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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

09 AUG 2010

Sands & Anor v Monem & Ors [2010] EWHC 1972 (Ch) (30 July 2010)

Mr Justice Norris has handed down his judgment in Sands & Anor v Monem & Ors [2010] EWHC 1972 (Ch) (30 July 2010). The case concerns the issue of preferences in bankruptcy. The learned judge notes:

"On this appeal the Bankrupt wishes to argue (although the Recipient does not) that she was a secured creditor because following the Instrument of Donation Mr Al-Gammal held the benefit of the equitable charge created by the original loan agreement on trust for the Recipient (a technical argument that turns upon the correctness of the decision in Morley v Morley (1858) 25 Beav. 253. It is then sought to argue that the transfer to her of property which was subject to an unperfected equitable charge held on trust for her did not constitute a preference.

In a letter to the court dated 9 June 2010 (copied to the Bankrupt) the trustees argue that this technical point is entirely academic. That was so because (a) on his case the Bankrupt has parted with the whole of his interest in the Property (b) whatever the outcome of the appeal he will not obtain an interest in the Property (c) the state of the bankruptcy is such that there is no possibility of a surplus in which he might have some future interest (and the appeal appears designed to reduce any theoretical surplus)."

In refusing leave to appeal the learned judge continues:

"District Judge Gamba was deciding an issue in an English bankruptcy (and I am likewise considering an appeal in that context). In that context (a) the person whose property is affected by the Order under appeal does not wish to appeal any aspect of the order (b) no other person with any real economic interest in the bankrupt's estate wishes to appeal the substance of the order. The essential question (ignoring the issue of whether an 1858 case was correctly decided) is therefore whether there is a real prospect of Mr Monem persuading an appeal court that he has any standing in the matter. Can someone who has no economic interest in the outcome of the English bankruptcy, but is subject to foreign proceedings which (so far as the evidence goes) will continue whatever the outcome of the English bankruptcy, challenge an order which is accepted as correct by all the parties who do have a real interest in the English bankruptcy? In my judgment the answer to that question on the facts of this case is plainly "No"."

The judgment also contains a mysterious reference to an error in a, "standard published work." £10 prize to the person who first spots the source!

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