Case details

MacDonald and another (Respondents) v Carnbroe Estates Ltd (Appellant) (Scotland)

Case ID: UKSC 2018/0092

Case summary


Whether the sale of premises was a "gratuitous alienation" under section 242 of the Insolvency Act 1986.


The respondents (the pursuers) are the joint liquidators of a company ("Grampian") which was in business as a provider of distribution services in Scotland and the wider UK. In 2014 it encountered very serious financial difficulties and was unable to meet its payments to its creditors, National Westminster Bank Plc ("NatWest") and HMRC.

In 2005 NatWest had financed Grampian’s purchase of its business premises ("the Property") and had retained various security interests over Grampian’s assets. In 2014 NatWest was threatening to enforce its securities if Grampian did not meet its monthly repayment obligations to NatWest.

In August 2014 Grampian sold the Property to the appellant (the defender) for the sum of £550,000, most of which Grampian immediately paid to discharge in full its debt to NatWest. Grampian did not have enough remaining assets to discharge fully its debt to HMRC.

Valuations of the Property in 2013 and 2014 had estimated a sale price of £1,200,000 if the Property were sold on the open market or, if a restricted marketing period of 180 days were assumed, a sale price of £800,000.

The respondent liquidators of Grampian commenced proceedings seeking reduction of the disposition of the Property to the appellant, on the basis that the sale was at a significant undervalue and therefore was a "gratuitous alienations" under section 242 of the Insolvency Act 1986.

The judge in the commercial court heard expert evidence from two surveyors. Their evidence was that the price of £550,000 was significantly below market value, but neither accepted the price of £550,000 was unreasonable in the circumstances.

The respondents reclaimed (appealed) to the Inner House of the Court of Session, which reversed the decision of the commercial judge.

Judgment appealed

[2018] CSIH 7



Carnbroe Estates Ltd

  1. Stewart MacDonald
  2. Pamela Coyne



Lord Reed, Lord Wilson, Lord Hodge, Lord Briggs, Lord Sales

Hearing start date

02 May 2019

Hearing finish date

02 May 2019

Watch hearing
02 May 2019 Morning session