|Sale for Deferred Consideration
- Court of Appeal Reverses Lewis v Metropolitan Realisations
On 12 June 2009 the Court of Appeal handed down a judgment
reversing the decision of Proudman J which originally held that the sale
by a trustee in bankruptcy of the debtor’s interest in his dwelling
house for deferred consideration constituted “ realisation” for
the purposes of section 283A of the Insolvency Act 1986.
The facts in this case are that on the day before the third anniversary
of the bankruptcy the joint trustee’s of Mr Lewis had assigned
the debtor’s interest to Metropolitan under terms which provided
immediate consideration of £1 together with 25% of any future proceeds
of sale. Proudman J had held that this amounted to a realisation of the
debtor’s interest and accordingly it did not re-vest in the bankrupt.
The decision was appealed by the bankrupt and in finding in his favour
the Court of Appeal considered the meaning of the term “realise” and concluded
that “realisation” involved the conversion of the property into full
cash consideration and that this was inconsistent with leaving any part of its
value outstanding in an unfulfilled monetary obligation. The Court concluded
that within the meaning of section 283A full cash consideration had not been
obtained and that the debtor’s interest had not been realised and that
it reverted to him.
Lewis v Metropolitan Property Realisations Limited  EWCA Civ 448