Fraudulent Transfer in UK Law

The transfer to the company constituted an act of bankruptcy. The relation back of the trustee's title, however, did not strictly render the transaction either void or voidable; it operated automatically to divest the debtor at the date of the act of bankruptcy of any title to pass to the transferee, and this enabled the trustee to prevail against anyone who could not bring himself within the protective provisions of Section 45.

If the debtor was adjudicated bankrupt, then as from the date of the act of bankruptcy neither the debtor nor any such person claiming under him who could not bring himself within the protective provisions of the Bankruptcy Acts had any title at all; as from that date title was vested in the trustee. Outside the law of bankruptcy no similar ambulatory title was known to the law.

This is not an action based on the contract but on the defendant's fraudulent misrepresentation. The plaintiffs are not seeking to enforce the contract by relying upon it or seeking any relief in connection with it. They have to prove, first, the fraudulent misrepresentation, which they have done, and, secondly, the resulting loss, the transfer of £45,000. But they are not the foundation of the plaintiffs' claim in any way.

On the one hand it is unacceptable that any court of law should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits. On the other hand, it is unacceptable that the court should, on the first indication of unlawfulness affecting any aspect of a transaction, draw up its skirts and refuse all assistance to the plaintiff, no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct.

Where the plaintiff's action in truth arises directly ex turpi causa, he is likely to fail, as he did in Alexander v. Rayson, [1936] 1 King's Bench 182; J.M. Allan (Merchandising) Ltd v. Cloke, [1963] 2 Queen's Bench 340; Ashmore, Benson, Pease & Co, Ltd. v. A.V. Dawson Ltd. [1973] 1 Weekly Law Reports 828; and Thackwell v. Barclays Bank plc, [1986] 1 All England Reports, 676. Where the plaintiff has suffered a genuine wrong, to which allegedly unlawful conduct is incidental, he is likely to succeed, as he did in Bowmakers Ltd. v. Barnet Instruments Ltd.

We remind ourselves of the warning of their Lordships in May (at paragraph 48(3) and (4) and in Jennings (at paragraph 13) against the dangers of judicial exegesis of the expression 'obtained', which has a clear English meaning. We are unable to see how it can be said that this defendant did not obtain by his offences of deception the payments which were actually made in response to his inflated claims, namely in count 3 (see above) £28,333.34.

This jurisdiction must be exercised with considerable caution, indeed sparingly. In particular, it cannot be exercised simply on the grounds that the Judge disagrees with the decision of the Crown to pursue confiscation, or with the way it puts its case on that topic.