Taylor vs Savik and Ryle

This case involved an Insolvency Act application by the trustee in bankruptcy of the second respondent, seeking orders related to property alleged to have been purchased with funds provided by the bankrupt.

TLDR:

• Trustee in bankruptcy filed an application under the Insolvency Act.
• Application involved allegations of sham transactions and fraud on creditors.
• The court had to consider the impact of a restraint order under the Proceeds of Crime Act 2002.
• The court decided to stay parts of the proceedings pending further developments.

The case was heard in the County Court at Bristol, with HHJ Paul Matthews presiding. The applicant, Tracy Ann Taylor, was represented by Steven Fennell from Irwin Mitchell, while the first respondent, Olga Savik, was represented by Dale Timson from Direct Access. The second respondent, Philip Ryle, represented himself.

The dispute arose from an Insolvency Act application by the trustee in bankruptcy of the second respondent, seeking orders related to a property registered in the name of the first respondent. The trustee alleged that the property was purchased with funds provided by the second respondent, who had been adjudicated bankrupt.

The trustee's application was based on three grounds: the doctrine of sham, a transaction at an undervalue under section 339 of the Insolvency Act 1986, and fraud on creditors under section 423 of the same Act. The first respondent made an informal application to dismiss the claims related to the transaction at an undervalue and fraud on creditors at the outset of the trial.

The background to the case included the second respondent's involvement in stamp dealing and related products, his subsequent bankruptcy, and a restraint order under the Proceeds of Crime Act 2002. The trustee argued that the second respondent made a tainted gift to the first respondent, and that the property in question was subject to a restraint order, which impacted the court's ability to make orders under sections 339 and 423 of the Insolvency Act.

The court had to consider whether to proceed with the application despite the restraint order. The trustee submitted that the court should continue with the application, make findings of fact, and potentially stay the proceedings until the restraint order was discharged. The first respondent argued that the application should be dismissed outright for the claims related to the transaction at an undervalue and fraud on creditors.

HHJ Paul Matthews referred to relevant case law, including the Supreme Court decision in Aquila Advisory Ltd v Faichney and the Court of Appeal decision in Ahmet v Tatum. The court noted that while there was a statutory prohibition on making certain orders under the Insolvency Act due to the restraint order, it was not absolute and depended on the timing of the restraint order's discharge.

The court decided that it would be inappropriate to proceed with the trial of the claims related to the transaction at an undervalue and fraud on creditors, given the current restraint order. Instead, the court opted to stay these parts of the proceedings pending the outcome of the sham transaction claim and any further developments in the Proceeds of Crime Act proceedings.

The decision highlighted the complexities of dealing with overlapping insolvency and criminal proceedings, and the importance of considering statutory prohibitions and relevant case law in making procedural decisions.

Legal representatives: Steven Fennell (instructed by Irwin Mitchell) for the Applicant, Dale Timson (instructed by Direct Access) for the First Respondent, The Second Respondent in person.

Judicial Panel: HHJ Paul Matthews

Case Citation Reference: [2024] EW Misc 18 (CC)