Duncan Lyle v Jetson Ralph Bedborough
| Jurisdiction | England & Wales |
| Judge | Jonathan Richards |
| Judgment Date | 08 February 2021 |
| Neutral Citation | [2021] EWHC 220 (Ch) |
| Date | 08 February 2021 |
| Docket Number | Case No: BR-2014-001819 |
| Court | Chancery Division |
[2021] EWHC 220 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Rolls Building
Fetter Lane
London
EC4A 1NL
JUDGE Jonathan Richards
Sitting as a Deputy Judge of the High Court
Case No: BR-2014-001819
Kate Rogers (instructed by Blake Morgan LLP) for the Applicants
Faith Julian (instructed by C J Jones Solicitors) for the Second Respondent
The First Respondent is a litigant in person
Hearing dates: 12 to 14 January 2021
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
The Applicants have applied for orders under sections 339 and 423 of the Insolvency Act 1986 (the “Insolvency Act”) to set aside transactions relating to a residential property in Uxbridge (the “Property”) and for consequential orders, for, among other matters, possession and sale of the Property.
Many of the underlying facts relating to these applications are disputed, and I will make findings of fact on contentious matters later in this judgment. However, for the time being, the issues arising can be understood by reference to the following high-level summary of the factual background:
i) Mr and Mrs Bedborough met in 1983 and were married in 1990. In 1994, they purchased the Property as their family home. At all material times it has been registered in their joint names.
ii) In 2008, the evidence of Mr and Mrs Bedborough is that they entered into an agreement, which was entirely oral and not reduced to writing to any extent, under which Mr Bedborough agreed to transfer his interest in the Property to Mrs Bedborough. Their evidence is that Mr Bedborough agreed to this transfer because Mrs Bedborough gave him an ultimatum to the effect that, if he did not do so, she would divorce him and make a claim for a property adjustment order under s24 of the Matrimonial Causes Act 1973. I will refer to this alleged agreement as the “2008 Agreement”. In doing so, I should not be taken as suggesting that this agreement existed or had any legal force. I will make findings as to the effect of the 2008 Agreement later in this judgment.
iii) On 10 December 2012, Mr and Mrs Bedborough entered into a declaration of trust (the “2012 Declaration”). In that document, Mr and Mrs Bedborough declared that they held their interests in the Property as tenants in common for Mr Bedborough as to a 5% share and Mrs Bedborough as to a 95% share. The 2012 Declaration, therefore, set out a different position from that which Mr and Mrs Bedborough say was set out in the 2008 Agreement as, under the 2012 Declaration, Mr Bedborough retained a 5% interest in the Property rather than having no interest at all.
iv) On 25 November 2014, just under two years after the 2012 Declaration was executed, HMRC presented a bankruptcy petition against Mr Bedborough. He was adjudged bankrupt on 13 January 2015 and the Applicants were appointed as his trustees in bankruptcy on 4 August 2015.
Much of the complexity in this case arises from the fact that the Respondents maintain that the 2008 Agreement gave rise to a constructive trust that altered the beneficial interests in the Property in 2008, more than 5 years before the bankruptcy petition was presented, and so not at a “relevant time” for the purposes of s341 of the Insolvency Act with the result that s339 cannot apply. As a fall back, the Respondents deny that an interest in the Property was transferred at an undervalue. By contrast, the Applicants deny that the 2008 Agreement had any effect on the beneficial interests in the Property and say that Mr Bedborough transferred an equitable interest in the Property only in 2012 on the making of the 2012 Declaration. Since the 2012 Declaration was made less than two years before the presentation of the bankruptcy petition the Applicants argue that it was unquestionably made at a “relevant time” for the purposes of s341 and since it was made at an undervalue, it can be set aside. However, in case they are wrong on this, they present a fall-back argument to the effect that s423 of the Insolvency Act, to which no time limit applies, applies to the transfer of the interest in the Property whether it was effected in 2008 or 2012.
It is, therefore, necessary for me to determine several issues to determine the applications that are before me and the parties have agreed a list of issues between themselves. The full text of that agreed list is set out in the Appendix and I will structure my decision by reference to those issues. In very broad summary, I need to decide the legal effect of the 2008 Agreement and the 2012 Declaration, whether the conditions of s339 or s423 of the Insolvency Act are engaged and, if they are, what order I should make.
HEARING FORMAT AND EVIDENCE
The hearing before me took the form of a fully remote video hearing and neither party applied to me for the hearing to take any different form. For the Respondents, I heard evidence of fact from Mr and Mrs Bedborough and from Mr Fairburn, a solicitor who provided advice on the 2012 Declaration. These three witnesses were cross-examined. For the Applicants, Mr Lyle, one of the joint trustees in bankruptcy, gave evidence and Mr Bedborough cross-examined him. I have accepted Mr Lyle's evidence. In addition, there was agreed expert valuation evidence from Andrew Barton of Gibbs Gillespie Surveyors Limited dealing with the market value of the Property at various times.
The Respondents' case was that the 2008 Agreement came into existence following purely oral discussions between them. The Applicants were concerned that, in such circumstances if the trial was fully remote, there was some risk that the Respondents might assist each other with their evidence. Accordingly, in the pre-trial review, the Applicants successfully asked Meade J for an order that while the hearing should, given the COVID epidemic take the form of a fully remote video hearing, the Respondents should attend the offices of one of their legal representatives to give their evidence and both be in separate rooms at all times while either was being cross-examined. However, after Meade J made that order, both Respondents contracted COVID and, while they were well enough to participate at the hearing, they were still exhibiting some residual symptoms which made it impracticable for them to attend a lawyer's office to give their evidence. As a result, both parties realistically and pragmatically agreed that it would be undesirable for the hearing to be adjourned until Meade J's order could be complied with and instead they agreed that the order should be varied as follows:
i) The Respondents could both give evidence by separate video-links from separate rooms at the Property.
ii) At all times while one Respondent was giving evidence, the other Respondent would have their camera and video switched on with the camera positioned to give a good view of the surrounding area so that the court could be satisfied that neither Respondent was communicating with the other by email or mobile device.
iii) To avoid any risk of confusion as to whether the rules were being complied with, Mrs Bedborough would not seek to contact her solicitor, Mr Fairburn, while Mr Bedborough was giving evidence. Instead, she would make a note of any points she wished to raise and save them up until his evidence had concluded, with proceedings being paused as necessary to enable those discussions to take place.
In practice those arrangements worked satisfactorily. When breaks took place during the trial, the two Respondents took it in turns to leave their positions in front of their cameras and the Applicants did not suggest that the Respondents were failing to comply with the amended arrangements.
The Bedboroughs' case as to the creation of a constructive trust relied heavily on the contents of purely oral discussions between them in 2008. The Applicants had no first-hand knowledge of those discussions and the Bedboroughs had an obvious self-interest in asserting the presence of a common intention to alter their respective interests in the Property in 2008. In those circumstances, I was looking for transparent and reliable evidence from them. Later in this judgment I will explain why I consider that, in some respects, Mrs Bedborough's evidence involved her putting forward an account of the 2008 discussions which, whether consciously or otherwise, was affected by a wish to bolster her case as to the formation of a constructive trust in 2008. I will also explain why I considered that her evidence gave a somewhat misleading impression of the extent of her knowledge of Mr Bedborough's financial difficulties in 2012. These instances affected my overall impression of her evidence.
Mr Bedborough trod carefully when being cross-examined in relation to the 2008 discussions but overall I considered that he was a reliable witness. Understandably given that he is a solicitor, Mr Fairburn was sensitive to any suggestion that his evidence might be untrue. I am entirely satisfied that he was a reliable and honest witness.
FINDINGS OF FACT
The Bedboroughs' early married life and renovations to the Property in 2002
Mr and Mrs Bedborough were married in 1990. Their first son, Louis, was born in 1991. At the time they purchased the Property as their family home in January 1994, Mrs Bedborough carried...
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...of Shahi Tandoori Restaurant Ltd) v Bashir [2021] EWHC 337 (Ch) Re Mederco (Cardiff) Ltd [2021] EWHC 386 (Ch) Lyle v Bedborough [2021] EWHC 220 (Ch) Re TXU Ltd, Insolvency and Companies Court, 2 March 2021 Re Port Finance Investment Ltd [2021] EWHC 378 (Ch) Brown (Liquidator of Shahi Tandoo......
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Insolvency Team ' Recent Insolvency Case Update - 21 April 2021
...of Shahi Tandoori Restaurant Ltd) v Bashir [2021] EWHC 337 (Ch) Re Mederco (Cardiff) Ltd [2021] EWHC 386 (Ch) Lyle v Bedborough [2021] EWHC 220 (Ch) Re TXU Ltd, Insolvency and Companies Court, 2 March 2021 Re Port Finance Investment Ltd [2021] EWHC 378 (Ch) Brown (Liquidator of Shahi Tandoo......
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Insolvency Team ' Recent Insolvency Case Update
...This summary covers: 1.Re PGH Investments Ltd [2021] EWHC 533 (Ch) 2.Re Mederco (Cardiff) Ltd [2021] EWHC 386 (Ch) 3.Lyle v Bedborough [2021] EWHC 220 (Ch) 4.Re TXU Ltd, Insolvency and Companies Court, 2 March 2021 5.Re Port Finance Investment Ltd [2021] EWHC 378 (Ch) Re PGH Investments Ltd......