(1) Kashif Ahmed v (1) David Ingram
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lady Justice Gloster,Lord Justice David Richards |
| Judgment Date | 19 March 2018 |
| Neutral Citation | [2018] EWCA Civ 519 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2016/3085 |
| Date | 19 March 2018 |
[2018] EWCA Civ 519
Lady Justice Gloster
Vice President of the Court of Appeal, Civil Division
Lord Justice Patten
and
Lord Justice David Richards
Case No: A2/2016/3085
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE IN BANKRUPTCY
Mrs Justice Proudman
IN THE MATTER OF THE INSOLVENCY ACT 1986
AND IN THE MATTER OF EAITISHAM AHMED (A DEBTOR)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Giles Maynard-Connor (instructed by Pannone Corporate LLP) for the appellants
Mr Francis Collaço Moraes (instructed by Max Legal Limited) for the Respondents
Hearing dates: 24 October 2017 – 25 October 2017
Further submissions filed: 31 October 2017 and 1 November 2017
Judgment Approved
Introduction
This is an appeal by Mr Kashif Ahmed (“the first appellant”), Ms Bushra Ahmed, Ms Tesneem Ahmed and Ms Tabusam Hussain (collectively “the appellants”) against an order and corresponding judgment of Proudman J (“the judge”) dated 29 June 2016.
This action relates to an application issued on 28 May 2013 by the respondents, Mr David Ingram and Ms Michaela Hall (“the trustees in bankruptcy” or “the respondents”) as the joint trustees in bankruptcy of Eaitisham Ahmed (“the bankrupt”), pursuant to s.284 of the Insolvency Act 1986 in relation to transfers of minority shareholdings (“the shares”) in three companies made by the bankrupt to the first appellant on 6 June 2007 (“the transfer date”), and later transfers by the first appellant of some of the shares to the second to fourth appellants (collectively “the sisters”).
The transfers to the first appellant took place after presentation of the relevant bankruptcy petition and before the bankruptcy order was made against the bankrupt. The exact timing of the subsequent transfers to the sisters is unclear, although it was agreed that these would have taken place sometime during the period 2008 to 30 June 2009 when the public records showed that they had been transferred. Amongst other things, the trustees in bankruptcy claimed a declaration that the transfers of the shares (“the share transfers”) were void. Although that was originally opposed, at trial such relief was admitted and the remaining issue in dispute related to the trustees in bankruptcy's monetary claims, by which they sought to restore the bankruptcy estate with the fair value of the shares as at the transfer date which they alleged was the relevant date for valuation purposes. Although the appellants had issued a cross-application seeking a validation order in respect of the share transfers, they had in fact delivered the shares up to the trustees on 27 February 2015, shortly before the trial began and accordingly had withdrawn their cross-application,
The trial took place before Proudman J on 9 – 13 March 2015, 14 January 2016 and 18 March 2016. A proposed preliminary issue was dealt with on 9 March 2015 to 11 March 2015 but not determined. The evidence, factual from one of the trustees in bankruptcy (“Mr Ingram”) and from the first appellant, and expert evidence from the parties' respective valuers, was then heard on 12 and 13 March 2015 and 14 January 2016. Closing submissions were made orally on 18 March 2016.
Proudman J handed down her judgment on 29 June 2016 and, by her order of the same date, upheld the trustees' application. She held that the appropriate basis of valuation was a fair value (as opposed to a market value) and declared that the fair value of the shares as at the transfer date 1 was £2,216,000. She ordered that each of the appellants were jointly liable to pay the value of the shares as at that date (to the extent that they had held relevant shares), less the fair value of the shares as at their date of return to the trustees on 27 February 2015. Directions were then given for the determination of the value of the shares as at 27 February 2015. The appellants were
also ordered to pay interest on the principal sums payable by them as from 25 February 2010 and to pay the trustees in bankruptcy's costs of the application and the withdrawn cross-application on an indemnity basis after 27 August 2013.Notwithstanding her judgment, Proudman J gave permission to appeal and, with the agreement of the trustees in bankruptcy, extended the time for filing the appellant's notice to 4pm on 3 August 2016. Further, the judge stayed payment of the sums ascertained to be due upon valuation of the shares as at 27 February 2015, until determination of the appeal or further order.
Mr Giles Maynard-Connor appeared on behalf of the appellants and Mr Francis Collaço Moraes appeared on behalf of the respondents on the appeal. Both appeared below, although Mr Maynard-Connor only appeared at a later stage of the trial.
Factual Background
A detailed narrative of events is set out in the judgment of Proudman J. It is not necessary to repeat that full account in this judgment. I merely summarise the key events relevant for the purposes of the appeal. I shall make more detailed reference to the judge's findings when I consider the various issues which arise on the appeal.
The bankrupt and the appellants are siblings. The subject companies, Continental Shelf 128 Ltd (“Continental”), Hornby Street Ltd (“Hornby”) and Wembley Menswear Company Ltd (‘Wembley’) (collectively “the companies”), are private family owned companies, trading in Manchester and London in the design, sourcing and distribution of branded and non-branded fashion clothing. The first appellant has been a director of Continental since 2 June 1997 and a director of Wembley and managing director of Hornby since 27 October 1999.
On 14 July 2006 Monecor (London) Limited (trading as ‘Tradeindex’) (“Monecor”) served a statutory demand in the sum of £4,443,457.73 on the bankrupt. An application to set aside the statutory demand failed.
In mid-September 2006 several members of the family of EA (including the first appellant and the sisters) retained Mr Andrew Andronikou of UHY Hacker Young to advise in respect of the insolvency of the bankrupt.
Monecor presented a bankruptcy petition against the bankrupt on 23 January 2007 (“the petition”).
An initial proposal for an IVA for the bankrupt was prepared by Mr Andronikou as nominee on 13 February 2007 and was accompanied by the 1st Nominee's report. An amended IVA Proposal was prepared on 8 March 2007 which was accompanied by a second Nominee's report of the same date.
By letter dated 28 March 2007 the first appellant agreed to contribute £1.45million to the IVA in return for the transfer to him of the bankrupt's 24% shareholding in Hornby.
On 29 March 2007 the IVA proposal was approved and Mr Andronikou and a Mr Andrew Hosking were appointed as joint supervisors as a result of what was subsequently determined to have been “vote-rigging” by the first appellant and other family members of the bankrupt.
On 22 May 2007, the first appellant paid £200,000 to the IVA in accordance with his letter.
On 26 April 2007, Monecor challenged the IVA under s.262 of the Insolvency Act 1986 (“the IVA challenge”). The IVA challenge was ultimately successful.
On 5 June 2007:
i) the first appellant entered into a written guarantee in respect of certain payments that the bankrupt agreed were going to be made in the IVA (“the guarantee”); the guarantee acknowledged that the bankrupt had an interest in each of the companies;
ii) under the terms of the guarantee the bankrupt agreed to transfer the relevant shares in the companies to the first appellant absolutely (as well as other assets) in consideration of the provision by the first appellant of the guarantee.
On 6 June 2007 the bankrupt transferred 1,200 shares in each of the companies to the first appellant pursuant to the terms of the guarantee; this represented 24% of each company.
At some date in 2008–2009, many months after the date of the original transfer on 6 June 2007, the first appellant transferred certain of the shares in the companies (excluding Continental) to the second to fourth appellants. They subsequently re-transferred the shares to the first appellant by no later than 30 June 2010.
Following a trial before Deputy Judge Andrew Simmonds QC on 15 December 2008, the IVA was revoked. He held that members of the family of the bankrupt (excluding the second to fourth appellants) and his associates had wrongly claimed they were owed debts of £6,980,876. Those claimed debts were used to approve the IVA. The Deputy Judge held, however that the claims were false and amounted to vote-rigging as, in reality, the claimed debts only amounted to £3,260,425. The first appellant gave evidence at the IVA challenge trial which was rejected. For the purposes of voting at the IVA, he claimed a debt of £3,882,424 whereas the debt he was owed in fact amounted to only £1,851,500.
A bankruptcy order was subsequently made against the bankrupt on 21 April 2009. On 22 July 2009 the bankrupt's assets vested in Mr Hosking on his appointment as trustee in bankruptcy. Mr Hosking subsequently resigned on 14 April 2010 and was replaced by Mr David Ingram, the first respondent, and Mr Nicholas Miller. Mr Miller was replaced by Mr Ian Defty on 1 May 2013. Mr Defty was later replaced by Ms Michaela Hall, the second respondent.
The application by the trustees in bankruptcy was subsequently issued on 28 May 2013 and the appellants' cross-application for validation of the transfers was issued on 27 August 2013.
On 14 January 2014 Mrs Registrar Derrett made an order that the parties should agree the...
To continue reading
Request your trial
-
Officeserve Technologies Ltd (in Compulsory Liquidation) v Annabel's (Berkeley Square) Ltd
...the physical return of the motorcar under the general law of tort, that is, interference with goods. 23 In the recent bankruptcy case of Ahmed v Ingram [2018] EWCA Civ 519, transfers of company shares had been made by the bankrupt after the presentation of the petition but before the bankru......
-
Skandinaviska Enskilda Banken AB (Publ) v Conway and another (as Joint Official Liquidators of Weavering Macro Fixed Income Fund Ltd)
...Ltd v Annabel's (Berkeley Square) Ltd [2018] EWHC 2168 (Ch); [2019] Ch 103. 70 In In re Ahmed (A Debtor), Ahmed v Ingram [2018] EWCA Civ 519; [2018] BPIR 535, the Court of Appeal considered an argument that a statutory right of action was created by section 284(1) of the Insolvency Act 1......
-
Brothers Produce Ltd ((in Liquidation)) v Tydene (Western) Ltd
...alternative to a claim based on the law of restitution, an officeholder may look to equity. The Court of Appeal held in Ahmed v Ingram [2018] EWCA Civ 519 at [45] that the effect of s.284 IA 1986 upon a disposition of property is that it is held by the recipient (i) contingently for the ba......
-
James Court Ltd ((in Liquidation)) v Hindsight Contractors Ltd
...claim made by JCL against HCL is restitutionary: Hollicourt (Contracts) Ltd v Bank of Ireland [2001] Ch. 555 at [22]; Ahmed v Ingram [2018] EWCA Civ 519, [2018] B.P.I.R. 535 at [33]. In a case involving the payment of money the particular form of claim is in unjust enrichment, being the m......