(Extra Division Inner House) The liquidator sought to have set aside the sale of a substantial hotel with golf courses on the basis that it was at an undervalue, with the buyer being aware of the seller’s potential insolvency. He appealed against a finding that the buyer had also assumed debts sufficient to give full value.
Held: The Lord Ordinary had erred in law. He had made no finding that the assumption of the debts had occurred with the sale so as to become part of the consideration, and without that finding, he had not been entitled to hold that the alienation of the property had been made for adequate consideration or, given the knowledge of the circumstances, that Foxworth had obtained the standard security in good faith. Moreover, the Lord Ordinary had not given satisfactory reasons for his conclusions and the issue was therefore at large for the appellate court. On the evidence before it, it was now held that the sale had been a gratuitous alienation, and that Foxworth had not obtained its rights under the standard security in good faith or for value. Decree was therefore granted for the reduction of the standard security.
Lady Paton said: ‘The consideration allegedly given in exchange for the granting of the disposition of Letham Grange to NSL required to be enforceable (ie able to be vindicated) at the time when the disposition was granted on 12 February 2001. On the Lord Ordinary’s own findings, however, there was no enforceable obligation binding NSL to repay Liu family loans as at that date. Taken in context, I am quite unable to read the words ‘part of the loan’ in the penultimate line of para 90 of the Lord Ordinary’s opinion as being referable to the precise or calculated figure of andpound;1.85 million but, even if they were so read, I doubt whether, in the absence of any documentation whatsoever, the ‘decision’ in question could properly be regarded as any more than a statement of intent on the part of Mr Liu. . . It was not open to the Lord Ordinary to accept that consideration was given in exchange for the disposition granted in the form of some vague obligation undertaken by NSL to repay Liu family debt.’

Judges:

Lady Paton

Citations:

[2013] ScotCS CSIH – 13, 2013 SLT 445

Links:

Bailii

Statutes:

Insolvency Act 1986 242

Jurisdiction:

Scotland

Citing:

Opinion – Henderson v Foxworth Investments Ltd SCS 12-Apr-2011
Outer House – The pursuer was liquidator of a Company, suing for declarator that ‘the pretended standard security’ granted by the second defenders in favour of the first defenders in respect of subjects was void and unenforceable; and for production . .
Costs at Outer House – Henderson v Foxworth Investments Ltd and Another SCS 17-Jun-2011
The court having assoilzied the defendant in the claim now considered an application for costs. . .
Lists of cited by and citing cases may be incomplete.

Land, Insolvency

Updated: 01 February 2022; Ref: scu.471308