Rushmer v Atkinson

In Rushmer v Atkinson (2015 EWHC 3720) the Applicant sought a declaration that the business she had conducted with her husband was a partnership and so fell outside her husband’s bankruptcy estate. She also sought delivery up of partnership documentation and other partnership property and an indemnity against any fines, penalties or interest levied by HMRC. The Respondent to the application was her husband’s Trustee in Bankruptcy.

The trial was heard over 5 days in October last year. In a detailed decision the Registrar considered the legal basis for a partnership under English law and found unequivocally that the business conducted by the Applicant and her husband was indeed a partnership. She also found that the Trustee had wrongfully and negligently withheld partnership property and that critical documents had either been lost by the Trustee or his advisers or not been properly searched for despite Court Orders that they be disclosed.

Beyond its own facts, the judgment will be interesting to office-holders and their advisers because of the stern warnings given by the Registrar about the way in which the Trustee had investigated the bankruptcy estate and the existence of the partnership, and presented evidence to the court. The Registrar said:

“A Trustee conducting an investigation into a contentious issue arising in a bankrupt’s affairs should strive to gather and review all readily available evidence on that issue on and impartial basis. He should be alive to the possibility of conjecture and unsubstantiated opinion. He should r-evaluate evidence as the investigation progresses.

In this case… the Trustee’s investigations appear to have been conducted with a view solely to collecting evidence in support of a desire result, rather than with a view to establishing the true position.”

The Registrar gave a strong judgment in the Applicant’s favour and awarded indemnity costs for the whole case. She also ordered £100,000 on account of costs to be paid within 72 hours so that the clients had some funds prior to Christmas.

Jeffrey Bacon and Max Cole represented Mrs Rushmer