(Chancery Division; Robin Knowles QC sitting as a deputy judge of the High Court; 7 June 2007)
In anticipation of intended divorce proceedings the husband had transferred his entire interest in the jointly-owned property (worth over £200,000) to the wife under an agreement whereby in consideration for payment of £1,000 and an undertaking by the wife to give up all ancillary relief claims against him, he relinquished his beneficial interest in the property and it was transferred into her sole name. The husband was subsequently made bankrupt and his trustee in bankruptcy sought declarations that prior to the transfer the husband and wife held the property in equal beneficial shares, that the transfer was a transaction at an undervalue and that the husband's beneficial interest in the property should vest in the trustee in bankruptcy under s 306 Insolvency Act.
The wife's contention that contributions to the purchase price of the property meant that she owned a two third share were not supported by sufficient evidence. This was a case in which the 'probable common understanding' (Stack v Dowden  1 FLR 254) was equal shares. An agreement to give up all claims for ancillary relief in exchange for the husband's beneficial interest in his property is not 'consideration in money or money's worth': Hill v Haines  EWHC 1012 (Ch). The consideration of £1,000 was significantly less than the value, in money or money's worth, than the husband's beneficial interest in the property. As such the transfer was a transaction at an undervalue under s 339 Insolvency Act 1986 and one half of the property vested in the trustee in bankruptcy.