Viscount St Davids v Lewis (Trustee in Bankruptcy)

For the 42-day period governing a trustee’s notice claiming after-acquired property, “knowledge” requires actual knowledge that the property was acquired by the bankrupt after the bankruptcy began. Where the bankrupt failed to disclose the property and did not co-operate, cogent evidence verified to the trustee’s reasonable satisfaction was normally required. Knowledge of allegations or claims was insufficient.

This was an appeal from Registrar Barber’s dismissal of an application challenging the validity of a notice served under section 307 of the Insolvency Act 1986. The trustee had claimed the bankrupt’s beneficial interest in a share in a Seychelles company. The appellant argued that the trustee had acquired the relevant knowledge in 2006 or 2008, through meetings, correspondence and evidence in foreign proceedings. The issue was when the trustee first knew both that the share was beneficially owned by the bankrupt and that it had been acquired after the bankruptcy commenced.

1. Appeal dismissed. The notice was served within time.
2. Under sections 307 and 309 of the Insolvency Act 1986, “knowledge” meant actual knowledge of both the bankrupt’s acquisition of the property and the fact that acquisition occurred after commencement of the bankruptcy. Knowledge of allegations or claims was insufficient.
3. Where the bankrupt had failed to disclose the property and had not co-operated, the trustee would normally be treated as acquiring the relevant knowledge only when cogent evidence, verified to his reasonable satisfaction, established both matters. The quality of evidence required varied with the circumstances.
4. The 2006 meeting note, the 2008 affidavit and correspondence, and information given at a December 2008 meeting disclosed no more than incomplete or unverified allegations. The Registrar’s factual findings were unassailable.
5. The application to adduce fresh evidence was refused under the Ladd v Marshall criteria and CPR rule 52.11(2)(b). The evidence could have been obtained with reasonable diligence and would probably not have materially affected the result.
6. The court’s power to extend time did not alter the quality of knowledge required to start time running. The appeal was dismissed.

1. High Court (Chancery Division): Registrar Barber dismissed the appellant’s application on 25 March 2015. Mr Justice Henderson dismissed the appeal.