Lord v Sinai Securities Ltd & Ors

Lord v Sinai Securities Ltd & Ors

The liquidator's claim under section 238 should not be struck out as there is a real prospect of establishing a transaction at an undervalue and that the statutory defence may not apply; however, the claim under section 239 is doomed to fail as neither Sinai nor Mr Smith was a connected person and the statutory definition of shadow director is not met.

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 dismissed; section 239 claim struck out.
Legal Topics
Transaction at an Undervalue, Preference, Liquidator's Powers, Connected Persons, Shadow Director, Restoration of Position
Insolvency Law Company Law Transaction at an Undervalue Preference Liquidator's Powers Connected Persons Shadow Director Restoration of Position

Case Brief

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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 claim under section 238 should not be struck out as there is a real prospect of establishing a transaction at an undervalue and that the statutory defence may not apply; however, the claim under section 239 is doomed to fail as neither Sinai nor Mr Smith was a connected person and the statutory definition of shadow director is not met.

Court Disposition

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

Orders

  • Liquidator may proceed with section 238 claim against Sinai.
  • Liquidator's section 239 claim is dismissed and may not proceed to trial.