Halberstam & Anor v Gladstar Ltd

This is a claim for injunctions and other orders in respect of various valuable items which were until 16 December 2014 kept at 3 West Heath Avenue London NW11, the home of the second claimant, Shoshana Stern, and her husband William Stern. On that date the goods were seized and taken away by court enforcement officers acting pursuant to a Writ of Delivery sealed by the Queen’s Bench Division Commercial Court.

The claimants assert that they are the owners of and entitled to possession of the goods at issue. They now seek interim mandatory orders that the items be delivered up to them. In the meantime, or in the alternative, they seek orders that the items should not be sold or disposed of pending trial. The defendant’s position is that no relief should be granted because the claimants cannot show any tenable claim to the goods, or even if they can, a claim for damages would represent an adequate remedy.

William Stern was very successful in the property business in the 1960s and early 1970s. He and Shoshana, who married in 1957, moved into 3 West Heath Avenue in 1965. But after the banking crisis in 1973 Mr Stern became in practice insolvent from some time in 1974. In 1978 he was made bankrupt in the sum of £143 million. This was at the time notorious as the largest ever personal bankruptcy in British legal history.

When William Stern fell on hard times his father, Mr Edmond Stern, stepped in. He bought the home in which Mr Stern was living with his wife Shoshana, and the furnishings and effects contained in it. Some at least of those items were listed in an inventory and valuation of December 1974. The inventory included some pieces of antique furniture (three tables, two mirrors, and various chairs) which are among the items the subject of this claim. The sale of the house and contents was supervised and agreed by Cork Gully, insolvency practitioners. They were the court-appointed administrator of the insolvent Wilstar group of companies and in that connection were overseeing William Stern’s affairs.

Mr Edmond Stern, who lived in New York, settled all this property, including the furniture, in a New York discretionary trust known as the Edmond Stern Settlement for the benefit of the six children of William and Shoshana Stern. With the agreement of the trustees and beneficiaries of the Settlement, the items remained in the couple's physical possession at 3 West Heath Avenue until they were removed on 16 December 2014 pursuant to the Writ of Delivery.

The furniture is claimed by the first claimant, David Halberstam, an attorney from New York, as a trustee of the Edmond Stern Settlement. The other trustee, Mr Willie Grangewood, is ill and unable to take an active part in this litigation. However Mr Halberstam has spoken to him, and he supports the claim which Mr Halberstam pursues on behalf of the Edmond Stern Settlement. Mr Halberstam’s evidence is that in any event New York law entitles him to claim on behalf of the Settlement to protect trust property from external threat.

Mr Halberstam also lays claim on behalf of the Settlement to 3 old master oil paintings which were among the items seized in December 2014: one by Guardi, one attributed to Chardin, and one from the circle of Rembrandt. These items were not included in the inventory of December 1974, and Mr Halberstam cannot produce any documentation to confirm their acquisition by the Settlement. However, Mr Halberstam states that he distinctly recalls being informed, at the time of his appointment in 2003, by Mr Grangewood, his fellow trustee, of what the trust property comprised, and that he established at the time that these three paintings were trust property. These paintings are said by Mrs Stern to have hung on the walls of 3 West Heath Avenue since before William Stern became insolvent in 1974. There is also some documentary evidence to which I shall come which is consistent with these paintings having become trust property.

There is a fourth work of art which is the subject of this application: a painting by the 20^th century artist Mane-Katz. This is claimed by Mrs Shoshana Stern, as second claimant, whose evidence is that she bought it in 1967. This painting has, she says hung in her home since then, until it was removed on 16th of December 2014.

Mrs Stern also claims in respect of a Rolex wristwatch. This was not among the items taken on 16 December 2014. It was delivered by Mr Stern to the defendant in November 2013 without, says Mrs Stern, her knowledge or authority. It has been said by the defendant however that the watch was sold in August 2014. That is said to entitle Mrs Stern to damages, but as she has no basis for quarrelling with what the defendant says about the sale, no relief has been sought on this application regarding the watch.

The picture I have painted so far ignores a series of transactions entered into between William Stern and the defendant company, and litigation over those transactions, which are critical to this application. For many years, it is said, the defendant, represented by Mr Jacob Plitnick, also known as Yankel Plitnick, lent money to Mr Stern. In 2013, when Mr Stern was unable to pay, Mrs Stern's brothers settled a debt to the defendant. By an agreement recorded in a Deed dated 7 February 2013 the defendant covenanted never again to advance money to Mr Stern. The Deed provided that any transaction entered into in violation of its terms would be unenforceable. The parties to the Deed included not only Mr Stern and the defendant company but also Mr Plitnick, Mrs Stern, and a company owned by her brothers.

Thus it is said that when, in May 2013, Mr Stern approached Mr Plitnick to raise funds for a business venture, both parties knew that this could not be done by means of a loan. Instead, by a series of transactions evidenced by bills of sale, the defendant bought all the furniture and paintings which are the subject of this application from Mr Stern. The items were left in Mr Stern's possession, but the defendant was entitled to delivery up upon payment of the full purchase price. Mr Stern was given an option to repurchase if he so desired.

Mr Plitnick says that the full purchase price for all the items was paid by the defendant. He did not initially request physical possession, for reasons of convenience. He had nowhere that could accommodate the items. According to Mr Plitnick, by December 2013 it had become apparent that Mr Stern was not going to repurchase the items. Hence on 3 December 2013 he sent an email requiring delivery of the items to his flat.

A dispute then arose between Mr Stern and the defendant, in which Mr Stern claimed that some of what appeared on their face to be sale transactions were in fact sham transactions, the reality being that they were loans. Hence, he said, they were in breach of the 2013 Deed, and unenforceable, meaning that he had no obligation to deliver up the goods. The parties agreed to arbitrate, and on 19 May 2014 their chosen arbitral tribunal, the Golders Green Beth Din, found against Mr Stern.

By an order of 4 June 2014 the Commercial Court granted the defendant leave to enforce the arbitral award, listed the 10 items which the Beth Din found had been sold to the defendant, and ordered Mr Stern to make those items immediately available for collection. An attempt by Mr Stern to judicially review the award relying on the Deed of 2013 was dismissed on the papers as unarguable by Hickinbottom J, and not renewed. But the goods were not delivered.

On 27 November 2014 solicitors for Mrs Stern wrote to those acting for the defendant arguing that the purported sales of the goods were sham transactions, and raising again the Deed of 2013. At about this time the Commercial Court sealed the Writ of Delivery to enforce its order of 4 June 2014. Enforcement followed on 16 December 2014. The packing of the goods for removal began in the early evening.

At about 10.30pm on the evening of 16 December 2014 Counsel for Mrs Stern made an out of hours application to Popplewell J for an order for the return of the goods. It was alleged that all the goods belonged to Mrs Stern, and that her husband therefore had no title to transfer to the defendant. The application was dismissed on the grounds that it was probably too late to prevent the goods being removed, and the information then before the court did not meet the high threshold necessary to support a mandatory injunction out of hours without notice.

On 22 December 2014 the same solicitors wrote on behalf of both the first and second claimants advancing the claims of title to the goods which I have outlined above. Mrs Stern has since apologised for the mistaken representation that she owned all the items. The solicitors’ letter asserted that the defendant must have known that Mr Stern did not have title to any of the goods the subject of the claim. The defendant did not respond to the letter of claim. The claim form and the application notice which is now before me were issued and served on 15 January 2015, supported by witness statements of Mr Halberstam, Mrs Stern, Mr Stern and Mr Golkorn of the claimant's solicitors. Particulars of claim were served the following day.

The claimants’ evidence included, in addition to the matters outlined above, a disavowal by Mr Stern of the authenticity of the apparent sales relied on by the defendant. Mr Stern’s witness statement asserted that none of the items that had been removed on 16 December 2014 were his, legally or beneficially. He stated that whilst he had put his name to “various documents with the defendant” which asserted or implied that those items were his, those statements were not correct. They were made in the context of sham documents dressed up to conceal what was in fact lending contrary to the Deed of 2013. Mr Stern’s evidence is that Mr Plitnick and, through him, the defendant knew the goods were not his.

Accordingly, the claimants’ case in summary was that although Mr Stern had purported to sell the goods to the defendant he had no title to any of them and, since nobody can give that which they do not have, the defendant acquired no title to any of the goods; alternatively, it was alleged, the purported sales were sham transactions entered into in breach of the 2013 Deed and hence unenforceable. The alternative basis of claim was relied on by Mrs Stern, as a party to the Deed, and was said to give rise to a claim in damages by her not only in respect of the purported sale of the Mane-Katz which she owned but also the other items.

The substance of the defendant’s case emerged two days before the hearing, on Monday 26 January 2015. On the morning of that day it was made clear by Counsel for the defendant that in addition to contesting the claimants’ claims to have title to the goods, two points of law would be taken. These were to the effect that even if the first claimant would otherwise claim against the defendant that claim could not succeed by virtue of s 8 of the Bills of Sale Act 1878 and/or s 24 of the Sale of Goods Act 1979.

The defendant’s evidence was served later that day. It set out, in greater detail, the position I have outlined above. It made clear that whilst the Rolex had been sold, the other items were in storage with Roseberys the auctioneers. A valuation by Roseberys was exhibited. The defendant’s evidence also exhibited a lower valuation by Sothebys. Sothebys’ valuation letter set out proposed auction dates for the items in and after April 2015. An inference was drawn on the claimants’ side that the intention was to sell in that way at that time. If so, there would have been a less pressing need for interim relief to be granted at the present hearing.

The witness statement of Mr Plitnick contained at paragraph 37 the following:

“I have offered to come to an agreement – for example that Gladstar will not sell the Paintings and Furnishings until after trial; or that I will return the items so long as Gladstar is offered proper security. I am afraid that I simply do not trust Mr Stern, though, and the order which the claimants are seeking leaves Gladstar extremely exposed, even assuming (as I fully expect) that this attack on Gladstar’s purchase, like every other attack so far, will be dismissed in short order.”

The claimant’s advisers seized on this paragraph, and via their Counsel’s skeleton argument served the following morning they said that they accepted what was described as the “primary offer” made in paragraph 37. However, shortly after midday the defendant’s solicitors emailed those acting for the claimants to state that the wrong version of the statement had been signed in error by Mr Plitnick. The first sentence should have read “Iconsidered coming to an agreement – for example that Gladstar will not sell the Paintings and Furnishings until after the trial …” etc. A revised version of the statement was served.

The application, as presented by Mr Bates on behalf of the claimants in his skeleton argument, gave rise to three issues:

Mr Bates invited me to rule first on his submission that a contract had been concluded or an estoppel created by the events described in paragraphs 21 and 22 above. It was plainly appropriate to do so as it could have concluded the hearing in short order. Having heard Counsel I held that the service of the witness statement and Mr Bates’ skeleton argument did not give rise to an enforceable agreement to submit to interim relief pending trial, or an estoppel. I was not persuaded that, considered objectively in its context and within the surrounding matrix of fact, what Mr Plitnick said in his witness statement amounted to an offer to submit to interim relief.

It was common ground that whilst an offer of compromise had been made, there had been no offer of either of the kinds referred to in the witness statement. The first sentence of paragraph 37 was therefore false, and known to the claimants to be false. It was, moreover, a false statement about a past fact, addressed to the court, and not cast in the form of an offer. If any such offer was to be made it would ordinarily be made by some other means. If it was to be made in a witness statement it would be spelled out plainly.

I also considered this to be a case where it was clear that there was no intention on Mr Plitnick’s part to create legal relations between the claimants and the defendant, by means of a sentence in a witness statement. I was not persuaded, either, that Mr Plitnick’s witness statement contained any clear or unequivocal promise on which reliance had been placed or detriment suffered so that it would be inequitable for the defendant to resile from it.

Overnight before the hearing it had emerged that the inference drawn from the programme of sales proposed by Sothebys in their valuation letter was a false one. The defendant wished, unless restrained, to sell through Roseberys by private treaty, and imminently. Thus, the question of whether some and if so what relief should be granted became more urgent. The distinction between Mr Bates’ second and third issues did not quite disappear, but it became much less relevant.

For each purpose he would need to establish, at least, that each claimant’s claim satisfied the requirements for interim relief identified in American Cyanamid v Ethicon [1975] AC 396: that they raised a serious issue to be tried, that damages would not be an adequate remedy, and that the balance of convenience favoured the grant of interim relief. So far as the balance of convenience was concerned, relief of any kind would represent an interference with the ability of the defendant to act as it wished and dispose of the items promptly. In the event, however, it was not necessary to address all these questions.

It is convenient to consider separately the claims advanced on behalf of the Edmond Stern Settlement, and the claim of Mrs Stern.

The case on behalf of the Edmond Stern Settlement rested on the contention that the furniture and paintings claimed were among the contents of 3 West Heath Avenue purchased by Edmond Stern in 1974 and settled by him in favour of his grandchildren. The trust deed, dated 13 December 1974, contained no reference to these assets. The defendant produced evidence that title to the house is registered in the name of William Stern. By the time of the hearing however the claimants’ evidence had been supplemented by two further statements of Mr Goldkorn, exhibiting documents from 1974 and 1975 which supported the claim that the house was sold to Mr Stern senior and acquired by the Settlement.

These documents included correspondence passing between English solicitors and a firm of New York Attorneys, said to be acting on behalf of the Settlement. The claimants’ case is that title to the house was registered in William Stern’s name because at one point he was the sole trustee of the Settlement. He ceased to be such in 2003 pursuant to a Deed, one counterpart of which was in evidence, by which Mr Halberstam and Mr Grangewood assumed his former role. The need to transfer title to the house was overlooked, it was suggested. A reason for that might be that the house was at the time in negative equity, a proposition supported by a passage in Mr Stern’s proposal for an individual voluntary arrangement, dated 6 September 2002, to which I shall return.

So far as the acquisition of the contents of the house is concerned, no contract of sale was in evidence. The claimants were able to produce a copy of the inventory of December 1974 which I have mentioned above, and documentary evidence that another inventory had come into existence, in 1973, but no copy of the latter. The 1974 inventory did not include any art. The inference was invited that the 1973 inventory would, if it could be produced, list the paintings claimed by Mr Halberstam.

Mr Bates pointed to a paragraph in one of the letters exhibited to Mr Goldkorn’s third witness statement, which referred to a “Copy Agreement in respect of the contents and Inventory”. This, it was suggested, was probably the agreement, or an agreement, for the sale of the contents of 3 West Heath Avenue. The letter was written by the solicitors to the New York attorneys on 20 December 1974, at a time when, on the face of the letter, the sale of the house was completed. The letter referred to a recent payment received by the solicitors in that connection, but requested a further payment of £29,724.42. The 1974 inventory included a valuation by L S Harris & Co, in the sum of £16,636. Thus, it was suggested, the solicitors’ letter supported the view that an agreement had been made to sell contents including not only the items on the 1974 inventory but also items on the 1973 inventory, valued at some £12,000, which included the paintings.

There is subsequent documentary evidence that lends further support to the case on behalf of the Settlement. By 2002 Mr Stern had again fallen into debt and was proposing an IVA to his creditors (which included the defendant). The IVA proposal document of September 2002 to which I have referred states on its second page that Mr Stern’s home “plus the contents” were sold to Edmond Stern and that he “immediately following his purchase” settled the property in the Settlement. Mr Bates pointed out that this IVA proposal is likely to have been subjected to careful scrutiny by Mr Stern’s creditors, especially given his history and the estimated deficiency of some £55 million. The proposal was accepted by the majority of creditors.

Criticisms of the claimants’ evidential case are made on behalf of the defendant. There is no doubt that it has several gaps, not the least of these being the absence of the presumed contract of sale of the contents. There are also some odd discrepancies, such as the reference in the solicitors’ letter of 20 December 1974 to an Inventory (singular) and a reference in a 2009 judgment of Akenhead J to Mr Stern being the trustee and sole beneficiary of the Edmond Stern Settlement. However, in my judgment the evidence to which I have referred, coupled with that of Mr Halberstam, is sufficient to establish a real prospect that the first claimant would be able at a trial to establish on the balance of probabilities his case that William Stern sold to his father, and his father conveyed to the Edmond Stern Settlement, the items presently claimed on behalf of the Settlement.

In reaching that conclusion I bear in mind the relative haste with which it has been necessary to assemble evidence of title in reliance on transfers made 40 years ago. There is however already a reasonable inferential case that a written agreement for the sale of the contents was in existence at the time of the solicitors’ letter relied on. It is plain, in my judgment, that if the sale by William to Edmond Stern took place it would have been effected by a written agreement.

That is not, however, the end of the question of whether there is a serious issue to be tried. Mr Halberstam has to contend with the defendant’s reliance on the Sale of Goods Act 1979 and the Bills of Sale Act 1878. Mr Bates embarked on submissions as to the former, but for reasons of economy and simplicity I decided to hear argument on the effect of the 1878 Act first. That is because it was placed at the forefront of Mr Scher’s written submissions for the defendant and evidently had the potential, if sound, to make further argument unnecessary.

Mr Scher’s argument starts with the proposition that on the claimants’ own case Mr Stern was at the time of the purported sales to the defendant a seller of the disputed goods, who remained in possession of those goods. He had sold the goods to his father in 1974 but they had remained in his possession ever since. That starting point was not and could not have been disputed by Mr Bates. Mr Scher goes on to submit that a buyer of goods from someone who is in possession of those goods but has in the past sold or transferred them to a third party is protected by s 8 of the 1878 Act.

Section 8 provides as follows (I set it out as did Mr Scher, broken down into paragraphs and with emphasis, neither of which features in the original):

“8 Avoidance of unregistered bills of sale in certain cases

The argument is that the agreement of 1974 for the sale of the furniture and paintings by Mr Stern to his father on which the claim depends was a bill of sale within the ordinary meaning of that term, and within the definition in s 4 of the Act, to which I shall come later. Hence, the agreement required to be registered under the Act if it was to take effect against the categories of person protected by s 8. A search of the Bills of Sale Registry by the defendant’s solicitors has established that a bill of sale was, at one stage, registered under the name of one or more of William Stern, Shoshana Stern, Edmond Stern, Alfred Stern, Halberstam, Grangewood and Edmond Sterm Trust. This might have related to the goods in question; it is not possible from the records to ascertain whether it did or not. However the registration, whatever it related to, has lapsed. Section 11 of the 1878 Act requires a registration, once made, to be renewed:

“The registration of a bill of sale, whether executed before or after the commencement of this Act, must be renewed once at least every five years, and if a period of five years elapses from the registration or renewed registration of a bill of sale without a renewal or further renewal (as the case may be), the registration shall become void.”

The registered date of the only bill that appears on the certificate produced by the Registry search is 15 January 2009, which is more than 6 years ago and well over 5 years before the execution of the Writ of Delivery. The defendant’s argument proceeds in this way: the High Court enforcement officers were officers seizing in the execution of the process of the court chattels comprised in the bill of sale; the defendant is a person on whose behalf such process was issued; accordingly, the bill of sale, being unregistered, is deemed fraudulent and void against the enforcement officers and the defendant so far as regards the property in or right to possession of the chattels comprised in it.

Mr Bates’ first point in response was to submit that the provisions of the 1878 Act are complex and their effects to a degree uncertain. A point based on the statute was inherently unsuitable for summary resolution on an application of this kind. There is scant authority relevant to the issue raised by Mr Scher. I accept that the court should not dismiss an application for injunctive relief on the basis that there is no serious issue to be tried unless it is satisfied that the claimant’s case is frivolous or vexatious or for some other reason has no real prospect of success at trial. An application should not be dismissed on the basis that there is an insuperable answer to it, unless the court is satisfied that the claimant has had a reasonable opportunity to meet the point raised, has not offered any reasonable answer to it, and has no realistic chance of doing so in future.

I was therefore hesitant to accept that Mr Scher’s submissions were conclusive against the first claimant. However, Micawberism cannot prevail in this context any more than it should in the context of an application for summary judgment. If a short point of law is raised by a defendant to which, after careful consideration, the court is convinced there is and can be no reasonable or viable answer, it would be a waste of resources to leave the point over for some later date. In this instance Mr Bates has failed to persuade me that there is any basis, legal or factual, on which the first claimant could hope to overcome the defendant’s reliance on the 1878 Act, or any real prospect that such a basis could be found.

The first and main answer offered to Mr Scher’s submissions was that the presumed agreement to sell the chattels to Mr Stern senior was not or might not be a bill of sale within the meaning of the Act. Section 4 defines the meaning of bill of sale. Again I have emphasised key words.

“4.

Interpretation of terms.

In this Act the following words and expressions shall have the meanings in this section assigned to them respectively, unless there be something in the subject or context repugnant to such construction; (that is to say), The expression “bill of sale”shall include bills of sale, assignments, transfers, declarations of trust without transfer, inventories of goods with receipt thereto attached, or receipts for purchase moneys of goods, and other assurances of personal chattels, and also powers of attorney, authorities, or licenses to take possession of personal chattels as security for any debt, and also any agreement, whether intended or not to be followed by the execution of any other instrument, by which a right in equity to any personal chattels, or to any charge or security thereon, shall be conferred, but shall not include the following documents; that is to say, assignments for the benefit of the creditors of the person making or giving the same, marriage Settlements, transfers or assignments of any ship or vessel or any share thereof, transfers of goods in the ordinary course of business of any trade or calling, bills of sale of goods in foreign parts or at sea, bills of lading, India warrants, warehouse-keepers’ certificates, warrants or orders for the delivery of goods, or any other documents used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by indorsement or by delivery, the possessor of such document to transfer or receive goods thereby represented:”

Mr Bates pointed out that for s 8 to bite on the present case the court must be satisfied that the document in question fell within the inclusive definition in the first part of s 4, and outside the excluded categories in the second part. He submitted, first, that in the absence of the document effecting the sale the court could not be satisfied that it was a bill of sale within the meaning of the first part. The transaction had been overseen or checked by Cork Gully and looked at again, it was to be inferred, in 1978 when Mr Stern became bankrupt and in 2002 at the time of Mr Stern’s IVA. It was therefore likely, or at least there was a real prospect, that the document had been formulated in such a way as to escape the provisions of the 1878 Act. That submission seems to me speculative and lacking in focus.

Mr Scher referred to Benjamin’s Sale of Goods 9^th edition, which states at para graph 1-016: “A bill of sale is, at common law, a written instrument (whether in the form of a deed or otherwise) effecting a transfer of personal property”. On the face of the claimants’ case and the documentary evidence this transaction was a straightforward sale and purchase, but with possession retained by Mr Stern. The fact that some document or documents clearly was or were registered, and may have been registered in the names of one or more trustees of the Settlement, is against Mr Bates’ submission, as it tends to suggest that the transaction may have been recognised as involving a bill of sale that needed to be registered. That is not conclusive. But it is not apparent how, and Mr Bates did not even attempt to identify any way in which, the transaction relied on could have been formulated or structured so as to fall outside the scope of the first part of s 4.

Alternatively, it was submitted, the sale of the chattels to Mr Stern senior, at a time when William Stern was insolvent and his affairs under the supervision or oversight of Cork Gully, was an “assignment for the benefit of creditors” within the meaning of the second part of s 4. The proceeds went, in the event, to meet the claims of those creditors, said Mr Bates. The only evidence to support that submission came in the form of Mrs Stern’s evidence that the transaction “converted physical assets … into cash for distribution to his creditors”. That is a very slender basis for the submission. I do not however reject the submission for that reason.

In my judgment, Mr Scher was right to submit that the alleged transaction plainly does not fall within the meaning of the words of s 4 which I have emphasised above. It was a sale, not an assignment, and it was made to Mr Stern’s father and not to an insolvency practitioner or trustee, or other person acting for or on behalf of Mr Stern’s creditors. Mr Stern’s affairs were not at that time subject to control by any insolvency practitioner. Even if he was in practice insolvent he was not formally bankrupt. It is not enough that the transaction may have been in fact for the benefit of creditors. An “assignment for the benefit of creditors” is a term of art which covers the assignment by a person to one or more others for distribution to creditors. If the claimants’ interpretation were adopted it would seem to encompass any disposition by a person with debts to others, carried out with the intention of facilitating the discharge of those debts. That would be far too broad an interpretation of the statutory words, and one which Parliament cannot realistically be supposed to have contemplated.

Mr Scher referred to authorities in which the Court had considered the application of the excluded category of “assignment for the benefit of creditors”. The leading case is Hadley & Son v Beedom [1895] QB 646, in which the High Court upheld the validity of a deed by which a debtor assigned all his personal property to trustees for the benefit of his creditors, notwithstanding that the deed was not registered as a bill of sale. The issue arose because the deed contained a proviso that no creditor should be entitled to any benefit under it unless he signified his assent to the deed within three months of its registration. The validity of the deed was contested by creditors who had not assented, but upheld by the court on the basis that all creditors had been equally entitled to participate in the distribution if they signified acceptance, and hence the deed was for the benefit of all.

I agree with Mr Bates that this decision, and the other cases cited which preceded it, do not of themselves foreclose the question of whether a sale such as that which Mr Stern is said to have made to his father in 1974 falls within the statutory wording. The cases do, however, indicate a class of case which Parliament may be considered to have had in mind when exempting that category of transaction from the provisions of the Act. In the end, though, my conclusion rests on the reasoning set out above: it is in my judgment impossible to argue that a sale of goods by A to B ranks as an assignment for the benefit of A’s creditors merely because A has debts and A, or even A and B, intend at the time of the transaction that the proceeds will be used to discharge A’s liabilities. Still less, of course, could such a transaction fall within the exclusionary words merely because that is what occurred after the event.

Mr Bates further submitted that the effect of s 8 of the 1878 Act would have been, if applicable, to vest title in the goods in an insolvency practitioner in 1978, when Mr Stern was made formally bankrupt. That is because the insolvency practitioner would be a person in the first of the protected classes identified in s 8. This of course is contrary to the first claimant’s first argument, that the transaction was approved by the insolvency practitioner. Mr Scher’s answer, which in my judgment is sound, is that if the Act would have made void the disposition to Mr Stern senior the claim by the Settlement against the defendant must fail.

For these reasons I have concluded that the first claimant has not established that there is a serious issue to be tried. The first claimant’s application must be dismissed.

So far as Mrs Stern is concerned Mr Bates was able to submit with some conviction that she has a real prospect of establishing that she is the owner and entitled to possession of the Mane-Katz painting. A press cutting from The Times of 3 May 1967 is in evidence, recording that Mrs Stern bought the painting the previous day at Sothebys for £1,300. Although Mr Stern purported on the face of the documents to be the owner of this painting when dealing with the defendant in 2013, that is not enough to undermine Mrs Stern’s case altogether. Mr Stern was not a seller in possession of this painting so that the Sale of Goods Act and Bills of Sale Act arguments were inapplicable to Mrs Stern’s claim.

I was however spared the need to reach a conclusion on this issue, and on whether any relief should follow, by an agreement reached between the parties after I had announced my conclusion on the first claimant’s claim. The defendant undertook to deliver up the painting to Mrs Stern upon her giving an undertaking in damages and other appropriate undertakings to the court to protect the defendant’s interests.