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Matthew Weaver, barrister at Radcliffe Chambers, discusses the case of Re Karl Eric Watkin, which concerned an action under the Insolvency Act 1986, and whether there was a presumption of advancement between parent and child for the purchase of three properties or whether they were held on trust.
Re Karl Eric Watkin Wood and another (as the joint trustees in bankruptcy of Karl Eric Watkin) v Watkin  EWHC 1311 (Ch)
This was an application brought by joint trustees of Karl Eric Watkin, a formerly wealthy businessman, for declarations that three properties purchased in the sole name of his daughter, Kate Watkin, in 2003, 2006 and 2007 were held by Kate on resulting trust for Karl. Alternatively, the trustees contended that sums paid by Karl for the purchase of these properties amounted to transactions to defraud creditors pursuant to section 423 of the Insolvency Act 1986 (IA 1986) and a sum of circa £2,000 retained by Kate from the re-mortgage of one of the properties amounted to a transaction at an undervalue pursuant to IA 1986, s 339.
The court was required to determine whether the properties were purchased with monies belonging to Karl so as to grant him a beneficial interest in the properties. This determination required the court to determine the source of the purchase monies and, in doing so, to consider the presumption of advancement between a parent and child.
The court also had to consider whether the purchase monies could be transactions at an undervalue for the purpose of putting Karl’s assets beyond the reach of his creditors (as required under IA 1986, s 423) and to determine whether the £2,000 retained by Kate was money due to Karl and, therefore, a transaction at an undervalue.
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