Reid-Roberts v Mei-Lin [2026] EWHC 49 (Ch) (the "Appeal").
This case concerns an appeal and a cross-appeal, against the decision of Deputy ICC Judge Firth (the "Deputy Judge") dated 10 April 2024. The Appellants are the joint trustees in bankruptcy (the "Trustees") of the Second Respondent, Mr Gudmundsson. The First Respondent, Ms Lin, was formerly married to Mr Gudmundsson. Together, they owned the property known as 9 Southcote Road, London N19 5BJ (the "Property").
Background
- Ms Lin and her former husband, Mr Gudmundsson, were engaged in divorce proceedings;
- They owned the Property as Joint Tenants. They have two children, both under the age of 18;
- Following a separation, Ms Lin remained in the Property. Financial remedy proceedings ensued. During the proceedings, Ms Lin and Mr Gudmundsson exchanged WhatsApp messages concerning the Property. These are detailed at paragraph 16 of the Judgment and read that:
Mr Gudmundsson: "I suggest that the responsibility of taking care of the kids goes to u 100%, then I can sign over my share of southcote road to u without any complications as I don't need any accommodation in London."
Ms Lin: "with some monthly maintenance then ok."
Mr Gudmundsson: "It goes without saying the monthly maintenance for the kids in accordance with CMS."
Ms Lin: "Are you saying I have full custody of kids?"
Mr Gudmundsson: "Yes that is what I was saying, moving out of London for good and out of the kids life."
Ms Lin: "I will take house and full custody of kids. And my paintings [in] Iceland should be returned then is done."
- Following these WhatsApp messages, emails were exchanged which contested whether an agreement as to the Property existed;
- In February 2019, a contested financial remedy hearing took place. Judgment was reserved and later handed down in March 2020. However, in February 2020, a Bankruptcy Order was made against Mr Gudmundsson. The Judgment in the financial remedy proceedings ordered that Mr Gudmundsson transfer his interest in the Property to Ms Lin (albeit by this stage his interest had vested in the bankruptcy estate);
- Ms Lin applied to have the Bankruptcy Order set aside. The application was dismissed;
- The Trustees applied for possession and sale of the Property.
At first instance, the Deputy Judge held that the Trustees and Ms Lin each held a 50% beneficial interest in the Property and ordered that Ms Lin should deliver up vacant possession to the Trustees on 1 August 2032, on the basis that there were exceptional circumstances owing to various mental health concerns and the age of the children. The Deputy Judge noted that Ms Lin's daughter would be 18 in February 2032 and, to ensure that preparation for any school examinations would not be interrupted, delivery of the Property would be deferred until August 2021.
The Trustees appealed.
The Trustees argued that the Deputy Judge was wrong to find that there were exceptional circumstances within the meaning of section 335A(3) of the Insolvency Act 1986 (the "IA86").
Ms Lin cross-appealed.
Ms Lin argued that the Deputy Judge was wrong to find that Mr Gudmundsson had not transferred his beneficial interest in the Property to Ms Lin, prior to the Bankruptcy Order. Ms Lin argued that such a transfer occurred during the WhatsApp and email exchanges. The effect of such communications, Ms Lin said, was that she was the sole beneficial owner of the Property.
Transfer of Ownership: will WhatsApp messages and email be enough?
The short answer, in this Appeal and in view of the facts of this case, is no. That is not to say, however, that it is not possible.
The Court distinguished the Appeal from the established principles in Hudson v Hathway [2022] EWCA Civ 1648 ("Hudson"). In Hudson, the Court found that the words used in an email exchange were sufficient to release an interest to the other joint tenant.
In the Appeal, the Court found that:
- the existence of divorce proceedings and the instruction of solicitors was relevant;
- WhatsApp messages were seen to be a relatively informal forum of communication;
- whilst it might technically be possible for WhatsApp messages to have the requisite intent, WhatsApp does, in the Judge's mind, suggest that there was not an intention to deal such a significant transaction;
- the language used in the WhatsApp messages are indicative of Mr Gudmundsson divesting himself of his interest in the Property as part of an overall divorce settlement, rather than an intention to immediately divest himself; and,
- the Court considered that the header within a WhatsApp 'chat' identifying the sender is analogous to an email address. In the Court's view, the header of a WhatsApp chat was not part of the actual message itself, but served to allow the sender of a WhatsApp message to be identified. This would not, therefore, satisfy the requirements of s. 53 Law of Property Act 1925, which are that dispositions of legal and equitable interests in land are required to be in writing and signed by the person making the disposition (section 53(1)(a) and (c)).
Exceptional Circumstances
The Court also turned its attention to the Deputy Judge's consideration of exceptional circumstances within the meaning of s. 335A IA86. The Court found the Deputy Judge to have erred when exercising his discretion to defer the sale for over eight years. The Court noted that, whilst the suspension of the order for sale was not indefinite, a suspension of over 8 years would be disproportionate.
In striking a balance between the creditors' interests, Ms Lin and the children, the Court amended the date for delivery of the Property to 31 July 2027. This, in the Court's view, reflected a proportionate compromise between the rights of the family, together with those of the creditors.
Practical Considerations
The Appeal is an interesting interlap between bankruptcy and family law. Whilst, on the facts of this case, the Court held that the WhatsApp messages alone were insufficient to demonstrate an intention to divest, the Court did note that it might be possible.
The Appeal reiterates the need to strike a balance between the interests of the bankrupt's family, together with those of the creditors, when considering whether it is proportionate to defer delivery of property.
