P (A Child) (Financial Provision: s 423 Insolvency Act 1986), Re

In Schedule 1 proceedings, the court may make broad-brush financial provision for a child after considering all relevant circumstances, including the parties’ resources, the child’s needs and the child’s standard of living. Where a payer gives materially deficient disclosure, the court may draw reasonable adverse inferences and estimate resources, but must avoid speculation and need not quantify assets where reliable quantification is impossible or disproportionate.

Section 423 of the Insolvency Act 1986 requires proof, on the balance of probabilities, of an undervalue transaction, a qualifying purpose of asset shielding or prejudice, and victim status. The purpose need only be one purpose. The court may make wide restorative orders, including against third parties, but cannot improve the victim’s position beyond that which would have existed absent the transaction.

The mother applied under Schedule 1 of the Children Act 1989 for housing, capital, maintenance, school fees and legal funding for P, aged seven. She also applied under section 423 of the Insolvency Act 1986 in respect of transactions by the father involving company shares, trust assets, property and cryptocurrency-mining hardware.

The father contended that he had disposed of his wealth and lacked resources. The paternal grandfather and the trustee of the T Trust were joined but took no active part in the final hearing. The central issues were the father’s true resources, the appropriate provision for P, and whether the transactions engaged the section 423 jurisdiction.

1. Schedule 1 provision. The court assessed the child’s housing, capital, educational and maintenance needs by reference to all the circumstances, including the father’s substantial resources, the mother’s means, the child’s welfare and the need to avoid excessive disparity between the parents’ homes. A broad-brush assessment was appropriate.
2. Disclosure and resources. The father had failed to provide full and frank disclosure. The court was entitled to draw reasonable adverse inferences and concluded that his resources were measured in tens of millions of pounds and sufficiently accessible to meet the claims. The court did not need to quantify every asset.
3. Section 423. The mother established that the relevant transfers were transactions at an undervalue, that asset shielding or prejudice was one purpose of the transactions, and that she was a victim because the transactions erected barriers to enforcement. The purpose did not need to be sole, dominant or directed specifically at the mother’s claim.
4. The transactions included the restructuring and transfer of company shares, transfers into the T Trust and a Liechtenstein foundation, the transfer of the father’s interest in the South West London property, and the gift of ASIC hardware. The court found that the principal purpose of these dispositions was to defeat creditors, including the mother.
5. The court made Schedule 1 orders comprising a £960,000 housing fund, £29,250 for other capital needs, £173,500 towards liabilities, maintenance of £5,000 per month, rent of £1,500 per month pending housing, school fees and £600,000 security. The section 423 claim was adjourned rather than immediately enforced. The freezing order remained in place until compliance with the capital orders.

First-instance decision. No appellate history was stated in the judgment.