Hawk Recovery Ltd v Hall & Ors

A bankrupt who has been divested of an interest in property ordinarily has no standing to appeal a judgment concerning that property. A general allegation of abuse of process does not create standing where there is no evidence of abuse and no continuing proprietary interest.

A beneficial owner seeking possession ordinarily has a better right to possession than a bare legal owner who has been ordered to transfer the legal title but refuses to comply. A legal owner cannot obtain a better possessory position by disobeying the court’s order.

Hawk Recovery Limited appealed against orders made by Deputy Master Mark and Deputy Master Mathews. Deputy Master Mark had refused to adjourn Hawk’s summary judgment application and had declared that Hawk was beneficially entitled to property purchased with trust money, ordering Mr and Mrs Hall to transfer the legal title.

Mr and Mrs Hall had subsequently been adjudged bankrupt. They appealed out of time, alleging that they should have been heard on abuse-of-process grounds and that summary judgment was inappropriate. Deputy Master Mathews later dismissed Hawk’s application for possession, holding that the Halls, as legal owners in possession, had the better right to possession until legal title was transferred. The central issues were the Halls’ standing and whether a beneficial owner could obtain possession from a bare legal owner who refused to comply with an order to transfer title.

1. Standing and the first appeal. On the appointment of a trustee in bankruptcy, the bankrupt is divested of his interest in property and ordinarily lacks standing to appeal a judgment concerning that property. The Halls’ reliance on abuse of process did not alter that conclusion. There was no evidence supporting the alleged vendetta or other abuse, and the matters pleaded in the Defence were no longer live. The right to a fair trial under Article 6(1) of the ECHR applied only to matters in which the party had an interest. The appeal against Deputy Master Mark’s order was therefore dismissed.
2. Summary judgment. The matters raised concerning the assignment, signatures, disclosure, absence of a trustee’s witness statement and alleged abuse did not disclose an arguable defence or a compelling reason for trial. The Deputy Master was entitled to proceed with the determination of beneficial title despite the Halls’ absence.
3. Possession. Deputy Master Mathews had been wrong to state that Hawk had not sought possession. In ordinary circumstances a beneficial owner has a better right to possession than a bare legal owner who is in possession but has been ordered to transfer the legal title to the beneficial owner and refuses to do so. That conclusion was supported by the rule in Saunders v Vautier, the trustees’ duties to beneficiaries, the relevant provisions of the Trusts of Land and Appointment of Trustees Act 1996, and the importance of maintaining the authority of the court.
4. The refusal to comply with the transfer order could not confer a positive advantage on the contemnor. The appeal against Deputy Master Mathews’s order was allowed. The court noted that, once Hawk obtained legal title, the presumption would be that legal title carried the right to possession.

• High Court (Chancery Division): Deputy Master Mark refused to adjourn the summary judgment application and granted judgment concerning Hawk’s beneficial entitlement and transfer of legal title.
• High Court (Chancery Division): Deputy Master Mathews dismissed Hawk’s possession application.
• High Court (Chancery Division): Mr Fancourt QC granted permission to appeal out of time on limited grounds in [2016] EWHC 3099 (Ch), and directed that both appeals be heard together.
• High Court (Chancery Division): The appeal against Deputy Master Mark’s order was dismissed. The appeal against Deputy Master Mathews’s order was allowed.