AC v DC & Ors (Financial Remedy: Effect of s37 Avoidance Order) (No 1)

AC v DC & Ors (Financial Remedy: Effect of s37 Avoidance Order) (No 1)

An order under s37 Matrimonial Causes Act 1973 operates retrospectively to annul the impugned transactions ab initio for all legal purposes, including fiscal consequences, unless there are subsequent bona fide third party rights. There are no such third party rights in this case, so the transactions are void as if they never occurred.

Parties
Applicant: AC; 1st Respondent: DC; 2nd Respondent: D Foundation; 3rd Respondent: A Investments Ltd; 4th Respondent: B Investments Ltd; 5th Respondent: C Investments Ltd; 6th Respondent: D Investments Ltd; 7th Respondent: E Investments Ltd; 8th Respondent: F Investments Ltd; 9th Respondent: Z Trust Company Limited
Jurisdiction
England and Wales
Judgment Date
19 July 2012
Procedural Posture
Family/financial Remedy / Judgment After Application to Set Aside Transactions Under S37 Matrimonial Causes Act 1973
Outcome
Application granted; transactions set aside ab initio
Legal Topics
Avoidance of Disposition, Financial Remedies on Divorce, Effect of Set Aside Orders, Retrospective Effect of Orders, Tax Consequences of Voidable Transactions
Family Law Trusts and Equity Tax Law Avoidance of Disposition Financial Remedies on Divorce Effect of Set Aside Orders Retrospective Effect of Orders Tax Consequences of Voidable Transactions

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Parties

AC

Applicant

DC

1st Respondent

D Foundation

2nd Respondent

A Investments Ltd

3rd Respondent

B Investments Ltd

4th Respondent

C Investments Ltd

5th Respondent

D Investments Ltd

6th Respondent

E Investments Ltd

7th Respondent

F Investments Ltd

8th Respondent

Z Trust Company Limited

9th Respondent

Procedural Posture

Family/financial Remedy / Judgment After Application to Set Aside Transactions Under S37 Matrimonial Causes Act 1973

Legal Issues

  1. 1 Whether transactions intended to defeat financial remedy claims should be set aside under s37 MCA 1973
  2. 2 Whether a set aside order under s37 operates retrospectively to annul transactions ab initio for all legal (including fiscal) purposes

Ratio Decidendi

An order under s37 Matrimonial Causes Act 1973 operates retrospectively to annul the impugned transactions ab initio for all legal purposes, including fiscal consequences, unless there are subsequent bona fide third party rights. There are no such third party rights in this case, so the transactions are void as if they never occurred.

Court Disposition

Application granted; transactions set aside ab initio

Orders

  • The transfer by the First Respondent of his 86.24% shareholding in D (Holdings) Ltd to the Ninth Respondent is set aside under s37(2) MCA 1973.
  • Subsequent transmissions of those shares to the Second Respondent and then to the Third to Eighth Respondents are set aside under s37(3) MCA 1973.