David Raymond Brierley v Frank Otuo & Ors
[2023] EWHC 919 (Ch)
Sean Richard Ormsby Lindsay v Jared Michael O’Loughnane & Ors
28 August 2024
[2024] EWHC 2232 (KB)
High Court
Two people lent money to a guy who was being sued. They got security on his houses. The person suing tried to say the agreement wasn't valid for various reasons. The judge decided the agreement was fine, and the lenders should get their money back from the houses.
Key Facts
- •Sean Lindsay (claimant) obtained charging orders against Jared O'Loughnane (first respondent) for a substantial judgment debt secured by various properties.
- •James French (second respondent, deceased) and Andrew Heaphy (fourth respondent) claimed prior equitable charges on the properties.
- •The claimant alleged the equitable charges were invalid due to late signing, lack of consideration, breach of a worldwide freezing order (WFO), and being transactions at an undervalue under section 423 of the Insolvency Act 1986.
- •The case involved extensive documentation and a nine-day hearing.
- •The underlying dispute stemmed from Jared's fraudulent misrepresentations causing significant losses to the claimant (established in prior litigation).
Legal Principles
Construction of contracts: A reasonable reader's interpretation considering the factual matrix and commercial purpose.
Arnold v Britton 2015 UKSC 36, Lukoil Asia Pacific Pte Ltd v Ocean Tankers (Pte) Ltd [2018] EWHC 163 (Comm), Investors Compensation Scheme v West Bromwich 1998 1 WLR 896
Sham transactions: Requires a common intention by all parties that the documents not create the legal rights and obligations they appear to create.
Snook v London and West Riding 1967 2QB 786, Blue Sky v Blue Airways 2009 EWHC 3314
Equitable charges: Can be created by writing signed by the grantor, even without specific wording of joint and several liability.
Law of Property Act 1925, section 53(1)(c); Re Hodgson [1886] 31 Ch 177; White v Tyndall 13 AC 263; AIB v Martin [2002] 1 WLR 494
Contracts for disposition of land: Must be in writing, incorporate all terms in one or exchanged documents, and be signed by each party.
Law of Property (Miscellaneous Provisions) Act 1989, section 2
Consideration: Equity requires value (including forbearance); past consideration can be sufficient if linked to a later promise.
Kekewich v Manning 1851 2 De GM&G 176; Hardinge v Cobden 45 ChD 470
Transactions defrauding creditors (Insolvency Act 1986, s. 423): Requires a transaction at an undervalue with the purpose of prejudicing a creditor's interests.
Insolvency Act 1986, section 423
Worldwide Freezing Orders (WFOs): Restrict dealing with assets except for ordinary course of business, reasonable living expenses, and legal costs (with notification).
CPR25, Law Society v Shanks 1988 1 FLR 504, Normid v Ralphs 1989 1 LLR 265, JSC v A [2010] EWCA 1141, Tidewater v Phoenixtide [2015] EWHC 2748, Koza v Ipek 2019 EWCA 891
Consequences of illegality: Court has discretion to refuse relief based on proportionality and policy (Patel v Mirza [2016] UKSC 42).
Patel v Mirza [2016] UKSC 42
Estoppel by convention: Requires a shared assumption, reliance, and detriment.
ING v Ros Roca [2011] EWCA 353, Avondale v Miss Delaney’s [2023] EWCA Civ 641
Limitation Act 1980: Actions on specialty (12 years), actions for sums recoverable by statute (6 years).
Limitation Act 1980, sections 8 & 9
Outcomes
The equitable charges held by the French Estate and Heaphy are valid and have priority over the claimant's charging orders.
The court found the charges were executed before the claimant's charging orders, were not shams, had sufficient certainty, were supported by consideration, were not transactions at an undervalue under section 423, and did not breach the WFO (due to consent or estoppel).
The French Estate and Heaphy are entitled to the net amounts they advanced, plus simple interest.
The court rejected the claimant's arguments that the transactions were invalid based on various legal and factual grounds.
The claimant's application to amend to add limitation defences is refused.
The amendment was considered late and without merit.