England the appropriate forum for s. 423 proceedings
The Tonstate Group Ltd (Tonstate), a property development company based in England, entered members’ voluntary liquidation in October 2021. Tonstate considers that when Gil Wojakowski (GW), former group director, transferred his shareholding in a company to his brother, Tuvia Lewkowicz (TL), it was a transaction defrauding creditors, pursuant to s. 423 of the Insolvency Act 1986 (the Act).
On 14 May 2024, Adam Johnson J granted permission to serve proceedings on GW and TL in Israel. GW and TL unsuccessfully applied to set-aside the order for permission to serve proceedings out of the jurisdiction.
In denying the application to set-aside the order, the court had to consider:
- The legal tests
- Whether there was a serious issue to be tried
- Whether Tonstate had given full and frank disclosure of all facts that it is material for the court to know
- Whether England and Wales was the appropriate forum to deal with this matter. (This was a stand-alone point).
Whilst GW and TL argued that there was no serious issue to be tried in respect of the purpose of the transaction, the court disagreed. There was a serious issue to be tried in relation to the purpose of the transaction, and the factual disputes could only be dealt with at trial. Further, there was a sufficient connection to the jurisdiction, which needed to be demonstrated for the purpose of s. 423.
Moreover, the court was satisfied that Tonstate had given full and frank disclosure. The court went so far as to say that if there had been a non-disclosure, and that was made in good faith, that was not sufficient to set-aside the order.
Notwithstanding that GW and TL are both Israeli residents, shares transferred were shares in an English company, located in the jurisdiction, and the transfer was an English law transfer. Further, the claim was best addressed in an English court, especially in circumstances where the wider dispute was already the subject of English proceedings.
Tonstate Group Ltd & Others v Gil Wojakowski, Tuvia Lewkowicz [2024] EWHC 3398 (Ch), 2024 WL 04913568
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