Lloyd's Maritime and Commercial Law Quarterly
ENFORCEMENT OF JUDGMENTS AGAINST WEALTH STRUCTURES: RECEIVERS, TRUSTS, INSOLVENCY ACT 1986, S.423 AND MAREVA INJUNCTIONS
Steven Gee*
This article considers remedies leading to compelling satisfaction of a judgment, from assets in a wealth structure used by a judgment debtor, or assets produced by them, or from persons who have received such assets. These include (1) enforcement by equitable execution, (2) enforcement disregarding “sham” or invalid trusts or through an undisclosed legal power, (3) the effect of the Model Form of Freezing Injunction, and (4) use of the Insolvency Act 1986, s.423 to unwind transactions prejudicing creditors, including when to attribute to others a debtor’s purpose to prejudice creditors. It considers the relevance of a person having legal or de facto control of assets to the availability of these remedies.
I. PUBLIC POLICY AND TRANSFERS INTENDED TO PREJUDICE CREDITORS
There has been over centuries a strong public policy against transfers of wealth for the purpose of leaving creditors unpaid. This is reflected in legislation, and more recently developments on the appointment of receivers and of the Mareva injunction, and of when it is “just and convenient” to grant a remedy under the Senior Courts Act 1981, s.37(1). The safe giving of unsecured credit enables commerce. For business, cash is oxygen. The policies are upholding contracts, enabling domestic and international trade, and promoting the due administration of justice, with satisfaction of judgments not being evaded by unscrupulous debtors. These objectives underpin the legal developments.
Legislation in 13771 made transferred wealth available to creditors. The statute on fraudulent conveyances of 1571, 13 Eliz c.5, identified ways of fraud and abuse and the reasons for its enactment. Its torrential terms identified known methods. Lord Mansfield CJ said of this and 27 El c.4, making fraudulent conveyances and settlements void when attacked by creditors, “These statutes cannot receive too liberal a construction, or be too much extended in suppression of fraud”.2 The statute was replaced by the Law of Property Act 1925, s.172, a variant of which is in force in Australia, and then the Insolvency Act 1986, s.423.
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