The question for the court was whether when there was more than one purpose of a transaction the proscribed purpose under the section had to be dominant or not.
Held: It was not necessary for the proscribed purpose to be the dominant purpose; it was sufficient if it was a real substantial purpose.
Arden LJ said: ‘Section 423 plays an important role in insolvency law. It can moreover apply even though the debtor is not in a formal insolvency . . Section [423] is a carefully calibrated section forming part of a carefully calibrated group of sections.’ The court should construe the provision as permitting the court to set aside a transaction entered into for a number of purposes provided that a real substantial purpose was to put assets beyond the reach of the Revenue. It would have confounded the purpose of the provision to permit the defendant to avoid an order merely because other purposes could be demonstrated.
Arden LJ
[2002] EWCA Civ 981, [2002] 2 BCLC 489, [2002] BPIR 974
Bailii
Insolvency Act 1986 423
England and Wales
Citing:
Appeal from – Inland Revenue Commissioners v Hashmi and Another ChD 4-Oct-2001
In 1989, the taxpayer transferred property by means of a trust deed in favour of his son in consideration of his ‘natural love and affection’ for him. Four years later the commissioners investigated his tax affairs, and concluded that there were . .
Cited – Edgington v Fitzmaurice CA 7-Mar-1885
False Prospectus – Issuers liable in Deceit
The directors of a company issued a prospectus, falsely stating that the proceeds were to be used to complete alterations to the buildings of the company, to purchase horses and vans and to develop the trade of the company. In fact it was to pay off . .
Cited by:
Cited – Hill (As Trustee In Bankruptcy of Nurkowski) v Spread Trustee Company Ltd and Another CA 12-May-2006
hill_spreadCA2006
The defendants sought relief for transactions entered into at an undervalue. The bankrupt had entered into charges and an assignment of a loan account in their favour before his bankruptcy, and the trustee had obtained an order for them to be set . .
Cited – Hayes v Willoughby CA 13-Dec-2011
Harassment Occurs on the Result, not the Intention
The claimant said that over several years, the respondent had pursued him in many ways challenging his management of a company’s affairs. Complaints had been investigated by the insolvency service and by the police who had discovered nothing to . .
Lists of cited by and citing cases may be incomplete.
Updated: 16 August 2021; Ref: scu.217183 br>