Key Facts
- •Kamran Malik appealed against a final charging order (FCO) made against his beneficial interest in a property.
- •Malik argued he divested himself of the interest via a trust deed in favour of his children.
- •The judge accepted the trust deed was genuine but used Section 423 of the Insolvency Act 1986 to set it aside.
- •Malik's application to amend his grounds of appeal to include a statute-barred argument was refused.
- •The appeal focused on the interpretation of Section 423(3) of the Insolvency Act 1986.
- •The judge found that Malik had entered into the trust deed with the purpose of protecting the property from future creditors.
Legal Principles
Section 423 of the Insolvency Act 1986 allows the court to set aside transactions entered into at an undervalue if done for the purpose of putting assets beyond the reach of creditors or prejudicing their interests.
Insolvency Act 1986, Section 423
In Section 423, 'purpose' is distinct from 'effect' or 'foreseeability'. The prohibited purpose need only be a purpose, not the sole or dominant purpose.
JSC BTA Bank v Ablyazov [2018] EWCA Civ 1176
Statutory interpretation involves considering the plain meaning of words, statutory context, functional construction, mischief, and the eiusdem generis rule.
Various case law and statutory interpretation principles
Section 423(3) does not require the transferor to have knowledge of specific creditors; the focus is on the purpose of the transaction.
This case's judgment
Outcomes
The appeal was dismissed.
The court rejected Malik's interpretation of Section 423(3), finding that it does not require knowledge of specific creditors for the section to apply. The judge's finding that Malik acted with a prohibited purpose was upheld.