The Facts

On 31 July 2012, a bankruptcy order was made in respect of Mr Dean Jonathan D’Eye on the basis of a statutory demand dated 11 July 2011.

During their investigations, his trustees in bankruptcy discovered that Mr D’Eye had made a payment of £321,919 to his father on 24 January 2012 (the Payment) and, after the presentation of the bankruptcy petition on 28 May 2012, a significant portion of this money had then been used to purchase a flat (the Flat).

Pursuant to Section 284 of the Insolvency Act 1986, the trustees in bankruptcy sought orders that the Payment was void and that the Flat, which was purchased with the receipts, was a bankruptcy asset.

The Decision

  • While Section 284 does not spell out the remedy available as a result of a disposition being void, its purpose is to ensure equal treatment of creditors and gives rise to an obligation to account for money had and received
  • Despite being made prior to the presentation of the bankruptcy petition, the Payment was void. To find otherwise would defeat the aim of Section 284
  • The Flat, which was purchased with the proceeds of the void Payment, vested in the trustees outright. It had clearly been purchased to try and put bankruptcy assets beyond creditors and an order for possession was consistent with the aims of Section 284.

Comment

The case is useful clarification that the remedy for void payments pursuant to Section 284 is an account for money had and received.

Moreover, the position is the same for payments made after bankruptcy and vesting so that, where an asset has been purchased with a void payment, it may simply be declared part of the estate.

Thomas and another v D’Eye and others [2016] All ER (D) 66