The claimant companies, both in liquidation, had substantial debts owing to HMRC. They brought a claim against a director of each of them, alleging that the director had transferred property to their parent companies at a substantial undervalue in breach of his director’s duties with a view to evading tax. The claim was dismissed at first instance and appealed.
The principal issue which the appeal court considered was the lower court’s findings of fact in respect of dishonesty on the part of the director. The lower court had not found the director to be dishonest and concluded that the director had transferred the properties at what he believed to be market value. Therefore, the court found there was no evidence that the director had, in breach of his director's duties and with a view to evading tax, agreed to the transfer of the two properties at a substantial undervalue.
The appeal court found that the first instance judge was justified in his approach and reaching the conclusions that he did based on the evidence before him. The appeal court acknowledged that a different judge may have come to a different finding of fact, but that was not the point.
Overall, the court concluded that there was not a sufficient basis for it to interfere with the findings of the lower court and the appeal was dismissed.
Carey Street Investments Ltd (In Liquidation) v Brown [2024] EWCA Civ 571
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