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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

26 SEP 2013

Official Receiver for Northern Ireland v Mallon [2013] NIMaster 9; [2013] BPIR 621

(Chancery Division, Master Kelly, 15 April 2013)

In 1995 M's father had sold a property to her brother, to assist the brother's joinery business, on the understanding that the property would always remain in the family and that the bankrupt would not sell to an outsider. M and her father continued to live in the property. In April 2006, M persuaded her brother to sell the property, then worth about £110,000, to her for £56,000. A bankruptcy order was made against the bankrupt in February 2009 and the Official Receiver sought to have the sale to the respondent set aside on the grounds that it was a transaction at an undervalue. M asserted that the beneficial interests in the property were not reflected by the legal title and claimed a proprietary estoppel in her favour. She also argued that her brother was not insolent at the time of the sale to her. Master Kelly allowed the application. In spite of the family context, the evidence showed that the brother was the full legal owner of the property after 1995 until the time of its later sale to M and no constructive trust arose. No proprietary estoppel arose, as M understood that her brother was the full legal owner when the property was transferred to her and there is no evidence of unconscionable conduct on his part. She also failed to show that her brother was not insolvent at the time of the sale to her. While granting the application would cause hardship, that in itself was not a sufficient ground for refusing to grant the order setting aside the undervalue sale. 

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