| Phillips v Brewin Dolphin Bell Lawrie Ltd | |
|---|---|
| Court | House of Lords |
| Citation(s) | [2001] UKHL 2, [2001] 1 BCLC 145 |
| Judge(s) sitting | Lord Steyn, Lord Hutton, Lord Hobhouse, Lord Millett and Lord Scott |
| Keywords | |
| Voidable preference, undervalue transaction | |
Phillips v Brewin Dolphin Bell Lawrie Ltd [2001] UKHL 2 is a leading UK insolvency law case, concerning voidable transactions.
So this shows the consideration for a transaction can be provided by various parties. It can be appropriate to consider details of a complex series of linked transactions to assess any ‘undervalue’. The transaction here was.
Contents |
Mr Phillips, the liquidator of AJ Bekhor & Co, sought to recover the £725,000 and interest for a business and asset that had been transferred to a subsidiary, which in turn was bought by Brewin Dolphin through a share purchase for £1. The question was whether this constituted a transaction at an undervalue contrary to the Insolvency Act 1986 section 238. Brewin Dolphin contended that part of the agreement was that it would pay AJ Bekhor four yearly instalments of £312,000 for renting computer equipment. The covenant for the rental had been sublet to BD by AJB despite an absolute bar in the head lease.
The trial judge and the Court of Appeal[1] refused to take the computer rental agreement into account, as part of consideration for the share transaction.
The House of Lords held that the transaction was effected at an undervalue, was voidable under section 238. The computer rental agreement was taken as consideration for the deal, but when assessing its value, reality and not speculative values should not be taken into account. The collateral agreement was precarious, and worthless because the headlessors had immediately declared the transaction to be a repudiatory breach, and it therefore had no value to Brewin Dolphin.
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