MacDonald and Another v Carnbroe Estates Ltd: SC 4 Dec 2019

‘This appeal concerns the Scots law of gratuitous alienations on insolvency. It raises three principal questions. First, there is a question as to the interpretation of the term ‘adequate consideration’ in section 242(4)(b) of the Insolvency Act 1986. Secondly, there is the question whether the Inner House was entitled to interfere with the Lord Ordinary’s evaluation that the consideration given by Carnbroe Estates Ltd (‘Carnbroe’) amounted to adequate consideration under that statutory provision. Thirdly, a question arose during the hearing as to the interpretation of the words in section 242(4) that empower the court to grant a remedy. The court invited and received written submissions from counsel for both parties. The question is whether the court has any discretion as to the remedy it may give.’
Held: There was an absence of agreement on the facts, and: ‘it is necessary to afford the First Division an opportunity to consider whether it is appropriate in the circumstances of this case to qualify the remedy of reduction which it has given to take account of all or part of the consideration which Carnbroe gave for the purchase, for example by requiring the liquidators to pay a specified sum to Carnbroe as a condition of the reduction.’


Lord Reed, Deputy President, Lord Wilson, Lord Hodge, Lord Briggs, Lord Sales


[2019] UKSC 57


Bailii, Bailii Summary


Insolvency Act 1986 242(4)(b)




At Outer HouseMacdonald and Others v Carnbroe Estates Ltd SCS 18-Jan-2017
(Outer House) Allegation of sale at an undervalue – Carnbroe had established that the sale of the Property was made for adequate consideration. Lord Woolman recorded the submission which counsel made on behalf of Carnbroe that Grampian was fighting . .
CitedMcCowan v Wright 1852
Under both the common law and the 1621 Act the challenger of a transaction did not have to prove that the debtor or the transferee was aware of the debtor’s insolvency or that the debtor was seeking to harm his creditors. . .
CitedAbram Steamship Co Ltd v Abram 1925
. .
CitedBank of Scotland v R W Forsyth Ltd 1988
. .
At inner houseLiquidators of Grampian Maclennan’s Distribution Services Ltd Reclaiming Motion By, v Carnbroe Estates Ltd SCS 23-Jan-2018
First Division, Inner House, Court of Session – allegation of sale at an undervalue. The liquidator appealed a finding that as a speedy sale was required the sale price was proper.
Held: The reclaiming notice was allowed. The sale of the . .
CitedEarl of Glencairn v Birsbane SCS 16-Jan-1677
In the reduction at the instance, of the Earl of Glencairn against John Birsbane, of his right of the lands of Freeland, and declarator, that a reversion in favours of the heir of the disponer’s own body, to take effect after the disponer’s death, . .
CitedHague and Another v Nam Tai Electronics PC 21-Feb-2008
(British Virgin Islands) . .
CitedOldham and others v Georgina Kyrris and Another CA 4-Nov-2003
The claimant sought to bring a claim against the administrators of a partnership alleging a duty of care to creditors.
Held: Such an administrator owed no greater duty to creditors than would a director. That duty was no different whether the . .
CitedSilven Properties Limited, Chart Enterprises Incorporated v Royal Bank of Scotland Plc, Vooght, Harris CA 21-Oct-2003
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor . .
CitedBaillie Marshall Ltd and Another v Avian Communications Limited SCS 21-Jul-2000
Challenge to an unfair preference under section 243 of the 1986 Act . .
CitedKerr (Aitken’s Trustee) v Aitken OHCS 26-Nov-1999
Lord Eassie said: ‘In my opinion the expression ‘adequate consideration’ means the giving of a consideration which might objectively be described as being a reasonable prestation for the property conveyed by the bankrupt to the transferee had the . .
CitedLafferty Construction Ltd v McCombe SCS 1994
Lord Cullen spoke of the meaning of ‘adequate consideration’ in section 242 of the 1986 Act: ‘In considering whether alienation was made for ‘adequate consideration’, I do not take the view that it is necessary for the defender to establish that the . .
CitedShort’s Trustee v Chung 1991
A man purchased two flats at a significant undervalue from an insolvent and conveyed them for no consideration to his wife. The insolvent’s permanent trustee successfully challenged the sales as gratuitous alienations. Before the Lord Ordinary and . .
CitedKyd (Gorrie’s Trustee) v Gorrie SCS 25-Jun-1890
A father, in the knowledge that he was insolvent, granted a lease of a shop to his son at a yearly rent of pounds 7. It was proved that the fair rent was pounds 12. In terms of the lease the son had expended about pounds 12 in repairs, and it was . .
CitedRaymond Harrison and Co’s Trustee v North West Securities Ltd 1989
. .
Lists of cited by and citing cases may be incomplete.


Updated: 09 May 2022; Ref: scu.645783