Abstract:
A recent case offers an opportunity to consider two types of impeachable
dispositions in insolvency law. One is the transfer of a trader’s business
under section 34(1) of the Insolvency Act, and the other is the commonlaw
actio Pauliana from which the entire law of impeachable dispositions
derives. In the first place, the nature of the application is characterised as
an attempt to reverse the transfer of the business and assets. A common
feature of section 34(1) and the actio Pauliana is spotted: they straddle
sequestration or winding-up. Compliance with sections 34(1) and (2) of the
Insolvency Act is discussed, and the trader’s celebration of doing so is then
ruined by the pervasive menace of the actio Pauliana, the defence of
necessity supplying a sword to cut the Gordian knot. The central insight of
the judgment about section 34(1) – the relative meaning of the word
“void” – is shown to be well-articulated by a widely followed juristic insight
into administrative validity. Some of the finer details of the ambit of the
word “void” are then teased out. The uneasy relationship between section
34(1) and sections 26, 29, 30, and 31 of the Insolvency Act and the actio
Pauliana is explored, and an answer to a dilemma over the application of
section 34(1) ventured. As for applying the requirements of the actio
Pauliana to the facts, a comprehensive, nuanced approach considering
both the two relevant possibilities is proposed, rather than the single
choice plumped for in the judgment apparently because it is the more
usual one. The closing remarks underline the wisdom of thoroughly
planning, discussing, and creating a Plan B for the client in the pleadings
and executing the procedural requirements and administration.
