After the presentation of a bankruptcy petition against him, the debtor obtained an adjournment of the petition by paying the petitioning creditors money which he falsely represented to be that of a third party. The debtor was afterwards adjudicated bankrupt, and the trustee claimed repayment of the money from the petitioning creditors, relying on the doctrine of relation back. The petitioning creditors submitted that the debtor was estopped by his misrepresentation from saying that the money was his, and that the trustee in bankruptcy could be in no better position.
Held: Repayment was ordered. The money had become the trustee’s money by reason of the doctrine of relation back before the representation was made. He had a higher title and could not be estopped from claiming repayment of his own money by a later misrepresentation about it. The doctrine of relation back was taken literally.
Phillimore J said: ‘No doubt, when a bankrupt is estopped by some representation of his made in the course of carrying on his business, his trustee who takes his estate would be, just as much as an executor, bound, quoad the estate, by the representation, and be estopped. But here the trustee takes by a higher title. This andpound;125 was the trustee’s money by reason of the doctrine of relation back, and any statement made at the time of payment on behalf of Ashwell [the bankrupt] that it was not Ashwell’s money cannot estop the trustee from claiming the money. For this purpose, Ashwell and the trustee are different persons, and it is just the same as if Ashwell had represented that it was the money of somebody else . . This was not Ashwell’s money to make any representation about at all. It was in the contemplation of the law the trustee’s money, and, therefore, there is no estoppel.’
Phillimore J
[1912] 1 KB 390
England and Wales
Cited by:
Cited – Re Dennis (A Bankrupt) CA 22-May-1995
A joint tenancy was severed (under the former law) on the event of an act of bankruptcy, and not only by the later actual adjudication of bankruptcy. The vesting of the debtor’s property in the trustee which occurred on adjudication was automatic; . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Leading Case
Updated: 01 November 2021; Ref: scu.186762
