Humphrey and anor v Bennett and ors [2025] EWHC 448 (Ch)

On 28 February 2025, the High Court of England and Wales (Michael Green J) handed down its decision in Humphrey v Bennett [2025] EWHC 448 (Ch), dealing for the very first time with whether a claim for knowing receipt of registered land is possible after the Supreme Court’s decision in Byers v Saudi National Bank [2024] AC 1191.

The judgment also deals with several other significant and interesting points of law for the first time, including (i) the availability of a parallel claim in unjust enrichment in respect of registered land; (ii) the availability of a parallel claim in unjust enrichment on the basis of alleged want of authority of a director of a company; and (iii) whether a claim under ss. 190/195 of the Companies Act 2006 can be brought using the derivative procedure. The court also dealt with some points of difficulty in respect of the procedure to be adopted on an amendment application.

Background

The judgment is the latest in the long-running Humphrey v Bennett litigation, concerning a joint venture property development company in the West Midlands. Brought as a derivative action, the claimant minority shareholders seek various orders against the defendant director in respect of alleged diversions of corporate money and opportunities. One of the alleged diversions concerns a parcel of registered land, which the claimants say was unlawfully sold from the joint venture to a company owned solely by the defendant director (“EHCL”), where it was then developed.

In addition to their claims against the director, the claimants have brought an additional claim against EHCL for knowing receipt. The claimants also applied to amend that claim to include alternative claims in unjust enrichment, dishonest assistance, unlawful means conspiracy, and under section 190 and 195 of the Companies Act 2006. EHCL resisted those amendments.

Knowing receipt of registered land

In Byers, the Supreme Court held that a claim in knowing receipt would only be possible if the claimant still had an equitable interest in the received property. At [88],Lord Briggs appeared to express the obiter view, including by approving of an academic text arguing this point at length, that the effect of section 29 of the Land Registration Act 2002 would be that, upon registration of a purchase of registered land, any subsisting equitable interests in the land would be lost such as to prevent a claim in knowing receipt.

On this basis, EHCL applied to strike out the claim against it in knowing receipt. The parcel of land in dispute had been purchased by EHCL for valuable consideration, such that the postponing effect of section 29 of the Land Registration Act 2002 applied. Citing Byers, and citing the academic text discussed by Lord Briggs therein, it was argued that this had the effect of extinguishing the joint venture’s equitable interest, or preventing it from being asserted against EHCL, such that a claim in knowing receipt was no longer possible.

However, the court refused the application. Michael Green J held that, despite the dicta in Lord Briggs’s judgment, Byers did not have theeffect of preventing a claim in knowing receipt of registered land, because the word “postpone” in section 29 of the Land Registration Act 2002 may not in fact entail the extinguishment or overriding of any continuing equitable interest. This was therefore said to be a developing area of law not suitable for determination on a summary basis.

Unjust enrichment

A further point which arose was the availability of an alternative claim in unjust enrichment on the basis of want of authority, particularly in respect of registered land. EHCL argued that such a claim had no real prospect of success, on the basis of various statements in Goff & Jones on Unjust Enrichment that there was no authority for such a claim.

Furthermore, there was extensive argument about the availability of a claim in unjust enrichment, parallel to a claim in knowing receipt, on the basis of want of authority in principle. This is a controversial point which has never squarely been decided.

In the first ever direct decision on this question, Michael Green J determined that it was at the very least arguable that both claims were possible in English law, and therefore permitted the claimants’ proposed amendments. He held that they should be subject to full argument at trial.

Section 190 of the Companies Act 2006

Another issue dealt with for the very first time concerns whether a claim under section 190 and section 195 of the Companies Act 2006 can be brought by way of a derivative claim.

Section 190 provides that a company may not transfer away a substantial non-cash asset to a director or a person connected to a director without the company first obtaining the approval of a resolution of its members. Section 195 sets out the consequences of an unapproved transaction taking place: the transaction shall be voidable, and even if incapable of being avoided, the director or connected transferee is liable to account back to the company.

Section 260(3) of the Companies Act 2006 stipulates that a derivative claim can be brought only in respect of “a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company”. However, it is unclear on its face whether claims under section 190/195 constituted such causes of action. Those sections do not, in terms, impose positive duties or obligations upon the directors. Furthermore, there were no decided cases on this question.

Handing down the first ever judgment on this point, Michael Green J held that a claim under ss. 190 and 195 CA 2006 can be brought using the derivative procedure. In his judgment, he stated that the threshold criteria in section 260(3) CA 2006 should be read widely, and taking into account the potential loss of utility in ss. 190/195 CA 2006 if they were not capable of being brought by way of derivative claim.

Conclusion

While EHCL’s application was dismissed and the claimants’ amendments were permitted, the judgment has provided significant clarity in several complex and controversial areas of law. In particular, it is clear that English law is still, for now, open to claims of knowing receipt and unjust enrichment in respect of registered land, and that claims under section 190 CA 2006 are amenable to being brought by way of derivative action.

To read the full judgment, please click here.

Steven Reed and Harry Samuels acted for the Defendants, including EHCL, instructed by Ian Meadows of Ansons Solicitors.