Amy Mehers (Trustee in Bankruptcy of Scherzade Khilji) v Scherzade Khilji & Anor

For the statutory revesting regime, a trustee in bankruptcy must be informed, or become aware, of an actual interest in the property falling within section 283A(1) of the Insolvency Act 1986. Notice of a potential claim, or knowledge of facts which merely suggest that further investigation might reveal an interest, is insufficient.

The required knowledge is fact-sensitive. A clear assertion of an undocumented beneficial interest may suffice, but equivocal facts ordinarily do not. An entitlement under an unadministered intestacy, matrimonial home rights, and mortgage contributions do not themselves constitute, or necessarily imply, the proprietary interest required by section 283A(1). Time therefore begins only when the qualifying interest is actually communicated or becomes known.

The applicant was the trustee in bankruptcy of the first respondent. The bankruptcy estate included the first respondent’s rights under her deceased husband’s unadministered intestate estate and, on the trustee’s case, a beneficial interest in the matrimonial property arising under a common intention constructive trust.

The first respondent contended that the trustee or official receiver had been informed of, or had become aware of, that interest within three months of the bankruptcy order through an interview, correspondence, matrimonial home rights, her intestacy entitlement, and mortgage contributions. If so, the three-year period under section 283A(2) of the Insolvency Act 1986 would have expired before the trustee’s application. The central issue was when the statutory period began to run.

1. The application succeeded on the revesting issue. The trustee’s application, issued on 11 January 2022, was made within time. The court invited the parties to agree an order giving effect to the judgment.
2. Section 283A(5) requires knowledge of an interest in a property of the kind specified in section 283A(1). Notice of a potential claim is not equivalent to knowledge. The court rejected the submission that the trustee was put on notice merely because the available facts might have prompted an investigation.
3. The knowledge requirement is fact-sensitive. A bankrupt who has failed to comply with the duty to disclose faces an uphill struggle in proving that the trustee nevertheless knew of the interest. However, the test is not necessarily limited to knowledge of a conclusively established or litigated interest. A clear assertion of an undocumented beneficial interest may be sufficient.
4. The court applied the reasoning in St Davids v Lewis concerning the difficulty of establishing knowledge where a bankrupt has not disclosed relevant property, while recognising that the statutory language and domestic-property context require a fact-sensitive approach. The reasoning in Stonham v Ramrattan supported equivalence between the knowledge acquired by the trustee and information which would have been supplied by the bankrupt.
5. An entitlement under an unadministered intestate estate gives a right to administration, not a present legal or beneficial interest in individual estate assets. Registered matrimonial home rights are a charge on another’s interest, not a proprietary interest in the property. Mortgage contributions are equivocal and do not themselves amount to an interest within section 283A(1).
6. The first respondent’s statements and documents before 6 September 2019 did not communicate, or cause the trustee or official receiver to become aware of, a qualifying beneficial interest. Her statement that she did not think she had been a joint owner pointed away from such knowledge. Time therefore began no earlier than service of the Defence and Counterclaim on 6 September 2019.