BROWN & Anor THE JOINT ADMINISTRATORS OF QUESTWAY AGAINST PELOSI JOINT ADMINISTRATORS OF OCEANCROWN Ltd & Ors [2015] ScotCS CSIH_12 (13 February 2015)

BROWN & Anor THE JOINT ADMINISTRATORS OF QUESTWAY AGAINST PELOSI JOINT ADMINISTRATORS OF OCEANCROWN Ltd & Ors [2015] ScotCS CSIH_12 (13 February 2015)

The court held that no consideration was paid for the alienation of the four properties at 110, 210, 260 Glasgow Road and 64 Roselea Drive. The payment to AIB was for the sale of 278 Glasgow Road only, and the subsequent transfers of the other properties were gratuitous. The defenders failed to prove that adequate consideration was given for the challenged alienations, and the transactions were devices to divert assets from creditors, not commercial transactions for value.

Citation
[2015] ScotCS CSIH_12
Parties
Pursuers and Respondents: Alan Alexander Brown and John Bruce Cartwright, the Joint administrators of Questway Limited, Oceancrown Limited, and Loanwell Limited; Defender and Reclaimer (ca25/13): Norman Ralph Pelosi Junior; Defender and Reclaimer (ca26/13 and Ca27/13): Stonegale Limited
Jurisdiction
Scotland
Judgment Date
13 February 2015
Procedural Posture
Reclaiming Motion (appeal) / Appellate Judgment (inner House, Court of Session)
Outcome
All three reclaiming motions refused.
Legal Topics
Challengeable Transactions, Adequate Consideration, Reduction of Alienation, Administration of Companies, Gratuitous Alienation
Insolvency Company Law Property Law Challengeable Transactions Adequate Consideration Reduction of Alienation Administration of Companies Gratuitous Alienation

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Parties

Alan Alexander Brown and John Bruce Cartwright, the Joint administrators of Questway Limited, Oceancrown Limited, and Loanwell Limited

Pursuers and Respondents

Norman Ralph Pelosi Junior

Defender and Reclaimer (ca25/13)

Stonegale Limited

Defender and Reclaimer (ca26/13 and Ca27/13)

Procedural Posture

Reclaiming Motion (appeal) / Appellate Judgment (inner House, Court of Session)

Legal Issues

  1. 1 Whether the alienations of heritable properties by Oceancrown, Loanwell, and Questway were made for adequate consideration under section 242(4)(b) of the Insolvency Act 1986
  2. 2 Whether payment to a secured creditor (AIB) constituted adequate consideration for the transfer of properties to related parties

Ratio Decidendi

The court held that no consideration was paid for the alienation of the four properties at 110, 210, 260 Glasgow Road and 64 Roselea Drive. The payment to AIB was for the sale of 278 Glasgow Road only, and the subsequent transfers of the other properties were gratuitous. The defenders failed to prove that adequate consideration was given for the challenged alienations, and the transactions were devices to divert assets from creditors, not commercial transactions for value.

Court Disposition

All three reclaiming motions refused.

Orders

  • Decree of reduction in respect of two dispositions by Oceancrown and one by Loanwell affirmed.
  • Order for payment of £125,000 in favour of Questway affirmed.