Phillips v Brewin Dolphin Bell Lawrie

Phillips v Brewin Dolphin Bell Lawrie

Court	House of Lords
Citation(s)	[2001] UKHL 2, [2001] 1 BCLC 145
Court membership
Judge(s) sitting	Lord Steyn, Lord Hutton, Lord Hobhouse, Lord Millett and Lord Scott
Keywords
Voidable preference, undervalue transaction

Phillips v Brewin Dolphin Bell Lawrie [2001] UKHL 2 is a leading UK insolvency law case, concerning voidable transactions.

In this case, the court examined whether a series of arrangements could be understood as one "transaction" for the purposes of the Insolvency Act 1986. Ultimately, the court found that, for the purposes of insolvency law, It may be appropriate to consider details of a complex series of linked transactions to assess whether the transaction was undertaken at an ‘undervalue’.

Facts

Mr Phillips, the liquidator of AJ Bekhor & Co, sought to recover the £725,000 and interest for a business and asset that had been transferred to a subsidiary, which in turn was bought by Brewin Dolphin (asset management firm in London) through a share purchase for £1. The question was whether this constituted a transaction at an undervalue contrary to the Insolvency Act 1986 section 238. Brewin Dolphin contended that part of the agreement was that its parent company, Private Capital Group Ltd, would pay AJ Bekhor four yearly instalments of £312,000 for renting computer equipment. The covenant for the rental had been sublet to BD by AJB despite an absolute bar in the head lease.

The trial judge and the Court of Appeal^[1] refused to take the computer rental agreement into account, as part of consideration for the share transaction.

Judgment

The House of Lords held that the transaction was effected at an undervalue, was voidable under section 238. The computer rental agreement was taken as consideration for the deal, but when assessing its value, reality and not speculative values should not be taken into account. The collateral agreement was precarious, and worthless because the headlessors had immediately declared the transaction to be a repudiatory breach, and it therefore had no value to Brewin Dolphin.

Cases on recouping assets

Insolvency Act 1986 ss 127, 238-245, 423

Re Parkes Garage (Swadlincote) Ltd [1929] 1 Ch 139

Re Yeovil Glove Co Ltd [1965] Ch 148

Re Gray’s Inn Construction Co Ltd [1980] 1 WLR 711

Re MC Bacon Ltd [1990] BCLC 324

Arbuthnot Ltd v Havelet Ltd (No 2) [1990] BCC 36

Re Shoe Lace Ltd [1994] 1 BCLC 111

Phillips v Brewin Dolphin Bell Lawrie Ltd [2001] UKHL 2

Insolvency Act 1986 ss 212-215

Re Anglo-Austrian Printing Union [1985] 2 Ch 891

Re Produce Marketing Consortium Ltd (No 2) [1989] BCLC 520

Re Oasis Merchandising Services Ltd [1995] 2 BCLC 493

Re Purpoint Ltd [1991] BCC 121

Morphites v Bernasconi [2003] 2 WLR 1521

see Unlawful trading and UK insolvency law

UK insolvency law
R v McCredie [1999] EWCA Crim 2155; [2000] 2 BCLC 438

Notes

↑ [1999] 1 W.L.R. 2052

References

External links

This article is issued from Wikipedia - version of the 10/29/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.