The case Wade & Anor v Singh & Ors [2024] EWHC 1203 (Ch) was a recent decision by the High Court of England and Wales (Chancery Division). The case involved disputes over beneficial ownership and allegations of misappropriation of assets within a family-owned business context.

This case is valuable for insolvency practitioners as it highlights effective legal avenues for asset recovery and provides a clear judicial approach to familial and business asset arrangements.

Litigation finance, funding arrangements and insurance allow insolvency practitioners to pursue claims on behalf of their clients whilst reducing financial risks. At Annecto Legal, we can assist clients by helping them secure funding and insurance for insolvency cases.

Wade & Anor v Singh & Ors [2024] EWHC 1203 (Ch)

In Wade & Anor v Singh & Ors [2024] EWHC 1203 (Ch), Deputy ICC Judge Curl KC ruled on a dispute involving the liquidators of MSD Cash & Carry plc and several family members. The liquidators aimed to enforce charging orders against properties owned by Mohinder Singh, his son Surjit Singh Deol, and daughter-in-law Raminder Kaur Deol, as well as the estate of a deceased family member. This case primarily focused on a property called “The Oaks.”

Initially, the liquidators pursued enforcement to recover a judgment debt owed by Mohinder and Surjit. The family defendants argued that Raminder was the sole beneficial owner of The Oaks, relying on a 2017 trust declaration that allegedly established Raminder’s ownership since 2003. They contended that this declaration was neither a sham nor an attempt to defraud creditors.

The judge outlined key issues, including whether:

1. An oral trust existed for Raminder in 2003,
2. A common intention constructive trust arose in Raminder’s favour in 2003,
3. The 2017 declaration created a valid trust,
4. The declaration was a sham, and
5. The declaration was a fraudulent transaction under section 423 of the Insolvency Act 1986 (IA 1986).

After reviewing the evidence, the judge found no proof of an express trust or constructive trust in 2003. He rejected the notion of a sham but agreed with the liquidators that the 2017 declaration was an attempt to shield assets from creditors, as prohibited by section 423 IA 1986.

Consequently, he ordered the declaration to be set aside, restoring the beneficial ownership of The Oaks to Mohinder and Raminder in equal shares. This decision underscores the court’s willingness to invalidate transactions deemed attempts to avoid creditor claims.

The judgment in Wade & Anor v Singh & Ors reinforces the importance of genuine intent in declarations of trust and serves as a significant reminder for insolvency practitioners and individuals involved in complex family-owned businesses about the limitations of using trusts to protect assets from insolvency claims.

Why is this case important for insolvency practitioners?

The decision in Wade & Anor v Singh & Ors is important for insolvency practitioners as it provides valuable guidance on enforcing creditor claims against assets held within complex family structures.

This case emphasises how insolvency practitioners can challenge trust arrangements that may have been set up to shield assets from creditors. The court’s approach to examining whether a trust was genuinely created or instead was a sham demonstrates how practitioners can scrutinise family trust declarations when attempting to recover assets for the insolvent estate.

The ruling also shows how section 423 of the Insolvency Act 1986 can be used to void transactions made to put assets beyond the reach of creditors. This highlights a tool that insolvency practitioners can use to set aside transactions made with the intent to defraud creditors, even if the parties argue that these transactions reflect their true intentions.

Insolvency litigation funding options

Litigation funding, the assignment of claims and/or ATE insurance can play a pivotal role in assisting insolvency practitioners (IPs) in meeting their obligations. Insolvency practitioners involved in insolvency litigation can make use of the following funding methods:

• After-the-event (ATE) legal insurance – ATE insurance is generally used to protect from adverse costs risks & Security for Costs requirements. After-the-event (ATE) legal expenses insurance is perhaps best thought as a similar to a ‘swap’. For either no upfront fee or a small upfront fee, the insurer takes on all of the risk of the potential adverse costs award. The claimant has swapped their obligation to pay the defendants in the event of a loss, with the obligation to pay the insurer in the event of a win. This ‘swap’ is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.
• Third party litigation funding – In some cases, third party litigation funders may be willing to provide funding for a claim in exchange for a share of any financial settlement or damages awarded. This option can be attractive when there are no funds to pursue a strong case. ATE insurance is often used in conjunction with this type of funding.
• Assignment of litigation – Some types of disputes can be assigned to a third party, usually for an upfront payment and a share of recoveries (after costs). This model can be useful on smaller cases when the ATE and CFA model would not deliver value. But giving up control can sometimes be costly, especially on larger claim disputes.

How can Annecto Legal assist?

When handling insolvency matters, insolvency practitioners are obligated to explore all options available in such cases. At Annecto Legal, we assist a wide range of clients in finding the appropriate insolvency litigation funding, assignment options and after-the-event (ATE) insurance.

Annecto Legal regularly assists licensed insolvency practitioners who are involved in dealing with insolvency and declaration of trust matters. If you are in the process of bringing or defending an insolvency dispute and want to find out whether we can assist in helping you fulfil your obligations and secure the right deal, then contact Annecto Legal now.