Case Law

Pathania v Tashie-Lewis and another (Judgment date 8 March 2021)

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The proceedings concerned a claim for relief under s 423 of the Insolvency Act 1986 (IA 1986).

In 2007 or 2008, the first defendant owned a property (number 36) in Essex. He was then a mortgage broker or introducer working from the same premises as the claimant, from whom he rented office space at another address in London where the claimant and with his wife ran a solicitor's practice. The first defendant referred conveyancing transactions to the claimant, and they were friends.

The first defendant decided to demolish number 36 and build two new properties, known as 36 and 36A. He needed funds and the claimant agreed to provide them. The properties had separate registered titles.

The claimant was, subsequently, adjudged bankrupt. He became aware that 36A was sold to Ms O and he contended that that sale had been at an undervalue and should be set aside under s 423. A judge held that the sale had been at an undervalue, but that it had resulted in no loss. The claimant successfully appealed.

The first defendant sold number 36 to the second defendant for £195,000. That sale price was agreed as representing the then market value. The claimant claimed against the second defendant, pursuant to s 423, to the extent of the undervalue which he originally said was £48,750, plus interest of about £40,000. Essentially, the claimant contended that the £48,750 had only been superficially paid by, or on behalf of, the second defendant and that that sum had been repaid to the first defendant. The second defendant denied that and contended that the sale had been entirely legitimate and above board.


No relief was sought against the first defendant and he played no part in the proceedings, save that he made a witness statement a few months after the proceedings had been commenced.




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