Bhattacharya v Armstrong

He rejected the bankrupts’ case that their daughters, Bishnupriya and Nayantara, were the beneficial owners of three flats forming part of the property, holding that the evidence overwhelmingly supported the trustees’ case. The bankrupts’ daughters were not parties to the trustees’ application.

The bankrupts’ daughters applied for:

1. an order under CPR 40.9 setting aside the declaration made in March 2025 and varying it so as to provide that the trustees’ legal and beneficial entitlement to the property was subject to their respective beneficial interests;
2. an order joining them to the proceedings under CPR 19.2(b); and
3. the determination (at a later trial) of their beneficial interests in the property.

Their application also came before ICC Judge Greenwood who gave judgment (Bhattacharya & Anor v Robert Armstrong & Anor [2026] EWHC 759 (Ch)) on 30 March 2026.

CPR Rule 40.9 provides: “A person who is not a party but who is directly affected by a judgment or order may apply to have the judgment or order set aside or varied.” The requirements for granting relief under the provision were considered in Ageas Insurance Ltd v Stoodley [2019] Lloyd’s Rep IR 1 in which the following principles were set out:

1. The requirement that the applicant be “directly affected” should be considered flexibly in light of the overarching need to ensure that injustice is not done to those affected. It had two elements: first, that the party be materially and adversely affected; and second, that it be directly rather than indirectly affected.
2. The promptness of the application was a material consideration.
3. The applicant must establish that it has a “real prospect of success” of having the judgment or order set aside: there must be a real prospect of securing a different outcome.

ICC Judge Greenwood said little about (1) and (2), presumably on the basis that there was no real issue about the direct effect of the declaration on the applicants or the promptness with which they acted in making their application. The focus was, therefore, on (3). Determining that issue was far from straightforward, leading the judge, in a comprehensive judgment, to cover a great deal of ground, notably the principles governing the law on res judicata, abuse of process, and privity, which defy succinct summary. Of central importance was the judge’s analysis of the nature and effect of  the declaration made as a result of his earlier judgment. He held that it amounted to “a decision or judgment of the court in rem, rather than in personam,” which, as such, determined the status of a thing (in this case, the property) “as against the whole world” (per Lord Mancei in Ali v Pattini [2007] 2 AC 85), its “jural relation” applying “to persons generally, not just parties and privies” (see Res Judicata, Spencer Bower and Handley, 6th edn, 10.01). “It follows therefore,” ICC Judge Greenwood held, “that in respect of res judicata based on a judgment in rem (and although of course the other conditions of a valid res judicata would have to be fulfilled) the court is not concerned with parties or privies – the judgment is available for and against persons generally.”

The real question was, then, not whether there was res judicata  (as was the case here) but whether the application under CPR 40.9 to set aside the declaration (ex hypothesi binding on the applicants) was an abuse of process. At the same time, the judge accepted that it was “not necessarily irrelevant to that issue” to consider whether the applicants were (or would have been, for the purposes of the res judicata doctrine) their parents’ privies. It was also necessary, in his view, to consider the court’s approach in The Law Society v Dua and Dua [2020] EWHC 3528 (Ch), in particular on the question whether the application to set aside or vary the declaration in respect of the property, which would mean a second trial, would be manifestly unfair to the trustees, or would otherwise bring the administration of justice into disrepute.

Having considered the law and evidence, Judge Greenwood held that the applicants had failed to meet the “real prospect of success” test. Their case was very similar to that advanced by the bankrupts, their parents, in the proceedings brought against them by the trustees and which resulted in the declaration: the principal difference was that, whereas the bankrupts had accepted that one of the flats belonged to them (having merely been “promised” to the second applicant), it was the second applicant’s case that, beneficially, it belonged to her. The judge had rejected the bankrupts’ case on grounds that he had described as overwhelming. That was the context in which the applicants had now to show that, were there to be another trial, they would have a real prospect of success, i.e. of showing that, notwithstanding the weight of the evidence that had supported the trustees’ case against their parents, it was realistic to suggest that the court might reach a different conclusion at another trial. The judge relied on a number of evidential matters in rejecting the possibility of such an outcome. (They are set out in detail in paragraphs 62-67 of the judgment.)

A major reason for the applicants’ failure was the contrast between the overwhelming evidence in favour of the trustees and the applicants’ evidence, which the judge described as “vague and imprecise,” as well as marred by inconsistency as between them.

He described abuse of process as “a concept untrammelled by the technicalities of res judicata; the circumstances in which it arises are very varied; it requires the court to make a “broad merits-based judgment’, and to ask itself whether in all the circumstances, a party’s conduct comprises an abuse, taking into account the interests of justice, public policy and the private interests of the parties.”

He held that the application was an abuse of process, and for that reason (in addition to the applicants’ failure to meet the test under CPR rule 40.9) should be dismissed. He gave the following reasons:

1. The applicants knew about the proceedings brought by the trustees and knew their purpose and intended effect; they knew that they concerned and affected their asserted interests in the property, and they knew that those interests were in issue and were to be determined; but they decided not to seek to be joined as parties, but were content to allow their parents to argue their case.
2. Mr and Mrs Bhattacharya as bankrupts had no economic interest in the property, so the case  they advanced against the trustees was really for the benefit of their daughters. “In other words, although strictly the interests of the Bankrupts and of the Applicants were different, the Bankrupts, having lost their own rights, unambiguously argued for those of the Applicants.”
3. Bankruptcy was a compulsory, collective process of asset realisation and distribution; if a person, in full knowledge of that process, claimed to be a creditor or to be the beneficial owner of property previously held by the bankrupt but now vested in the trustee, it was incumbent on him/her to participate in that process and assert his/her rights and claims, or risk their determination against him/her. “The present Application is not simply a further instance of the Applicants merely defending themselves, the Trustees having always been ‘in the driving seat’: it is a claim positively but (by the Applicants, rather their parents) only very belatedly advanced.”
4. The issues raised in the proceedings were hotly disputed, and were litigated to trial, at some cost; the bankrupts were represented by counsel; and the trial involved a final determination of the parties’ rights (which was not the position in some of the relevant case law to which the judge had been taken).
5. If the declaration were set aside, there would have to be a second trial at significant cost to the bankrupts’ creditors and to the public.
6. The application was abusive because, to allow it to succeed, and to allow the applicants to re-litigate something that had already been litigated and decided, would be unfair to the trustees and would bring the administration of justice into disrepute among right thinking people.

The application was dismissed.

There is an interesting passage in ICC Judge Greenwood’s judgment dealing with the little-known “Nana Ofori principle,” According to Greenwood, Stuart-Smith LJ  had recourse to it in House of Spring Gardens Ltd v Waite (No.2) [1991] 1 QB 241, deriving it from a nineteenth century judgment of Lord Penzance in a case called Wytcherley v Andrews:

“There is a practice in this court, by which any person having an interest may make himself a party to the suit by intervening, and it was because of the existence of this practice that the judges of the Prerogative Court held, that if a person, knowing what was passing, was content to stand by and see his battle fought by someone else in the same interest, he should be bound by the result, and not be allowed to re-open the case. That principle is founded on justice and common sense, and is acted upon in courts of equity where, if the persons interested are too numerous to be all made parties to the suit, one or two of the class are allowed to represent them; and if it appears to the court that everything has been done bona fide in the interests of the parties seeking to disturb the arrangement, it will not allow the matter to be re-opened.”

Its appellation is the result of endorsement of the principle by Lord Denning in the Privy Council case Nana Ofori Atta II v Nanu Abu Bonsra II [1958] AC 95.

Trustees in bankruptcy with the benefit of what appears to be a secure order for possession and sale of a bankrupt’s property do, on occasions, find themselves later facing further litigation from members of the bankrupt’s family or others raising what are often spurious claims to rights in the property, sometimes instigated by the bankrupt in an attempt to postpone possession. Although much about Bhattacharya v Armstrong is case-specific, there is much in this judgment that will help in such a situation.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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