Invest Bank PSC v El-Husseini & Ors [2023] EWCA Civ 555 (19 May 2023)

Invest Bank PSC v El-Husseini & Ors [2023] EWCA Civ 555 (19 May 2023)

Section 423 Insolvency Act 1986 is capable of applying to acts by a debtor who causes a company he controls to enter into a transaction at undervalue, even if the asset is not beneficially owned by the debtor. The statutory language is broad and purposive, and does not require beneficial ownership or insolvency. The High Court judge erred in restricting the scope of section 423 to acts by the debtor in a personal capacity or to assets beneficially owned by him.

Citation
[2023] EWCA Civ 555
Parties
Claimant/appellant: Invest Bank PSC; Defendant/respondent: Ahmad Mohammad El-Husseini; Defendant/respondent: Mohammed Ahmad El-Husseiny; Defendant/respondent/appellant: Alexander Ahmad El-Husseiny; Defendant/respondent/appellant: Ziad Ahmad El-Husseiny; Defendant/respondent: Ramzy Ahmad El-Husseiny; Defendant/respondent: Joan Eva Henry; Defendant/respondent: Virtue Trustees (Switzerland) AG; Defendant/respondent: Global Green Development Limited
Jurisdiction
England and Wales
Judgment Date
19 May 2023
Procedural Posture
Appeal From High Court (commercial Court) / Preliminary Applications; Permission to Amend Pleadings; Jurisdictional Challenge
Outcome
Bank's appeal allowed; Defendants' appeal dismissed.
Legal Topics
Transactions at Undervalue, Debt Avoidance, Beneficial Ownership, Statutory Interpretation, Section 423 Insolvency Act 1986
Insolvency Company Law Civil Procedure Transactions at Undervalue Debt Avoidance Beneficial Ownership Statutory Interpretation Section 423 Insolvency Act 1986

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Parties

Invest Bank PSC

Claimant/appellant

Ahmad Mohammad El-Husseini

Defendant/respondent

Mohammed Ahmad El-Husseiny

Defendant/respondent

Alexander Ahmad El-Husseiny

Defendant/respondent/appellant

Ziad Ahmad El-Husseiny

Defendant/respondent/appellant

Ramzy Ahmad El-Husseiny

Defendant/respondent

Joan Eva Henry

Defendant/respondent

Virtue Trustees (Switzerland) AG

Defendant/respondent

Global Green Development Limited

Defendant/respondent

Procedural Posture

Appeal From High Court (commercial Court) / Preliminary Applications; Permission to Amend Pleadings; Jurisdictional Challenge

Legal Issues

  1. 1 Whether a debtor can enter into a transaction within section 423 Insolvency Act 1986 when acting solely as the organ of a company
  2. 2 Whether section 423 applies to assets not beneficially owned by the debtor

Ratio Decidendi

Section 423 Insolvency Act 1986 is capable of applying to acts by a debtor who causes a company he controls to enter into a transaction at undervalue, even if the asset is not beneficially owned by the debtor. The statutory language is broad and purposive, and does not require beneficial ownership or insolvency. The High Court judge erred in restricting the scope of section 423 to acts by the debtor in a personal capacity or to assets beneficially owned by him.

Court Disposition

Bank's appeal allowed; Defendants' appeal dismissed.

Orders

  • Permission granted to Bank to pursue section 423 claims as pleaded.
  • Permission to amend Particulars of Claim upheld.