Where owners of a property were appealing against an order that a creditor had a beneficial interest in their property (following a tracing claim), the court declined to order the sale of that property pending the hearing of the appeal.
In Hawk Recovery Ltd v Hall and others, the claimant was the assignee of a judgment against the defendants in favour of B. B, through various companies and assignees, had been engaged in a number of claims against the defendants who alleged he had a vendetta against them and which had been orchestrated for illegitimate purposes.
The defendants had been made bankrupt on B's petition following an unpaid costs order in another claim. Although they had been discharged, their assets remained vested in their trustee in bankruptcy.
The claimant obtained a declaration that it had a beneficial interest in the property (through the tracing claim) and sought an order for sale. The court refused to order that title to the property be transferred to the creditor or that it was entitled to possession. The claimant appealed. The defendants had obtained leave to appeal against the declaration of beneficial interest and argued that if they were successful in their appeal, an unnamed family friend would lend them the sum required (£75,000) to pay off the bankruptcy debt and so no order for sale should be made at the current time.
The High Court decided that it should wait for the defendants' appeal to be heard before determining whether an order for sale should be made. If such an order were made now, the defendants would have to vacate the property. If they were then successful on their appeal, it would transpire that the claimant in fact had no beneficial interest in the property and no entitlement to an order for sale.
If the defendants' appeal was unsuccessful, the claimant would still have a beneficial interest and the defendants would have to sell the property. Although the claimant was being kept out of his money pending the appel, greater justice was achieved by allowing the defendants to remain in the property pending the hearing of their appeal.
Things to consider
The court took into account the history between the parties in reaching its decision and that the claimant was simply being kept out of its money for a period of time whereas the defendants would have to find a new home which might not be necessary if they were successful on appeal. The harm to the defendants would be far greater than the harm to the claimant if an order for sale was made.
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