Delaney v Chen and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Carnwath,Lord Justice Sullivan |
| Judgment Date | 16 November 2010 |
| Neutral Citation | [2010] EWCA Civ 1455 |
| Docket Number | Case No: A3/2010/0533 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 November 2010 |
[2010] EWCA Civ 1455
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION,
BIRMINGHAM DISTRICT REGISTRY
(His Honour Judge Purle QC)
Before: Master of the Rolls
(Lord Neuberger)
Lord Justice Carnwath
and
Lord Justice Sullivan
Case No: A3/2010/0533
Mr Alper Riza QC (instructed under the Direct Access Scheme) appeared on behalf of the Appellants
Mr Mark Anderson QC (instructed by Wilkes Partnership) appeared on behalf of the Respondent.
(As Approved)
Lord Neuberger MR:
This is an appeal against a decision of His Honour Judge Purle QC sitting in the Birmingham District Registry of the Chancery Division. He allowed an appeal brought by Mr Paul Delaney in circumstances where Mr Delaney had been found by the District Judge to have been party to a transaction which fell foul of section 423(1)(c) of the Insolvency Act 1986.
The factual background to the case is somewhat complicated and does not need to be set out in any detail. The appellants, Mrs Chen and Mr Du, were in partnership with a Mrs Chiu and Mr Ding, and they fell out. The effect was that the appellants obtained judgment against Mrs Chiu and Mr Ding (“the debtors”) and, shortly before a charging order would have been obtained, the debtors entered into a transaction, which is the transaction which is sought to be impugned under section 423, with Mr Delaney. That transaction involved them selling their freehold, of their home, 10 Pioneer Close, Simpson Manor, which was subject to a mortgage which was in the region of £169,000, to Mr Paul Delaney for £210,000 and taking a leaseback of the property. The leaseback was on its face a rather unusual arrangement. It provided for a fixed rent of £500 per calendar month, it was for a term from 8 May 2008 until 9 May 2029 (albeit that the word “May” between “9th day of” and “2029” had been left out), and it was absolutely unassignable.
The applicants began proceedings against the debtors and Mr Delaney to set aside the transaction under the provisions of section 423 1(c), which provides as follows:
“(1) this section relates to transactions entered into at an undervalue and a person enters into such a transaction with another person if…
(c) he enters into a transaction with the other for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth of the consideration provided by himself.”
Subsection (2) states the court may make such order as it thinks fit, effectively undoing the transaction if satisfied that “a person has entered into such a transaction”. Section 423(3) provides:
“In the case of a person entering into such a transaction an order should only be made if the court is satisfied that it was entered into by him for the purpose –
(a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him; or
(b) of otherwise prejudicing the interests of such a person in relation to the claim that he is making or may make.”
The evidence put in by the appellants amounted to a contention or belief that the value of the property was £350,000, whereas the price paid for it, as recorded in the Land Registry on 8 May 2008, was £210,000.
Evidence was put in on behalf of the debtors, including a detailed witness statement from Mr Delaney who had purchased the property and had granted the leaseback. The lease, as I say, ran from 8 May 2008 when the sale of the property took place, put it was dated 1 May 2008.
The evidence of Mr Delaney was that he had been involved in equity release transactions with a number of people of middle or older age, selling the freehold of their homes to individuals or companies such as Mr Delaney in return for retaining a tenancy of the property until their death. He said he had been involved in a hundred of such transactions. He also set out the history of this matter so far as he understood it. He explained that the debtors had tried to enter into an equity release scheme with a company trading under the name of UK Property Buyers, and that they had then approached him, who already knew them, and eventually agreed the transaction which I have described. He attached documentation which showed that UK Property Buyers had made a not dissimilar proposal, albeit rather more disadvantageous to the debtors, that had been put to them in respect of the property. He also appended the draft proposed tenancy agreement which UK Property Buyers were in the habit of granting, and that draft granted an assured shorthold for a period of up to two years with a side letter saying that the occupier could remain in occupation thereafter and that the rent “can only increase by the rate of inflation at every two-year renewal”. Because it was an assured tenancy it would not have been assignable without the landlord's consent, which can be withheld arbitrarily: see section 15(1) and (2) of the Housing Act 1988.
Mr Delaney and the debtors also put in valuation evidence from Jonathan Carpenter, a chartered surveyor, who said that the value of the property “with the benefit of full vacant possession as at May 2008” was in the region of £275,000 and that the value of the property ...
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...Whether the transaction was at an undervalue is to be decided by looking at value from the point of view of SICA (see Delaney v Chen [2010] EWCA Civ 1455, [2011] B.P.I.R. 39 at [15]). SICA obviously did not receive any benefit from the sale of CHL's share. c) When deciding whether SICA, ac......
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Asertis Ltd v Mr Dale Heathcote
...by the Company (subsection (1)). The court looks at the value received from the point of view of the company: see Delaney v Chen [2010] EWCA Civ 1455 at 22 I would also have to be satisfied that the Company's purpose was either that of putting assets beyond the reach of a person who is mak......
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Payroller Ltd ((in Liquidation)) v Little Panda Consultants Ltd
...issue of whether value was provided for the transaction was to be considered from the point of view of the debtor: see Delaney v Chen [2010] EWCA Civ 1455 at [15]. They made an alternative case that, if Payroller had received any consideration, it was for a consideration which was significa......