Summary

The judge did not accept that because the proposed sale by the defendants of their business was bona fide it prevented the court from interfering. There was no reason in principal or for commercial common sense to fetter the court's jurisdiction to grant the continuation of a Mareva injunction if it considered it just and convenient to do so.

Facts

Application by the plaintiffs ('Customs') to continue a Mareva injunction restraining the defendant ('Anchor') from selling or disposing of its assets otherwise than in the course of business, and for ancillary relief. The application was made because Anchor had proposed to transfer the whole of its undertaking to a company of which it was a wholly owned subsidiary for #9 million, which, it contended, was the value of the undertaking. In consequence Anchor would have been left with one asset, namely cash of #9 million, and one overall liability, namely alleged arrears of customs duties amounting to #264 million. Customs claimed that the proposed sale price of #9 million was substantially lower than the real market value of the business. Anchor argued that it was inappropriate to invoke the Mareva injunction jurisdiction in circumstances where a defendant was proposing to effect a bona fide transfer of assets for a price fixed by reference to a full and considered valuation by an independent and respected firm of chartered accountants, and that, as neither s.238 nor s.423 Insolvency Act 1986 could be invoked to impugn the sale of the business for #9 million, the court had no jurisdiction to interfere with the transaction. The issues before the court were its jurisdiction to grant Mareva injunctions, the interrelationship between Mareva injunctions and the 1986 Act, and the discretion of the court regarding cross-undertakings in damages where the plaintiff was an emanation of the Crown.

Held

(1) On the evidence, there was a real prospect of the transfer causing the Commissioners a substantial loss. (2) Anchor's proposed sale of the business was a bona fide transaction at an price in accordance with the independent valuation of a top firm of chartered accountants, but this did not prevent the court from granting an injunction to stop the sale, if it considered that it would be appropriate to do so. (3) This was not a case of an arm's length sale by a defendant of an asset in the open market in the normal course of its business, but a transfer of the whole of Anchor's undertaking to a new company formed for that purpose and owned by the same person who owned Anchor. It was also a transfer effected because of the existence of the very claims upon which Custom's relied in the proceedings. (4) The provisions of s.238 and s.423 of the 1986 Act were of some assistance to Anchor on the question of discretion but did not go to the issue of jurisdiction. Section 238 was only available to a liquidator and was exercisable only in relation to transactions entered into within a specified period before the liquidation, while s.423 was only available where the transaction had a particular type of motive. (K/S A/S Admiral Shipping v Portlink Ferries Ltd (1984) 2 Lloyd's Rep 166 considered.) (5) If the injunction were to be granted, there was a real possibility of prejudice to Anchor. Nevertheless in all the circumstances justice and convenience would best be served by granting the injunction, provided that Customs gave a cross-undertaking in damages.

Injunction continued. Leave to appeal granted.