The interaction between a transaction to defraud claim and previous proceedings

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Court allows claimant to pursue transaction to defraud claim, notwithstanding a similar previous claim having been unsuccessful.

On 7 April 2011 Mr W senior killed his wife and was convicted of her murder on 19 December 2011.  On 21 November 2011 Mr W had executed a transfer form in favour of his son in respect of his beneficial interest in various properties.

The deceased’s sister brought a civil claim for damages against Mr W for the unlawful killing and obtained judgment in default of £1.5m.  The judgment creditor sought a declaration that the transfer form was invalid but did not rely on a transaction to defraud claim pursuant to section 423 of the Insolvency Act 1986 and the application failed.

Subsequently, a section 423 claim was issued by the same judgment creditor.  The question then arose as to whether this was an abuse of process as the judgment creditor was seeking to re-open its challenge to the validity of the transfer by introducing a cause of action it should have raised on the earlier application.

The law in this area is complex.  In this case, the court concluded that there was no abuse of process as the section 423 point had clearly not already been litigated between the parties. 

However, when pursuing proceedings, a claimant office holder should think carefully about all claims available and plead the claim as widely as possible to mitigate the risk that a route of recovery is missed and is then subsequently “res judicata” and is not available to be pursued.

Deansgate 123 LLP v Workman [2019] EWHC 2

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