Court's discretion to make no order despite transaction at undervalue (High Court)

On an application for relief on the basis of a transaction at an undervalue, the court may exercise its discretion to refuse to make an order, even if the statutory requirements of section 339 of the Insolvency Act 1986 have been met.

In Re the trustee in bankruptcy of Claridge [2011] EWHC 2047 (Ch), the court has found that a transfer of funds by an individual to his spouse was a transaction for consideration the value of which was significantly less than the value of the consideration provided, within the meaning of section 339(3)(c). However, in this case, it was just not to make an order for relief in favour of the trustee in bankruptcy.

This is an unusual decision, following a principle established in Singla v Brown [2007] EWHC 405 (Ch) (and, in the context of corporate insolvency, Re Paramount Airways Ltd (in administration) [1993] Ch 223)). (Re the trustee in bankruptcy of Claridge [2011] EWHC 2047 (Ch).