Land – Beneficial interest – Trustee in bankruptcy – Claimant claiming beneficial interest in property purchased by uncle with proceeds of sale of another property in he had beneficial interest – Defendant executor contending claimant lacked standing to bring proceedings due to bankruptcy – Claimant arguing for interest based on equitable estoppel and constructive trust not vesting in trustee in bankruptcy – Whether claimant having locus or standing to pursue claim – Application granted
The claimant issued proceedings claiming to have a beneficial interest in a property said to result from its purchase by his uncle (D) using the proceeds of sale of another property in which the claimant claimed to have a beneficial interest, subject to the life interests of D and D’s twin brother, both of whom had both died. The claimant relied on an oral agreement made in 1975 and written agreements made in 1978 and 1981, which provided that he was entitled to direct D and his brother to leave the other property and/or the sum of £8000 (an interest free loan) to his three daughters equally, if he predeceased them. It was common ground that the claimant had been adjudged bankrupt in 1992.
The defendant, as D’s executor, contended that the claimant lacked standing to pursue the claim since the claimant’s interest in the properties, as defined in section 436 of the Insolvency Act 1986, had become subject to the official receiver’s control upon the making of a bankruptcy order and vested in the claimant’s trustee in bankruptcy on appointment. Consequently, the claimant was divested of such equitable interest he had in the properties and any such interest would not have become re-vested in the claimant on his discharge from bankruptcy. The claimant contended that his interest was based upon a cause of action in equitable estoppel and alternatively, a remedial constructive trust and was not caught by the provisions of the 1986 Act and, therefore, did not vest in his trustee.
On the defendant’s application, the court was asked to determine whether the claimant had locus or standing to pursue his claim. Although the application was framed as a preliminary issue, it was tantamount to a defendant’s application for summary judgment and was dealt with as such.
Held: The application was granted.
The examination in fact being undertaken was one of measurement or valuation of an equitable interest which already existed or had existed. The examination relevant to determining whether the subject matter of the equitable estoppel was property for the purposes of section 436 required consideration of the circumstances at an earlier point in time, namely as they had been at the time of the bankruptcy. The fact that it might not be possible to say, until after the happening of some future contingent event, whether or not an equity had been satisfied and, if not, to identify the minimum relief necessary to satisfy the equity did not mean that the equity had not come into existence, or that it could not have existed, unless and until the future contingent event had occurred. The equity came into existence, if at all, as the result of a promise being made to, relied upon by and a detriment being suffered by a promisee. It was at that point that the promise became irrevocable, the equity was recognised and it was that equity to which the definition of property at section 436 was to be applied: Webster v Ashcroft [2011] EWHC 3848 (Ch); [2012] 1 WLR 1309 considered.
On the facts of the present case, what had been promised to the claimant under the 1975 agreement had been property, as defined in section 436 and such property came under the control of the official receiver and vested in the claimant’s trustee in bankruptcy upon the latter’s appointment. There was no realistically arguable basis on which the claimant could contend that he had standing to pursue his claim based on equitable estoppel or remedial constructive trust. Accordingly, the particulars of claim would be struck out.
Glenn Willetts (instructed by Harrisons Solicitors) appeared for the claimant; Paul Burton (instructed by Brindley Twist Tafft & James, of Coventry) appeared for the defendant.
Eileen O’Grady, barrister
Land – Beneficial interest – Trustee in bankruptcy – Claimant claiming beneficial interest in property purchased by uncle with proceeds of sale of another property in he had beneficial interest – Defendant executor contending claimant lacked standing to bring proceedings due to bankruptcy – Claimant arguing for interest based on equitable estoppel and constructive trust not vesting in trustee in bankruptcy – Whether claimant having locus or standing to pursue claim – Application grantedThe claimant issued proceedings claiming to have a beneficial interest in a property said to result from its purchase by his uncle (D) using the proceeds of sale of another property in which the claimant claimed to have a beneficial interest, subject to the life interests of D and D’s twin brother, both of whom had both died. The claimant relied on an oral agreement made in 1975 and written agreements made in 1978 and 1981, which provided that he was entitled to direct D and his brother to leave the other property and/or the sum of £8000 (an interest free loan) to his three daughters equally, if he predeceased them. It was common ground that the claimant had been adjudged bankrupt in 1992.The defendant, as D’s executor, contended that the claimant lacked standing to pursue the claim since the claimant’s interest in the properties, as defined in section 436 of the Insolvency Act 1986, had become subject to the official receiver’s control upon the making of a bankruptcy order and vested in the claimant’s trustee in bankruptcy on appointment. Consequently, the claimant was divested of such equitable interest he had in the properties and any such interest would not have become re-vested in the claimant on his discharge from bankruptcy. The claimant contended that his interest was based upon a cause of action in equitable estoppel and alternatively, a remedial constructive trust and was not caught by the provisions of the 1986 Act and, therefore, did not vest in his trustee.On the defendant’s application, the court was asked to determine whether the claimant had locus or standing to pursue his claim. Although the application was framed as a preliminary issue, it was tantamount to a defendant’s application for summary judgment and was dealt with as such.Held: The application was granted. The examination in fact being undertaken was one of measurement or valuation of an equitable interest which already existed or had existed. The examination relevant to determining whether the subject matter of the equitable estoppel was property for the purposes of section 436 required consideration of the circumstances at an earlier point in time, namely as they had been at the time of the bankruptcy. The fact that it might not be possible to say, until after the happening of some future contingent event, whether or not an equity had been satisfied and, if not, to identify the minimum relief necessary to satisfy the equity did not mean that the equity had not come into existence, or that it could not have existed, unless and until the future contingent event had occurred. The equity came into existence, if at all, as the result of a promise being made to, relied upon by and a detriment being suffered by a promisee. It was at that point that the promise became irrevocable, the equity was recognised and it was that equity to which the definition of property at section 436 was to be applied: Webster v Ashcroft [2011] EWHC 3848 (Ch); [2012] 1 WLR 1309 considered.On the facts of the present case, what had been promised to the claimant under the 1975 agreement had been property, as defined in section 436 and such property came under the control of the official receiver and vested in the claimant’s trustee in bankruptcy upon the latter’s appointment. There was no realistically arguable basis on which the claimant could contend that he had standing to pursue his claim based on equitable estoppel or remedial constructive trust. Accordingly, the particulars of claim would be struck out.Glenn Willetts (instructed by Harrisons Solicitors) appeared for the claimant; Paul Burton (instructed by Brindley Twist Tafft & James, of Coventry) appeared for the defendant.Eileen O’Grady, barrister
