Garden House Software Limited v Timothy Marsh & Ors

An application for reverse summary judgment or strike out should be assessed by reference to whether the claim has a real prospect of success or discloses reasonable grounds. A transaction under section 423 of the Insolvency Act 1986 may arguably be established where a company grants security without consideration, and the existence of security does not necessarily prevent an undervalue claim or the availability of statutory remedies. Whether consideration was provided, and the value of the relevant assets, may be matters for trial. A party may also abuse the process by raising serial interlocutory applications on points which could and should have been advanced earlier, absent a significant material change of circumstances or newly discovered facts.

The claimant, as assignee from the liquidator of Serisys Ltd, brought claims concerning the transfer of software intellectual property to Serisys Asset Holding Ltd and a later charge over that intellectual property. The claims included transactions at an undervalue and transactions defrauding creditors under sections 238 and 423 of the Insolvency Act 1986, together with claims arising from alleged breaches of duty and related conduct.

The first, second, sixth and seventh defendants applied for reverse summary judgment or strike out. They argued that the 2019 charge could not be a relevant transaction, was not at an undervalue, and barred the remedies sought. The claimant also contended that the application was an abuse of process because substantially similar issues could have been raised in an earlier interlocutory application.

1. The application was dismissed on the merits. The pleaded case had a real prospect of success and disclosed a reasonable basis for the relevant statutory claims.
2. The defendants’ reliance on El-Husseiny and another v Invest Bank PSC [2026] AC 1 did not establish that the claim was bound to fail. The claimant alleged that Serisys Asset Holding Ltd entered into the 2019 charge transaction and that Serisys Ltd, its liquidator or its creditors were victims because the charge impeded remedies or enforcement. That was at least arguable.
3. The reasoning in Re MC Bacon Ltd (No 1) [1999] B.C.C. 78 concerned a comparison where consideration was provided but was allegedly worth significantly less than the consideration given. The claimant instead alleged that no consideration was provided for the 2019 charge. Whether loan forbearance constituted consideration, and whether the transaction was at an undervalue, were matters for trial. Hill v Spread Trustee Co Ltd [2007] 1 WLR 2404 supported the conclusion that the pleaded case was arguable.
4. The existence of the 2019 charge did not necessarily bar relief concerning the earlier assignment. The charge might itself be set aside under section 241, and other remedies might be available under section 241(1)(d) of the Insolvency Act 1986. The absence of evidence about Hong Kong registration law was therefore not material to the application.
5. Independently, the application was an abuse of process. Applying Koza Ltd v Koza Altin Isletmeleri AS [2020] EWCA Civ 1018, interlocutory proceedings require parties generally to advance all reasonably available points at the first opportunity. The defendants identified no significant material change of circumstances or previously undiscoverable facts.
6. The defendants were ordered to pay the claimant’s costs of and incidental to the application, subject to written submissions on consequential matters.

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