The Supreme Court recently issued its judgment in the case of Dooneen Ltd (t/a McGinness Associates) and another v Mond. The case was heard on appeal from the Inner House of the Court of Session.
Brian Pollock, Associate in our Dispute Resolution and Litigation team, provides a summary of the case here. A more detailed article is available below which offers examination of the implications of the judgment in a comprehensive interview with Robert Matthews produced for Lexis Nexis.
The point in dispute concerned whether a debtor was entitled to retain PPI compensation received after a final distribution was made under a trust deed, discharging the debtor from his debts. At the time of the final distribution, the trustee was not aware of the existence of the PPI claim, nor had it been deliberately concealed by the debtor. The appellant (Mr Mond) contended that the final distribution could not be said to have taken place until the creditors had been paid in full or the debtor’s assets were exhausted. On that basis the monies ought to form part of the debtor’s estate for the purpose of distribution to the creditors.
Finding in favour of the respondents (Dooneen Ltd and Mr Davidson (the debtor)), the Supreme Court held that a final distribution had in fact taken place in this instance, effectively discharging the debtor from the trust deed. The debtor was accordingly entitled to retain the PPI compensation.
In his leading judgment, Lord Reed expressed recognition that a less than satisfactory outcome had been reached here where a debtor was entitled to retain monies which, had their existence been known at the relevant time, ought to have been distributed to the creditors.
However, in reaching the decision the Supreme Court emphasised the need for clarity as to when a final distribution had been made in order to avoid a raft of unintended consequences resulting from ambiguity as to the status of the trust deed. For example, ambiguity as to whether the debtor had been discharged from his debts could have practical consequences for the debtor and any third parties dealing with him.
You can read the Lexis Nexis article with here.
If you would like to discuss any issues raised here, our Dispute Resolution and Litigation experts would be happy to help. Click here to contact a member of our Dispute Resolution and Litigation team.