Withers LLP v Harrison-Welch
(Queen's Bench Division, HHJ Shaun Spencer QC (sitting as a judge of the High Court), 4 October 2012)
W retained a firm of solicitors in proceedings against H, her former husband, alleging fraud and non-disclosure in relation to ancillary relief proceedings. In 2007 H obtained summary judgment and an indemnity costs order was made against her. Thereafter, he lent her money towards the payment of her costs. H sold his house and moved in with W to support her. W transferred her property to herself and H, and transferred 99% of the beneficial interest to H. In 2010, W obtained judgment against W in respect of outstanding fees. Having obtained judgment against W on the outstanding fees, the solicitors issued proceedings under s 423 of the Insolvency Act 1986 seeking to set aside the transfer of the beneficial interest as a transaction defrauding creditors. The application was dismissed. The transfer of equity to H was not a gift for no consideration because W felt obliged to repay H for funding her litigation costs. It had been understood that H would receive W's house or virtually all of it having sold his own house to support W, as by the time of the transfer, H had loaned more than 99% of the value of W's property. The transaction was not at an undervalue and, even if the effect of the transfer had been to put the property out of reach of W's creditors, the purpose was for W to honour her obligations to H.
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