The trial largely focussed on a single question: whether the Defendant transferred assets to and for the benefit of his family for the purpose of putting them beyond the reach of the Bank as a potential creditor?

The Defendant’s debt arose from judgments obtained by the Bank in Abu Dhabi on his personal guarantees, with default judgment subsequently entered in England on common law debt actions based upon those Abu Dhabi judgments. No part of the debt had been paid. The Bank sought to advance the case at trial that the Defendant was concerned about potential claims by the Bank on his personal guarantees as a result of the fact that one of his companies was balance sheet insolvent or had serious liquidity problems in late 2016/early 2017, and that was why he transferred his assets to his family members.

The Court concluded that a clear pleading of a sufficiently cogent case is required in respect of a claim that a defendant has entered into a transaction to defraud creditors under section 423 of the Insolvency Act 1986 (UK). The contention in this case of disreputable conduct or serious wrongdoing must be properly pleaded and proved. Quite apart from that, because the Bank’s case was inferential, and where particular elements of a cause of action are said to be established by inference from primary facts, the primary facts must also be pleaded.

While the Bank had pleaded that the Defendant’s company had ultimately failed by May 2017, it did not plead the case it sought to run at trial that the company was in serious financial difficulties before that date. It was not therefore open to the Bank to advance the unpleaded claim and its case was dismissed.

Harneys does not advise on the law of England and Wales, but this judgment will be persuasive in common law jurisdictions such as the BVI. The equivalent statutory provision in the BVI is section 81 of the Conveyancing and Law of Property Act, which provides that every conveyance of property with intent to defraud creditors is voidable.

This case is a salutary reminder of ensuring allegations are properly pleaded.