Reid v Ramlot Ltd
| Jurisdiction | England & Wales |
| Judge | The Vice-Chancellor |
| Judgment Date | 15 November 2002 |
| Neutral Citation | [2002] EWHC 2416 (Ch) |
| Docket Number | Case No: 8/M of 1999 |
| Court | Chancery Division |
| Date | 15 November 2002 |
[2002] EWHC 2416 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Vice-Chancellor
Case No: 8/M of 1999
Mr. Stephen Davies QC (instructed by Messrs Peterkins) for the Applicant
Mr. Guy Newey QC (instructed by Messrs Clintons) for the Respondent
Hearing dates: 7th November 2002
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
On 1st February 1994 Allan McLean Thoars ("the Deceased") took out a unit-linked life insurance policy with Skandia Life Assurance Co.Ltd ("the Policy"). On 1st February 1996 the annual premium, which was variable, was £1,176 for a sum payable on death then amounting to £185,568. On 19th July 1996 the Deceased, who was suffering from cirrhosis of the liver, was put on the active list for a liver transplant. On 26th July 1996 the Deceased assigned the benefit of the Policy to the defendant ("Ramlort") by means of a written declaration of trust which was not expressed to be made for any consideration. On 18th September 1996 the Deceased underwent a liver transplant. The following day he died both intestate and insolvent.
The claimant ("Mr Reid") is the judicial factor of the Deceased's insolvent estate, having been so appointed by the Sheriff for the area in which the Deceased lived, namely Grampian, Highlands and Islands, on 16th September 1997. On 12th March 1999 he commenced these proceedings. He seeks an order to set aside the assignment of the policy under s.339 Insolvency Act 1986 on the grounds that it was a transaction at an undervalue.
S.339 provides
"(1) Subject as follows in this section and sections 341 and 342, where an individual is adjudged bankrupt and he has at a relevant time (defined in section 341) entered into a transaction with any person at an undervalue, the trustee of the bankrupt's estate may apply to the court for an order under this section.
(2) The court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction.
(3) For the purposes of this section and sections 341 and 342, an individual enters into a transaction with a person at an undervalue if —
(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration,
(b) he enters into a transaction with that person in consideration of marriage, or
(c) he enters into a transaction with that person for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the individual."
S.341(1)(a) prescribes the relevant time for the purposes of ss.339 as a time within 5 years prior to the presentation of the petition on which the individual was adjudicated a bankrupt. But, by virtue of s.341(2), a time not within the last two years of that period is not relevant unless the individual was insolvent at that time or became insolvent in consequence of the transaction. In the case of a transaction between that individual and an associate of his it is presumed that those conditions are satisfied unless the individual establishes the contrary.
It is not in dispute that the declaration of trust was executed by the Deceased at a relevant time. Mr Reid relies on the sum payable on death as at 1st February 1996, namely £185,598, and contends that his claim comes within each of the grounds set out in s.339(3). This is disputed by Ramlort. It contends that the policy had no value or none exceeding its surrender value of £71.96. In addition it asserts that it gave good consideration for the declaration of trust by reimbursing the Deceased for the premium due on 1st February 1996, agreeing to pay the remaining premiums as and when they fell due and paying the Deceased £1,900.
The parties have given disclosure and exchanged the reports of experts on the valuation of the Policy. They have not exchanged witness statements or the reports of medical experts. On 27th November 2001 Mr Registrar Jaques adjourned the application to the judge for the determination of a preliminary issue in the following terms:
"To what extent (if at all) the value of the consideration provided by Mr Thoars to Ramlort Ltd by the declaration of trust made on 26th July 1996 should be assessed in the knowledge of and/or taking into account the fact that he underwent a liver transplant operation on 19th September 1996 and died during surgery on that date."
The formulation of the preliminary issue mistates the facts because the transplant was carried out on 18th September and the Deceased died, not during surgery on that day, but on the following day, 19th September, when in intensive care after the operation had been completed.
I did not understand that order to have been made by consent but neither side appealed. For reasons I will explain later I do not consider such a preliminary issue to be susceptible of just determination in accordance with its terms. But in view of the delays which have already occurred in the resolution of this dispute I should give such guidance as I properly can in advance of findings of relevant facts.
The essential point is the extent, if any, to which subsequent events may be regarded in assessing the value of consideration in money or money's worth as required by s.339(3)(c). That the court may in appropriate circumstances have regard to subsequent events in assessing values is not in doubt. In The Bwllfa and Merthyr Dare Steam Collieries(1891) Ltd v The Pontypridd Waterworks Co [1903] AC 426, 431 Lord Macnaghten said
"If the question goes to arbitration, the arbitrator's duty is to determine the amount of compensation payable. In order to enable him to come to a just and true conclusion it is his duty, I think, to avail himself of all information at hand at the time of making his award which may be laid before him. Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?"
In Phillips v Brewin Dolphin Bell Lawrie Ltd [2001] 1 WLR 143 the House of Lords considered the entitlement of a court to have regard to subsequent events in ascertaining the value of the consideration in money or money's worth received by an insolvent company. The question arose under s.238(4)(c) which...
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