A mother and son agreed that the sum repayable by the son in respect of periodic loans made by the mother (which could not exceed andpound;650, and might be as little as andpound;10, in all) was to increase from andpound;650 to andpound;1,650 (plus interest) in the event of the son’s bankruptcy.
Held: The applicable principle was that a ‘person cannot make it a part of his contract that, in the event of bankruptcy, he is then to get some additional advantage which prevents the property being distributed under the bankruptcy laws’. The agreement was ‘a deliberate device to secure that more money should come to the mother if the son went bankrupt, than would come to her if he did not; and, that being so . . the device is bad’.
Judges:
Tomlin J
Citations:
[1928] Ch 737
Jurisdiction:
England and Wales
Cited by:
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.
Insolvency, Contract
Updated: 04 May 2022; Ref: scu.442613