Consideration, Characterisation, Evaluation: Transactions at an Undervalue after 'Phillips v Brewin Dolphin'

Rizwaan Jameel Mokal

Look Chan Ho

jcls Vol 1 Issue 2 (December 2001)

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Abstract

This paper takes the opportunity, presented by the House of Lords' decision in Phillips v Brewin Dolphin, to examine the law governing the reversal of transactions at an undervalue entered into by a company which then becomes insolvent. The paper discusses the sequence in which issues related to ascertaining whether a transaction had been at an undervalue are to be approached, the proposition that contracts somehow "linked" with each other can be taken together as constituting a single "transaction", and the prior question about when such con-tracts should be considered "linked" in the first place. Finally, the paper detects something of a tendency in the case law to use the notion of a transaction at an undervalue to brush aside inconveniences arising from the peculiarities in the way certain cases have been pleaded. Notably, it suggests that Phillips v Brewin Dolphin might not have involved any transaction at an undervalue at all.

Keywords

company law, contracts, corporate insolvency, transactions, undervalue, vulnerable transaction