Credit & Mercantile plc v Kaymuu Ltd and others

Credit & Mercantile plc v Kaymuu Ltd and others

Original news

Judgment was heard this month in the case of Credit & Mercantile plc v Kaymuu Ltd and others [2014] All ER (D) 49 (Jun).

In brief

The claimant held a charge over a property, which had been occupied by the second defendant. It sought to retain a sum of money from the net proceeds of the sale of the property. The second defendant contended that he was entitled to that sum as the beneficial owner of the property. The Chancery Division held that, whilst the second defendant had been the beneficial owner of the property, on the facts, he could not assert his beneficial ownership of the property in priority to the claimant's charge. The claimant was entitled to retain the amount it held from the proceeds of sale of the property. The second defendant was entitled to the surplus paid into court in respect of the balance of the proceeds of sale.

Summary

The proceedings concerned a mortgagee's action for possession of a residential property in Kent (the property). The property had been formerly occupied by the second defendant (W). The claimant held a charge over the property. The charge had been entered into in 2010 to secure monies borrowed from the claimant by the first defendant (Kaumuu), the legal owner of the property. Kaymuu was controlled by S, a bankrupt businessman. The third defendant was S's trustee in bankruptcy (the trustee). The property was sold in 2012 for £1.1m. The claimant sought to retain £694,072.75 from the net proceeds of sale to realise its security. W laid claim to that amount, contending that he had beneficial ownership of the property which overrode the claimant's charge. W's case was that he and S had undertaken various property development projects together and that it had been agreed that that each of the relevant business partners would take from the profits generated by the sale of interests in a project and that, in W's case, that that sum would

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About the author:
Eleanor qualified in 1998 into the insolvency team at ASB law. She became a partner in 2005, and went on to head up the Recovery & Insolvency team. Whilst traditionally specialising mainly in contentious corporate insolvency matters, in recent years she has moved into the non contentious arena, in particular specialising in company administrations.