Earp v Kurd, LTL 11/9/2013

Following a 7 day trial in the Chancery Division, Mr Nicholas Strauss QC (Sitting as Deputy High Court Judge) dismissed a claim by the Trustee in Bankruptcy to set aside a legal charge on the grounds of sham. After a detailed analysis of the law since Snook v. London & West Riding Investments Ltd (1967) 2 QB 786, the Court found that the charge was not a sham even though it had overstated the amount advanced, because the bankrupt had agreed to this misstatement. Applying the doctrine of estoppel by deed as recently restated in Solcom Trading Ltd v Tatik Inc (2012) EWHC 3464 (Ch), the Court held that the Trustee could not go behind the terms of the charge even though the bankrupt had lied in parts of his evidence. The Court also rejected a claim by the Trustee to recover his investigation costs from the mortgagee, finding that the decision in Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] EWCA Civ 3 was limited to claims for damages for the foreseeable consequence of a tortious act.

Clifford Darton, instructed by Amandeep Singh Sandhu of Whitmore Law LLP acted for the successful mortgagee.