Chohan v Saggar and Another
| Jurisdiction | England & Wales |
| Judgment Date | 16 October 1991 |
| Date | 16 October 1991 |
| Court | Chancery Division |
Chancery Division
Insolvency - undervalue transaction - caught by statute
As long as the dominant purpose of a debtor in entering a transaction at an undervalue was for the purpose of putting assets beyond the reach of a creditor, the transaction was caught by section 423 of the Insolvency Act 1986, despite the existence of other possible motives for the transaction.
Mr Edward Evans-Lombe, QC, sitting as a deputy judge of the Chancery Division, so stated in a reserved judgment on October 7 setting aside a transfer of property made on November 17, 1987.
HIS LORDSHIP said that section 423 of the 1986 Act replaced section 172 of the Law of Property Act 1925 which had made voidable conveyances made "with intent to defraud creditors".
The new section removed the requirement of fraudulent intent replacing it in subsection (3) with the requirement that the transaction should have been entered into "for the purpose of" putting assets beyond the reach of or otherwise prejudicing the interests of a person. The removal of the requirement for fraudulent intent also removed the difficulty Lord Justice Cairns had felt in Lloyds Bank Ltd v MarcanWLR ([1973] 1 WLR 1387) in finding fraud without dishonesty.
The main issue was the construction of the words "for the purpose of" and in that respect his Lordship saw no reason to give section 423 of the 1986 Act a different construction from that given to section 172 of the 1925 Act in Marcan. Thus there had to be a...
To continue reading
Request your trial
-
B v IB
... ... and made shortly after W had presented her petition, named IB as executor together with another individual. His estate is left on trust for his surviving children. W receives nothing under the ... In Chohan v Saggar [1994] 1 BCLC 706, CA Nourse LJ explained that Parliament in enacting s423 had intended ... ...
-
Ram v Ram and Others
...vested in any person, either absolutely or for the benefit of all the persons on whose behalf the application is treated as made;" 14 In Chohan v Saggar [1994] 1 BCLC 706, 714 c-e, Nourse LJ explained the effect of section 423(2): "The object of ss 423 to 425 being to remedy the avoidance o......
-
Ramlort Ltd and Michael James Meston Reid [CA (Civil), 06/07/2004]
...should be granted. Judge Havelock-Allan QC recorded the acceptance by counsel for the purchaser, based on the decision of this court in Chohan v. Saggar [1994] 1 BCLC 706, that section 238(3) of the 1986 Act (which corresponds to section 339(2)) is to be interpreted as requiring restoration......
-
British Broadcasting Corporation and another v Sugar (No 2)
...of the statement represent a slender foundation for the bold and unequivocal terms in which it is couched. 50 The first authority is Chohan v Saggar [1992] BCC 306. There the High Court held that the power under section 423 of the Insolvency Act 1986 to set aside a transaction entered into......