Singla (Trustee in Bankruptcy of Brown) v Brown
| Jurisdiction | England & Wales |
| Judgment Date | 01 March 2007 |
| Neutral Citation | [2007] EWHC 405 (Ch) |
| Docket Number | Claim No. 949 of 2005 |
| Court | Chancery Division |
| Date | 01 March 2007 |
[2007] EWHC 405 (Ch)
Mr. Thomas Ivory Q.C.
Claim No. 949 of 2005
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN BANKRUPTCY
Hearing date: 6, 7 February 2006
Introduction
This is an application under s.339 of the Insolvency Act 1986 (transactions at under value) by the trustee in bankruptcy of Rodney Lambton Brown (“Mr. Brown”) in respect of a transfer of 49% of the beneficial interest in a house at 74 Chester Road, Wanstead, London E11 to the Second Respondent, Mrs. Malden-Browne. The background to this matter is as follows.
Mrs. Malden-Browne occupied the house in question from 1981 as a secured tenant. She was married, but the marriage broke down in 1987. She continued to live in the house with the child she then had. From the early 1990s until June 2005, she had a relationship with Mr. Brown with whom she has had two further children, one born in 1993 and the other in 2001. Despite the similarity in names, she was not married to Mr. Brown. Mr. Brown did not actually live in the house before 1998. He moved into the house around May 1998 after he was badly injured in a motorcycle accident.
In September 1998, following the death of the owner of the freehold, Mrs. Malden-Browne was offered the chance to purchase the freehold, at a substantial discount to the value of the house with vacant possession because of her secured tenancy.
Eventually the purchase price was agreed at £130,000, which was some £70,000 less than the value of the property with vacant possession. The purchase was financed by a mortgage of £129,780 after deduction of some expenses from Mortgages 2 Limited. Mrs. Malden-Browne says she paid an additional £2,776.68 for legal and other expenses. She had borrowed £6,000 from her parents to pay the deposit.
Completion took place on 23 November 1999. The property was conveyed into the joint names of Mrs. Malden-Browne and Mr. Brown expressly on trust for themselves as joint tenants. Mrs. Malden-Browne says her original intention had been to purchase the property in her sole name. The reason the house was put into their joint names was because the mortgage company insisted that the mortgage be in their joint names. But she says there was an agreement or understanding between her and Mr. Brown that he was only to have a nominal interest in it. She also says he made no capital contribution to the purchase of the house, nor has he contributed to the mortgage payments, the life policy premiums or household expenses since the purchase.
The express trust as joint tenants in the conveyance does not accord with what Mrs. Malden-Browne says was their understanding at the time of the purchase. She says she was not given any explanation by her solicitors as to what the legal effect of buying as joint tenant would be, or the possibility of declaring a tenancy in common in unequal shares. She discovered Mr. Brown had acquired more than a nominal interest in the property the month after the purchase, when she met Sheila Conroy, a legal executive to whom she was introduced by a mutual friend. Following informal advice from Ms. Conroy about the effect of the declaration of a joint tenancy, and how this could be changed to reflect her and Mr. Brown's intentions, on 6 February 2000 she signed and gave to Mr. Brown a notice of severance of the joint tenancy which stated that the property would thereafter be held by them as tenants in common in unequal shares, 99% for her and 1% for him, and he signed a document acknowledging receipt of the notice and accepting the apportionment of the shares stated in it. This is the transaction which the Trustee seeks to set aside under s.339 of the Insolvency Act 1986 in this application before me. Before dealing with that, I shall summarise briefly the subsequent history of this matter.
Mr. Brown together with a Mr. Paul Moscow had been concerned in business, through a company called Cigar Vending Company Limited. There was a dispute between that company and a company called Swedish Match Limited, which resulted in proceedings being commenced in November 1999. Cigar Vending Company was represented in those proceedings by Kay & Co., (the same solicitors who acted for Mrs. Malden-Browne in the purchase of the house). At Mr. Kay's insistence, Mr. Moscow and Mr. Brown agreed to accept personal responsibility to Mr. Kay for the company's legal costs. In July 2001, Cigar Vending lost the proceedings against Swedish Match. Swedish Match obtained orders for costs against Mr. Moscow and Mr. Brown personally, and a freezing injunction against Mr. Brown.
On 12 July 2001, Mr. Kay obtained a legal charge from Mrs. Malden-Browne and Mr. Brown over the house, as security for Kay & Co's costs. Those costs were ultimately assessed at just over £71,000, of which Mr. Brown paid approximately £1,300 and Mr. Moscow paid the rest. Mr. Moscow then claimed a contribution from Mr. Brown. He duly obtained judgment against Mr. Brown for some £40,000, and in October 2003 he obtained a charging order over Mr. Brown's beneficial interest in the house.
Mr. Moscow then commenced proceedings seeking to enforce his judgment against the house, in which he claimed to be entitled to an assignment of the benefit of the charge in favour of the Kay & Co., and made an alternative claim under s.14 of the Trusts of Land and Appointment of Trustees Act 1996 for a declaration that Mr. Brown was entitled to 50% of the beneficial interest in the house. Mr. Moscow died shortly after commencement of those proceedings, and they were continued by his son, Simon, as his personal representative.
Those proceedings came on for trial before Mr. Justice Lloyd in January 2005. The principal issues in those proceedings were:
(i) whether the charge over the house was voidable; and
(ii) whether the notice of severance and receipt were fabricated in the sense of being back dated, having really been signed some date after Mr. Moscow obtained the charging order in October 2003.
Mr. Justice Lloyd found for Mrs. Malden-Browne on both issues. As to the first issue, the charge signed by Mrs. Malden-Browne in favour of Kay & Co. was a security by her over her interest in the property for an existing liability of Mr. Brown to Kay & Co. (who was also Mrs. Malden-Browne's former solicitor), where there was no further credit to be gained on the security and no particular incentive for Mrs. Malden-Browne to sign the document. Clause 7 of the charge stated that both she and Mr. Brown had taken independent legal advice in respect of the charge and confirmed that the charge was executed voluntarily without any undue influence, coercion or preference. But that was untrue, at least as regards Mrs. Malden-Browne. The Judge found that “Mr. Kay plainly should have advised Mrs. Browne to get separate advice and knew it, as Clause 7 of the mortgage shows, but failed to do so…I am satisfied that her signature on this mortgage was procured in breach of duty by Mr. Kay, and probably, also, by a collateral contract, and that Mr. Kay could not enforce it against her”. Accordingly, the charge was voidable and there would be no benefit to the Claimant in having the mortgage assigned to him.
As to the second issue, the Judge “conclude[d] on the balance of probability that [Mrs. Malden-Browne] was telling me the truth about the circumstances in which the notice of severance and receipt came to be prepared and signed and, in particular, that the date they bear is accurate” and “reject[ed] the contrary submission that this part of her evidence is perjured, and that the documents were thought up and created after October 2003 by the First Defendant”.
Accordingly, Mr. Justice Lloyd dismissed both claims and held that Mr. Brown had only a 1% share of the property. In the course of his judgment, he recorded that Counsel for the Claimant had mentioned Section 339 of the Insolvency Act, and observed “but that is only open to a trustee in bankruptcy. So that is a future question not arising in these proceedings”.
Following the trial before Mr. Justice Lloyd, a bankruptcy petition was presented, I understand 3 days before the expiry of the “relevant period” for the purposes of the s.339 application now before me. The bankruptcy order was made on 23 March 2005. On 27 April 2005, Mrs. Malden-Browne paid Mr. Moscow's estate the sum of £1,409.76 representing 1% of the agreed value of the equity in the house, being Mr. Brown's beneficial interest as determined by Mr. Justice Lloyd, so that she became the sole beneficial owner. Mr. Singla was appointed Mr. Brown's trustee in bankruptcy on 20 May 2005, and issued this application in early September 2005.
Mrs. Malden-Browne's relationship with Mr. Brown ended in June 2005, and in October 2005 she emigrated to Australia where she now lives with her two younger children in rented accommodation. She intended to sell the property before emigrating, and use the net proceeds to buy a property in Australia where property prices are cheaper. She instructed estate agents to market the property, but has been unable to sell it because of the present application and a notice placed by the Trustee on the registered title. The property was eventually let on 5 December 2005. It is currently let on a year's tenancy from December of last year.
The Application under s. 339
The principal issues for decision are:
(i) whether the notice of severance and receipt fall within s. 339 of the Insolvency Act 1986; and, if so,
(ii) what order the Court should make, and in...
To continue reading
Request your trial
-
Hill and another v Haines
...administration), Re [1992] 3 All ER 1, [1993] Ch 223, [1992] 3 WLR 690, CA. Pope, Re, ex p Dicksee [1908] 2 KB 169, CA. Singla v Brown [2007] EWHC 405 (Ch), [2007] All ER (D) 05 Thoars (decd), Re, Reid v Ramlort Ltd [2002] EWHC 2416 (Ch), [2003] 1 BCLC 499; affd[2004] EWCA Civ 800, [2005] 1......
-
The Trustee in Bankruptcy of Gordon Robin Claridge v 1. Gordon Robin Claridge and Another
...section 339(2) if that is the just result: see In re Paramount Airways Ltd (in administration) [1993] Ch 223, 239G-H; Singla v Brown [2007] EWHC 405 (Ch); [2008] CH 357, [51]–[52] and [59]. In my judgment, that is the position here. 49 In reaching that conclusion I have particular regard t......
-
Dormco Sica Ltd ((in Liquidation)) v S B L Carston Ltd
...of the one case which counsel had found where the discretion was exercised against the insolvent estate ( Singla v Brown and Another [2007] EWHC 405 (Ch), [2008] Ch 357, [2007] BPIR 424 – noting that this decision and Stonham v Ramratten do not appear to have been referred to the Privy Co......
-
1) Malcolm Shiersoz 2) Jonathan Birch v Viren Kumar Rastogi
...1 BCLC 294, 303 para 31 and of Mr Thomas Ivory QC, sitting as a deputy High Court judge of the Chancery Division in Singla v Brown [2007] EWHC 405 (Ch) para 29. I agree with them. 40 Accordingly I reject the submissions of counsel for the Bankrupt and accept that of counsel for the Trustees......
-
De La Théorie Des Troubles de Voisinage en Matière de Recours Collectif ; un Débat Clos?
...965/06 CCWIPP v. Royal Group Technologies Ltd. Silver v. Imax Corp. 51579-CP 06-CV-318004CP 19 Cohen v. Imax Corp. VOLUME 4, N o 2, m ar ch 2008 357 2) Managing Shareholder Class Actions in Ontario Responsibility for managing class actions in Ontario — and even more so shareholder class act......
-
Utility at Last for Sections 23 and 24 of the Class Proceedings Act, 1992
...965/06 CCWIPP v. Royal Group Technologies Ltd. Silver v. Imax Corp. 51579-CP 06-CV-318004CP 19 Cohen v. Imax Corp. VOLUME 4, N o 2, m ar ch 2008 357 2) Managing Shareholder Class Actions in Ontario Responsibility for managing class actions in Ontario — and even more so shareholder class act......
-
Introduction
...965/06 CCWIPP v. Royal Group Technologies Ltd. Silver v. Imax Corp. 51579-CP 06-CV-318004CP 19 Cohen v. Imax Corp. VOLUME 4, N o 2, m ar ch 2008 357 2) Managing Shareholder Class Actions in Ontario Responsibility for managing class actions in Ontario — and even more so shareholder class act......
-
Seeking Recognition of Canadian Class Action Judgments in Foreign Jurisdictions: Perils and Pitfalls
...965/06 CCWIPP v. Royal Group Technologies Ltd. Silver v. Imax Corp. 51579-CP 06-CV-318004CP 19 Cohen v. Imax Corp. VOLUME 4, N o 2, m ar ch 2008 357 2) Managing Shareholder Class Actions in Ontario Responsibility for managing class actions in Ontario — and even more so shareholder class act......