Affidavits including hearsay were inadmissible on a challenge to voluntary arrangement. The proceedings were for a final order.
Times 19-Jul-1995, Ind Summary 10-Jul-1995
England and Wales
Updated: 11 May 2022; Ref: scu.85697
A debtor does not have a right, under the constitution to participate in any scheme for the relief of debt. Accordingly it was not ultra vires for the Lord Chancellor to provide no discretion on the payment of court fees by an intending applicant for bankruptcy. Such fees were used toward the administration of the applicant’s affairs.
Times 18-Aug-1999, Gazette 11-Aug-1999
Insolvency Fees Order 1986 (1986 No 2030) 8(1) 9(b)
England and Wales
Updated: 11 May 2022; Ref: scu.85375
A waste management licence could constitute both property and onerous property for the purposes of the Insolvency Act. It could also be an interest incidental to the land to which it related. Because of this the liquidator of a waste management company could disclaim the licence without committing an offence under the Act.
Times 05-Aug-1999
Environmental Protection Act 1990 33 34, Insolvency Act 1986 178(3), 436
England and Wales
Updated: 11 May 2022; Ref: scu.84428
A bankrupt labourer (aged 30) after the bankruptcy order issued a writ against a doctor who had treated him for back pain before the bankruptcy order, claiming damages for negligence, including damages for pain and suffering as well as damages for loss of earnings.
Held: An action for damages for personal injuries arising from negligence, brought by a bankrupt was a hybrid claim. It involved claims which were both of a personal and a proprietorial nature, and as such the claim vested in the trustee in bankruptcy. Any part of it could only remain with the bankrupt if it fell within an established exemption. Damages relating to any personal cause of action would be held by the trustee in trust for the bankrupt.
Aldous LJ said: ‘The authorities are only consistent with the conclusion that the trustee is entitled to the damages for past and future loss of earnings and is not entitled to the damages for pain and suffering. As there is a single cause of action, it vested in the trustee. There is in my view nothing in that conclusion which imposes practical difficulties with which the law cannot deal. The trustee as constructive trustee would have to account to the bankrupt for the property which he obtained inadvertently or by arrangement in an action which vested in him for the benefit of the creditors. The idea that the cause of action should vest in the bankrupt would not be acceptable and compulsory joinder of both could lead to difficulties when the claim for loss of earnings was small compared with the potential costs of the litigation. In such a case the trustee, if the cause of action vested in him, would have to consider carefully his duty to the bankrupt and would probably, if requested, assign the cause of action to him’.
Aldous LJ, Kennedy and Mantell LJJ
Times 11-Jan-2000, Gazette 07-Jan-2000, [2000] Ch 352, [2000] 1 All ER 193, [2000] 2 WLR 755
England and Wales
Cited – Mulkerrins v Pricewaterhouse Coopers HL 31-Jul-2003
The claimant sought damages from her former accountants for failing to protect her from bankruptcy. The receiver had unnecessarily caused great difficulties in making their claim that such an action vested in them. The defendants had subsequently, . .
Cited – Khan v Trident Safeguards Ltd and others CA 19-May-2004
The claimant had ben made bankrupt. The defendant argued that his claim vested in the trustee.
Held: A discrimination claim was hybrid in nature rather than purely personal, and so it vested in the trustee. However the real issue was the . .
Cited – Simpson v Norfolk and Norwich University Hospital NHS Trust CA 12-Oct-2011
The court was asked whether it was possible to assign as a chose in action a cause of action in tort for damages for personal injury, and if so under what circumstances it was possible.
Held: The appeal was dismissed. The claimant did not have . .
Lists of cited by and citing cases may be incomplete.
Updated: 11 May 2022; Ref: scu.84474
A trustee in bankruptcy had had vested in him the legal title to an action for damages for the loss to personal reputation and status of the bankrupt.
Held: A declaration that he had no interest in a claim for damages against a former insolvency practitioner, was not a judgment in rem, making him a bare trustee of that claim. The bankrupt must therefore first secure an assignment of the claim from the trustee in order to bring the action. The declaration did not create a world which was binding upon the defendants.
Times 12-Jan-2001, Gazette 01-Feb-2001
England and Wales
Appeal from – Mulkerrins v Pricewaterhousecoopers (A Firm) ChD 29-Mar-2000
Where a bankrupt wished to pursue an action held for him personally rather than his creditors.
Held: The trustee in bankruptcy held the right of action in trust for the bankrupt, but declined to sue. The bankrupt had the right to join the . .
Appeal to – Mulkerrins v Pricewaterhousecoopers (A Firm) ChD 29-Mar-2000
Where a bankrupt wished to pursue an action held for him personally rather than his creditors.
Held: The trustee in bankruptcy held the right of action in trust for the bankrupt, but declined to sue. The bankrupt had the right to join the . .
Appeal from – Mulkerrins v Pricewaterhouse Coopers HL 31-Jul-2003
The claimant sought damages from her former accountants for failing to protect her from bankruptcy. The receiver had unnecessarily caused great difficulties in making their claim that such an action vested in them. The defendants had subsequently, . .
Lists of cited by and citing cases may be incomplete.
Updated: 11 May 2022; Ref: scu.84114
A judgment obtained by default against a bankrupt in a foreign jurisdiction, was not sufficient evidence of itself, to establish that the debt which it proved had been obtained or created by fraud, or by a fraud to which they were a party. The party had been debarred from defending himself, and a finding on those terms could not mean that the debt should survive a bankruptcy here.
Gazette 02-Sep-1999, Times 05-Aug-1999
England and Wales
Updated: 10 May 2022; Ref: scu.83466
A scottish receiver of a company is not himself in occupation of the company’s premises for rating purposes.
Times 14-Apr-1994
Scotland
Updated: 10 May 2022; Ref: scu.83554
Successive liquidators in company where insufficient assets to meet all costs had costs abated rateably.
Times 11-Jul-1997
England and Wales
Updated: 10 May 2022; Ref: scu.83669
A company asserting that it had a defence to a debt upon which an application for winding up was founded, could not succeed simply by filing an affidavit saying it would defend. The court should assess prospects in same was as it would on an application for summary judgment.
Times 03-Dec-1998
England and Wales
Updated: 10 May 2022; Ref: scu.83155
Where a company in liquidation made profits which were to be taken into account for Corporation Tax even though they might never be realisable, the tax payable had priority over the claims of the creditors. In this case the prime asset of the company was a debt due from a connected company. It would not be paid, but the law deemed it to receive interest and that the interest was taxable.
Times 29-Mar-2000, Gazette 14-Apr-2000
Income and Corporation Taxes Act 1988
England and Wales
Updated: 10 May 2022; Ref: scu.82253
Administrators took on new employees during the period of administration, but when it came to an end, they were unable to pay the PAYE and NIC for the employees.
Held: The statute gave special priority to debts incurred under new contracts. The liability for PAYE fell under that category, and so did liability for NIC, and these took precedence over the expenses of administration. The tax was a statutory translation of the administrator’s debt to the employee of the amounts deducted from his salary. Secondary NI contributions did not carry the same special priority.
Times 02-Aug-2000, Gazette 03-Aug-2000
Insolvency Act 1986 19(4) 19(5) 19(6)
England and Wales
Appeal from – In Re FJL Realisations Ltd ChD 2-Mar-2000
Administrators took on new employees during the period of administration, but when it came to an end, they were unable to pay the PAYE and NIC for the employees.
Held: The statute gave special priority to debts incurred under new contracts. . .
Appealed to – In Re FJL Realisations Ltd ChD 2-Mar-2000
Administrators took on new employees during the period of administration, but when it came to an end, they were unable to pay the PAYE and NIC for the employees.
Held: The statute gave special priority to debts incurred under new contracts. . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.81888
The court has sufficient discretion to order that the surplus proceeds of sale of a leasehold interest could be paid to the liquidator despite his having himself disclaimed any interest in the lease. Nobody else had claimed an interest, and the creditors should receive the benefit. This was sensible despite the apparent termination of the liquidator in the lease.
Times 22-Aug-1999
Insolvency Act 1986 320 315(3)
England and Wales
Appeal from – In Re Lee (A Bankrupt) ChD 24-Feb-1998
An order vesting a lease disclaimed by the trustee in bankruptcy, in a mortgagee, may provide that any profit which is made on a re-sale of the lease was to be paid on to the receiver for the benefit of creditors. . .
Appealed to – In Re Lee (A Bankrupt) ChD 24-Feb-1998
An order vesting a lease disclaimed by the trustee in bankruptcy, in a mortgagee, may provide that any profit which is made on a re-sale of the lease was to be paid on to the receiver for the benefit of creditors. . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.82003
Where permission to appeal had been granted, an application to set aside that permission had to be considered only where there existed compelling reason for that reconsideration. The issues for the grant were the overriding objective of litigation and whether an appeal offered a real prospect of success. If that existed, permission was to be granted. If not then it should be refused. The cases of Iran Nabuvat [1990] 1 WLR and Smith v Cosworth Casting Processes Ltd ([1997] 4 All ER 840) remained applicable.
Times 20-Oct-2000
England and Wales
Updated: 10 May 2022; Ref: scu.81531
When asked to find that a voluntary arrangement was unfair to a particular creditor, the court was not limited to looking at how much the creditor might receive in bankruptcy proceedings, but could look more widely at what the other effects might be of not recognising the arrangement. Those consequences might include possibilities other than bankruptcy, including litigation over the debts.
Times 27-Jul-2000, Gazette 27-Jul-2000
England and Wales
Updated: 10 May 2022; Ref: scu.81650
The duty of care of a lender to get the best price for repossessed properties, was not broken when the business closed before repossession, and the property was not sold as a going concern.
Times 11-Mar-1998, Gazette 08-Apr-1998
England and Wales
Appeal from – AIB Finance Ltd v Debtors ChD 10-Apr-1997
A Statutory Demand is only finally decided after the failure of a set aside application. . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.77681
The assignment of the fruits of an action for damages was a sale of property within section 436 of the Act, it was not within the exemption for champerty provided by the Act to a liquidator which arose from the statutory power of sale. The assignment of a cause of action assigned the right to pursue an action, but an assignment of the fruits of an action took place only in equity, and the assignee acquired no interest in the action itself.
Times 31-May-2000
England and Wales
Updated: 10 May 2022; Ref: scu.77783
[2004] BPIR 335
England and Wales
Appeal from – Strongmaster v Kaye ChD 2002
An IVA which has expired by effluxion of time has come to an end, and cannot be revived. . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.271283
Jonathan Parker LJ discussed the granting of declarations: ‘things have indeed moved on since the Meadows case was decided; and the courts should not nowadays apply such a restrictive meaning to the passage in Lord Diplock’s speech in Gouriet’s case’.
Jonathan Parker LJ
[2006] Ch 585
England and Wales
Cited – Meadows Indemnity Co Ltd v The Insurance Corporation of Ireland plc and Another CA 1989
A claim was made for declaratory relief.
Held: The Claimant, a re-insurer, did not have locus to claim a declaration that the main insurer could avoid the main contract of insurance, to which the Claimant was not a party. The court considered . .
Appeal from – Feetum and Other v Levy and Others ChD 5-Jan-2005
The applicants sought a declaration that the appointment of the defendants as administrative receivers of the company, a limited liability company, was precluded by the 1986 Act.
Held: The administrator had been appointed under a debenture, . .
Cited – Gouriet v Union of Post Office Workers HL 26-Jul-1977
The claimant sought an injunction to prevent the respondent Trades Union calling on its members to boycott mail to South Africa. The respondents challenged the ability of the court to make such an order.
Held: The wide wording of the statute . .
Cited – Office of Fair Trading v Foxtons Ltd ChD 17-Jul-2008
Complaint was made that the Foxtons standard terms of acting in residential lettings were unfair. Foxtons objected to the jurisdiction of the Claimant to intervene.
Held: On a challenge to an individual contract, the court would be able to see . .
Cited – Rolls-Royce plc v Unite the Union CA 14-May-2009
The parties disputed whether the inclusion of length of service within a selection matrix for redundancy purposes would amount to unlawful age discrimination. The court was asked whether it was correct to make a declaratory judgment when the case . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.271001
It was said that, after the discharge of the debtor from his bankruptcy, he had uttered a fresh promise to pay the debt. The court considered the proper construction of section 49 of the 1869 Act. Earlier statutes had made express provision making subsequent promises to pay of no avail to the creditor. That section was not in the same terms, but released the debtor from any ‘proceedings in respect of any debt from which he is released’.
Held: Lord Coleridge CJ said: ‘The plaintiffs’ counsel was driven to say that this was not only not an action brought for the old debt, but not a proceeding in respect of the old debt . . It is in vain to say that this is not a proceeding in respect of a debt provable under the liquidation, and which was discharged by the order of discharge.’
Lord Coleridge CJ
(1876) 2 CPD 1
Cited – Law Society of England and Wales and others v Shah and others ChD 30-Nov-2007
Solicitor firms had been made bankrupt leaving a shortfall after thefts from client accounts of over 12 million pounds. The thief had diappeared, and the other partners were now discharged form bankruptcy. The Law Society accepted that it could not . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.262981
When apportioning the assets of a pension fund on its winding up under the statutory scheme, the trustees had to take careful note of the differing historic retirement ages throught the scheme and between men and women.
Times 17-Aug-2007
England and Wales
Appeal from – Trustee Solutions Ltd and others v Dubery and Another ChD 21-Jun-2006
The rules of a pensions scheme were altered. It was required that any such alteration be in writing, but the trustees had not signed the document creating the amendment.
Held: The words ‘writing under hand’ clearly required a signature, and . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.259287
Arden J was asked to approve aproposal that the company should go into voluntary liquidation, on the basis that, prior to that happening, the administrators would pay into a trust account in their own name a sum equal to the total amount owing to the preferential creditors, from which account the preferential creditors would be paid, leaving the balance of the money in the administrators’ hands to be passed on to the voluntary liquidators for distribution pro rata to the unsecured creditors. The purpose of this was that a voluntary liquidation was the preferred exit route for the administration, but the preferential creditors would otherwise have been prejudiced by that course, as their preferential status would only arise under a compulsory liquidation.
Held: Section 18(3) could only be relied on to support a provision ‘which results directly or indirectly in the discharge of the administration order’. However, the purpose of the administration had effectively come to an end, and ‘[A] provision is consequential even though it will have to take effect immediately before the discharge because it is a direction which is being made to the administrators and they of course will cease to hold office on discharge of the administration order. As I see it, this particular direction is necessitated by the application for discharge since there will have to be a liquidation, and voluntary liquidation is the preferred route.’
Arden J therefore considered that the Court had ‘power to make the proposed direction provided that the administrators have power to make proposed payments to themselves on trust’. The combination of section 14 of, and paragraph 13 of Schedule 1, to the 1986 Act did enable the court to make such an order: ‘part of the function of the administrators is to bring the administration to a conclusion . . in the best interests of the creditors . . Under Schedule 1 the Administrators have the power to present a petition for the winding up of the company, in other words, the functions extend to bringing the administration to a conclusion and ensuring that the company is put into a position from which it can make distributions to creditors. As I see it, it is part of their function to put the company in that position and in a manner which is most advantageous to the creditors. In this particular case, this is achieved by first putting the company in a position whereby it can enter into voluntary liquidation. As I see it, the proposed payment to the administrators as trustees is a payment which will enable that process to be achieved and therefore comes within paragraph 13.’
Mrs Justice Arden
[2001] 1 WLR 436
England and Wales
Approved – In re Luna Metal Products Ltd (in Administration) CA 14-Dec-2006
The administrators held cash. They proposed a distribution giving creditors who would on a winding up be preferential, full preference. They appealed refusal by the court to sanction the proposal.
Held: The court had no power to make such an . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.247767
[1900] QB 508
England and Wales
Cited – Hill (As Trustee In Bankruptcy of Nurkowski) v Spread Trustee Company Ltd and Another CA 12-May-2006
The defendants sought relief for transactions entered into at an undervalue. The bankrupt had entered into charges and an assignment of a loan account in their favour before his bankruptcy, and the trustee had obtained an order for them to be set . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.244176
The court considered the relevance of a statutory limitation period in relation to applications to set aside transactions as being at an undervalue or as voidable preferences under section 238 to 241 of the 1986 Act. Applications to set aside transactions under the sections are generally actions on a specialty within the meaning of section 8 of the 1980 Act and subject to a 12 year limitation period accordingly; but where the substance of the claim is not to set aside a transaction, but to recover a sum of money, such applications will be governed by section 9, and thus subject to a six-year limitation period.
John Randall QC
[2001] BPIR 144
Insolvency Act 1986 238, Limitation Act 1980 8
England and Wales
Cited – Hill (As Trustee In Bankruptcy of Nurkowski) v Spread Trustee Company Ltd and Another CA 12-May-2006
The defendants sought relief for transactions entered into at an undervalue. The bankrupt had entered into charges and an assignment of a loan account in their favour before his bankruptcy, and the trustee had obtained an order for them to be set . .
Cited – Nolan v Wright ChD 26-Feb-2009
The defendant sought to re-open the question of whether the charge under which he might otherwise be liable was an extortionate credit bargain. The creditor said that that plea was time barred. The defendant argued that a finding that the agreement . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.244183
(1869) LR 4 Ch App 398
England and Wales
Cited – In re Melton, Milk v Towers CA 1918
In 1901 Richard Melton and another guaranteed to a Bank his son Arthur’s debts up to andpound;500. Richard died survived by his widow, Arthur and three daughters, giving his real estate to his widow for her life, with remainder to his four children . .
Cited – In re SSSL Realisations (2002) Ltd and Another; Squires and others v AIG Europe (UK) Ltd and Another CA 18-Jan-2006
A creditor claiming an equity in a debt but who himself owed money to the debtor, could not pursue his claim without first contributing the sum due. A person could not take an aliquot share out of a fund without first contributing what he owed to . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.238734
The debtor had contracted to sell his land to a third party developer, Silver. Between contract and completion, the debtor was made bankrupt. His wife, who already held legal charges over part of the land, took a transfer of a charge over the remainder of the land from Nationwide Building Society and completed the contract by transferring the entirety of the land to Silver in exercise of her power of sale as mortgagee. It was contended that, for the purposes of section 423, the sale by the debtor’s wife as mortgagee to Silver was a sale at an undervalue which had been entered into by the debtor.
Held: The suggestion was rejected. The sale by the debtor’s wife as mortgagee could not be dismissed as ‘conveyancing mechanics’, and the transfers by the debtor’s wife effectively superseded the contract.
Jonathan Parker J
[2001] 1 BCLC 11
England and Wales
Cited – Department for Environment, Food and Rural Affairs v Feakins and Another ChD 26-Nov-2004
The farmer complained that the department had, during the foot and mouth outbreak destroyed animals which did not belong to the owner of the land. The department said that the farmer had disposed of his land at an undervalue to defeat his creditors. . .
Cited – Feakins and Another v Department for Environment Food and Rural Affairs (Civ 1513) CA 9-Dec-2005
The department complained that the defendants had entered into a transaction with their farm at an undervalue so as to defeat its claim for recovery of sums due. The transaction used the grant of a tenancy by the first chargee.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.237724
The debtor had made an unsuccessful attempt to set aside a statutory demand. She did not then pay, and a third party debt order was made by the registrar in bankruptcy.
Held: The CPR applied to bankruptcy proceedings, and its powers could be exercised by a registrar acting in a bankruptcy, and to make the third party debt order.
Lewison J
Times 09-Jan-2006
England and Wales
Updated: 10 May 2022; Ref: scu.237837
What is required of the court in applying section 335A(3) is, in effect, a value judgment. The court must look at all the circumstances and conclude whether or not they are exceptional. That process, he considered, left ‘very little scope for the interference by an appellate court’. The court here found a reason to suspend an order for possession where an occupier suffered a terminal disease.
Jonathan Parker J
[1998] BPIR 558
England and Wales
Cited – Donohoe v Ingram ChD 20-Jan-2006
The appellant had lived with the bankrupt for several years, and sought an order delayng sale of the house they had lived in until their children had grown up. She said the circumstances were exceptional.
Held: The fact that the delay might . .
Lists of cited by and citing cases may be incomplete.
Updated: 10 May 2022; Ref: scu.238749
The effect of an individual voluntary arrangement was not such as to release solvent co-debtors under the rule of law that the release of one of two or more joint debtors has the effect of releasing the other or others.
[1995] 3 All ER 581
Cited – Johnson and Another v Davis and Another CA 18-Mar-1998
The court was asked: ‘whether or not the appellants were released from their obligation under a covenant to indemnify the respondents against claims arising under a lease by reason of the terms of an individual voluntary arrangement made under part . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.224362
A property adjustment order cannot be made against a bankrupt former spouse because the property of the bankrupt vests in the trustee in bankruptcy against whom an order under section 24 cannot be made. It was highly unlikely that postponement of payment of the debts would cause any great hardship to any of the creditors.
Sir David Cairns, Buckley LJ
[1981] 1 Ch 405
England and Wales
Cited – Harman v Glencross 1986
On the divorce, the wife applied for a property transfer order in relation to the jointly owned matrimonial home. A creditor of her husband then obtained a charging order on H’s interest. She sought its varation. The creditor said that there was . .
Cited – Donohoe v Ingram ChD 20-Jan-2006
The appellant had lived with the bankrupt for several years, and sought an order delayng sale of the house they had lived in until their children had grown up. She said the circumstances were exceptional.
Held: The fact that the delay might . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.223620
The court noted the differences in bankruptcy law between England and Jersey: ‘The word ‘bankruptcy’ in section 122, if indeed it refers at all to process of bankruptcy, must, in my judgment, be construed in a wide sense, for the section is designed to produce co-operation between courts acting under different systems of law, and it would be much restricted if extended only to jurisdictions which reproduce all the main features of English procedure. Dodd J took much the same view of a similar provision in the Bankruptcy (Ireland) Amendment Act 1872: see In re Bolton [1920] 2 IR 324, 327.’
Goulding J
[1981] Ch 384
England and Wales
Cited – Al Sabah and Al Sabah v Grupo Torras SA Culmer as trustee of the property of Sheikh Fahad Mohammed Al Sabah, bankrupt PC 11-Jan-2005
PC (Cayman Islands) The claimant complained of an order of the Court of Appeal of the Cayman Islands, requiring him to comply with a letter of request from the Grand Court of the Bahamas.
Held: In earlier . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.222846
Where a Scottish sequestration occurred shortly after an English garnishee order nisi, the judgment creditor prevailed over the trustee in bankruptcy, although the result would have been different if both the attachment and the bankruptcy had occurred in the same jurisdiction (whether England or Scotland). The attachment in England had not been completed, but the fact that it had started meant that the garnished debt was no longer ‘free assets’ of the bankrupt.
Lord Macnaghten said: ‘It may have been intended by the Legislature that bankruptcy in one part of the United Kingdom should produce the same consequences throughout the whole kingdom. But the Legislature has not said so. The Act does not say that a Scotch sequestration shall have effect in England as if it were an English bankruptcy of the same date. It only says that the Courts of the different parts of the United Kingdom shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy. The English Court, no doubt, is bound to carry out the orders of the Scottish Court, but in the absence of special enactment the Scottish Court can only claim the free assets of the bankrupt. It has no right to interfere with any process of an English Court pending at the time of the Scotch sequestration.’
Lord Dunedin said that there should be only one universal process of the distribution of a bankrupt’s property and that, where such a process was pending elsewhere, the English courts should not allow steps to be taken in its jurisdiction which would interfere with that process: ‘Now so far as the general principle is concerned it is quite consistent with the comity of nations that it should be a rule of international law that if the court finds that there is already pending a process of universal distribution of a bankrupt’s effects it should not allow steps to be taken in its territory which would interfere with that process of universal distribution.’
Lord Macnaghten, Lord Dunedin
[1910] AC 508
England and Wales
Appeal From – Galbraith v Grimshaw and Baxter CA 1910
A garnishee order nisi does not operate as a transfer of the property in the debt, but it is an equitable charge on it, and the garnishee cannot pay the debt to any one but the garnishor without incurring the risk of having to pay it over again to . .
Cited – Al Sabah and Al Sabah v Grupo Torras SA Culmer as trustee of the property of Sheikh Fahad Mohammed Al Sabah, bankrupt PC 11-Jan-2005
PC (Cayman Islands) The claimant complained of an order of the Court of Appeal of the Cayman Islands, requiring him to comply with a letter of request from the Grand Court of the Bahamas.
Held: In earlier . .
Cited – Rubin and Another v Eurofinance Sa and Others SC 24-Oct-2012
The Court was asked ‘whether, and if so, in what circumstances, an order or judgment of a foreign court . . in proceedings to adjust or set aside prior transactions, eg preferences or transactions at an undervalue, will be recognised and enforced in . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.222844
An ordinary creditor’s cause of action for non-payment of a contract debt is barred after the expiration of 6 years from the date of the accrual of his cause of action. He is then no longer a creditor of the company and is neither entitled to present a winding up petition nor to prove for the statute barred debt in the liquidation.
Slade J
[1982] 1 WLR 1195
Companies Act 1948 257(1), Limitation Act 1939 2(1)(a)
England and Wales
Cited – Ridgeway Motors (Isleworth) Ltd v Alts Ltd CA 10-Feb-2005
The company appelaed a refusal of the judge to strike out a winding up petition. They said the petition was based upon a judgment which was now time barred. The petitioner replied that such a petition was not an action under the section.
Held: . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.223041
Nigeria had no bankruptcy law of its own.
Held: The general vesting provisions of the Bankruptcy Act 1869 of the United Kingdom (and not merely provisions about reciprocal enforcement) applied in Nigeria.
[1891] AC 460
Cited – Al Sabah and Al Sabah v Grupo Torras SA Culmer as trustee of the property of Sheikh Fahad Mohammed Al Sabah, bankrupt PC 11-Jan-2005
PC (Cayman Islands) The claimant complained of an order of the Court of Appeal of the Cayman Islands, requiring him to comply with a letter of request from the Grand Court of the Bahamas.
Held: In earlier . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.222841
The court was presented with a petition of a creditor to wind up a company. The company had leasehold premises which contained a provision for forfeiture of the lease in the event of such a petition. The petitioner had agreed with the company’s landlord that if a petition to wind up the company was presented before a certain date the landlord would terminate the lease and grant a new lease to the petitioner.
Held: The court dismissed the petition as an abuse of process: ‘The question, therefore, is not ‘does the petitioner genuinely wish to wind up the company’. It would be hard for me to find that this petitioner which has taken all regular steps to prosecute its petition and which plainly has reasons to desire the winding-up of this company, since that must put beyond much cavil the future of the company’s lease, does not in truth desire to wind up the company. In my judgment the true question is ‘for what purpose does the petitioner wish to wind up this company’ A judge has to decide whether the petition is for the benefit of the class of which the petitioner forms a part or is for some purpose of his own. If the latter, then it is not properly brought. If the petitioner can show that he and his class stand together and will benefit or suffer rateably, then his ill motive is nothing to the point. But here it is plain that no such even-handedness exists. If the petition is properly brought, then the petitioner stands to get a valuable asset for itself and the rest of the class of creditors are likely to get nothing. If the petition is not properly brought, so that in Scotland the company’s lease remains un-‘irritated’ (and I have no certainty that this will be so) then the class of creditors including the petitioner may all have some hope of payment or will at least suffer rateably.’
Harman J
[1983] 1 BCC 98937
England and Wales
Cited – In the Matter of British American Racing (Holdings) Limited; In the Matter of the Insolvency Act 1986 ChD 16-Dec-2004
The company raced in the Formula 1 series. Its main sponsors had been British American Tobacco, but because of restrictions of tobacco advertising, the company lost substantial revenue and fell in to loss, and entered into an individual voluntary . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.221022
Receivers of property under charge are not obliged before sale to spend money on repairs.
Lawrence J
[2001] 2 All ER (Comm) 741
England and Wales
Cited – Lloyds Bank Plc and others v Cassidy CA 1-Dec-2004
The defendant sought leave to appeal against orders for possession. The trial had been transcribed by the claimant. At the start of the application, a copy of the transcript was given to the judge but not the defendant despite his application.
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.221430
The assets of group of companies were sold, and it then went into insolvent liquidation. The liquidator claimed that the sale was at an undervalue, and appliied to continue an interlocutory injunction.
Held: There was a triable issue as to whether the sale was at an undervalue. The court considered what remedy might be granted if the liquidator succeeded, and whether it was seriously arguable that the court would set aside the sale and order the re-vesting of the assets. The purchaser had submitted that, given events which had occurred since the sale, the only remedy would be the shortfall between the agreed consideration and a fair price, and hence that no further interlocutory relied should be granted. Applying Chohan v. Saggar: ‘I accept that in broad terms the function of section 238 is . . . to restore fair value to creditors. But to pass from that proposition to the proposition that in any case where subsequent events have intervened so as to alter or vary the assets transferred, the court will invariably order monetary compensation rather than the revesting of the assets, is to lose sight of the express wording of section 283(3). Section 283(3) says, in effect, that the purpose of any order under section 241 is ‘for restoring the position to what it would have been if the company had not entered into the transaction. . . . The task of the court is to restore the status quo ante so far as is practicable. Assets which have been lost in the normal course of business since the date of the transaction can be ignored as being irretrievable . . . Post-acquired rights can also be protected . . . So, provided that there are no intractable and insuperable difficulties, and none are suggested in this case, the court does not start with the presumption that, unless the assets remain wholly or largely intact, the court will order payment of compensation rather than vesting of the assets back in the administrator or liquidator. The court will look to see what orders the justice of the case requires in order to achieve restoration of the status quo ante. To my mind, the court would be slow to allow a transferee, who has entered into a transaction with an insolvent company when on notice that the transaction may be challenged by the liquidator as being at an undervalue, to retain his purchase simply by means of paying a further sum at a later date. I suggest that the court would look carefully at allowing a transferee in these circumstances to buy his way out of the problem if the court were to consider that he went into the transaction with his eyes open and took a calculated risk.’
His Honour Judge Havelock-Allan QC
[2002] BPIR 621
Applied – Chohan v Saggar and Another CA 27-Dec-1993
The word ‘and’ in sections 423(2)(a) and 423(2)(b) is to be read conjunctively not disjunctively. Section 238(3) is to be interpreted as requiring restoration of the former position ‘as far as possible’ or ‘as far as practicable’, and that . .
Cited – Ramlort Ltd v Michael James Meston Reid CA 8-Jul-2004
The company sought to claim under a life policy. The deceased had died in Scotland insolvent. The trustee of the policy had declared that he held it on trust for the claimant, but the defendant, the judicial factor of the estate, said the . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.213660
The additional words in the new Act relating to set-off ‘were intended to give a more extended right of set-off than previously existed’
Malins V-C
(1872) LR 15 Eq 30
Cited – Secretary of State for Trade and Industry v Frid HL 13-May-2004
The company went into insolvent liquidation. The secretary of state was to make payments to employees and there were other state preferential creditors. At the same time a refund of VAT was due from the Commissioners of customs and Excise.
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.196882
The creditor appealed an order setting aside a statutory demand.
Held: The demand had been issued to enforce a costs order when in related matters an action was pending against the creditor and where the debt upon which the demand was based arose from associated proceedings.
Ward LJ, Jonathan Parker LJ, Moses J
Times 14-May-2004, Gazette 13-May-2004
England and Wales
Applied by analogy – Seawind Tankers Corporation v Bayoil SA CA 12-Oct-1998
Although a company admitted a debt, it was nevertheless right to set aside a petition for winding up under that debt, where the company had an unquantified but greater counterclaim within the same proceedings, even if that claim could not presently . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.197759
Sir George Jessel MR said: ‘Now the enactment as to ‘mutual credits’ is a very old one, first appearing in 5 Geo 2, c 30, but the whole tendency of the subsequent legislation, as of the legislation respecting proveable debts, has been to extend the principle upon which it is founded.’
Sir George Jessel MR
(1881) 8 QBD 147
Cited – Secretary of State for Trade and Industry v Frid HL 13-May-2004
The company went into insolvent liquidation. The secretary of state was to make payments to employees and there were other state preferential creditors. At the same time a refund of VAT was due from the Commissioners of customs and Excise.
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.196883
The court refused to sanction a scheme because it treated a creditor with preferential rights in a liquidation as an ordinary unsecured creditor.
[1869] 11 Ch D 676
England and Wales
Cited – In re Telewest Communications Plc ChD 26-Apr-2004
A scheme of arrangement had been proposed. The creditor complained that in providing for payment in a currency other than that agreed, it had been prejudiced.
Held: The provision in the scheme did purport to alter the claimant’s rights. . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.197910
[2019] EWHC 182 (Ch)
England and Wales
Updated: 09 May 2022; Ref: scu.633422
Allegation by bankrupt of conversion by trustee – whether equipment sold was for his personal, employment or business use.
Judge Eyre QC sitting as a High Court judge
[2018] WLR(D) 737, [2018] EWHC 2943 (Ch)
England and Wales
Updated: 09 May 2022; Ref: scu.631361
Trustee may not register decree but can seek to have register amended.
Times 30-Dec-1993
Scotland
Appeal from – Short’s Trustee v The Keeper of the Registers of Scotland HL 7-Dec-1995
The limited scope for rectification of registered land titles was explained. If the Keeper were to recognise an error of a very minor nature, such as an obvious spelling mistake, he would amend it at his own hand. However, he would not adjust a . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.89245
The claimant sought to bring a claim against the administrators of a partnership alleging a duty of care to creditors.
Held: Such an administrator owed no greater duty to creditors than would a director. That duty was no different whether the duty was also a fiduciary duty or one at common law. His position was directly analagous with a director. No general duty of care was owed to creditors and the claim had properly been struck out.
Lord Justice Jonathan Parker Lord Justice Thorpe Lord Justice Dyson
[2003] EWCA Civ 1506, Times 07-Nov-2003, Gazette 02-Jan-2004, [2004] BPIR 165, [2004] PNLR 18, [2003] NPC 133, [2004] BCC 111, [2004] 1 BCLC 305
England and Wales
Cited – Bruce Peskin; Kevin Milner v John Anderson and Others CA 14-Dec-2000
The Royal Automobile Club (RAC) had been demutualised. The claimants were former members who sought damages from former directors because they had received no benefit. They had ceased to be members before the re-organisation and claimed they should . .
Cited – National Provincial and Union Bank of England v Charnley 1924
The court considered the general principles of equitable charges: ‘The first question that arises is whether or not this document does create a mortgage or charge, and to determine that it is necessary to form an idea of what is meant by ‘charge’. . .
Cited – Williams v Burlington Investments 1977
. .
Cited – Swiss Bank Corporation v Lloyds Bank Ltd CA 1981
An equitable charge is created when property is expressly or constructively made liable to the discharge of a debt or some other obligation, and the charge confers on the chargee a right of realisation by judicial process such as a sale order. . .
Cited – Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery Ad Cross CA 22-Mar-2001
The court always leans against a conclusion which will leave parties who clearly intended to contract without a legally binding contract, and that this is the more so where they have acted as though they were bound. The court strains to supply . .
Cited – Knowles v Scott 1891
A company’s voluntary liquidator is the company’s agent and no action lies against for delay him save in the case of misfeasance or wilful misconduct. He is not a trustee for the creditors or contributories of a company in liquidation. Nor does he . .
Cited – Foley v Classique Coaches Ltd CA 1934
The sellers had sold to the buyers a piece of land to use in the latter’s business as coach proprietors, and also contracted with them to supply all the petrol required for that business ‘at a price to be agreed by the parties in writing and from . .
Cited – Caparo Industries Plc v Dickman and others HL 8-Feb-1990
Limitation of Loss from Negligent Mis-statement
The plaintiffs sought damages from accountants for negligence. They had acquired shares in a target company and, relying upon the published and audited accounts which overstated the company’s earnings, they purchased further shares.
Held: The . .
Cited – Re B Johnson and Co (Builders) Ltd CA 1953
A receiver of property is not managing the mortgagor’s property for the benefit of the mortgagor, but the security, the property of the mortgagee, for the benefit of the mortgagee. Section 333 was a procedural section which created no new cause of . .
Cited – Henderson v Merrett Syndicates Ltd HL 25-Jul-1994
Lloyds Agents Owe Care Duty to Member; no Contract
Managing agents conducted the financial affairs of the Lloyds Names belonging to the syndicates under their charge. It was alleged that they managed these affairs with a lack of due careleading to enormous losses.
Held: The assumption of . .
Cited – Pulsford v Devenish ChD 1903
The liquidator in a voluntary liquidation negligently failed to inform the company’s creditors of the liquidation, and distributed the company’s assets to its contributories without regard to the creditors’ claims. The company was later dissolved. . .
Cited – James Smith and Sons (Norwood) Ltd v Goodman CA 1936
Two leases had been granted by the plaintiff to a company. Subsequently the company determined the leases but it had previously assigned the leases to a third party. The company went into liquidation and the liquidator distributed its assets. He . .
Cited – MacDonald and Another v Carnbroe Estates Ltd SC 4-Dec-2019
‘This appeal concerns the Scots law of gratuitous alienations on insolvency. It raises three principal questions. First, there is a question as to the interpretation of the term ‘adequate consideration’ in section 242(4)(b) of the Insolvency Act . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.187469
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor leads to the assumption by receivers who accept such appointment of responsibilities and duties which differ from those owed by the mortgagees.
Held: By accepting office as receivers of the Claimants’ properties the Receivers assumed a fiduciary duty of care to the Bank, the Claimants and all (if any) others interested in the equity of redemption. The scope or content of the duty depends on the special nature of the relationship between the Bank, the Claimants and the Receivers arising under the terms of the mortgages and the appointments of the Receivers, and in particular the role of the Receivers in securing repayment of the secured debt and the primacy of their obligations in this regard to the Bank. That was inconsistent with a duty to take the pre-marketing steps for which the Claimants contended in this action.
Lord Justice Aldous Lord Justice Tuckey Mr Justice Lightman
[2003] EWCA Civ 1409, Times 27-Oct-2003, Gazette 20-Nov-2003, [2004] 1 WLR 997, [2004] 4 All ER 484
England and Wales
Cited – Re Charnley Davies Ltd (No 2) ChD 1990
An administrator owed a duty to the company over which he was appointed to take reasonable care to obtain the best price that the circumstances, as he reasonably perceived them to be, permitted, including a duty to take reasonable care in choosing . .
Cited – Downsview Nominees Ltd and Another v First City Corporation Ltd and Another PC 19-Nov-1992
(New Zealand) The holder of a second debenture appointed receivers to the assets. The first debenture holder then also appointed receivers not to obtain repayment of its debt, but to disrupt the work of the first appointed receivers and in order to . .
Cited – Medforth v Blake and others CA 26-May-1999
A receiver appointed to manage a business had duties over and above those of mere good faith. A receiver who failed to obtain discounts normally obtainable for supplies to the business might be liable for that failure. when considering the position . .
Cited – Nash v Eads CA 1880
Sir George Jessel MR: ‘The mortgagee was not a trustee of the power of sale for the mortgagor, and if he was entitled to exercise the power, the Court could not look into his motives for so doing. If he had a right to sell on June 1, and he then . .
Cited – Palk v Mortgage Services Funding Plc CA 1993
The mortgagees had obtained an Order for possession with the intention, not of proceeding to sell the property but of waiting in the hope that the market might improve. The mortgagor was anxious that the property should be sold so that the proceeds . .
Cited – Tse Kwong Lam v Wong Chit Sen PC 1983
For a mortgagee in possession selling a property, it does not matter that the time may be unpropitious and that by waiting a higher price could be obtained: he is not bound to postpone in the hope of obtaining a better price. . .
Cited – China and South Sea Bank Limited v Tan Soon Gin PC 1990
A mortgagee’s decision on sale is not constrained by reason of the fact that the exercise or non-exercise of the power will occasion loss or damage to the mortgagor. He can sit back and do nothing. He is not obliged to take steps to realise his . .
Cited – McHugh v Union Bank of Canada PC 1913
There was a mortgage of horses, which the mortgagee needed to drive to market if he was to sell them.
Held: If a mortgagee goes on with a sale of property which is unsaleable as it stands, a duty of care may be imposed on him, when taking the . .
Cited – Standard Chartered Bank Ltd v Walker CA 1982
The mortgagee having obtained insufficient on the sale at auction of the property charged to recover the sum secured, applied for summary judgment against the mortgagor for that sum. The mortgagor resisted the application alleging that the mortgagee . .
Cited – Knight v Lawrence 1991
If a mortgaged property is let, the receiver is duty bound to inspect the lease and, if the lease contains an upwards only rent review, to trigger that rent review in due time. . .
Cited – Kelly v Cooper and Another PC 25-Nov-1992
There was a dispute between a client and an estate agent in Bermuda. The client sued the estate agent for damages for breach of duty in failing to disclose material information to him and for putting himself in a position where his duty and his . .
Cited – Knight v Lawrence 1993
As part of his duty of care, a receiver may be required to take positive steps to maintain the value of the property. . .
Cited – Routestone Ltd v Minories Finance ChD 1996
A receiver’s management duties will ordinarily impose on him no general duty to exercise the power of sale, or to ‘work’ an estate by refurbishing it before sale. Speaking of the role of an expert witness ‘What really matters in most cases are the . .
Cited – Yorkshire Bank Plc v Hall and Others CA 18-Dec-1998
The Court of Appeal is not strictly bound by the terms of leave to appeal given, but where the points had been specifically considered a point could only be heard with the leave of the Court of Appeal which had full power to regulate its own . .
Cited – Ratford v Northavon District Council CA 1986
The reality of the agency of a receiver is reflected in the continuity, after the appointment of receivers, of the rateable occupation of the mortgagor through the agency of the receivers. The possession of an agent is to be attributed to that of . .
Cited – Re Offshore Ventilation 1989
The position of agency of receivers is a real one, even though it has some peculiar incidents. . .
Cited – Piacentini v Dayman QBD 5-Feb-2003
The reality of the agency of a receiver for a mortgagor is shown in the absence of personal liability of the receivers for tax in respect of receipts which come to the hands of the receivers as agents. . .
Cited – Gaskell v Gosling CA 28-Apr-1896
The agency of a receiver for the mortgagor is one where the principal, the mortgagor, has no say in the appointment or identity of the receiver and is not entitled to give any instructions to the receiver or to dismiss the receiver. ‘For valuable . .
Cited – Gaskell v Gosling CA 28-Apr-1896
The agency of a receiver for the mortgagor is one where the principal, the mortgagor, has no say in the appointment or identity of the receiver and is not entitled to give any instructions to the receiver or to dismiss the receiver. ‘For valuable . .
Cited – Gomba Holdings v Homan 1986
A receiver’s powers of management are really ancillary to the duty to manage the security, the property of the mortgagee, for the benefit of the mortgagee. In the context of the agency of a receiver which is no ordinary agency but primarily a device . .
Cited – Henderson v Merrett Syndicates Ltd HL 25-Jul-1994
Lloyds Agents Owe Care Duty to Member; no Contract
Managing agents conducted the financial affairs of the Lloyds Names belonging to the syndicates under their charge. It was alleged that they managed these affairs with a lack of due careleading to enormous losses.
Held: The assumption of . .
Cited – Den Norske Bank Asa v Acemex Management Company Ltd CA 7-Nov-2003
Money had been loaned for the purchase of three ships,and mortgages over the ships had been given given. The borrowers were in default, and the lender sought to arrest the vessels. The defendant argued that the way the arrest had been undertaken . .
Cited – MacDonald and Another v Carnbroe Estates Ltd SC 4-Dec-2019
‘This appeal concerns the Scots law of gratuitous alienations on insolvency. It raises three principal questions. First, there is a question as to the interpretation of the term ‘adequate consideration’ in section 242(4)(b) of the Insolvency Act . .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.187019
‘This appeal concerns the Scots law of gratuitous alienations on insolvency. It raises three principal questions. First, there is a question as to the interpretation of the term ‘adequate consideration’ in section 242(4)(b) of the Insolvency Act 1986. Secondly, there is the question whether the Inner House was entitled to interfere with the Lord Ordinary’s evaluation that the consideration given by Carnbroe Estates Ltd (‘Carnbroe’) amounted to adequate consideration under that statutory provision. Thirdly, a question arose during the hearing as to the interpretation of the words in section 242(4) that empower the court to grant a remedy. The court invited and received written submissions from counsel for both parties. The question is whether the court has any discretion as to the remedy it may give.’
Held: There was an absence of agreement on the facts, and: ‘it is necessary to afford the First Division an opportunity to consider whether it is appropriate in the circumstances of this case to qualify the remedy of reduction which it has given to take account of all or part of the consideration which Carnbroe gave for the purchase, for example by requiring the liquidators to pay a specified sum to Carnbroe as a condition of the reduction.’
Lord Reed, Deputy President, Lord Wilson, Lord Hodge, Lord Briggs, Lord Sales
[2019] UKSC 57
Scotland
At Outer House – Macdonald and Others v Carnbroe Estates Ltd SCS 18-Jan-2017
(Outer House) Allegation of sale at an undervalue – Carnbroe had established that the sale of the Property was made for adequate consideration. Lord Woolman recorded the submission which counsel made on behalf of Carnbroe that Grampian was fighting . .
Cited – McCowan v Wright 1852
Under both the common law and the 1621 Act the challenger of a transaction did not have to prove that the debtor or the transferee was aware of the debtor’s insolvency or that the debtor was seeking to harm his creditors. . .
Cited – Abram Steamship Co Ltd v Abram 1925
. .
Cited – Bank of Scotland v R W Forsyth Ltd 1988
. .
At inner house – Liquidators of Grampian Maclennan’s Distribution Services Ltd Reclaiming Motion By, v Carnbroe Estates Ltd SCS 23-Jan-2018
First Division, Inner House, Court of Session – allegation of sale at an undervalue. The liquidator appealed a finding that as a speedy sale was required the sale price was proper.
Held: The reclaiming notice was allowed. The sale of the . .
Cited – Earl of Glencairn v Birsbane SCS 16-Jan-1677
In the reduction at the instance, of the Earl of Glencairn against John Birsbane, of his right of the lands of Freeland, and declarator, that a reversion in favours of the heir of the disponer’s own body, to take effect after the disponer’s death, . .
Cited – Hague and Another v Nam Tai Electronics PC 21-Feb-2008
(British Virgin Islands) . .
Cited – Oldham and others v Georgina Kyrris and Another CA 4-Nov-2003
The claimant sought to bring a claim against the administrators of a partnership alleging a duty of care to creditors.
Held: Such an administrator owed no greater duty to creditors than would a director. That duty was no different whether the . .
Cited – Silven Properties Limited, Chart Enterprises Incorporated v Royal Bank of Scotland Plc, Vooght, Harris CA 21-Oct-2003
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor . .
Cited – Baillie Marshall Ltd and Another v Avian Communications Limited SCS 21-Jul-2000
Challenge to an unfair preference under section 243 of the 1986 Act . .
Cited – Kerr (Aitken’s Trustee) v Aitken OHCS 26-Nov-1999
Lord Eassie said: ‘In my opinion the expression ‘adequate consideration’ means the giving of a consideration which might objectively be described as being a reasonable prestation for the property conveyed by the bankrupt to the transferee had the . .
Cited – Lafferty Construction Ltd v McCombe SCS 1994
Lord Cullen spoke of the meaning of ‘adequate consideration’ in section 242 of the 1986 Act: ‘In considering whether alienation was made for ‘adequate consideration’, I do not take the view that it is necessary for the defender to establish that the . .
Cited – Short’s Trustee v Chung 1991
A man purchased two flats at a significant undervalue from an insolvent and conveyed them for no consideration to his wife. The insolvent’s permanent trustee successfully challenged the sales as gratuitous alienations. Before the Lord Ordinary and . .
Cited – Kyd (Gorrie’s Trustee) v Gorrie SCS 25-Jun-1890
A father, in the knowledge that he was insolvent, granted a lease of a shop to his son at a yearly rent of pounds 7. It was proved that the fair rent was pounds 12. In terms of the lease the son had expended about pounds 12 in repairs, and it was . .
Cited – Raymond Harrison and Co’s Trustee v North West Securities Ltd 1989
. .
Lists of cited by and citing cases may be incomplete.
Updated: 09 May 2022; Ref: scu.645783
[1952] 1 All ER 1269
Cited – Wight, Pilling, Mackey v Eckhardt Marine GmbH PC 14-May-2003
(Cayman Islands) An international bank went into liquidation in the Cayman Islands, with liabilities in Bangladesh. A new bank was created in Bangladesh, and the applicants sought to make the new bank liable, and through them the liquidators.
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.183830
[1900] 2 QB 211
England and Wales
Cited – Flightline Ltd v Edwards and Another ChD 2-Aug-2002
Money had been paid into an account in the joint names of the parties’ solicitors in order to purchase the release of the applicants from an asset freezing order. The respondent company was in liquidation. It was argued that the payment of funds . .
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.182271
A company had entered into a voluntary arrangement with its creditors, but subsequently went into liquidation. There was then a dispute as to the destination of sums held under the arrangement.
Held: Such arrangements created trusts. Whether that trust continued after formal insolvency was a matter of interpretation of the trust deed. Where money was expressly set aside to be paid to the creditors under the arrangement, that trust would normally continue beyond insolvency. If the deed made express provision for events on insolvency, that deed should be followed. The creditors under the voluntary arrangement could still prove in the bankruptcy for any balance of debt due to them after money secured under the deed.
Lord Justice Peter Gibson, Lord Justice Ward and Lord Justice Dyson
Times 11-Apr-2002, Gazette 10-May-2002
England and Wales
Cited – Olympic Airlines Sa Pension and Life Assurance Scheme, The Trustees of The v Olympic Airlines Sa SC 29-Apr-2015
The airline was incorporated in Greece but with an office in the UK. It became insolvent leaving a deficit in the UK employee pension scheme. The trustees of the fund sought a secondary insolvency within the UK, and now a reference to the European . .
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.168565
The bankrupt had taken out insurance against disability. He came to make a claim. He asserted that the benefits were personal to him, and not to be taken by the trustee in bankruptcy for the benefit of creditors. The court held that the benefits were contractual, forming part of the bankrupts general estate. There was no precedent for excepting from the bankrupt’s estate, assets on the basis of some close and personal connection with or dependence on the condition of the bankrupt.
Times 15-Mar-2001, Gazette 03-May-2001
England and Wales
Updated: 08 May 2022; Ref: scu.79506
Mr Justice Meade
[2020] EWHC 3083 (Ch)
England and Wales
See Also – Koldyreva v Motylev and Others ChD 14-Sep-2020
. .
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.656285
Adam Johnson J
[2020] EWHC 3011 (Ch)
England and Wales
Updated: 08 May 2022; Ref: scu.655622
[2020] EW Misc 7 (CC)
England and Wales
Updated: 08 May 2022; Ref: scu.655646
The court considered whether, a tenant having become bankrupt during the currency of a quarter, that part of the quarter’s rent apportionable to the part of the quarter before the order of adjudication should be held to be rent ‘accrued due’, within section 42(1) of the 1883 1883. Such apportionable part of the quarter’s rent was of course not recoverable from the tenant until the expiry of the quarter; but it was held, nevertheless, that is to say, notwithstanding the fact that it was not payable until the end of the quarter, to have ‘accrued due’ within the meaning of section 42, from day to day. In other words, the effect of the Apportionment Act was held to be that, rent accruing de die in diem, the part attributable to the time elapsed must be considered as ‘accrued due’ for the purpose of applying a statute passed before the Apportionment Act itself.
[1895] 1 QB 844
England and Wales
Cited – Hydro-Electric Power Commission (Ontario) v Albright 2-May-1922
Supreme Court of Canada – Contract – Purchase of shares in company – Mortgage on company property – Security for bonds – Covenant to provide sinking fund – Earnings for calendar year-Payments at fixed date – Payments ‘accrued but not yet due’ . .
Cited – Tael One Partners Ltd v Morgan Stanley and Co International Plc SC 11-Mar-2015
This appeal raises a question of contractual interpretation. Its significance lies in the fact that the contractual condition in question forms part of the Loan Market Association standard terms and conditions for par trade transactions which are a . .
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.564963
The court was asked to decide whether shares in a joint stock company were to be classified as choses in action for the purposes of the proviso to section 44(iii) of the 1883 Act by which property in the order or disposition of the bankrupt in his trade or business with the consent of the true owner, other than choses in action, was made available for the satisfaction of his debts.
Held: The Court discussed the history and nature of choses in action.
Cotton and Lindley LJJ held that shares were not choses in action for the purposes of the statute, although they both regarded them as a form of intangible personal property.
Fry LJ (dissenting) held that the share were choses in action, satying that: ‘all personal things are either in possession or in action. The law knows no tertium quid between the two.’
Cotton and Lindley L.JJ
[1885] 30 ChD 261
England and Wales
Appeal from – Colonial Bank v Whinney HL 1886
The parties disputed whether shares in a joint stock company were choses in action for the purposes of the 1883 Act so as to make them available to creditors on a bankruptcy.
Held: The appeal succeeded.
Blackburn L noted that there had . .
Cited – Your Response Ltd v Datateam Business Media Ltd CA 14-Mar-2014
The claimant employed the defendant to manage subscription lists for the claimant’s magazines. The claimant came to seek damages, and the defendant for non-payment of its invoices. The court was now asked whether it was possible to assert a common . .
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.559267
[1916] 2 Ch 250
England and Wales
Updated: 08 May 2022; Ref: scu.556771
[1972] 1 Ch 286
England and Wales
Updated: 08 May 2022; Ref: scu.556774
The borrower, which was not in liquidation and made no claim to the money, was the parent company of a group one of whose subsidiaries was in financial difficulty. There was a danger that if it were wound up or ceased trading it would bring down the whole group. A consortium of the group’s banks agreed to put up a fund of more than andpound;500,000 in an attempt to rescue the subsidiary. They paid the money into a special account in the name of the parent company for the express purpose of ‘providing money for the subsidiary’s unsecured creditors over the ensuing weeks’ and for no other purpose. The banks’ object was to enable the subsidiary to continue trading, though on a reduced scale; it failed when the subsidiary was put into receivership at a time when some andpound;350,000 remained unexpended.
Held: The primary trust was a purpose trust enforceable (inter alios) by the subsidiaries’ creditors as the persons for whose benefit the trust was created.
Sir Robert Megarry V-C
Unreported, 6 October 1978
England and Wales
Updated: 08 May 2022; Ref: scu.556781
Funds had been advanced for the sole purpose of purchasing equipment. The money was used to pay a deposit for the equipment but the company was placed into receivership before the equipment arrived.
Held: Since most of the deposit was returned to the company, the receiver could not retain the returned deposit money, which had to be returned to the lender.
Dillon LJ observed that: ‘On Quistclose principles, a resulting trust in favour of the provider of the money arises when money is provided for a particular purpose only, and that purpose fails.’
. . And that it was a long established principle of equity that, if a person who is a trustee receives money or property because of, or in respect of, trust property, he will hold what he receives as a constructive trustee on the trusts of the original trust property and that, by reason of that principle, the same trust must have attached to the repayment as attached to the original sum. However, his Lordship also observed that, if the equipment which was intended to be acquired had in fact been acquired, then ‘any trust attaching to that money because of that purpose, would indeed have been satisfied’ and ‘the company’s interest in that equipment would have been a general asset of the company held by the company free from any proprietary or equitable interest of the appellant by way of trust or otherwise’.
Bingham LJ said that: ‘Until the sums were paid out, the company plainly held them on trust to apply them for the stipulated purpose and no other. Had the purpose failed before payment, the case would have been indistinguishable from Quistclose. But that did not happen. The sums were applied for the stipulated purpose.
It would, I think, strike most people as very hard if the appellant were in this situation to be confined to a claim as an unsecured creditor of the company. While it is literally true that the fund which he provided was applied to the stipulated purpose, the object of the payment was not achieved and that was why the balance was repaid to the respondents. My doubt has been whether the law as it stands enables effect to be given to what I can see as the common fairness of the situation. Our attention has not, I think, been drawn to any case closely analogous to the present. But the company certainly held the fund on trust in the first instance. The purpose for which the fund was paid out partially failed. The repayment to the respondents was a direct result of the company’s original holding of the fund as trustee. The balance which was recovered may reasonably regarded as not having been paid out at all. I am happy to be persuaded that the sums repaid are to be treated as held on the same trusts as the original andpound;60,000 and, in the present circumstances, on a resulting trust for the appellant.’
Diloin, Bingham LJ
[1987] BCLC 646
England and Wales
Updated: 08 May 2022; Ref: scu.556773
Lindley LJ said of the section: ‘The first question is, what is the meaning of the debtors ‘giving notice’ that he has suspended, or is about to suspend, payment of his debts? I think it does not mean mere casual talk; it must be something formal and deliberate, something done by the debtor with a consciousness that he is ‘giving notice,’ and intended to be understood in that sense. An act of bankruptcy is a serious matter. I am of opinion that what was done in the present case did not amount to a ‘giving notice’ within the Act.’
Lindley LJ
[1884] 13 QB 471
Cited – Michael Gerson Ltd v Greatsunny Ltd CA 9-Feb-2011
The landlord had agreed that its rights in respect of certain hired equipment installed by the tenant would be waived. On the tenant becoming insolvent, the landlord was to allow the owner 28 days to remove it. The parties disputed whether adequate . .
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.440067
Although the Court has jurisdiction to extend the time for registration of a charge, its settled practice is not to do so when the company that granted the charge has already entered into liquidation. An application to extend the time for registration should be made on realisation that the deadline had been missed, and any delay may be taken to indicate a calculation fatal to the application.
The rationale of the rule was explained: ‘Ever since [the decision of Buckley J in Re Joplin Brewery Co Ltd [1902] 1 Ch 79] it has been the practice to insert in an order extending the time for registration some such words as: ‘but that this order be without prejudice to the rights of parties acquired prior to the time when the debentures shall be actually registered.’ The reason for the proviso is as valid today as it was then. Such an application would be made either ex parte by the chargor company, which had the statutory duty to register, or by the chargee, in which case the company would be joined as the only respondent, if there were any respondent at all. It was not the practice to advertise for creditors and to make one of them a respondent. Consequently, it was necessary to protect persons whose rights would otherwise be overridden in their absence . .
It soon became established that, so long as the company was a going concern at the date of registration, the proviso did not protect, and was not intended to protect, an unsecured creditor who had lent money at a time when the charge should have been but was not registered . . The reason for this was that such unsecured creditor could not have intervened to prevent payment being made to the lender whose charge was not registered (whom we will call ‘the unregistered chargee’). Nor could such unsecured creditor have prevented the creation of a new charge, duly registered, to take the place of the unregistered charge. The proviso was intended to protect only rights acquired against, or affecting, the property comprised in the unregistered charge, in the intervening period between the date of the creation of the unregistered charge and the registration of such charge. Such persons would include a subsequent chargee of the relevant property, a creditor who has levied execution against the relevant property, and an unsecured creditor if, but only if, the company has gone into liquidation before registration is effected. Once the company has gone into liquidation, the existing unsecured creditors are interested in all the assets of the company, since the liquidator is bound by statute to distribute the net proceeds pari passu among the unsecured creditors, subject to preferential debts. The assets of the company are at that stage vested in the company for the benefit of its creditors. The unsecured creditors are in the nature of cestuis que trust with beneficial interests extending to all the company’s property.
It follows from this approach that the court must invariably refuse to extend the time for registration once the company has gone into liquidation. If an order extending time were made and the proviso included, registration would be of no assistance whatever to the unregistered chargee because the unsecured creditors at that stage would be protected by the proviso. Such an order after liquidation would be futile and will be refused . .
The position accordingly became firmly established that the court (i) invariably adds to an order extending time the proviso which we have mentioned and (ii) will not make an order once liquidation has supervened, because the effect of the proviso would be to render the order futile. This is a matter of discretion and not of law. It is possible to imagine a case, for example where fraud is involved, in which the court might extend the time for registration after the commencement of liquidation and omit the proviso which would render the order futile; we do not know of such a case in practice, and certainly the instant case does not fall into the category of fraud.’
[1982] 3 All ER 66, [1982] 3 WLR 964
England and Wales
Cited – Re Joplin Brewery Co Ltd ChD 1902
The applicants, owners of a solvent family business, sought to register a charge over the company’s assets out of time.
Held: Buckley J saw the application under s 15 of the 1900 Act as a similar application to the application to register out . .
Cited – in Re Resinoid and Mica Products Ltd CA 1967
(From 1967) An order extending time for registration of a charge will not normally be made after a company has gone into liquidation. . .
Cited – Rehman v Chamberlain and Another ChD 6-Sep-2011
The claimant asserted as against the liquidator, a floating and registered charge over the company’s assets. The liquidator said that it had been granted within the twelve months prior to the onset of the insolvency, was caught by section 245(3)(b), . .
Lists of cited by and citing cases may be incomplete.
Updated: 08 May 2022; Ref: scu.444531
If the conduct of a creditor can be castigated as oppressive or vexatious the Court can and should grant relief in order to protect the performance by administrators of their functions and duties.
Glidewell LJ
[1993] BCLC 680
England and Wales
Cited – Harms Offshore AHT Taurus Gmbh and Co KG v Bloom and Others CA 26-Jun-2009
The court had granted to the liquidators of a company a mandatory injunction requiring the appellant German companies to attempt to obtain the release of assets from attachment by the court in new York.
Held: The appeal was dismissed. The . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.375971
The expression ‘proceedings to recover costs’ in the Solicitors’ Remuneration Order 1972 . . includes a winding up petition even though such a petition does not lead to an order for payment of the sum in question. It may well be, and I incline to the view, that this conclusion would apply to a bankruptcy petition.’
An untaxed solicitor’s bill of costs is a disputed debt, and: ‘Before such taxation takes place [that’s to say, taxation of the Bill of Costs concerned] there is no certainty whatever as to whether all or any specific part of the debt alleged by the petition will be found truly due to the Petitioners.’
Slade J
[1981] 1 WLR 133
England and Wales
Cited – Truex v Toll ChD 6-Mar-2009
The bankrupt appealed against an order in bankruptcy made against her on application by her former solicitors in respect of their unpaid costs. The bankrupt said that since the bill was yet untaxed, it might be altered and could not base a statutory . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.317856
An employee claimed re-instatement following alleged unfair selection for redundancy by an administrator.
Held: The effect of the 1986 Act was not that proceedings brought against a company in administration without consent or the permission of the court were a nullity, but only that they were liable to be stayed as other proceedings in section 11(3)(d). Lord Coulsfield said: ‘It seems to us that there is no way of construing section 11 so as to exclude from its scope claims under the employment protection legislation.’
Lord Coulsfield
[1994] ICR 18, [1993] BCC 855, [1994] 2 BCLC 474
Trade Union and Labour Relations (Consolidation) Act 1992 188, Insolvency Act 1986 11(3)(d)
England and Wales
Applied – Unite the Union and others v Sayers Confectioners Ltd EAT 9-Feb-2009
EAT PRACTICE AND PROCEDURE Application/claim
Tribunal wrong to refuse to accept complaint presented against company in administration – correct course to accept the complaint but stay it – Carr v British . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.316668
G appealed against a refusal to set aside a statutory demand. The demand related to a claim for professional fees. G said he had a claim for professional negligence against the firm of solicitors issuing the demand. G had paid the sum claimed, but the costs of the application remained an issue. The parties had both become embroiled in a substantial fraud by a third party, and the claimant said he had lost out by the respondent’s management of the registration of an estate contract.
Held: The judge was correct in deciding that the claimant’s case in negligence was unarguable. The claimant’s argument that the defendant had acted in breach of professional standards on conflict of interest had already been put, investigated, and concluded against the claimant. The argument failed.
Pill, Lloyd, Moore-Bick LJJ
[2009] EWCA Civ 30
England and Wales
Updated: 07 May 2022; Ref: scu.282602
BCCI contracted with three companies and their directors or others as sureties. Money was deposited with BCCI as security from the companies. Some agreements described the sureties as ‘principal debtor’ or contained personal covenants by them as ‘principal debtor’.
One document headed ‘cash deposit security terms – third party’ entitled BCCI, at any time and without notice, to set off monies deposited by Mr Ahmed against amounts due from the companies, and he also agreed to guarantee to pay to BCCI upon written demand all liabilities of the companies to BCCI and further declared ‘as a separate and independent obligation hereunder’ that the company’s liabilities ‘shall be recoverable by you from me as principal debtor and/or by way of indemnity and shall be repaid by me on demand made in writing by you or on your behalf whether or not demand has been made on the [company]’.
In a letter of charge, Mr Amir charged his credit balances agreeing that ‘the liabilities hereunder shall be as that of principal debtor’. He did not give an express personal covenant to be liable to BCCI but the letter was taken to have that effect in an amount not more than the amount of his deposits. The court was asked whether BCCI’s liability on the sureties’ deposits should be set off under rule 4.90 of the Insolvency Rules against their liabilities to BCCI as sureties. There could be no set-off involving a contingent due debt to a company in liquidation unless and until the contingency occurred. BCCI argued that the sureties’ liabilities were contingent on demands made by it, which it might well never make.
Held: Affirming the decision at first instance, the court held that as the sureties had covenanted to pay as principal debtors, a demand was unnecessary and there should therefore be a set-off under rule 4.10. A demand is not necessary under a guarantee to make the liability under immediately payable.
In the context of a winding up, the relevant date for assessing the mutuality of credits and debts in insolvency set-off is the date of the winding up order.
Dillon LJ recorded BCCI’s acceptance that the liabilities of the companies to BCCI were at all times presently enforceable without any need for a demand before the issue of a writ, even if expressed to be repayable on demand. He referred to the line of authorities leading up to Bradford Old Bank v Sutcliffe, and said: ‘The effect of that must be to dispense with any need for a demand in the case of Mr Amir since he has made the companies’ debts to BCCI his own debts and thus immediately payable out of the deposit without demand. In the case of Mr Ahmed there must be immediate liability even though the word ‘demand’ was used, because he accepted liability as a principal debtor and his deposit can be appropriated without further notice.’
Hoffmann LJ
[1993] Ch 425, [1993] 3 WLR 220, [1993] 3 All ER 769
England and Wales
Cited – Bradford Old Bank Ltd v Sutcliffe CA 1918
A demand for payment is not necessary in order to make a present debt immediately payable, even if it is expressed to be payable on demand, unless it is a collateral debt. . .
Cited – TS and S Global Ltd v Fithian-Franks and others ChD 18-Jun-2007
Appeal against setting aside of statutory demand disputed as to amount of liability under contract.
Held: The guarantors’ liability under the guarantee was immediately payable by them, without the need for a demand, before service of the . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.267644
The court appointed a provisional liquidator to protect the English assets of a New Zealand company which was being wound up in New Zealand. Kay J said: ‘[What] is the effect of the winding up order which it is said has been made in New Zealand? This court upon principles of international comity, would no doubt have great regard to that winding up order and would be influenced thereby [but there was nevertheless jurisdiction to make a winding up order, and therefore to appoint a provisional liquidator, to protect the English assets] . . I consider that I am justified in taking steps to secure the English assets until I see that proceedings are taken in the New Zealand liquidation to make the English assets available for the English creditors pari passu with the creditors in New Zealand.’
Kay J
(1884) 27 Ch D 225
Cited – McGrath and others v Riddell and others HL 9-Apr-2008
(Orse In Re HIH Casualty and General Insurance Ltd)
HIH, an Australian Insurance company, became insolvent. An order was sought for the collection and remission of it assets in England under a letter of request from the Australia Court.
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.266552
English moveables may vest automatically in a foreign trustee or assignee where the bankrupt submitted to this jurisdiction.
(1873) LR 15 Eq 383
Northern Ireland
Cited – Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors (of Navigator Holdings Plc and Others) PC 16-May-2006
(Isle of Man) A scheme of arrangement was proposed for a company with involvement in several jurisdictions. An order in New York sought assistance in the vesting of shares and assets in the Isle of Man in the creditors committee. Cambridge was a . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.266726
1993 SCLR 718
Scotland
Cited – Jacobs v Official Receiver; In re Jacobs (a bankrupt) ChD 3-Apr-1998
The bankrupt was due to have his automatic discharge, but the Official Receiver applied on the day before for the discharge for an interim suspension of the discharge to allow consideration of his alleged lack of co-operation. The bankrupt said the . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.259285
Deputy ICC Judge Baister
[2020] EWHC 3187 (Ch)
England and Wales
Updated: 07 May 2022; Ref: scu.656292
ICC Judge Jones
[2020] EWHC 3139 (Ch)
England and Wales
Updated: 07 May 2022; Ref: scu.656301
Applications were made for the removal of a liquidator from several appointments in corporate nd individual insolvencies. He had been a partner in a firm and that had ceased in a way which left it impossible to work with his former partners to perform his duties.
Held: The appointments were personal, and the only practical course was for his removal. The court has jurisdiction to make such an order under the 1986 Act. The more testing question was as to whether the court could make an alternative appointment. Though there was no such express power in the Act, the rules presupposed it.
Blackburne J
Unreported, 17 October 1997
Insolvency Act 1986 108(2) 172(2)
England and Wales
Cited – Re Bridgend Goldsmiths Limited and Others ChD 1995
The High court may not exercise its jurisdiction under section 263 of the 1986 Act within a voluntary arrangement within the county court. . .
Cited – John Abbott and others No 00137 of 1997 ChD 1997
Having exercised its power under s41 to remove liquidators and supervisors, the court had power itself to appoint replacement officers. The existing practitioner had ceased to hold the appropriate authorisation. . .
Cited – Re Bullard and Taplin Ltd ChD 1996
Tne question of whether there was at any time ‘pending court proceedings’ was answered by asking if there existed a court file. The section empowered a court itself to appoint another trustee in bankruptcy. Section 41 of the 1984 Act could be used . .
Cited – In re Sankey Furniture Ltd, ex parte Harding; Re Calorifique Limited, ex parte Betts ChD 1995
Separate applications were made by liquidators of companies in variously voluntary or compulsory liquidation and otherwise. . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.246700
Rimer J
[2005] 1 WLR 1581
England and Wales
Cited – In re Luna Metal Products Ltd (in Administration) CA 14-Dec-2006
The administrators held cash. They proposed a distribution giving creditors who would on a winding up be preferential, full preference. They appealed refusal by the court to sanction the proposal.
Held: The court had no power to make such an . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.247766
Limitation applies where a claim is not against a bankrupt’s estate or is not a claim ‘in the bankruptcy’.
[1914] 2 Ch 68
England and Wales
Approved – Cottrell v Price 1960
The rights of a secured creditor against his security were held to be rights ‘outside the bankruptcy’. As to the case of Benzon: ‘The importance of that case and of the way in which the doctrine is stated in the judgment of the Court is that it . .
Cited – Doodes v Gotham, Perry ChD 17-Nov-2005
The trustee in bankruptcy had taken a charge on the property in 1992 to support the bankruptcy in 1988. He sought to enforce it in 2005. The chargor appealed an order which denied he was protected by limitation.
Held: The appeal succeeded. . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.235331
Referring to Turner: ‘Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s 271 of the duty to decide whether or not to make a bankruptcy order on the material which is then before it. Plainly, a court will ask itself whether arguments that are being run before have already been run and failed; and it may go on to ask itself why arguments which have been run before it have not previously been run. But it is for that court to decide whether the conditions which must be satisfied before a bankruptcy order can be made are satisfied.’
Chadwick LJ
[2002] EWCA Civ 1924
England and Wales
Cited – Turner v Royal Bank of Scotland CA 2000
The court was asked whether a debtor could pursue at the hearing of the bankruptcy petition a challenge to the petition debt on grounds which had already failed on an earlier application to set aside the statutory demand. . .
Cited – West Bromwich Building Society v Crammer CA 2002
Referring to Turner: ‘Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s 271 of the duty to decide . .
Cited – West Bromwich Building Society v Crammer CA 2002
Referring to Turner: ‘Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s 271 of the duty to decide . .
Cited – Coulter v Chief Constable of Dorset Police CA 13-Jul-2005
An appeal was made against an order refusing to set aside a second statutory demand. The demand was to enforce payment of an order for costs made in proceedings between the parties. The first statutory demand had been upheld, and the judge found . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.230918
Where a party seeks to run an argument which might have been made earlier, it will inquire why those arguments were not run at the time when they could and should have been run. However, a failure to apply to set aside the statutory demand does not affect the debtor’s right to raise a dispute in due course at the hearing of the bankruptcy petition.
Whilst a petition might still be dismissed even if an application to set aside the statutory demand had not been made, the better procedure was to challenge the debt before a petition could be issued.
HHJ Maddocks
[2004] BPIR 693
England and Wales
Cited – Coulter v Chief Constable of Dorset Police CA 13-Jul-2005
An appeal was made against an order refusing to set aside a second statutory demand. The demand was to enforce payment of an order for costs made in proceedings between the parties. The first statutory demand had been upheld, and the judge found . .
Cited – Harvey v Dunbar Assets Plc CA 13-Feb-2017
This appeal raises an issue of principle in the law of bankruptcy on which there is no previous authority directly in point. If:
(a) a debtor’s application to set aside a statutory demand (‘SD1’) is dismissed on the merits, by application of . .
Cited – Jacob v Vockrodt QBD 12-Oct-2007
The claimant sought damages saying that the instigation by the defendant of insolvency proceedings had been malicious. . .
Cited – Vaidya v Wijayawardhana ChD 31-Mar-2010
Application for permission to appeal against refusal of annulment of bankruptcy order. . .
Cited – Hurley v The Darjan Estate Company Plc ChD 10-Feb-2012
H appealed against an order made for his bankruptcy on an application by DJ. . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.230917
In a case where there had been no reasoned determination of the arguments at the earlier stage and the application had simply been struck out for a formal defect, then the principle referred to in Turner was not engaged.
The court heard an appeal against a bankruptcy order where an adjournment of the hearing of the petition had been refused despite a medical certificate in respect of the debtor. There had also been a misunderstanding about the application to set aside the statutory demand, which was dealt with on paper under rule 6.5(1) and dismissed on technical grounds, namely that the reasons for disputing the debt had been set out in a letter rather than an affidavit.
Held: The appeal was allowed.
The court dealt with the issue of whether the applicant should be allowed to raise the same issues on the appeal against the bankruptcy order as he raised on the application to set aside the statutory demand: ‘But where, as in the present case, there has been no reasoned determination at all at the earlier stage and the application has simply been struck out for a purely formal defect in the manner in which it was brought, then it seems to me that the principle referred to by Chadwick LJ [i.e. the general rule in Turner v Royal Bank of Scotland plc] is not even engaged in the first place. If there were any doubt about the ambit of the dicta in that case I think it is resolved by his own subsequent statements in the case of West Bromwich Building Society v Crammer [2002] EWCA Civ 1924 (unreported) 19 December 2002 . . the learned Lord Justice referred to his earlier observations in Turner v Royal Bank of Scotland plc [2000] BPIR 683 in response to a suggestion that there had been some concern as to the width of those observations. He then says this: ‘Buxton LJ expressly agreed with those observations; and Aldous J agreed with both judgments. Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s271 of the duty to decide whether or not to make a bankruptcy order on the material which is then before it. Plainly, a court will ask itself whether arguments that are being run before it have already been run and failed; and it may go on to ask itself why arguments which have been run before it have not previously been run. But it is for the court to decide whether the conditions which must be satisfied before a bankruptcy order can be made are satisfied.’
Mr Launcelot Henderson QC
[2003] BPIR 803
England and Wales
Cited – Turner v Royal Bank of Scotland plc CA 6-May-1999
The bank replied to several enquiries as to the customer’s credit status without first seeking the customer’s consent. It claimed that this was general practice at the time.
Held: The practice fell short of being ‘notorious’ or well known, and . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.230919
A distress for taxes was ‘really by way of execution’.
[1914] 1 KB 288
England and Wales
Not followed – Herbert Berry Associates Ltd v Inland Revenue Commissioners ChD 1976
The collector of taxes distrained on the goods of the company under section 61 TMA 1970 for unpaid taxes and the company entered into a walking possession agreement. Before the collector had sold the goods, and completed the distress, the company . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.228991
The court considered the sale of a cause of action by the trustee in bankruptcy: ‘Now, the sale of a cause of action by a trustee can only be effected by an assignment. It vests in the trustee in the first place because it is deemed to have been duly assigned to him . . The legal process by which it gets to him must operate to vest it in the person to whom he sells it. If this were not so, such a cause of action would be of no value to the creditors unless the trustee himself tried to enforce it. To do so, unless success was assured, would require the expenditure of money which would otherwise be available for distribution among the creditors. To assign the cause of action for good consideration to another person who was willing to try to enforce it could be a sensible way of disposing of the bankrupt’s assets.’
Lawton LJ
[1977] 1 WLR 686
England and Wales
Cited – Norglen Ltd (In Liquidation) v Reeds Rains Prudential Ltd and Others; Circuit Systems Ltd (In Liquidation) and Another v Zuken-Redac HL 1-Dec-1997
An assignment of a cause of action by a company in liquidation was valid, even though the dominant purpose was to avoid having to give security for costs, and to get legal aid. In dismissing the argument that the transactions were a device to defeat . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.223196
Interim asset freezing injunctions had been obtained on the application of a liquidator in South Africa. The defendant applied for their discharge.
Held: They should be discharged. No foreign proceedings had been specified for which they were proposed as support. An insolvency process was insufficient for this purpose. The court had forewarned the plaintiff of this difficulty. The 1982 Act applied only to injunctions sought for foreign proceedings. The only order in South Africa was an order nisi, was narrow and involved no damages claim nor any tracing remedy.
John Jarvis QC
Times 08-Oct-2004
Civil Jurisdiction and Judgments Act 1982 25
England and Wales
Cited – Herbert Berry Associates Ltd v Inland Revenue Commissioners; re Herbert BerrySP, Regina (on The Application of) v The Lord Chancellor HL 1977
The principle to the effect that the court should exercise its discretion to restrain a distress levied by a landlord before the commencement of a winding-up only where there were special circumstances rendering it inequitable that he should be . .
Cited – Hughes and others v Hannover Re Ruckversicherungs-Aktiengesellschaft CA 28-Jan-1997
An insolvency court answering an international call for assistance has the full range of remedies available to it. It may exercise ‘its own general jurisdiction and powers’ as well as the insolvency laws of England and the corresponding laws of the . .
Cited – Siskina (owners of Cargo lately on Board) v Distos Compania Naviera SA HL 1979
An injunction was sought against a Panamanian ship-owning company to restrain it from disposing of a fund, consisting of insurance proceeds, in England. The claimant for the injunction was suing the company in a Cyprus court for damages and believed . .
At first Instance – Fourie v Le Roux and others HL 24-Jan-2007
The appellant, liquidator of two South African companies, had made a successful without notice application for an asset freezing order. He believed that the defendants had stripped the companies of substantial assets. The order was set aside for . .
Appeal from – John Louis Carter Fourie v Allan Le Roux and others CA 7-Mar-2005
The defendant’s company in South Africa had become insolvent and the claimant had recovered judgment for arrears of rent. They obtained a freezing order against the defendant. The defendant appealed saying the court did not have jurisdiction, and . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.216340
Dillon LJ
[1985] 1 All ER 417, [1985] Ch 232
England and Wales
Cited – Transag Haulage Ltd (In Admin Receivership) v Leyland Daf Finance Plc and Another ChD 31-Jan-1994
Hire-purchase agreements for the hire of three lorries were entered into by Transag, a haulier, between January and May 1991. The price for the three lorries was andpound;177,333, with down payments totalling andpound;69,333 and the balance (for . .
Cited – Cavendish Square Holding Bv v Talal El Makdessi; ParkingEye Ltd v Beavis SC 4-Nov-2015
The court reconsidered the law relating to penalty clauses in contracts. The first appeal, Cavendish Square Holding BV v Talal El Makdessi, raised the issue in relation to two clauses in a substantial commercial contract. The second appeal, . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.199783
Two of the company’s contributories asked be added to the list for the purpose of obtaining a 7 day adjournment of the hearing of the petition so as to give them time to consider whether they wished to ask for substitution.
Held: An ordinary individual or company cannot be substituted as petitioner on a Secretary of State’s petition under the section.
Harman J
[1992] BCLC 376
England and Wales
Cited – Rodencroft Limited, W. G. Birch Developments Limited, H-M Birch Limited; Simon Allso v The Secretary for State for Trade and Industry ChD 23-Apr-2004
The Secretary of state sought the winding up of the companies saying it was expedient in the public interest to do so. A shareholder opposed this saying that the companies were solvent.
Held: The shareholder had, in the absence of any position . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.197021
Section 163 provided ‘any . . distress or execution put in force against the estate or effects of the company after the commencement of the winding up shall be void to all intents.’ After the presentation of a petition, the commencement of a compulsory winding up, but before the winding up order, the lessor of land of which the company was the beneficial tenant levied a distress upon the company’s goods for arrears of rent. The liquidator claimed that the distress was void under the statute.
Held: It had a discretionary power to validate the distress. It derived this power from section 87, which provided that after a winding up order, no ‘suit action or other proceeding’ should be proceeded with or commenced against the company without the leave of the court. Turner LJ: ‘I also concur in the decision of the Master of the Rolls. I think the 163rd section of the Act must be construed as only avoiding attachments, sequestrations, distresses or executions when leave to put them in force has not been given under the 87th section.’
Turner LJ
(1864) 4 De G J and S 377
England and Wales
Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.190093
As part of his duty of care, a receiver may be required to take positive steps to maintain the value of the property.
[1993] BCLC 215
England and Wales
Appeal from – Knight v Lawrence 1991
If a mortgaged property is let, the receiver is duty bound to inspect the lease and, if the lease contains an upwards only rent review, to trigger that rent review in due time. . .
Cited – Medforth v Blake and others CA 26-May-1999
A receiver appointed to manage a business had duties over and above those of mere good faith. A receiver who failed to obtain discounts normally obtainable for supplies to the business might be liable for that failure. when considering the position . .
Appealed to – Knight v Lawrence 1991
If a mortgaged property is let, the receiver is duty bound to inspect the lease and, if the lease contains an upwards only rent review, to trigger that rent review in due time. . .
Cited – Silven Properties Limited, Chart Enterprises Incorporated v Royal Bank of Scotland Plc, Vooght, Harris CA 21-Oct-2003
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.187032
An insolvent building society had, outside its powers, run a banking business. The House considered the competing claims of the unadvanced shareholders of the building society’s intra vires business, members of the society who had not been granted mortgages, and the depositors of its ultra vires banking business. The claims of all other creditors had, by agreement, been met. It was accepted that contracts entered into for the purposes of that ultra vires business, which by the time of bankruptcy had become the society’s predominant business, were, so far as the society was concerned, void. The issue was the significance of that fact for the priority of claims of the shareholders and the depositors to the funds held by the Liquidators. In the High Court and the Court of Appeal the unadvanced shareholders prevailed: the depositors’ contracts were held void, and therefore would only be honoured to the extent that all prior valid claims had been met.
Held: The competing claims for priority of both the unadvanced shareholders and the depositors were declined. The available funds were to be shared pro rata, an outcome that had not been considered until raised by Viscount Haldane during argument.
Viscount Haldane approached the question by assuming that specific tracing was not possible and, on that basis, concluding that pro rata sharing was the way to apportion the monies: ‘The depositors can, in my opinion, only claim the depreciated assets which represent their money, and nothing more. It follows that the principle to be adopted in the distribution must be apportionment on the footing that depreciation and loss are to be borne pro rata. I am, of course, assuming in saying this that specific tracing is not now possible.
What is there must be apportioned accordingly among those whose money it represents, and the question of how the apportionment should be made is one of fact. In the present case the working out of a proper apportionment based on the principle of tracing not only would involve immense labour but would be unlikely to end in any reliable result. The records necessary for tracing the dealings with the funds do not exist. We have therefore, treating the question as one of presumption of fact, to give such a direction to the liquidator as is calculated to bring about a result consistent with the principles already laid down.
Viscount Haldane
[1914] AC 398, [1914-15] All ER 622
England and Wales
Explained – In re Diplock’s estate CA 1948
After considering a situation in which trust money had been applied in making alterations to the property of an innocent third party but had not added to the value of the property,
Held: The origin of the equitable rules of tracing were . .
Cited – Foskett v McKeown and Others CA 27-Jun-1997
Various people had paid money with the promise of acquiring an interest in land in Portugal. The scheme was fraudulent. The funds had been used to purchase a life/investment policy. The policy was held in trust for the fraudster’s mother but he had . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.187413
The section gives the court jurisdiction to make an administration order if it ‘(a) is satisfied that a company is or is likely to become unable to pay its debts’ and ‘(b) considers that the making of an order . . would be likely to achieve’ one or more of the purposes specified in s8(3). The court had to consider the meaning of the word ‘likely’.
Held: ‘likely’ connotes probability but the particular degree of probability intended must be gathered from qualifying words (very likely, quite likely, more likely than not) or context. It cannot be a misuse of language to say that something is likely without intending to suggest that the probability of its happening exceeds 0.5. The legislature seemed to intend to set a modest threshold of probability to found jurisdiction and to rely on the court’s discretion not to make orders in inappropriate cases.
Hoffmann J
[1989] 1 WLR 368
England and Wales
Cited – Cream Holdings Limited and others v Banerjee and The Liverpool Daily Post and Echo Limited CA 13-Feb-2003
The defendants considered publication of alleged financial irregularities by the claimant, who sought to restrain publication. The defendants argued that under the Act, prior restraint should not be used unless a later court would be likely to . .
Cited – Cream Holdings Limited and others v Banerjee and others HL 14-Oct-2004
On her dismissal from the claimant company, Ms Banerjee took confidential papers revealing misconduct to the local newspaper, which published some. The claimant sought an injunction to prevent any further publication. The defendants argued that the . .
Cited – Lachaux v Independent Print Ltd (1) CA 12-Sep-2017
Defamation – presumption of damage after 2013 Act
The claimant said that the defendant had published defamatory statements which were part of a campaign of defamation brought by his former wife. The court now considered the requirement for substantiality in the 2013 Act.
Held: The defendant’s . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.182935
Mr Andrew Sutcliffe QC, (sitting as a Judge of the High Court)
[2020] EWHC 3123 (Ch)
England and Wales
Updated: 06 May 2022; Ref: scu.656290
Proceedings were instituted against a trustee in bankruptcy after he had seized an aircraft claimed by the plaintiff.
Held: There is no right to sue an officer of the court in another court, without the sanction of the court, which appointed him.
The Court may itself dispose of an issue where ‘although no bankruptcy point is involved the question directly affects the administration of what are undoubtedly assets of the bankrupt.’
The court treated retrospective leave in insolvency as a thing capable of being granted and as requiring no particular discussion.
Goff J
[1969] 2 Ch 201
England and Wales
Cited – Park v Cho and Others ChD 24-Jan-2014
The parties disputed the chairmanship of a charity. The claimant succeeded, but a third party later intervened saying that permission had not first been obtained from the Charity Commission as required. The defendant now appealed against the lifting . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.567257
Lindsay J considered the calculation of costs of solicitors: ‘if . . the proper guide is that of the average solicitor employed by the average firm in the area concerned, then the Central London Law Societies’ survey, whilst not necessarily a perfect indication of that average, is, on the evidence in this case, the closest approach we have to that average.’
Lindsay J
[1995] 2 All ER 155
Approved – KPMG Peat Marwick McLintock v The HLT Group QBD 18-Mar-1994
The plaintiffs claimed for professional fees, and the defendants counter-claimed alleging negligence. The plaintiffs obtained summary judgment under Order 14 with an order for costs on the standard basis, to be taxed if not agreed. The plaintiffs . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.471975
The court was asked to consider whether a judgment debt in respect of sums due under a hire-purchase agreement was a good petitioning creditor’s debt. The judgment sum included the balance of all the remaining hire charges which became payable on the premature determination of the agreement. After the judgment the Campbell Discount case had invalidated the clause as a penalty.
Held: Cross J exercised his power to go behind the judgment to hold that the creditor had, on a proper application of the law, no more than a cause of action against the debtor for unliquidated damages.
Cross J
(1962) 106 Sol Jo 469
England and Wales
Applied – Campbell Discount Company Ltd v Bridge HL 1962
The parties disputed the validity of a clause in a car hire contract relating to the consequences of a breach.
Held: (Majority) The agreement had been terminated by breach rather than by the exercise of an option, so that the stipulated . .
Cited – McGuinness v Norwich and Peterborough Building Society CA 9-Nov-2011
The appellant had guaranteed his brother’s loan from the respondent, and the guarantee having been called in and unpaid, he had been made bankrupt. He now appealed saying that the guarantee debt, even though of a fixed amount could not form the . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.450462
The court was asked whether a creditor might petition for bankruptcy on a liability as a broker who had failed to settle sums due on purchasing shares on the London Stock Exchange. He was declared a defaulter under the Exchange rules as to andpound;5,623. The petition was met with a plea that their claim was not for a liquidated sum due at law or in equity as required by s.6 of the 1869 Act but was a claim for unliquidated damages.
Held: The claim was for a debt in a liquidated sum. The Stock Exchange rules were incorporated into the contract and the contract itself provided the means of ascertaining the amount due.
Cotton LJ said: ‘Rule 170 in the case of a defaulter really alters the original contract, and provides a new contract as between the defaulter and his creditor, and then the amount of the liability is fixed and ascertained in accordance with that altered contract.’
Cotton LJ
(1882) 22 Ch D 132
Cited – McGuinness v Norwich and Peterborough Building Society CA 9-Nov-2011
The appellant had guaranteed his brother’s loan from the respondent, and the guarantee having been called in and unpaid, he had been made bankrupt. He now appealed saying that the guarantee debt, even though of a fixed amount could not form the . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.450452
The parties disputed whether a particular creditor was entitled to vote at the first meeting. The section excluded a right to vote in the case of creditors in respect of ‘any unliquidated or contingent debt, or any debt the value of which is not ascertained’.
Held: He did not habve the right to vote. A claim for untaxed costs was either unliquidated or ascertained.
Mellish LJ said: ‘The question really is, what is meant by an ‘unliquidated debt’ in the 3rd sub-section. The fair construction of the clause seems to me this: ‘a contingent debt’ refers to a case where there is a doubt if there will be any debt at all; ‘a debt, the value of which is not ascertained,’ means a debt the amount of which cannot be estimated until the happening of some future event; and ‘an unliquidated debt’ includes not only all cases of damages to be ascertained by a jury, but beyond that, extends to any debt where the creditor fairly admits that he cannot state the amount. In that case there must be some further inquiry before he can vote.’
Mellish LJ
(1872-2) LR 8 Ch App 997
Cited – McGuinness v Norwich and Peterborough Building Society CA 9-Nov-2011
The appellant had guaranteed his brother’s loan from the respondent, and the guarantee having been called in and unpaid, he had been made bankrupt. He now appealed saying that the guarantee debt, even though of a fixed amount could not form the . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.450451
A prospective buyer of a ship had the right to take possession of the ship and use the shipbuilder’s premises and chattels to complete the building work, in the event of the builder not proceeding with the shipbuilding or going bankrupt.
(1884) 26 Ch D 510
Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.442612
Nourse LJ
[1996] EWCA Civ 1349, [1996] 2 BCLC 389, [1996] BCC 718
England and Wales
Updated: 06 May 2022; Ref: scu.432466
H and W charged the property to secure the H’s overdrawn bank account. The account was used both for his business and for payment of expenses relating to the matrimonial home. H was adjudicated bankrupt. W sought her equity to be exonerated from H’s debt.
Held: Scott J said that where payments had been made for the joint benefit of the household, they must be paid from the net proceeds before division. However an equity of exoneration applied to payments made purely for business purposes and for H’s sole benefit, and these were to be deducted only from H’s share.
Exoneration depended on the presumed intention of the parties. To apply, it would be necessary to demonstrate that (a) the spouse joined in a charge over jointly owned property; (b) the spouse did so for the purposes of the bankrupt; and (c) the money must have been borrowed and used for the bankrupt’s sole benefit.
The joint owner who is effectively in the position of a surety for the other joint owner is not only entitled to be indemnified by the other joint owner in relation to the relevant debt but the right to an indemnity carries with it a proprietary right over the indemnifying party’s share in the property. Thus, the party with the benefit of an equity of exoneration has not only a personal claim but is also a secured creditor in relation to that claim.
The court set out a definition of an equity of exoneration: ‘if the property of a married woman is mortgaged or charged in order to raise money for the payment of her husband’s debts, or otherwise for his benefit, it is presumed, in the absence of showing an intention to the contrary, that she meant to charge her property merely by way of security, and in such case, she is in the position of a surety, and is entitled to be indemnified by the husband, and to throw the debt primarily on his estate to the exoneration of her own.’
‘It is, I think, clear that the effect of the equity of exoneration in a case such as this is indeed to enhance the proprietary interest of the surety/joint mortgagor and not simply to give the surety a personal right to an indemnity from the debtor who is the other joint mortgagor.’
Scott J
[1985] All ER 285
England and Wales
Cited – Re Cronmire, ex parte Cronmire CA 1901
At the husband’s request his wife deposited with his bankers the title deeds of her property as security for advances to be made to him. Before he became bankrupt the debt was paid off by her.
Held: The court acknowledged the entitlement of a . .
Cited – Hall v Hall ChD 1911
An equity of exoneration in favour of a wife arises ‘at the time she charges her estate’. The doctrine of exoneration is based on an inference in each case from all the facts of that particular case. Where one co-habitee joins in granting a charge . .
Cited – Re a debtor (No 24 of 1971), ex parte Marley (J) v Trustee of the property of the debtor ChD 1976
The court will look to the realities of the relationship between the mortgagors and will not be governed by the terms of the mortgage instrument if they do not accord with the actual facts.
Held: the court accepted that an equity of . .
Cited – Paget v Paget CA 1898
The plaintiff wife was ‘a lady of fortune’, with the bulk of her property settled on her for life for her separate use without power of anticipation. They ‘moved in good society and, large as their income was, they lived far beyond it.’ They were . .
Cited – Re Woodstock (a bankrupt) ChD 19-Nov-1979
Walton J drew attention in his judgment to the need for the courts, in considering how the equity of exoneration should work as between a husband and a wife, to take into account the relationship which husbands and wives bear, or ought to bear, to . .
Cited – Day v Shaw and Another ChD 17-Jan-2014
Mr and Mrs Shaw had granted a second charge over their jointly-owned matrimonial home to secure the personal guarantee given by their daughter and by Mr Shaw in respect of a bank loan to a company (Avon). Their daughter and Mr Shaw were the . .
Cited – Armstrong v Onyearu and Another CA 11-Apr-2017
Exoneration of partner’s equity on insolvency
The court considered the equity of exoneration, where property jointly owned by A and B is charged to secure the debts of B only, A is or may be entitled to a charge over B’s share of the property to the extent that B’s debts are paid out of A’s . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.420747
Four workmen who had suffered pre-liquidation accidents but had made post-liquidation claims had, at the date of the winding up, ‘contingent claims’.
[1947] Ch 763
Cited – McCartney and Unite The Union and Another v Nortel Networks UK Ltd (In Administration) ChD 22-Apr-2010
The administrators gave employees of the company notice of termination of their employment. Then administrators refused consent under para 43(6) to actions against the company in the Northern Ireland Industrial Tribunal for protective awards, unfair . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.416337
William Alt died insolvent in 1908. His estate included shares in the company, which went into voluntary liquidation in 1914. Alt owed the company andpound;2,633.
Held: In the distribution of the company’s surplus assets the liquidator could retain out of the fund, on account of Alt’s debt, only the amount of the dividend on the debt. Sargant J distinguished other cited authorities as having ‘an entire absence of the special feature present in Cherry v Boultbee and in the case before me, namely, the insolvency of the original debtor before the right of retainer or quasi set-off had first arisen.’ He restated the Cherry v Boultbee rule: ‘where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed so to participate unless and until he has fulfilled his duty to contribute.’
Sargant J
[1915] 2 Ch 144
Explained – Cherry v Boultbee HL 22-Nov-1839
B died having made a will leaving a fund to pay income to A who owed her money but had been made bankrupt before the death. The debt to B remained unpaid.
Held: The liability to pay the debt and the right to receive the legacy had never tested . .
Cited – In re Kaupthing Singer and Friedlander Ltd SC 19-Oct-2011
The bank had been put into administrative receivership, and the court was now asked as to how distributions were to be made, and in particular as to the application of the equitable rule in Cherry v Boultbee in the rule against double proof as it . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.416572
Sir George Jessel MR said: ‘there could not be a set-off until action brought and set-off pleaded.’
Sir George Jessel MR
(1878) 9 ChD 568
Insolvent Debtors Relief Act 1729 13
Cited – Aectra Refining and Marketing Inc v Exmar NN CA 15-Aug-1994
A time loss claim can found a legal set-off claim against ship owners, provided that the loss claim can be made in the same court. The court referred to a ‘transaction set-off and independent set-off’. Cross-claims must both be due and payable, and . .
Cited – Fuller v Happy Shopper Markets Ltd and Another ChD 6-Mar-2001
A tenant complained to the landlord about his failure to repair. He ceased paying rent, and the landlord eventually distrained for rent by direct action.
Held: The tenant was unable to claim a legal set-off because there was no context of . .
Lists of cited by and citing cases may be incomplete.
Updated: 06 May 2022; Ref: scu.416724
A proceeding in bankruptcy was based upon an order to enforce an ordinary civil arbitration award. Under the 1889 Act it was possible to obtain an order in the High Court of England for the enforcement of such an order and all that was held was that that was a civil proceeding in the High Court. For the enforcement of the order it was necessary to issue an originating summons in the High Court based upon the award and to obtain an order.
Held: It was a proceeding in the High Court.
[1896] 1 QB 368
Cited – National Ability Sa v Tinna Oils and Chemicals Ltd CA 11-Dec-2009
Implied promise to pay arbitral award
The parties disputed how limitation affects the enforcement of an arbitration award. More than six years had passed since the award had been made, and the defendant said it was out of time.
Held: A party can enforce an award either by ordinary . .
Lists of cited by and citing cases may be incomplete.
Updated: 05 May 2022; Ref: scu.384114
There had been an agreement to lend to the bankrupt some stock which she undertook to replace. The act of bankruptcy and the declaration of her bankruptcy took place before the stock was replaced. The parties disputed whether the agreement created a provable debt. It was argued that the agreement did not provide for payment of a sum certain but only for the replacement of the stock at some indefinite point in the future. It was therefore a claim for unliquidated damages.
Held: (Majority) There was a provable debt.
Lord Kenyon thought that there was a provable debt in an amount equal to the value of the stock on the day of bankruptcy.
Ashurst J said that the only provable debts were those which could be recovered in the form of an indebitatus assumpsit, thus excluding any claim in damages.
Buller J said that the form of action was not determinative and the real question was whether the amount of the debt could be ascertained without the intervention of a jury.
Grose J said that a creditor could prove for a claim in damages provided that they were in a liquidated sum.
Lord Kenyon CJ said: ‘The question in this case depends on a simple principle of law, which cannot be doubted. It is clear, that where one person, previous to his bankruptcy, is indebted to another in a precise sum which is ascertained, the latter may prove his debt under the commission: but it is as clear, that where there is only a cause of action existing, where the debt is to arise on a stipulation which has not been broken previous to the time of the bankruptcy, and where the debt remains to be inquired into, there the creditor cannot prove his debt under the commission, and the demand will remain undischarged by the certificate.’
Lord Kenyon Ch J, Grose, Buller, Ashurst JJ
(1790) 3 Term Reports 539, [1790] EngR 2276, (1790) 3 TR 539, (1790) 100 ER 721
Cited – McGuinness v Norwich and Peterborough Building Society CA 9-Nov-2011
The appellant had guaranteed his brother’s loan from the respondent, and the guarantee having been called in and unpaid, he had been made bankrupt. He now appealed saying that the guarantee debt, even though of a fixed amount could not form the . .
Lists of cited by and citing cases may be incomplete.
Updated: 05 May 2022; Ref: scu.365329