Halberstam & Anor v Gladstar Ltd

Interim mandatory relief requires a serious issue to be tried, inadequacy of damages and a favourable balance of convenience. However, the court may decide a short point of law at the interim stage where, after a reasonable opportunity to respond, the claim has no realistic prospect of overcoming it. Under the Bills of Sale Act 1878, a straightforward sale of goods by a debtor to another person is not an assignment for the benefit of creditors merely because the seller has debts or intends to use the proceeds to discharge them. Where such a transaction falls within the statutory definition of a bill of sale and is unregistered, section 8 may render it void against protected persons, including persons enforcing court process.

The claimants sought interim mandatory orders for delivery of furniture and paintings seized from the home of Shoshana Stern under a writ of delivery obtained by Gladstar Ltd. Alternatively, they sought to restrain Gladstar from selling or disposing of the goods pending trial.

The first claimant claimed certain items for the Edmond Stern Settlement, asserting that they had been bought by Edmond Stern in 1974 and settled on trust. Mrs Stern claimed a Mane-Katz painting as her own property. Gladstar relied on purported 2013 sales by William Stern and argued, among other things, that the Settlement’s claim was defeated by section 8 of the Bills of Sale Act 1878. The issues included whether an interim agreement or estoppel had arisen, whether the hearing should be adjourned, and whether interim relief should be granted.

1. The alleged agreement or estoppel arising from a sentence in Gladstar’s witness statement was not enforceable. Objectively construed in context, the statement was not an offer to submit to interim relief. Nor was there a clear promise intended to create legal relations on which the claimants had relied to their detriment.
2. The applicable interim-relief principles were those identified in American Cyanamid v Ethicon [1975] AC 396: a serious issue to be tried, damages not being an adequate remedy, and the balance of convenience favouring relief. It was unnecessary to determine each issue because the Settlement’s claim failed on the statutory point.
3. The evidence gave the Settlement a real prospect of proving title to the goods at trial. Nevertheless, the alleged 1974 sale was a straightforward sale of personal chattels while William Stern remained in possession. It fell within the inclusive part of section 4 of the Bills of Sale Act 1878.
4. The phrase assignment for the benefit of creditors in section 4 is a term of art. It refers to an assignment by a debtor to one or more persons for distribution to creditors. A sale to the debtor’s father does not fall within that exclusion merely because the seller has debts, or because the parties intend or later use the proceeds to discharge them. Hadley & Son v Beedom [1895] QB 646 illustrated the relevant class of exempt transaction but did not alter that conclusion.
5. Because the relevant bill of sale was unregistered, section 8 rendered it void against the defendant in respect of the goods seized in execution of court process. The first claimant therefore had no serious issue to be tried, and his application was dismissed.
6. Mrs Stern had a real prospect of establishing ownership of the Mane-Katz painting. The statutory arguments did not apply to her because William Stern was not the seller in possession. The parties nevertheless agreed that Gladstar would deliver up the painting on Mrs Stern giving an undertaking in damages and other appropriate undertakings.