Brigita Morina v Catherine Mairead McAleavey & Ors

Under Insolvency Act 1986, section 423, a claim or potential claim need not have a realistic prospect of success, or any particular degree of merit, to qualify as a claim. The relevant focus is the transferor’s subjective purpose when entering the transaction. A claim may be contingent, future or unknown, and no causative link between the transaction and prejudice is required.

The discretion to grant relief under section 423(2) is comparatively narrow. It concerns restoring the position and protecting victims, with only limited recognised principles of justice relevant. It cannot be used to reintroduce arguments that have failed at the statutory-purpose or victim stages, or to conduct a general balancing exercise concerning the parties’ circumstances.

The claimant sought to defend an alternative claim under section 423 of the Insolvency Act 1986 concerning transfers of shares in Key Platinum Holdings Limited. The Adult Children alleged that the transfers were made for the statutory purpose of putting assets beyond the reach of, or prejudicing the interests of, persons who might make claims against the transferor.

The claimant applied to strike out parts of her defence and sought permission to amend. She also sought permission to appeal case-management decisions refusing an additional disclosure issue and certain foreign-law expert evidence. The central questions concerned the meaning of “claim” under section 423(3), the scope of the statutory discretion, the relevance of later events and foreign convictions, and whether an issue estoppel arose from an earlier case-management judgment.

1. Strike out. The claimant’s contention that section 423(3) requires the relevant claim to have a realistic prospect of success, both as to outcome and enforcement, was clearly wrong in law. The word “claim” is not subject to that qualification. It may include a contingent, future or unknown claim. The merits of the claim may bear on whether the transferor had the statutory purpose, but they are not a qualifying condition for section 423(3) (paras [71]-[110]).
2. The focus of section 423(3) is the transferor’s subjective purpose at the time of the transaction. The statute does not require a causative link between the transaction and the prejudice. The transaction must have been entered into for the prohibited purpose, but it need not itself be sufficient to cause the prejudice (paras [81]-[99]).
3. The pleaded case that foreign public-law claims were excluded because they would be unenforceable in England as a matter of public policy was likewise unsustainable. That principle did not disqualify such claims from being claims under section 423(3), nor prevent the statutory purpose from existing (paras [123]-[127]).
4. The claimant’s wider case that the claims lacked merit, and that this could affect the inference as to the transferor’s purpose, was in principle arguable and suitable for trial. Later events were not necessarily irrelevant if capable of throwing light on the position at the relevant dates. However, specific occasions on which legal advice was received had to be pleaded with appropriate particularity (paras [112]-[122]).
5. A foreign criminal conviction was inadmissible as evidence of the facts found in it. It could prove no more than the bare fact of conviction on the pleaded case. Permission to add that material was refused (paras [128]-[133]).
6. The concept of a victim under section 423(5) is wide. It can include a person whose prejudice arises only after the prospect of the relevant claim has ended. Permission to plead the contrary contention was refused (paras [134]-[143]).
7. The discretion under section 423(2) is narrow and focuses on property claims, restoration and protection of victims. It does not permit a general balancing exercise, reconsideration of whether a person is a victim, or reliance on the merits of the underlying claim, the disappearance of a claim, the absence of lifetime claims by beneficiaries, or the extent of provision made for them (paras [144]-[158]).
8. Permission to appeal was refused. The Deputy Master had relied on both the correct legal approach to section 423 and independent case-management reasons. There was no real prospect of success or other compelling reason for an appeal. The court also held, in any event, that the earlier judgment had created an issue estoppel preventing reliance on the realistic-claim argument (paras [159]-[211]).
9. The strike-out application succeeded in part. The April 2023 amendment application succeeded in part, subject to the stated conditions and exclusions. Permission to appeal was refused (paras [202]-[208]).

The claimant sought permission to appeal against the Deputy Master’s October 2022 case-management order. The High Court refused permission to appeal. The substantive appeal therefore did not proceed; the judge stated that, if permission had been granted, it would have been dismissed.