“This section relates to transactions entered into at an undervalue; and a person enters into such a transaction with another person if— … (c) he enters into a transaction with the other for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by himself.” (2) That it was a “victim” of this transaction. Section 424(1) identifies three classes of person who may apply under section 423. The first two classes are, for present purposes, immaterial. New Media contended it fell within the third class. Section 424(1) provides in this regard: “An application for an order under section 423 shall not be made in relation to a transaction except— … (c) in any other case, by a victim of the transaction.”
“(a) restoring the position to what it would have been if the transaction had not been entered into, and (b) protecting the interests of persons who are victims of the transaction.”
“(1) Without prejudice to the generality of section 423, an order made under that section with respect to a transaction may (subject as follows)- (a) require any property transferred as part of the transaction to be vested in any person, either absolutely or for the benefit of all the persons on whose behalf the application for the order is treated as made; (b) require any property to be so vested if it represents, in any person's hands, the application either of the proceeds of sale of property so transferred or of money so transferred; (c) release or discharge (in whole or in part) any security given by the debtor; (d) require any person to pay to any other person in respect of benefits received from the debtor such sums as the court may direct; (e) provide for any surety or guarantor whose obligations to any person were released or discharged (in whole or in part) under the transaction to be under such new or revived obligations as the court thinks appropriate; (f) provide for security to be provided for the discharge of any obligation imposed by or arising under the order, for such an obligation to be charged on any property and for such security or charge to have the same priority as a security or charge released or discharged (in whole or in part) under the transaction. (2) An order under section 423 may affect the property of, or impose any obligation on, any person whether or not he is the person with whom the debtor entered into the transaction; but such an order- (a) shall not prejudice any interest in property which was acquired from a person other than the debtor and was acquired in good faith, for value and without notice of the relevant circumstances, or prejudice any interest deriving from such an interest, and (b) shall not require a person who received a benefit from the transaction in good faith, for value and without notice of the relevant circumstances to pay any sum unless he was a party to the transaction.”
“The first species, which I will call ‘cause of action estoppel’, is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, i.e. judgment was given upon it, it is said to be merged in the judgment, or, for those who prefer Latin, transit in rem judicatam. If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam. This is simply an application of the rule of public policy expressed in the Latin maxim ‘Nemo debet bis vexari pro una et eadem causa’. In this application of the maxim ‘causa’ bears its literal Latin meaning. The second species, which I will call ‘issue estoppel’, is an extension of the same rule of public policy. There are many causes of action which can only be established by proving that two or more different conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was.”
“The distinction between cause of action estoppel and issue estoppel on the one hand, and the principle of merger in judgment on the other hand, has been of great importance where the judgment in question is the judgment of a foreign court in the sense of a non-English court. This is because, whereas it has been recognised that the judgment of a non-English court may give rise to a cause of action estoppel where the judgment is in favour of the defendant (see, e.g., Ricardo v. Garcias (1845) 12 CI & F 368), and more recently to an issue estoppel (see Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No 2)[1967] 1 AC 853 ), nevertheless such a judgment, in favour of the plaintiff, did not at common law constitute a bar against proceedings in England founded upon the same cause of action. This was because the principle of merger in judgment did not apply in the case of a non-English judgment: see Spencer Bower and Turner, Res Judicata, pp. 363-364, and cases there cited. It was to remove this anomaly thatsection 34 of the Civil Jurisdiction and Judgments Act 1982 was enacted. This provides: “No proceedings may be brought by a person in England and Wales or Northern Ireland on a cause of action in respect of which a judgment has been given in his favour in proceedings between the same parties, or their privies, in a court in another part of the United Kingdom or in a court of an overseas country, unless that judgment is not enforceable or entitled to recognition in England and Wales or, as the case may be, in Northern Ireland.”
“…Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to an abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should, in my opinion, be a broad, merits-based judgment which takes account of the public and private interests involves and also takes account of all the facts of the case, focussing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.”
“It is one thing to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. The latter (though not the former) is prima facie a denial of the citizen’s right of access to the court conferred by the common law and guaranteed byArticle 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression. In Brisbane City Council v. Attorney General for Queensland[1979] AC 411 , 425 Lord Wilberforce, giving the advice of the Judicial Committee of the Privy Council, explained that the true basis of the rule in Henderson v. Henderson…is abuse of process and observed that it “ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation”
“[New Media] is entitled to seek relief under section 423 of the 1986 Act as a victim of the Dilution within the meaning of sections 423(5) and 424(1)(c). The Dilution deprived [Iota] of over 99% of the indirect ownership of TVi. [Iota] is therefore unable to pay all or any part of the sum owed under the [New Media Judgment]. [New Media] is thus prejudiced.”
“42. Mr Gusinski alleges that the [New Media] proceedings were never intended to be covered by this settlement agreement because the agreement is defined to apply only to the [New Media Proceedings] and [New Media] is not a party to the agreement. 43. That is not correct. Because my personal liability in New York had been set aside…this is the reason I believe that the [New Media] licence claims were not included. As I was not personally liable, I believe that is the reason that it was not part of the settlement agreement.”
“A real and substantial purpose of [Iota] in entering into the Dilution (which purpose is to be attributed to [Iota] from Mr Kagalovsky in the light of the matters set out in paragraph 11 above) was: 12.1 to put an asset (TVi) beyond the reach of [Mr Gusinski’s Nominee] who had potential claims against [Iota]; and/or 12.2 otherwise to prejudice the interests of [Mr Gusinski’s Nominee] in relation to such claims.”
“13. As mentioned, the Hashmi case establishes that, where the transaction was entered into by the debtor for more than one purpose, the court does not have to be satisfied that the prohibited purpose was the dominant purpose, let alone the sole purpose, of the transaction. In a passage quoted above, Arden LJ (with whom Laws LJ agreed) held that it is sufficient if the statutory purpose can properly be described as “a purpose” (my emphasis) of the transaction; but she later referred to “a real substantial purpose” and the term “substantial” was also used by the other members of the court. The significance of this epithet is not immediately clear. The word “substantial” is capable of bearing a wide range of meanings. In Re Brabon[2000] BCC 1171 , Jonathan Parker J confessed to finding it difficult to distinguish between a “substantial” purpose and a “dominant” purpose. If, on the other hand, the contrast is between a “substantial” purpose and a “trivial” purpose, it is not easy to understand when it would make sense to regard putting assets beyond the reach of creditors as a “trivial” purpose for entering into a transaction at an undervalue. 14. The description of the requisite purpose as a “substantial” purpose was not necessary to the decision of the Court of Appeal in the Hashmi case and to my mind it risks causing confusion. The word “substantial” is not used in section 423 and I can see no necessity or warrant for reading this (or any other) adjective into the wording of the section. At best it introduces unnecessary complication and at worst introduces an additional requirement which makes the test stricter than Parliament intended. I agree with the point made in McPherson’s Law of Company Liquidation (4th ed (2017)), para 11-116, that there is no need to put a potentially confusing gloss on the statutory language. It is sufficient simply to ask whether the transaction was entered into by the debtor for the prohibited purpose. If it was, then the transaction falls within section 423(3), even if it was also entered into for one or more other purposes. The test is no more complicated than that. 15. Arden LJ made this very point in the Hashmi case when she said (at [23]) that “there is no epithet in the section and thus no warrant for reading one in”
“In ascertaining whether or not [New Media] was a victim within [section 423(5)] involves an assessment of [New Media] in context rather than in isolation. At the time of the Dilution and the New York judgment, [New Media] was owned by [Mr Gusinski’s nominee]. Both these corporate vehicles were merely entities through which Mr Gusinski made his personal investment in the joint venture. Neither had a value outside the joint venture and neither had a value (or balance sheet solvency) without the sustained financial support of the joint venture partners.”
“…[Mr Kagalovsky] admits that, prior to the Dilution, [Iota] was the owner of a television station worth at least US$50 million . He has rightly abandoned his allegation that [Iota] was insolvent as at the date of the Dilution or would have become insolvent imminently. Further, as the New York State Court recorded in its judgment, he gave evidence in those proceedings that TVi was valuable when he took it from the partnership and said not long after the Dilution that “it is quite clear this is going to be very profitable”