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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

19 DEC 2013

Donald McKinnon v Richard Graham [2013] EWHC 2870 (Ch); [2013] BPIR 1070

(Chancery Division, HHJ Behrens, 20 September 2013)

Mr Graham applied to HHJ Behrens for permission to appeal an order made by DJ Pescoed on an application brought by Mr Graham's trustee in bankruptcy for possession and sale of a property in Berwick-upon-Tweed. The relevant order opening insolvency proceedings against Mr Graham was a sequestration order of the Edinburgh Sheriff Court. This was therefore a case of a Scottish bankruptcy where the bankrupt had an asset located in England and Wales. The trustee's application to the English Court was made by a Part 8 Claim and engaged s 426 of the IA 1986. Mr Graham's principal defence was that, because the application was made more than 3 years after vesting of the Berwick-upon-Tweed property in the trustee, the property had revested in Mr Graham. Although both Scottish and English law provide for the revesting of property after a period of time, there were material differences. Under Scottish law, the property would not revest; under English law, it might revest, depending on whether it was Mr Graham's principal residence (which was a fact which was in dispute).

 

DJ Pescoed decided to apply, pursuant to s 426(5) of the IA 1986, Scottish law to decide the question of revesting. In so doing he was exercising a discretion. HHJ Behrens was not prepared to interfere with that exercise of discretion. In reaching that view, HHJ Behrens appears, tacitly at least, to have relied upon the ‘golden thread' of modified universalism (per Lord Hoffmann in HiH, McGrath v Riddell [2008] UKHL 21), and holding that the same applies to personal insolvency. Applying Scottish law instead of English law did not offend a fundamental principle of English insolvency law or any public policy. HHJ Berhens also rejected arguments based on delay by the trustee, or that the ruling infringed Mr Graham's human rights. Permission to appeal was refused.

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