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[2010] BPIR 418
M agreed to acquire some properties from F, but did not complete the transaction. In 2006 F brought proceedings to recover the balance of deposits. M counterclaimed for breach of contract, in the sum of £121,250 plus interest. A bankruptcy order was made against M in March 2007, on a third party's petition, and consequently the claim and the counterclaim were each stayed. H was appointed as M's trustee in bankruptcy. The only asset potentially of significant value was the counterclaim. The progress of the bankruptcy was hampered in the early stages by a number of meritless applications to court by M, culminating in a civil restraint order, and by M's attempts to frustrate investigations. It was clear that any realisations would be used to meet the petitioning creditor's costs and legal costs. H was not going to receive any settlement of his costs and there was no prospect of any recovery for creditors. After taking legal advice, H decided not to pursue the counterclaim due to problems with its merits and funding, and decided that it would be in the best interests of the bankruptcy to offer the counterclaim for assignment, considering that each of M and F might be interested in bidding for it. H's solicitors wrote to each of them in substantially the same terms, inviting bids, on terms that H would have to be indemnified as to any sums payable in the Fairview proceedings and that H's costs of the assignment and application to court were to be borne by the assignee. In correspondence with each of them, H's solicitors indicated that the indemnity would be capped at £3,000. In correspondence with F, H's solicitors indicated that the costs of the assignment and the application would be capped at £5,000 but did not communicate that to M. M submitted a bid based on a percentage of the recovery on the counterclaim or a fixed sum, whichever was less, whereas F's bid was for an outright cash figure. H decided to accept F's bid, communicated this to the parties and submitted an application for directions for the disposal of the counterclaim. M argued that the bidding process was unfair, as he had been unaware of the costs cap of £5,000, and that had he been aware of it he would have submitted a better cash offer with the benefit of third-party finance, which he proceeded to put forward. M also argued that it was conceptually impossible for the counterclaim to be assigned to F. F argued that the outcome of the original bid process was determinative, alternatively that if the original bid process was not binding it would wish to make a further bid. H's position was that a further round of final bids from each of M and F should now take place. If there were to be a further bidding process, H and F disagreed as to the terms upon which it should take place.
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