Lord v Sinai Securities Ltd & Ors [2004] EWHC 1764 (Ch) (21 July 2004)

Lord v Sinai Securities Ltd & Ors [2004] EWHC 1764 (Ch) (21 July 2004)

The liquidator's application under section 238 should not be struck out at this stage as there is a real prospect of establishing the transaction was at an undervalue and that the statutory defence under section 238(5) may not apply. However, the application under section 239 is doomed to fail as neither Sinai nor Mr Smith was a connected person within the statutory definition, and the argument that Mr Smith was a shadow director is unsustainable.

Citation
[2004] EWHC 1764 (Ch)
Parties
Claimant: Jonathan Guy Lord (the liquidator of Rosshill Properties Limited (in liquidation)); First Defendant: Sinai Securities Limited; Second Defendant: Ronald Smith; Third Defendant: Spread Trustee Company Limited; Fourth Defendant: Philip Carruthers; Fifth Defendant: Charles Joseph McHugh; Sixth Defendant: Ralph Dieter Sacki; Seventh Defendant: John Carnell; Eighth Defendant: Jacqueline Carnell; Ninth Defendant: Mukesh Nanubani Desai; Tenth Defendant: Alexander Ragonesi; Eleventh Defendant: Hayle Harbour Company Limited
Jurisdiction
England and Wales
Judgment Date
21 July 2004
Procedural Posture
Insolvency Application / Interlocutory Application to Strike Out or Dismiss Liquidator's Claim
Outcome
Application to strike out section 238 claim refused; section 239 claim struck out.
Legal Topics
Transaction at an Undervalue, Preference, Liquidation, Shadow Director, Corporate Governance
Insolvency Company Law Transaction at an Undervalue Preference Liquidation Shadow Director Corporate Governance

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 8 Party arguments 2 Amounts and remedies 6
Sign in to unlock

Parties

Jonathan Guy Lord (the liquidator of Rosshill Properties Limited (in liquidation))

Claimant

Sinai Securities Limited

First Defendant

Ronald Smith

Second Defendant

Spread Trustee Company Limited

Third Defendant

Philip Carruthers

Fourth Defendant

Charles Joseph McHugh

Fifth Defendant

Ralph Dieter Sacki

Sixth Defendant

John Carnell

Seventh Defendant

Jacqueline Carnell

Eighth Defendant

Mukesh Nanubani Desai

Ninth Defendant

Alexander Ragonesi

Tenth Defendant

Hayle Harbour Company Limited

Eleventh Defendant

Procedural Posture

Insolvency Application / Interlocutory Application to Strike Out or Dismiss Liquidator's Claim

Legal Issues

  1. 1 Whether the transaction between Rosshill and Sinai was at an undervalue under section 238 of the Insolvency Act 1986
  2. 2 Whether the transaction constituted a preference under section 239 of the Insolvency Act 1986
  3. 3 Whether the court should exercise its discretion to make an order under section 238(3)

Ratio Decidendi

The liquidator's application under section 238 should not be struck out at this stage as there is a real prospect of establishing the transaction was at an undervalue and that the statutory defence under section 238(5) may not apply. However, the application under section 239 is doomed to fail as neither Sinai nor Mr Smith was a connected person within the statutory definition, and the argument that Mr Smith was a shadow director is unsustainable.

Court Disposition

Application to strike out section 238 claim refused; section 239 claim struck out.

Orders

  • Liquidator's claim under section 238 may proceed to trial.
  • Liquidator's claim under section 239 is dismissed.