AAZ v BBZ & Ors

Dispositions of assets may be set aside where the evidence shows that they were made at an undervalue, or for no consideration, as part of an attempt to evade financial liabilities and frustrate enforcement of the court’s orders. Newly created entities receiving the assets may be treated as ciphers or the alter egos of the judgment debtor where the circumstances support that inference. Assets transferred in this way remain available to satisfy the financial relief order.

The judgment dealt with developments following an earlier financial-relief judgment. The court had awarded the applicant substantial financial relief and had previously ordered the reversal of transactions involving assets transferred at an undervalue.

Evidence given by the respondent’s personal lawyer disclosed that a modern art collection and financial assets had recently been moved to newly established financial institutions in another European country. The issue was whether those further dispositions should be set aside so that the assets remained available for enforcement.

1. The court found that the transfer of the modern art collection and financial assets to newly established entities had been made at an undervalue or for no consideration. The transfers formed part of an attempt to hide assets, avoid liabilities and make enforcement more difficult.
2. The court inferred that the two recipient entities were closely connected and formed part of the same scheme. It further found that they were no more than ciphers and the alter egos of the respondent.
3. Applying the reasons given in the earlier financial-relief judgment, the court ordered that all dispositions of the assets to the recipient entities in or around November 2016 be set aside. The assets therefore vested in the respondent and remained immediately available to enforce the applicant’s financial-relief award.