Summary
A gratuitous transfer from a parent to a child is presumed to be a gift, but the presumption may be rebutted by evidence of contrary intention. A gift may remain a gift even where it is made for a particular purpose.
For Insolvency Act 1986, section 423, the purpose of prejudicing creditors need not be dominant or exclusive. It must be a real and substantial purpose, positively intended rather than merely a consequence of the transaction. A claim under section 423 seeking recovery of money falls within the six-year limitation period in section 9 of the Limitation Act 1980.
Factual background
BTA claimed that £1.1 million transferred from an account held by Mukhtar Ablyazov and his son Madiyar to an account in Madiyar’s name was held on resulting trust for Mukhtar. Alternatively, BTA sought relief under section 423 of the Insolvency Act 1986, alleging that the transfer was made to prejudice creditors.
Madiyar sought a declaration that he owned the fund outright. The court considered the transfer’s purpose, the evidential significance of earlier judgments, the statutory-purpose test under section 423, and limitation under the Limitation Act 1980.
Held
- Trust claim dismissed. A gratuitous transfer from father to son is presumed to be a gift, subject to rebuttal by evidence showing that the transferor did not intend a gift. The contemporaneous documents, including the memorandum of gift and the arrangements for Madiyar’s investor visa, established that Mukhtar intended the transfer to be an irrevocable gift. A gift may be made for a particular purpose without ceasing to be a gift. The court rejected the argument that the intended investment of the money made the transfer inconsistent with an outright gift.
- Section 423 claim failed on purpose. Under section 423(3), the purpose of putting assets beyond creditors’ reach need not be the dominant or only purpose. It must, however, be a substantial purpose which positively motivated the transferor. A consequence or by-product is insufficient. The court accepted that Mukhtar would have made the transfer to enable Madiyar to obtain an investor visa even if no creditor claims were anticipated. The evidence therefore did not establish that prejudicing creditors was a substantial purpose.
- Limitation. Although unnecessary to the outcome, the court held that a section 423 claim seeking recovery of the transferred money was, in substance, a claim to recover a sum recoverable by statute and therefore fell within section 9(1) of the Limitation Act 1980, rather than section 8. The applicable period was six years. Had the claim been maintainable, section 32 would have postponed limitation because Madiyar claimed through Mukhtar and BTA could not reasonably have discovered the assumed fraud without exceptional measures.
- Madiyar was declared the owner of the fund.
The court’s approach to earlier authorities
Available to signed-in members.
Appeal route
- This judgment [2016] EWHC 3071 (Comm) High Court (Commercial Court)
- Appealed to[2018] EWCA Civ 1176Outcomeappeal dismissed (unanimously).
Key cases cited
12 authorities cited.
- R v Preddy (R v Dhillon, R v Slade) [1996] AC 815
- Hoyle v Rogers & Anor [2014] EWCA Civ 257
- Allison & Anor v Horner [2014] EWCA Civ 117
- Hill v Spread Trustee Company Ltd & Anor [2006] EWCA Civ 542
- Inland Revenue v Hashmi & Anor [2002] EWCA Civ 981
- Otkritie International Investment Management Ltd & Ors v Gersamia & Anor [2015] EWHC 821 (Comm)
- Zambia v Meer Care & Desai (a firm) & Ors [2007] EWHC 952 (Ch)
- Compagnie Noga D’Importation Et D’Exportation SA v Australia and New Zealand Banking Group Limited and ors [2005] EWHC 225 (Comm)
- Eddis v Chichester Constable [1969] 2 Ch 345
- Baker (G L) Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216
- Hollington v F Hewthorn & Co Ltd [1943] KB 587
- Re Priory Garage (Walthamstow) Limited
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Cases citing this case
5 later cases · 4 positive · 1 neutral
Most senior citing decisions:
- Republic of Korea v Elliott Associates, LP [2026] EWHC 368 (Comm) approved
- The Kingdom of Sweden v Max Emil Serwin (formerly known as Emil Amir Ingmanson) & Ors [2025] EWHC 1620 (Comm) applied
- Lakatamia Shipping Company Ltd v Chang Tai-Chou & Ors [2024] EWHC 1749 (Comm) followed
- Lakatamia Shipping Company Limited v Tseng Yu Hsia & Anor [2023] EWHC 3023 (Comm)
- PJSC NATIONAL BANK TRUST & Anor v BORIS MINTS & Ors [2022] EWHC 871 (Comm)
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