Halberstam & Anor v Gladstar Ltd

Factual and Procedural Background

This claim concerns injunctions and other orders relating to various valuable items formerly kept at the home of the second claimant and her husband at 3 West Heath Avenue, London. On 16 December 2014, these goods were seized by court enforcement officers under a Writ of Delivery issued by the Queen's Bench Division Commercial Court. The claimants assert ownership and entitlement to possession of the goods and seek interim mandatory orders for their return or, alternatively, to prevent their sale or disposal pending trial. The defendant contests relief, arguing the claimants lack a tenable claim or that damages would be an adequate remedy.

The factual background includes the insolvency of the husband in the 1970s, the purchase of the home and furnishings by his father, and the settlement of these assets into a New York discretionary trust (the Edmond Stern Settlement) for the benefit of the claimants’ children. The first claimant, an attorney and trustee of the Settlement, claims the furniture and paintings as trust property, while the second claimant claims ownership of a particular painting and a Rolex wristwatch (the latter not part of the current application).

The defendant’s position is that the disputed items were sold to it by the husband through bills of sale in 2013, following an agreement that prohibited further loans. The defendant contends these were valid sales with possession retained by the husband, who had an option to repurchase. Arbitration and subsequent court orders supported the defendant’s right to possession, but the claimants dispute the sales as sham transactions and challenge the title.

After enforcement and removal of the goods, the claimants sought urgent relief which was refused due to timing and evidential thresholds. The claim form and particulars were issued in January 2015. The defendant later raised legal arguments based on the Bills of Sale Act 1878 and the Sale of Goods Act 1979.

Legal Issues Presented

1. Whether the parties had compromised the application for interim relief by conduct and correspondence, thereby affecting the court’s interim relief decision.
2. Whether the hearing should be adjourned to allow a better-prepared interim application, with interim relief in the meantime.
3. Whether the claimants had established a serious issue to be tried, that damages would be an inadequate remedy, and that the balance of convenience favoured granting interim relief pending trial.
4. Whether the first claimant’s claim to the goods was barred by section 8 of the Bills of Sale Act 1878 and/or section 24 of the Sale of Goods Act 1979.

Arguments of the Parties

Claimants' Arguments

• The furniture and paintings were purchased by the father of the husband and settled into the Edmond Stern Settlement for the benefit of the claimants’ children, entitling the first claimant as trustee to possession.
• The paintings, including three old master oil paintings, were trust property even though not all were listed in the 1974 inventory.
• The second claimant owns a painting by Mane-Katz, purchased in 1967, and the Rolex watch (though the latter is not part of the current application for relief).
• The purported sales to the defendant were sham transactions intended to disguise loans in breach of the 2013 Deed, thus unenforceable and conferring no title to the defendant.
• Even if the defendant had title, damages would be an inadequate remedy, justifying interim relief.

Defendant's Arguments

• The defendant purchased the disputed items from the husband in 2013 via bills of sale after the parties agreed no further loans would be made.
• The defendant paid the full purchase price and had an option to require delivery of the goods, which was exercised when it became clear the husband would not repurchase.
• The defendant relies on the Bills of Sale Act 1878 section 8, arguing that any prior unregistered bill of sale is void against it as an enforcement officer acting under court process.
• The defendant contends the Sale of Goods Act 1979 also bars the first claimant’s claim.
• The defendant offered to agree not to sell the items before trial or to return the items with proper security but retracted the offer due to mistrust of the husband.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
American Cyanamid v Ethicon [1975] AC 396	Criteria for granting interim injunctions: serious issue to be tried, inadequacy of damages, balance of convenience.	The court applied this test to determine whether interim relief should be granted pending trial.
Hadley & Son v Beedom [1895] QB 646	Definition and validity of an assignment for the benefit of creditors as an exception to the Bills of Sale Act 1878 registration requirements.	The court considered this case in assessing whether the 1974 sale could be an assignment for the benefit of creditors; it concluded it was not.

Court's Reasoning and Analysis

The court first considered whether the parties had reached a binding compromise regarding interim relief based on the defendant’s witness statement and the claimants’ counsel's response. It concluded no enforceable agreement or estoppel arose, as the purported offer was a false statement about past facts, not an offer to submit to interim relief.

Turning to the substantive claims, the court separated the claims of the Settlement and the second claimant. The first claimant’s claim rested on establishing that the items were sold by the husband’s father and settled into the trust. Despite evidential gaps, including absence of a sale contract and discrepancies in inventories, the court found a real prospect that the first claimant could establish title at trial.

However, the defendant’s reliance on section 8 of the Bills of Sale Act 1878 was a critical hurdle. The court analysed the statute’s protections for buyers from sellers in possession and the registration requirements for bills of sale. It found that the 1974 sale agreement was likely a bill of sale requiring registration, which had lapsed. The unregistered bill of sale was void against enforcement officers and the defendant under the statute.

The court rejected the claimants’ argument that the transaction was an assignment for the benefit of creditors exempt from registration, holding the 1974 sale was a straightforward sale to the father, not a formal assignment to insolvency practitioners or trustees. The court concluded that the first claimant had no realistic prospect of overcoming the statutory bar.

Regarding the second claimant’s claim to the Mane-Katz painting, the court accepted there was a real prospect of establishing ownership and entitlement to possession, unaffected by the Bills of Sale Act or Sale of Goods Act arguments.

Following the court’s conclusions, the defendant undertook to deliver the painting to the second claimant upon her providing appropriate undertakings to protect the defendant’s interests.

Holding and Implications

The court DISMISSED the first claimant’s application for interim relief concerning the items claimed on behalf of the Edmond Stern Settlement, concluding there was no serious issue to be tried due to the statutory bar under the Bills of Sale Act 1878.

For the second claimant’s claim to the Mane-Katz painting, the court did not need to decide on interim relief as the parties reached an agreement for its delivery subject to undertakings.

The direct effect is that the first claimant’s claim to possession of the disputed items fails at the interim relief stage, while the second claimant will regain possession of the painting. No new legal precedent was established beyond the application of existing statutory provisions and case law to the facts.