Brown & Anor (Joint Administrators of Oceancrown Ltd) v Stonegale Ltd [2013] ScotCS CSOH_189 (11 December 2013)

Brown & Anor (Joint Administrators of Oceancrown Ltd) v Stonegale Ltd [2013] ScotCS CSOH_189 (11 December 2013)

No consideration was paid for the dispositions of 110, 210, 260 Glasgow Road and 64 Roslea Drive; the payment to the bank was solely for the sale of 278 Glasgow Road and not for the other properties; the subsequent reduction in indebtedness and discharge of securities does not constitute consideration for the challenged dispositions; the loan agreement is a sham and does not evidence any genuine transaction; therefore, the dispositions are gratuitous alienations and fall to be reduced.

Citation
[2013] ScotCS CSOH_189
Parties
Pursuers: Alan Alexander Brown and John Bruce Cartwright, the joint administrators of Oceancrown Limited; Defenders: Stonegale Limited
Jurisdiction
Scotland
Judgment Date
11 December 2013
Procedural Posture
Civil / Judgment After Proof (trial)
Outcome
Reduction of dispositions granted; orders for re-transfer and repayment issued.
Legal Topics
Gratuitous Alienation, Reduction of Dispositions, Adequate Consideration, Sham Transactions, Cross Guarantees, Bank Security Discharge
Insolvency Property Law Company Law Gratuitous Alienation Reduction of Dispositions Adequate Consideration Sham Transactions Cross Guarantees +1 more

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Parties

Alan Alexander Brown and John Bruce Cartwright, the joint administrators of Oceancrown Limited

Pursuers

Stonegale Limited

Defenders

Procedural Posture

Civil / Judgment After Proof (trial)

Legal Issues

  1. 1 Whether the alienations of 110, 210 and 260 Glasgow Road, Rutherglen and 64 Roslea Drive, Glasgow were made for adequate consideration under section 242 of the Insolvency Act 1986
  2. 2 Whether the loan agreement between Strathcroft and Stonegale was genuine or a sham

Ratio Decidendi

No consideration was paid for the dispositions of 110, 210, 260 Glasgow Road and 64 Roslea Drive; the payment to the bank was solely for the sale of 278 Glasgow Road and not for the other properties; the subsequent reduction in indebtedness and discharge of securities does not constitute consideration for the challenged dispositions; the loan agreement is a sham and does not evidence any genuine transaction; therefore, the dispositions are gratuitous alienations and fall to be reduced.

Court Disposition

Reduction of dispositions granted; orders for re-transfer and repayment issued.

Orders

  • Reduce the dispositions of 110 and 260 Glasgow Road, Rutherglen, and order the defenders to execute dispositions of the subjects to the pursuers within 21 days, failing which, warrant is granted to the Deputy Principal Clerk of Session to execute and deliver dispositions in appropriate terms.
  • A similar order to be made in the proceedings concerning the disposition of 210 Glasgow Road granted by Loanwell.