Mark Levy (The Trustee in Bankruptcy of Errol Weston Ellis-carr v Errol Weston Ellis-carr and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Norris |
| Judgment Date | 23 January 2012 |
| Neutral Citation | [2012] EWHC 63 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH/2011/0313 |
| Date | 23 January 2012 |
[2012] EWHC 63 (Ch)
Mr Justice Norris
Case No: CH/2011/0313
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
The Rolls Building
Fetter Lane
EC4A 1NL
Anthony Allston (instructed by Charles Henry) for the Appellant
Christopher Boardman (instructed by Rochman Landaw) for the Respondent
Hearing dates: 19 January 2011
In August 1972 a property at 26 Elmar Road, Tottenham N15 ("Elmar Road") was registered in the joint names of Errol Weston Ellis-Carr ("the Appellant") and his mother ("Mrs Ellis"). The form of registration was that generally used for legal and beneficial joint owners. In June 1991 a restriction was put on this title such as is normally entered when a joint tenancy is severed. As a matter of law the severance of a joint tenancy would result in a tenancy in common in equal shares.
On the 6 June 1994 a bankruptcy order was made against the Appellant (who is a former solicitor) in respect of the unpaid costs of an intervention into his practice and a failure to reimburse the Law Society Compensation Fund for payments made in consequence of the Appellant's theft from his clients.
Under sections 291 and 333 of the Insolvency Act 1986 (" IA 1986") a bankrupt is bound to give all relevant information to the Official Receiver (or trustee); and I am sure that as a former solicitor who one day hoped to be readmitted to the Roll the Appellant would have taken those duties seriously. In the answers to his Bankruptcy Questionnaire the Appellant disclosed that he owned a property and that he owned it with another person. The property was Elmar Road. He drew attention to the existence of two charging orders which arose out of personal debts of his and informed the Official Receiver
"… Any mortgage loans outstanding fully paid up in 1982 by myself. The property is currently in the joint names of myself and my mother. Some Charging Orders were made against the property in respect of my share".
This led to the Official Receiver preparing a statement of assets showing a 50% share of Elmar Road included in the bankruptcy estate (but subject to the charges). There a deficiency (because the amount secured by the charges exceeded the value of the Appellant's half share of the equity).
Over time the value of the equity in the property increased. At the end of 2000 the Appellant enquired how he could "proceed to acquire the Official Receiver's interest". He also wanted to know about his secured creditors "so he [could] look into buying back his beneficial interest". But nothing came of that.
The administration of the bankruptcy was transferred to the Protracted Realisations Unit with a view to the realisation of the Appellant's interest in Elmar Road for the benefit of his creditors. The Appellant then wrote on 21 February 2001 to the PRU to say that he was not sure he had any interest in Elmar Road and that the entire beneficial interest might belong to his mother (as she was asserting). He set out what he described as "the major facts". These were that the purchase price of Elmar Road was £6750; that his mother provided the deposit of £2000 and that the Appellant and his mother together obtained a mortgage for £4750; and that the Appellant's mother provided money for him to pay monthly mortgage instalments up to about 1981–82, at which point the Appellant paid off the balance of the mortgage. He said he had also paid for substantial work to be carried out to the property. (This reference to paying for works confirmed the description of his liabilities which the Appellant had given to the Official Receiver showing some £86,000.00 which he had borrowed to "fix up" or improve the house). He produced a Memorandum signed by himself and Mrs Ellis recording that "the £2000.00 on the … property is contributed solely by [his mother]".
The trustee was not dissuaded by that and began the realisation of the interest which he claimed. The trustee wrote to Mrs Ellis, who instructed solicitors. The solicitors' letter of response said;
"[The Appellant] did not contribute financially to the property and in fact he wrote a letter to the Insolvency Service in February last year, to which he agrees this was the basis on which the property was purchased…She is not however in a financial position to take court proceedings to obtain a declaration that she owns a greater percentage than 50% of the ownership of the property… If you are not able to entertain or consider that our client has a greater than 50% interest in the property, would you at least confirm that no action will be taken regarding repossession of the property and sale of the same whilst our client is still alive".
The trustee did not press for a sale. Instead he continued to offer to sell the bankruptcy estates interest in Elmar Road to Mrs Ellis. But the process got nowhere and in view of the approach of a realisation deadline arising from the terms of section 283A IA 1986 the trustee gave notice of his intention to realise the Appellant's interest. On 22 June 2006 the mother again instructed solicitors who gave her advice as to her position and recorded her wish "to buy out the share". But although (according to her solicitors' letter of 21 July 2006) Mrs Ellis was seeking to raise money through an equity release scheme she was unsuccessful; eventually she could not afford solicitors (according to a letter from her former solicitors in September 2006).
On the 15 January 2007 the trustee in bankruptcy issued an originating application seeking a declaration that he (as the Appellant's trustee in bankruptcy) and Mrs Ellis were beneficially entitled in equal shares to Elmar Road (and seeking in the alternative an enquiry and declaration as to their respective interests). He also sought an order for possession and sale. Both the Appellant and his mother were named as Respondents to this application, but neither participated in the proceedings at all.
On 8 March 2007 Registrar Derrett declared that the Appellant and the mother were beneficially entitled in equal shares to Elmar Road, ordered that the property be sold with vacant possession, ordered that possession to be given up on the 5 April 2007 and removed the Appellant as one of the registered proprietors (appointing his trustee in bankruptcy in his place). Mrs Ellis was ordered to pay the trustees costs (which were to be deducted from her interest in the proceeds of sale).
The trustee's agents began to put this order into effect; but neighbours in Elmar Road said that Mrs Ellis behaved eccentrically, and the trustee thought that he ought to enquire into her mental capacity. No formal finding as to her capacity appears to have been made and no application was made to discharge the Order dated 8 May 2007. But there were proposals to appoint a litigation friend to act for Mrs Ellis and to seek the court's approval to a compromise; but before any of that could be put into effect Mrs Ellis died. She died intestate, and it appears that the Appellant is her sole beneficiary. He has obtained a grant of representation to her estate. It then became in the Appellant's interest to argue that Elmar Road was held in trust for his mother, that no part of it fell into the bankruptcy estate, and that he should receive the entirety as the only person entitled to inherit his mother's estate.
Because of the uncertainties created by the doubts over Mrs Ellis' mental capacity the trustee issued an application returnable on 20 May 2010 against the Appellant (both in his capacity as the bankrupt and in his capacity as his mother's personal representative) again seeking a declaration as to the beneficial interests (or alternatively in enquiry) and new orders for possession and sale, but this time adding a claim that the Appellant (as the personal representative of his mother) should pay an occupation rent in the sum of £37,800 as representing half the annual letting value of Elmar Road in respect of 6 years worth of occupation by the Appellants mother. The final prayer was
"For such further or other relief as to this court shall see just or appropriate including (but not limited to) affirming the court order dated 8 March 2007".
On the 20 May 2010 the Appellant sought an adjournment of the proceedings to the European Court of Human Rights: but the Chief Registrar gave directions for the filing of evidence by the Appellant. The Appellant filed a witness statement which began
"I appreciate that a witness statement should comprise factual statements rather than legal arguments. Nonetheless I think it may be helpful if I do address certain issues of law that arise in this case, so that the Applicant can make a considered decision now whether he wishes to continue with the case".
The points the Appellant made were that the order of the 8 March 2007 could not be "confirmed", that it was necessary to make an entirely fresh application, that no entirely fresh application could be made because of the provisions of section 283A IA 1986, that he wished to rely on the doctrine of laches, and that he disputed that he had a 50% share in the property at the time of his bankruptcy asserting that "the property belonged primarily to my mother". The witness statement continued to give very little more than had been asserted in the February 2001 letter by way of evidence. It...
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