but since there are no funds available to distribute to creditors Mr Pettit has not determined the proofs and there is no point in him doing so. In summary, their position is that it is unfortunate there is no dividend available for distribution to creditors, but that is not their fault or responsibility. It is a function of the size of the Bankrupt’s available estate and of the costs they have legitimately had to incur, both in pursuing proceedings to realise assets, and latterly, to defend themselves against claims made by Mr Birdi and others relating to the estate.

The Applicants make many detailed allegations, but it seems to me that I am faced with what is essentially a broad question, namely whether it is in the interests of the Bankruptcy process as a whole to contemplate removing Mr Pettit and appointing a new trustee at this very late stage.

It further seems to me that the real focus of the inquiry should be on the allegations made in relation to costs.

I say that because, looking at matters broadly, the variables which affect the likelihood (and size) of any distribution being made in Mr Birdi's Bankruptcy are (1) the number and value of the claims on the estate, (2) the value of the assets realised, and (3) the costs and expenses incurred in realising them.

As regards (1), the Trustees have not reached the position of having to determine the proofs of debt submitted by creditors for the purpose of declaring a dividend. Mr Pettit says he would only do so where there were sufficient funds in hand to make it worthwhile. It follows that under their heading "Fraud: Fabrication of creditors", the Applicants are simply wrong to say that the "trustee knowingly and intentionally made fraudulent claims that the proven creditors amount to some £1million". All he has done is to say that proofs of debt have been received which total about £1million – i.e., £1,048,373. This, and the other criticisms made under the same heading, all rest on the misconception that the submitted proofs have been finally adjudicated upon for dividend purposes. They have not been.

For purposes of the present analysis, however, it seems to me that such points are of secondary importance. The Applicants' complaint that they are the only "legitimate proven" creditors of Mr Birdi is actually something of a red herring, unless they are able to show either that there are further assets of the Bankrupt which fall within his estate which have not yet been realised, or that the costs and expenses incurred are excessive and in some way fall to be reduced. If not, then there will still be nothing available for distribution to creditors, even assuming that the Applicants are the only creditors entitled to make a claim.

As regards variable (2), the Applicants do not say that there are any as yet unrealised assets, aside perhaps from the costs orders against Mr Birdi and Mr Senna, but no one has suggested that they will tip the balance in favour of there being a surplus. Indeed, somewhat ironically, the single largest realisation for the estate so far has been the payment received by Mrs Birdi of £300,000, representing the value of Mr Birdi's half share in the matrimonial home. By means of her Application, which I will deal with below, Mrs Birdi seeks to reverse that payment, which of course would have the effect of reducing the overall value of the Bankruptcy estate, not increasing it.

That leaves variable (3), costs and expenses, which the Applicants do complaint about. It seems to me that unless I can see some basis for saying that such costs and expenses should be "rescinded/revoked", or very materially reduced, there is no point at all in removing the current Trustee and appointing a new one. To do so would leave the creditors in no better position, and would only give rise to cause further disruption and cost.

The Applicants say that costs have been inflated unnecessarily and improperly, and indeed go so far as to allege (Skeleton at paragraph 53.2) that "the Trustee has acted in his own best interests to rack up bogus costs to finance his lavish lifestyle". They ask for Orders which "rescind/revoke the remuneration of the Trustee".

I can see no proper basis for the Applicants' complaints.

The starting point is that the structure of the Trustees' remuneration was approved at the creditors' meeting on 26 June 2013. As noted above, the Applicants appear to suggest that this meeting was somehow "bogus". I do not fully understand this suggestion and in any event reject it. Mr Pettit has exhibited minutes of that meeting, and Mr Miles himself has exhibited the relevant notice of meeting. There is no basis whatever for doubting the authenticity of any of these documents or indeed for doubting that the meeting took place and that the relevant resolutions were duly passed.

It is also relevant that creditors were given regular updates by the two Trustees of the course of the Bankruptcy, including as regards accumulating costs and expenses. Mr Pettit has exhibited six Annual Progress Reports, for the years 2013 to 2018 inclusive, together with proof of posting or proof of uploading onto a relevant website. These Reports included, as Ms Kyriakides has pointed out, (1) the remuneration of the Trustees and a breakdown of that remuneration in accordance with SIP 9; (2) details of Cat 1 and Cat 2 expenses; (3) a receipts and payments account; and (4) an explanation of the rights of creditors to seek clarification of the Trustees' remuneration and expenses and to challenge the same, and the time limits for making a challenge. Yet until the present Applications, no challenge had ever been made. The Applicants' response is again to say (Skeleton at paragraph 56) that the Annual

The Insolvency Rules make provision for creditors to challenge a trustee's remuneration, but the challenge must be made in a timely manner, i.e., within 8 weeks of delivery of the relevant report: see Insolvency Rules 1986, Rule 6.142(1B), and Insolvency Rules 2016, Rule 18.34(3) (in force from 6 April 2017). Ms Kyriakides argued that that is for good reason, because in order for the bankruptcy to proceed in an orderly fashion, any objections should be made straightaway.

I agree with Ms Kyriakides. Of course, the Court has power to extend time in appropriate cases, but no application to extend time has been made and in any event there is no good reason to do so here. The Applicants complain that they never saw any of the Annual Progress Reports when they were sent, but they are entirely vague about when they did first see them, and give no explanation as to why (if they say they first saw them only recently) they apparently chose to take no interest at all in the course of Mr Birdi's Bankruptcy over the course of the last six and-a-half years. All of them submitted proofs of debt at the outset. Even if they did not receive any updates at all (which seems implausible), they could have made inquiries of their own well before now.

Even if that is wrong, and it is otherwise appropriate even at this late stage to conduct a review of the Trustees' remuneration, I can see no proper basis for interfering with it, and certainly not to such an extent as would enable any distribution to be made to creditors.

In my judgment, there is no basis for the assertion that the Trustees have incurred unnecessary costs, as part of a scheme to benefit themselves. On the contrary, the evidence shows that a great deal of time and effort has been spent in responding to the efforts of Mr Birdi and his associates to avoid engaging with the Bankruptcy process and to complicate and disrupt it. The Trustees collectively have incurred over £270,000 worth of time costs but have been able to draw down less than half of that, i.e., about £117,000. This is far less even than the £194,671 which the Applicants complain about. In the circumstances, it is obviously wrong to suggest that the Trustees have managed the Bankruptcy in a way designed to support their lavish lifestyles.

As noted above, the main plank of the Applicants' attack on the Trustees' costs relates to the manner in which Mr Price went about dealing with Mr Birdi's connection with Precision and the seizure and sale of the Equipment. The Applicants say "[a]ll of these costs must be put back into the kitty for the creditors", and in support they rely on certain alleged findings of Newey J. in his Judgment of 20 July 2017. For example, in their Skeleton (and indeed in their Witness Statements) the Applicants say:

In fact, this is a complete mischaracterisation of what Newey J. said: his paragraph 23 did not set out any findings or views, but instead was a summary of Mr Birdi's own complaints, taken from submissions made by Mr Birdi's counsel. Moreover, the true position as regards the seizure and sale of the Equipment has now been analysed in great detail by HHJ Eyre QC, whose conclusions in his Judgment of 30 November 2018 are entirely consistent with the idea that the Trustee's costs (those of Mr Price at the time) were reasonably incurred, given the efforts made by Mr Birdi to obfuscate and confuse.

In his Judgment at [9]-[37], HHJ Eyre QC sets out how Mr Birdi has given confusing and inconsistent accounts over time, both as regards the Equipment and as regards his relationship with Precision. For example, in an "assets and liabilities statement" sent to the court in March 2012, in an effort to obtain an adjournment of the hearing of his Petition, Mr Birdi represented that he had available various items of equipment to the value of £620,000 (Judgment at [9]), but then in his Bankruptcy Preliminary Information Questionnaire, in response to the questions asking for details of "machinery, plant and equipment" and "fixtures and fittings", Mr Birdi answered "none" (Judgment at [11]). Likewise, Mr Birdi's initial position as regards Precision was that units 9 and 10 at Hayes Metro Centre and the Equipment had been leased to Precision, but later when seeking to argue that the Equipment represented his personal tools of trade, he said that Precision was a licensee (Judgment at [21]). Thus, as HHJ Eyre QC noted at [19]:

That gives a flavour of what the Official Receiver and later Mr Price were presented with. Mr Price as Bankruptcy Trustee had an obligation properly to investigate Mr Birdi's affairs. Mr Birdi's behaviour can only have increased the complexity of that exercise, and the costs and expenses incurred should be looked at in the light of such factors. Some other examples of Mr Birdi's behaviour are given by Mr Pettit in his First Witness Statement. He describes Mr Price's early investigations having revealed:

The matter does not end there. One cannot sensibly stop the clock and look only at the £194,672.26 of time costs incurred as at 22 May 2015. In assessing at this stage the utility of appointing a new trustee one must look at the overall costs and expenses (including Trustees' fees) incurred to date. These obviously include costs and expenses incurred not only in gathering in Mr Birdi's assets (such as those relating to the Possession Proceedings, which proceeded to trial in 2016), but also in defending and dealing with the various adverse claims brought against the Trustees (and others) by Mr Birdi and Mr Senna, viz.:

Looking at the matter in the round, there is little doubt that this is a case in which by one means or another Mr Birdi, with the assistance of others, has gone to extraordinary lengths to complicate and indeed prolong the administration of his Bankruptcy estate. In this regard I should say that I attach no weight to what the Applicants have sought to characterise as "offers" from Mr Birdi, in letters they have exhibited dated 7 January 2013, 28 February 2018 and 29 July 2013. On examination, as Ms Kyriakides points out, these are not offer letters at all but requests for information. In his First Witness Statement Mr Pettit accepts that other letters amounting to offers were received by Mr Price, but goes on to say that Mr Birdi never provided funds or evidence of any funds to settle his liabilities. In the circumstances, and in light of the other evidence available as to Mr Birdi's patterns of behaviour, it seems to me impossible to conclude that pursuing those offers would have resulted in any, or any material, cost saving for the estate.

It follows that I see no merit at all in the Applicant's core complaints under the headings "Fraud: Fabrication of costs" and "Fraud: Fabrication of documents and misrepresentations".

Many of the Applicants' other complaints and allegations of wrongdoing are tied up with the overall question of costs, and in particular the costs associated with realising the value of the Equipment, and dealing with the subsequent litigation brought by Mr Birdi flowing from that. None of these allegations is sustainable. I deal with the main points below, again using the broad headings from Mr Miles' Skeleton:

In all these circumstances, and given that I see no basis for the Applicants' criticisms of the way in which the Trustees have managed the Bankruptcy, and no basis on which the costs they have incurred can sensibly be criticised, it follows that I see no grounds for removing the present Trustee and replacing him with another office holder. Such a step would serve no useful purpose at all, and would only give rise to yet further delay, disruption and cost.

Is that conclusion affected by the criticisms made of the manner in which the two Trustees came to be appointed? In my view, the answer is no.

Dealing first with Mr Pettit, the current Trustee, although the Applicants' complaint is put forward under the heading "Fraud: Change of Trustee", it is very difficult to see what the alleged "fraud" is said to have been. It seems to be based on the assumption that because the previous Trustee, Mr Price, retired from his practice in January 2014, he cannot have made any application to have himself replaced by Mr Pettit in May 2014, at the time of the Block Transfer Order. If that is the allegation, it is obviously misguided, since it confuses Mr Price's retirement from his practice with his continuing status as office holder. It is quite clear from the terms of the Block Transfer Order dated 22 May 2014 that Mr Price continued as Mr Birdi's Trustee in Bankruptcy until that date, when he was removed and replaced by Mr Pettit. The Application Mr Price made for his removal was made by him in that capacity.

The Applicants also say that the Block Transfer Order was not published in The Gazette and that in any event they were not told about it. There is nothing in these points. Mr Pettit has exhibited an extract from The Gazette giving notice of the change of Trustee in respect of Mr Birdi's Bankruptcy. He has also exhibited a copy of the Annual Report for the period to 22 May 2014, which contains a special notice stating: "Pursuant to an Order of the High Court dated 22 May 2014 Mr Price has been replaced as office holder by Mr Gary Stephen Pettit". This satisfied the requirement in paragraph 11 of the Order that " … this Order and its effects shall be specifically drawn to the attention of Creditors in the office holders' next report to Creditors".

As to Mr Price, the original trustee, the allegations as regards his appointment are different. They are made under the heading: "Fraud: Procuring appointment as

It will be recalled that Verdi Ferrari was the company owned by Mr Birdi’s son, which was wound up by Order of the Court on 11 December 2011.

During the course of the hearing, the picture became clearer in relation to this group of allegations. The nub of the complaint is that certain creditors who were properly to be regarded as creditors of Verdi Ferrari or of Mr Birdi’s son, Kabir Virdi, had improperly been persuaded by Mr Price to submit proofs of debt in the Bankruptcy of Mr Birdi instead. Mr Price, it was said, had thereby improperly manipulated the process and engineered his own appointment, in the sense that a majority of the creditors by value voted for him and not for Messrs Grant and Stevens of Wilkins Kennedy.

As matters developed at the hearing, the key allegations were in relation to Max Donnelly, Randal Hockey, Sean Downes and Craig Swenden (or Sweden). In the "List of Proofs & Proxies" produced for the meeting on 20 July 2012, the values attributed to their proofs were as follows: Mr Donnelly, £21,192; Mr Hockey, £45,326.12; Mr Downes, £37,995; and Mr Swenden (or Sweden) £48,410.00. (I should mention for completeness that at one stage the allegations of misconduct at the meeting included an allegation that the "proxies and voting rights of Antony Antoniades" had been misappropriated. During the course of the hearing I was shown an unsigned Statement of Mr Antoniades, saying that he had opposed the appointment of Mr Price as Trustee. However, I attach no weight to that Statement because (1) it is unsigned, (2) the assertion made in it is inconsistent with the contemporaneous documents, and (3) Mr Antoniades' Application was dismissed by consent and he has played no part in the proceedings).

A number of documents were produced by the Applicants in support of this part of their case, including:

The Applicants also produced copies of some recent email exchanges between Mr Senna and Mr Donnelly, Mr Hockey, and Mr Sweden (or Swenden). The email from Mr Donnelly dated 21 January 2019 represents the high-water mark:

“Alan Price told me about the creditors meeting at the office of the official receiver in 2012 and told me to vote for him. I asked if this was legal because I was already a creditor in the liquidation of Verdi’s company. Alan Price told me he will make it legal but after he got appointed even he disappeared and I have not heard anything for the past 5 years.”

What to make of all this? The Applicants say it is evidence of "fraud by Alan Price for soliciting creditors to procure an appointment", presumably as part of the larger scheme that he had to benefit himself personally by incurring unnecessary costs in administering Mr Birdi's estate.

In my view, the documents relied on by the Applicants do not support such a conclusion. They are more consistent with the idea that customers at the time were confused and uncertain about exactly which party they were contracting with. That seems to me understandable, in circumstances where there were apparently a number of businesses operating from the same premises more or less simultaneously.

The overall picture on the documents is unclear. For example:

The picture which emerges from this, consistent with other evidence of how Mr Birdi arranged his business affairs, is one of understandable confusion, and of creditors not being at all clear whom they properly had claims against. That interpretation is supported by the following extract from Mr Price's letter to Mr Birdi dated 12 August 2013:

In those circumstances, I do not see the documents relied on by the Applicants as supporting a case of fraud. All one can say with certainty is that some creditors seem to have made claims against different debtors, perhaps with the encouragement of Mr Price. Their precise motivations are somewhat obscure at this distance of time, but it seems very likely they were doing no more than hedging their bets because of uncertainty about who their true debtor was, and thus trying to preserve whatever claims they did have, which would fall to be finally adjudicated on for dividend purposes at some future time. I have seen nothing to suggest that anyone knowingly made claims with a view to obtaining an illegitimate double-recovery. As to later events, of course as far as Mr Birdi's Bankruptcy is concerned, final adjudication of proofs has not happened because there has never been a realistic possibility of a dividend and hence the practical need has never arisen. I have no information about the liquidation of Verdi Ferrari or Kabir Virdi's bankruptcy, but the recent emails attached to the Applicants' Skeleton suggest that none of the four relevant creditors has ever received anything from anyone. Thus, there is nothing to suggest that any of the creditors has actually been paid out twice, and knowingly kept payments they were not entitled to.

The Applicants' complaints fail to recognise that admission of the proofs for voting purposes at the 20 July 2012 meeting was not and was not intended to be a final determination of their legitimacy. Admission of proofs for voting at the meeting was a matter for the Chair, Janet Hallamore of the Official Receiver's Office. I can see no basis at this stage for entertaining a challenge to the decisions she made. I note again that the Insolvency Rules 1986 provided a specific mechanism for challenge via an appeal within 21 days (Insolvency Rules 1986, Rule 6.94). No appeal was brought, and in all the circumstances it is far too late now for the Court to contemplate extending time.

It follows that I reject the Applicants' criticisms of the appointment of Mr Price. In any event as I see it, the question for me at this stage is whether the available evidence about Mr Price's appointment gives rise to sufficient concern to justify removing Mr Pettit, given that no-one is saying there are further assets to realise and there are no grounds for unwinding or materially reducing the Trustees' fees incurred so far. I do not think so. Such a step would not be in the interests of the Bankruptcy process as a whole.

The Applicants' alternative case is that the Court should require Mr Pettit to convene a creditors' meeting to consider and approve a resolution for his removal. Their position seems to be that the notices contained in their complaint letters sent in August and September 2018 satisfied the statutory requirements, and that accordingly the Court should require Mr Pettit to convene a meeting.

It is useful to set out again the text of IA section 298(1):

“Subject as follows, the trustee of a bankrupt’s estate may be removed from office only by an order of the court or by a decision of the bankrupt’s creditors made by a creditors’ decision procedure instigated specially for that purpose in accordance with the rules.”

Under IA section 298(4), where (as in this case) a trustee is appointed by the Court, a creditors' decision procedure may be instigated for the purpose of removing him only if either (a) the trustee thinks fit, (b) the court so directs, or (c):

A request under IA section 298(4)(c) qualifies as a "requisitioned decision" under the Insolvency Rules 2016 ("IR"), Rule 15.18(1). Certain procedural requirements are therefore imposed by Rules 15.18 and 15.19.

Rule 15.18(3) says that the request for a requisitioned decision must include a statement of the purpose of the proposed decision and either (a) a statement of the requisitioning creditor's claim together with (i) "a list of the creditors … concurring with the request and of the amounts of their respective claims", and (ii) confirmation of concurrence from each creditor; or alternatively (b) a statement of the requesting creditor's debt and that that alone is sufficient without the concurrence of other creditors.

Rule 15.19(1) requires the convenor (here Mr Pettit), within 14 days of receiving a request, to provide the requesting creditor with itemised details of the sum to be deposited as security for payment of the expenses of such procedure. Rule 15.19(2) provides that the convenor is not obliged to initiate the decision procedure until either the convenor has received the required sum or the period of 14 days has expired without him having informed the requesting creditor of the sum required.

On the face of it, if the relevant formalities are complied with, the convenor is under an obligation to comply. Thus, although Rule 15.19(2) talks of the convenor having no obligation to initiate the decision procedure if the required sum is not paid, it would seem to follow from that that if it is paid, an obligation then arises.

Ms Kyriakides however has drawn my attention to two authorities which suggest that, although the duty is expressed in mandatory terms, in fact the Court has power to override the convenor's obligation (even if it has arisen) and direct him not to comply with it. In Re Barings (No. 6) [2001] 2 BCLC 159, Sir Andrew Morritt V-C held that although section 168(2) IA imposed a duty on the liquidator to whom a requisition was addressed to summon a meeting, the court had jurisdiction to override that duty (see at [43]). That involved the Court making an assessment of whether the proposed meeting (see at [47]):

On the facts, that test was not met and so no meeting was convened. Similarly in Managa Properties Ltd v. Brittain [2009] EWHC 157 (Ch), [2010] Bus LR 599, a case dealing with IA section 172, it was held (at [17]) that even where 25% or more of the creditors by value concurred:

In my judgment the relevant formalities under the Insolvency Rules have not been complied with, and so Mr Pettit is under no obligation to convene a creditors' meeting. 108. I say that for the following reasons:

Even if the above analysis is incorrect, and Mr Pettit is under an obligation to convene a meeting, it seems to me that this is a case in which the Court should intervene and override that obligation. I say that because, in light of the conclusions expressed in the previous section of this judgment, I cannot see that there would be any practical utility in forcing a change of trustee at this very late stage. In reality, nothing is left to be done except for Mr Pettit to collect on the costs Orders made for the benefit of the estate. Changing trustees now would only serve to create unnecessary work and waste costs, and in my view cannot be justified. In any event, no replacement trustee is available for any meeting to appoint.

I come back to Mrs Bridi's Application for a declaration that the £300,000 she paid for Mr Birdi's share in the matrimonial home be revoked or rescinded.

No basis for this declaration is set out in Mrs Birdi's Application Notice. The matter is touched on only lightly in her Witness Statement, where among the "Issues to be decided", she lists:

No further particulars are given and the point is not developed.

Since I have been shown nothing which would justify Mrs Birdi's claim for a declaration, it is dismissed.

In my judgment, and for all the reasons given above, the Applications should be dismissed in their entirety. For the avoidance of doubt, that includes: