MB had been the secured tenant of a property in which she lived with B, and which she had bought at a substantial discount. The property was conveyed into the joint names of MB and B as joint tenants. Although MB’s mortgage company had insisted the property be in joint names, she claimed that the intention had always been that B would only have a minimal interest in it. He had made no contribution to the purchase price, mortgage repayments or household expenses. When MB had ascertained the effect of the joint tenancy, she gave notice of severance to B. She stated that the property would be held by them as tenants in common, 99 per cent for her and 1 per cent for him. He signed a document acknowledging receipt and acceptance. B was later made bankrupt and the trustee sought to set aside the notice of severance and receipt under s339 Insolvency Act 1986 as there had been no consideration for the transfer.
The court held that although the requirements of s339 were made out, the court had an overall discretion under s339 to make no order at all if justice so required. The evidence was that it was always the parties’ intention that B would only ever have a minimal interest in the property and the severance notice and receipt reflected that. Additionally, the mortgage repayments were made by MB alone. The circumstances here were exceptional. Justice required that no order be made.
The distinguishing feature in this case compared to the Hill case is that, in effect, the asset had never been (or was never intended to be) part of the bankrupt’s estate, whereas in Hill it had been.
Surjit K Singla (Trustee in Bankruptcy for Brown) v Brown & Malden-Brown