Importers Service Corporation & Anor v Mario Aliotta & Ors

Mr Simon Gleeson:

1. Introduction

1. This is the trial of an application under section 423 of the Insolvency Act 1986. The two Claimants (referred to as “ISC” save where it is necessary to distinguish between them) are bringing an action against the First Defendant Mr Aliotta in the US and the UK (the “Main Action”), in which they seek to recover substantial damages from him. Their claim in these proceedings is that Mr Aliotta has acted to put assets beyond their reach in the event that they are successful in the Main Action. The specific assets which are the subject of these proceedings are 116 shares in a property-owning company called WSA Construction Limited (“the Company”), which have at various times been transferred by the Second and Third Defendants to the Fourth to Sixth Defendants. The Claimants in this action challenge those transfers as transactions effected at an undervalue with the intention of putting the shares beyond the reach of ISC.

2. The Parties

2. The First Claimant (“ISC US”) is a New Jersey company which carries on business in the importing of raw gum acacia (known as “gum arabic”) into the US from suppliers principally located in Africa. Between 2003 and 2022, the First Defendant, Mr Aliotta, provided intermediary services to ISC US through his company, RE International Import-Export Limited (“RE International”) (which entered liquidation in June 2025). Those services included locating suppliers of raw gum arabic in Africa which was then sold to ISC US.

3. The Second Claimant, ISC Europe, is a wholly owned subsidiary of ISC US which, as referred to above, purchases processed gum acacia from ISC US and sells it in Europe. Mr Aliotta was a director of ISC Europe from 17 May 2006 to 15 March 2023.

4. The Second Defendant, Aliotta Holdings Limited (“AH”), was incorporated on 18 November 2003 and has acted as a holding company for various of Mr Aliotta’s ventures. Mr Aliotta owns 70% of the shares in AH with the balance being held as to 15% each by his sisters, Alessia and Rosanna.

5. The Third Defendant, Mrs Aliotta, is, and was at all material times, Mr Aliotta’s wife.

6. The Fourth, Fifth and Sixth Defendants were co-investors with Mr Aliotta in the Company.

7. The Fourth Defendant, Mr Sleater, is from a corporate, banking background. At the relevant times he was a programme manager and looking to invest his capital.

8. The Fifth Defendant, Mr Whitehead, has worked in the building trade for 20 years. The Sixth Defendant, Oakwood Property Solutions (“Oakwood”), is Mr Whitehead’s wholly owned company.

9. Mr Aliotta was a director of the Company from 4 October 2019 to 16 February 2023. Mr Sleater has been a director of the Company since 20 March 2020 (and is now its sole director). Alessia Aliotta was a director of the Company from 16 February 2023 to 2 August 2024.

3. The Facts

10. The Company was incorporated on 4 October 2019. It was established as a vehicle for a joint venture between Mr Aliotta, Mr Sleater and Mr Whitehead (acting through Oakwood) by which they each agreed to contribute sums towards the purchase of a property at 29-33 (odd numbers) Lower Kings Road, Berkhamsted (“the Main Property”) with a view to its refurbishment and sale. The Main Property combines mixed use office space and retail units.

11. Upon incorporation, the Company was a shell, with 100 fully paid up shares, all of which were held by AH. The original plan was that Mr Sleater was to contribute £500,000, Mr Whitehead £250,000 and Mr Aliotta was to contribute £350,000 plus another building which he owned (“Property B”). These arrangements were recorded in a Shareholders’ Agreement (the “SHA”) which was executed on 20 March 2020. On the same date there was a board meeting of the Company at which it was resolved to allot additional shares in the Company as follows: 16 additional shares were allotted to AH for a consideration of £350,000. 56 shares were allotted to Mr Sleater for a consideration of £500,000. 28 shares were allotted to Oakwood for a consideration of £250,000.

12. The result of these allotments was that, as of 20 March 2020, the 200 shares in the Company were held as follows: AH -116 shares; Mr Sleater – 56 shares; Oakwood – 28 shares.

13. The evidence of Mr Sleater and Mr Whitehead was that, although they signed the SHA, they had neither read it thoroughly nor appreciated its effect. They had trusted Mr Aliotta. This was to turn out to have been an error on their part.

14. The difficulty was that the SHA provided that the number of shares to be issued to AH was the number which would have reflected its contribution had Property B in fact been transferred to the Company. This would have been fine had the relevant provision of the SHA actually committed AH to make such a transfer. However, what the relevant provision of the SHA in respect of Property B actually said was as follows;- “Clause 2.10 [Aliotta Holdings] agrees that it will transfer Property B to [the Company] free of all charges and restrictions upon the earlier of the following: a) One year from the date of this agreement or b) Property B being free of all charges and restrictions The consideration for such transfer will be £750,000 payable on or before the date of transfer.”

15. This had come about in the following way. Whilst the draft SHA was being prepared, Shaun Mary (Mr Aliotta’s then accountant) emailed all the parties proposing that the Company should pay for Property B through the issue of preference shares, and a draft SHA to this effect was then produced. This idea was abandoned, and Mr Goodman (Mr Aliotta’s then solicitor) suggested that the transaction should be cash funded, with a loan mechanism built into the SHA. However in the end (on 5 March 2020) Mr Goodman thought that it was more in his client’s interests (AH’s) to omit the loan mechanism, his argument being that this would give AH “optionality” as to whether or not to transfer Property B. It is notable that at this point Mr Aliotta was giving his professional advisers two incompatible sets of instructions as to the transaction to be documented in the SHA – on the one hand he insisted that since he was committed to transferring Building B to the Company, his holding in the Company should reflect its value, but on the other he said that the transfer of Building B should only take place if the Company paid full value for it.

16. The Company purchased the Main Property on 20 March 2020 for £2.2 million with the assistance of a loan from Kimberley Capital of £1,199,000.

17. It is fair to say that the discovery by Mr Sleater and Mr Whitehead of the final terms of the SHA caused some difficulty in their relationship with Mr Aliotta. It rapidly became clear that neither AH nor Mr Aliotta could raise enough cash to discharge the financing currently secured on Property B, and that there was therefore no prospect of his being able to transfer it free of all charges and restrictions to the Company. Equally, the Company could never have raised the £750,000 purchase price that it would have had to pay for the building.

18. Mr Sleater first raised the question with Mr Aliotta of the transfer of Property B to the Company in around July 2020. His evidence was that “The next 18 months or so was long, and protracted, as we tried again and again to get Mario to recognise that this was not right”. Mr Aliotta was saying that “he didn’t actually need to put [Property B into the Company] but that in fact he was owed £750,000 by us”.

19. The negotiations continued until 2022.

20. Mr Aliotta’s primary income was derived from his business as an importer of gum arabic, which he conducted in association with the Claimants. His evidence was that by 2021 he felt that something was amiss in the relationship, and on 19 July 2022, ISC US commenced proceedings against Mr Aliotta, AH and others in New Jersey (“the US Proceedings”). The US Proceedings allege that Mr Aliotta fraudulently overcharged ISC US for raw gum acacia for many years and bring a variety of claims including in conspiracy, breach of loyalty and unjust enrichment. The issuing of proceedings seems to have come as a surprise to Mr Aliotta: as he said to Mr Sleater at around this time, “I can’t believe these guys have started to turn on me”. It was also deeply concerning for Mr Sleater (and his wife). As Mrs Sleater said to Mr Aliotta on 1 September 2022, “Mario obviously very concerned by todays [sic] news about the Company being listed as a majority shareholder asset you have against fraud law suits…”

21. Mr Sleater also noted on 13 September 2022 (referring to the US Proceedings) that: “The wider context that is super concerning is that unfortunately Mario has 'wider problems' and currently those place undue risk on what is a incorrect [sic] position in terms of factual and tangible investment into the company”. The implication of these ‘wider problems’ was as Mr Sleater then explained: “In the event (god forbid) they don’t transpire as Mario hopes [i.e. Mario loses the US Proceedings] – there is a risk that an ‘on-paper’ controlling stake of the company will be an asset that is seized and that will severely impact Trevor and I and it is a position I would not want to put my friends in”

22. Two days later, on 15 September 2022, the parties reached an agreement (the “Settlement”) by which they agreed that the shareholdings in the Company should be changed to reflect the true economic position as between the investors. This was to be achieved through a transfer of shares by AH to the other investors, so that 45% of the Company (90 shares) would be held by Mr Sleater, 46 shares (23%) would be held by Oakwood, and 32% (64 shares) would be held by Mr Aliotta. Instructions were given to professional advisers to document this arrangement. However, it appears that nothing further was actually done in this direction for some time to come.

23. On or around 28 April 2023, Mr Whitehead appears to have transferred the shares in the Company that Oakwood owned at that time (i.e. the 28 shares that had been allotted to Oakwood in 2020) to himself.

24. On 19 April 2024, ISC Europe commenced proceedings in the Chancery Division against Mr Aliotta and AH (“the Main Claim”). This alleges that Mr Aliotta has caused ISC Europe to be overcharged for processed gum in breach of fiduciary duty and brings various additional claims for the misappropriation and misapplication of company monies. The Main Claim is listed for trial in May 2026. 3.1 The 2024 Transactions

25. On 4 October 2024 solicitors acting for ISC Europe sent a letter to (inter alia) Mr Sleater and Mr Whitehead notifying them of ISC’s claims against Mr Aliotta and AH, and foreshadowing claims on the shares in the Company. This created a flurry of WhatsApp messages between the three parties. In that exchange Mr Aliotta said that “we need to have a board meeting and minutes of such meeting in which our agreement to re level the shares was agreed and signed”. The use of the past tense is significant.

26. It seems to me to be clear from the evidence that Mr Aliotta, Mr Sleater and Mr Whitehead agreed in November 2024 to pretend that a board meeting of the Company had taken place in June 2024, and backdated board minutes were created purporting to show that a board meeting had taken place on 14 June 2024 (the metadata for this document shows that it was created on 25 November 2024). Mr Aliotta produced these backdated board minutes and Mr Sleater and Mr Whitehead ultimately agreed them. Alessia Aliotta (Mr Aliotta’s sister) also signed them. That was necessary because she had been a director of the Company as of 14 June 2024 (but was not by November 2024) and therefore if the false board minutes were going to achieve their aim of deceiving ISC into thinking they were genuine, they had to be signed by her.

27. The false board minutes record that it was resolved that the shares in the Company would be reallocated to “accurately reflect the actual cash contributions made by each party”. The new ownership structure would then be that Mr Sleater would hold 90 shares, Mr Whitehead would hold 46 shares and Mrs Aliotta would hold 64 shares. This was backdated to 2020.

28. AH therefore transferred a total of 52 shares to Mr Sleater and Mr Whitehead (as to 34 shares and 18 shares each) and the remaining 64 shares to Mrs Aliotta.

29. It is entirely possible that these steps were entirely ineffective to transfer legal ownership of the shares. Legal ownership of a share only changes when the transfer is registered by the issuing company (see J Sainsbury plc v O'Connor [1991] 1 WLR 963, per Nourse LJ at 977), and s. 770 of the Companies Act 2006 provides that a company may not register a transfer of shares in or debentures of the company unless “a proper instrument of transfer has been delivered to it”. It is not clear to me that a stock transfer form produced as part of a collusive agreement to misrepresent the facts of a transaction is a “proper” instrument of transfer. However this point was not argued before me, and I proceed on the basis that the shares were validly transferred.

30. I do not think that I have to decide when the arrangement as regards the disposal of the 116 shares in the Company held by AH actually took place. The possibilities are 15 September 2022, when the Settlement was arrived at, June 2024, the date of the fraudulent board minutes, or 25 November 2024 when the board minutes were finalised insofar as that represented the agreement by AH to dispose of all 116 of its shares in the Company. I think that in reality the transaction was a “continuing event that was made up of a series of individual components”: Griffin v Awoderu [2008] BPIR 877 at [27].

31. Mr Aliotta then asked Ms Parsey of Dux Advisory, the Company’s then accountants, to prepare backdated share transfer forms. A form in the name of Mrs Aliotta was prepared backdated to 20 March 2020, recording that she had been allocated the 18 shares actually allotted to AH on the establishment of the venture. At the same time Ms Parsey, on the instructions of Mr Aliotta, amended the register of members of the Company to record that the 100 shares initially allotted to AH had in fact been allotted to Mrs Aliotta. A form RP04 was sent to Companies House purporting to correct previously filed Confirmation Statements.

32. The result of this was that the Company register recorded that AH held 0 shares; Mrs Aliotta held 64 shares; Mr Sleater held 90 shares; Mr Whitehead held 46 shares.

33. Thus AH had transferred 64 of its shares to Mrs Aliotta, 34 to Mr Sleater and 18 to Mr Whitehead.

34. The Claimants say that these transfers by AH were either gifts or transactions for inadequate consideration. 3.2 The 2025 Transactions

35. The key driver of the 2025 Transactions was the fact that Mr Aliotta needed immediate cash, and had a £186,000 director’s loan due to him from the Company. The basic proposal was as follows: i) Mr Sleater and Mr Whitehead would introduce £150,000 of new money into the Company. ii) The Company would raise a further £50,000 of new debt (via a refinancing) and pay it to Mr Aliotta. iii) The Company would repay Mr Aliotta’s £184,117 director’s loan. iv) Mr Sleater and Mr Whitehead would hand back their investments in AH to Mr Aliotta (which they valued at £70,000 from Mr Sleater and £95,000 from Mr Whitehead). v) The Company would grant Mr Aliotta’s company a rent-free lease of some of the office space in the Main Building (worth £25,000). vi) The Company would invoice Krilliot (a separate company) £50,000 for a right of access over its property to a property owned by Krilliot, and would transfer that receivable immediately to Mr Aliotta.

36. In exchange for all this, Mr Aliotta would arrange for the transfer of the 64 shares registered in the name of Mrs Aliotta to Mr Sleater and Mr Whitehead for a payment of £90,832.

37. As Mr Sleater and Mr Whitehead saw it, what this meant was that Mr Aliotta was receiving £440,000 of benefit in total, and in exchange for this he was transferring (what they clearly regarded as) his remaining shares in the Company to them. From the personal perspectives of Messrs Sleater and Whitehead, what was happening was that they were injecting a new £150,000 of funding into the Company and paying a further £90,832 to Mrs Aliotta, in exchange for which they were getting the remaining 64 shares in the Company. I think it is clear that the price they were to pay for the shares was never calculated on the basis of the value of the shares per se, but was simply the balancing item left over after the other items had been calculated.

38. All of these steps were substantially completed. There was a very slight shortfall – the amounts actually transferred to Mr Aliotta summed to £432,110.31, but that is not significant for this purpose.

39. On 13 January 2025, Ms Parsey sent Mr Aliotta two stock transfer forms for Mrs Aliotta to sign. The first was for a transfer of 36 shares to Mr Sleater and stated that the consideration money was £51,093. The second was for a transfer of 28 shares to Mr Whitehead and stated that the consideration money was £39,739. The shares were transferred on 13 January 2025. On 17 January 2025, Ms Parsey confirmed that the share transfer was complete.

4. Section 423 of the Insolvency Act 1986

40. There are a number of relevant provisions as regards the interpretation of s.423. The section itself reads as follows: “423 Transactions defrauding creditors. (1) This section relates to transactions entered into at an undervalue; and a person enters into such a transaction with another person if— (a) he makes a gift to the other person or he otherwise enters into a transaction with the other on terms that provide for him to receive no consideration; (b) he enters into a transaction with the other in consideration of marriage or the formation of a civil partnership; or (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) Where a person has entered into such a transaction, the court may, if satisfied under the next subsection, make such order as it thinks fit for— (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. (3) In the case of a person entering into such a transaction, an order shall only be made if the court is satisfied that it was entered into by him for the purpose— (a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or (b) of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make. … (5) In relation to a transaction at an undervalue, references here and below to a victim of the transaction are to a person who is, or is capable of being, prejudiced by it; and in the following two sections the person entering into the transaction is referred to as “the debtor.”

41. Other relevant sections are “424 Those who may apply for an order under s.

423. ” (1)An application for an order under section 423 shall not be made in relation to a transaction except— …. (c)… by a victim of the transaction. (2) An application made under any of the paragraphs of subsection (1) is to be treated as made on behalf of every victim of the transaction.” Also “425(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.

42. As the Claimants point out, the title ‘transactions defrauding creditors’ is a misdescription. There is no need for any creditors to have been prejudiced: it suffices that a step has been taken with the purpose of prejudicing the interests of someone who might make a claim; a “victim” does not need to be a creditor (see Clydesdale Financial Services v Smailes [2009] EWHC 3190 (Ch) at [73] per David Richards J). Equally, it is not necessary to prove that the debtor acted fraudulently or with dishonest intent: Arbuthnot Leasing v Havelet Leasing [1990] BCC 636 at 644B.

43. In order to reverse a transaction under s.423, what needs to be shown is that: i) There was a ‘transaction’. This is defined very broadly (and non-exhaustively) under section 436(1) of the Act as including gifts, agreements and arrangements; ii) The transaction was a gift or at an undervalue; and iii) A purpose of the debtor was to put assets beyond the reach of someone who was making or might make a claim against him, or otherwise prejudicing the interests of such a person.

44. Thus what I have to determine is whether some part of Mr Aliotta’s motivation for entering into the transactions was to put assets beyond the reach of potential creditors.

45. I think the appropriate criteria to be applied here were well summarised by Miles J in Credit Suisse Virtuoso Sicav-Sif and ano’r v Softbank Group Corp [2025] EWHC 2631 (Ch) at [616-618] “616. It is not necessary for the claimant to demonstrate that the transfer would not have been made but for the improper purpose: Akhmedova v Akhmedov [2021] 4 WLR 88 at [81]. It is possible for a person genuinely to desire to benefit a third party but also to act with the prohibited purpose: ibid at [82]. On the other hand the relevant outcome or consequence must be “positively intended”: see Ablyazov at [17] ”

617. It is not necessary to show that the relevant transaction was entered into for the purpose of prejudicing the particular person now bringing the claim: Fortress Value Recovery Fund I LLC v Blue Skye Special Opportunities Fund LP [2013] 1 All ER (Comm) 973 at [108]-[111]. Nor is it necessary for the debtor to know the identity of any or all actual or potential creditors who may be prejudiced by the impugned transaction, although the debtor’s knowledge of the presence of a particular creditor or potential creditor may shed light on its purpose in entering into the transaction: Malik v Messalti [2025] BPIR 91 at [64].

618. The claimants submitted that a person is generally assumed to intend the consequences of his acts, and referred to Swift Advances v Ahmed [2015] EWHC 3265 (Ch) and Pena v Coyne [2004] EWHC 2684 (Ch) at [126]. It appears to me that the proper approach, exemplified by those cases, is that the court is required to assess all of the evidence, find the primary facts, and determine, by a process of inference, whether the relevant person has the necessary subjective state of mind. The relevant facts from which inferences may be drawn may include the transaction’s obvious or self-evident consequences. However, the terms of the statute and the cases referred to above show it is not enough simply to allege and prove that the transaction had the relevant prejudicial consequences.

46. The only evidence put forward by the Claimants is a witness statement of Mr Iverson, a solicitor, setting out the course of the litigation to date. The First to Third Defendants take a point that the Claimants therefore offer no direct evidence as to the state of mind of Mr Aliotta, and rely exclusively on inference from the facts. That seems to me to be a reasonable approach for the Claimants to take – in cases of this kind it is usual that the Claimants cannot give any evidence at all in relation to the underlying facts, and the truth or otherwise of the Defendants’ evidence is the only thing in issue. The requisite purpose may be inferred despite the fact that the debtor denies having had it (Moon v Franklin [1996] BPIR 196 at 204).

47. In cases of this kind inference from the facts is the only reasonable approach available to a judge, and the relevant facts from which inferences may be drawn include the transaction’s obvious or self-evident consequences. However, it is accepted that the statutory purpose cannot be inferred from the bare fact that a transaction has been entered into at an undervalue (Royscott v Lovett [1995] BCC 502, 507 (CA)) – what matters is purpose. Any inference as to intentions must be reached on the balance of probabilities (Henwood v Barlow Clowes [2008] EWCA Civ 577, [68]-[69]). This means that the court must be satisfied that the inference the Claimant seeks to draw as to the Defendant’s purpose is more likely than not on all the relevant and proved facts. If there are ‘conflicting inferences of equal degrees of probability, so that the choice between them is mere matter of conjecture, then the applicant has failed to prove [its] case’. (Richard Evans & Co v Astley [1911] AC 676, 687 per Lord Robson).

48. The purpose or bona fides of the transferee is entirely irrelevant in determining whether the elements of the cause of action are made out. All that matters is the purpose of the debtor: Delaney v Chan Chen and another [2010] BPIR

316. It is irrelevant for example that the transferee believed that the debtor was acting lawfully in entering into the transaction (Moon v Franklin at [202]) or that lawyers advised that the transaction was proper and could be carried into effect (Arbuthnot (above) at 644C). Section 423 enables the Court to override the property rights of innocent recipients of property (Invest Bank P.S.C. v El-Husseini & Ors [2024] EWHC 2976 (Comm)). Thus even if Mr Sleater and Mr Whitehead were wholly unaware of any intention by Mr Aliotta to put assets beyond the reach of creditors, that unawareness would not provide them with any defence to an order requiring them to return the transferred property.

49. In IRC v Hashmi [2002] BCC 943 the Court of Appeal upheld a finding at first instance that there had been a section 423 transaction when the debtor declared that he held the beneficial interest in a property on trust for his son. The requisite purpose to harm creditors was to be inferred even though no proceedings had been brought against the debtor by HMRC at the time of the declaration of trust.

50. The First to Third Defendants also argue that it was not Mr Aliotta’s dominant purpose to remove assets from ISC’s reach. I agree with this – I think that at the time of the Settlement and the 2024 Transactions his predominant purpose was to restore some degree of commercial balance to the arrangement between him and his partners, and at the time of the 2025 Transactions his predominant purpose was to raise immediately available cash by any means necessary. However, Hashmi confirms that there is no need for the relevant purpose to have been the debtor’s dominant purpose (in Hashmi the trial judge found that the debtor was a caring parent who had wanted to give his son the security of having the property for the future but that he had also wanted to put it out of the reach of creditors, should creditors emerge: see at [7]. Those mixed motives sufficed for section 423).

51. The Fourth to Sixth Defendants argue that if the 2024 transfer of shares to Mrs Aliotta was not a section 423 transaction, then the 2025 Transactions by which the shares were transferred from Mrs Aliotta to Mr Sleater and Mr Whitehead cannot be section 423 transactions and ISC cannot be said to be a victim of them. The basis for this argument is that the Main Claim is against Mr Aliotta and his company alone, and there is no claim in those proceedings against Mrs Aliotta. The Claimants accept that there is no claim against Mrs Aliotta in the Main Claim, but point out that the s423 claim against her in these proceedings – i.e. the claim for an order that she return the shares received by her pursuant to the 2024 Transactions – is itself a claim against her, and that ISC is therefore a victim of the 2025 Transactions because their effect was to make it harder for ISC to succeed on its then extant claim against Mrs Aliotta under section 423: if Mrs Aliotta no longer held the 64 shares that were the subject of ISC’s then extant section 423 claim against her because she had transferred them pursuant to the 2025 Transactions, then ISC is plainly someone who is “capable of being prejudiced” by the 2025 Transactions (because they would mean that the Court was unable to order her to return the 64 shares to AH because she no longer owned them).

5. The Witnesses Mr Aliotta

52. Mr Aliotta was a curious witness. He was truthful about his own untruthfulness – admitting to having forged a board minute to – in his own mind – protect the transferees of shares from legal proceedings.

53. However – perhaps surprisingly – I did not find Mr Aliotta a particularly untruthful witness as to matters of fact. He was surprisingly open about the fact that he had (in effect) swindled Mr Sleater and Mr Whitehead out of part of their investment in the Company at the moment of its inception, and that in his mind the aim of the 2024 Transactions was – at least in part – to reverse that action. Against that, however, on the points where he was clear what the evidence had to be – such as the question of the intention behind the transactions, the common intention of the parties as regards the SHA, and the issue of declarations of trust – it was clear to me that he knew what his evidence had to be and he gave that evidence. I therefore place no reliance at all on his evidence in this regard. Mrs Aliotta

54. Mrs Aliotta’s evidence – which I found entirely credible – was that she had no idea what her husband was doing, and simply signed documents when asked to by him. With one exception, her evidence did not contribute materially to the case. The exception is that she was clear that she had never declared a trust of any form over any shares in her name. Mr Sleater

55. Mr Sleater’s evidence as to the order of events and the nature of the dealings between him and Mr Whitehead on the one hand and Mr Aliotta on the other was entirely credible. The Claimants say that his evidence was to a very considerable extent supportive of their case – in particular in detailing the chronology in 2022 that led up to the Settlement – which illustrated the extent to which it was the bringing of the US Proceedings in July 2022 that precipitated Mr Aliotta’s change in attitude. Mr Whitehead

56. Mr Whitehead largely confirmed Mr Sleater’s evidence as to the factual matrix. The primary issue between him and the Claimants was that he seems to have been responsible for providing a valuation of the Main Property of £3.4m, which was then recorded in the accounts of the Company for 2025. The basis of this valuation was challenged by the Claimants, who say that he was motivated to devalue the Main Property in the Company’s draft 2025 accounts for the purposes of these proceedings. Ms Parsey

57. Ms Parsey had limited recollections of events in 2024 and her evidence did not contribute materially to the case. Mrs Sleater

58. Mrs Sleater’s evidence did not contribute materially to the case. Mr Rodgers

59. Mr Rodger’s evidence did not contribute materially to the case. Although he produced a discussion document on 8 April 2021 at the time when the Defendants were in dispute over the SHA, it was not a useful document because he was not given a copy of the SHA. The Expert Witnesses

60. It has been said to be preferable for the Court to arrive at a precise valuation figure where it is able to do so if only given the possibility of a remedy in damages: Re Thoars, Reid v Ramlort Ltd [2004] EWCA Civ 800 at [104] and [105]. Permission has accordingly been given for expert evidence in the field of share valuation. ISC and The Fourth to Sixth Defendants have each served expert reports. The experts have prepared a joint statement which sets out a range of valuations for the 116 shares transferred pursuant to the 2024 Transactions (between £488,880 and £881,074) and for the 64 shares transferred pursuant to the 2025 Transactions (between £240,174 and £456,557). The differences between them derive primarily from the different valuations they have relied on for the Main Property.

61. I heard evidence from Mr Shear, the Claimants’ expert, and Mr Geale, the Fourth to Sixth Defendants’ expert.

62. The issues between the experts are narrow. It should be noted that permission was given to appoint experts in the field of share valuation, and this is the field which the experts profess. However the primary factor in the valuation of the shares in the Company is the valuation to be ascribed to the Main Property. The differences between the experts therefore arose as a result of their views on the valuation of the Main Property, an area in which neither of them claimed any specific expertise.

63. There are three possible valuations for the Main Property. i) A surveyor’s valuation report prepared for Allica Bank dated 14 April 2021 concluded that it was worth £3.83 million. If that is right, then the experts agree that the 116 shares were worth £711,147 at the 2024 Transactions date and the 64 shares were worth £362,804 at the 2025 Transaction date. ii) The accounts of the Company recorded that further work was done on the property after the Allica Bank valuation, and that this work should be and was capitalised. If these improvements are included in the valuation, then the Main Property was worth £4,164,833 on both valuation dates. If that is right, then the experts agree that the 116 shares were worth £881,074 at the 2024 Transactions date and the 64 shares were worth £456,557 at the 2025 Transactions date. iii) The most recent accounts of the Company record the property as being worth £3.4 million. If this valuation is correct, then the experts agree that the 116 shares were worth £488,880 at the 2024 Transactions date and the 64 shares were worth £240,174 at the 2025 Transactions date.

64. The decision of the directors of the Company to value the property at £3.4m seems to have been taken as a result of a review conducted by Mr Whitehead based on advice received from Ian Archer of Aitchison Raffety (a property consultancy) sent on 17 July 2024.

65. It is not disputed that Mr Whitehead has spent his professional life in the construction business and is very familiar with property prices and values. However, as the Claimants point out, he has no formal qualifications in this area.

66. I think that what is most significant here is that it seems to be broadly accepted that the best proxy for valuing commercial real estate (and indeed rent-producing real estate generally) is to divide the actual rent received by the expected yield on property of that type. The point that Mr Whitehead made in his evidence was that “rent” amount that had been used for the earlier valuations was based on a theoretical optimum rather than the amounts actually received. He said that in previous years rent had never exceeded £250,000, and in the 2025 accounts the amount received was recorded as £264,016. Taking an expected rental yield of 8% (which did not seem to be challenged as an appropriate approach), that would produce a figure somewhat below the £3.4m arrived at by Mr Whitehead and adopted by Mr Sleater for the Company.

67. It therefore seems to me that in all the circumstances it was reasonable for the directors to have adopted the figure put forward by Mr Whitehead and to have used that figure in the Company’s accounts.

68. Mr Head, for the Claimants, points out that for the purposes of this litigation it may suit the directors personally to have a lower figure, and that the decision to use a lower value may have been influenced by the prospect of this litigation. However, the value recorded in the Company's accounts will be used for a number of other purposes, and it seems to me that (a) the directors’ decision to use the £3.4m value in the Company's Accounts was not unreasonable, (b) that fact suggests to me that that is the value which should be used by the experts unless they can provide convincing evidence for some other approach (c) none of the experts – who were admittedly not experts in commercial real estate valuation – provided any such evidence.

69. I therefore find that the shares were worth the following (as per the Joint Statement): i) The 116 shares that were the subject of the 2024 Transactions were at that time worth £4,214 each. ii) The 64 shares that were the subject of the 2025 Transactions were at that time worth £3,752 each.

6. The Issues between the Parties

70. The 2024 Transactions were prima facie for no consideration, and the Claimants rely on this.

71. As regards the transfers to Mr Sleater and Mr Whitehead, they say that: i) these transfers were in fact for valid consideration, that consideration being the non-pursuance of claims which they say the Defendants had under the SHA (the “Sufficient Consideration” argument); and/or ii) the transfers to Mr Sleater and Mr Whitehead were transfers of the legal estate only, since the effect of the Settlement was that AH held those shares on constructive trust for them (the “Settlement Trust” argument), and/or iii) these transfers were in satisfaction of a moral obligation owed by Mr Aliotta to his co-investors (the “Moral Obligation” argument); and/or iv) these transfers were made in satisfaction of a pre-existing specifically enforceable obligation on Mr Aliotta to transfer the shares which therefore gave rise to a constructive trust of the shares (the “Specific Performance” argument).

72. As regards the transfer to Mrs Aliotta, the First to Third Defendants say that these shares were and had always been held by AH on trust for the children of Mr and Mrs Aliotta (the alleged “Children’s Trust”), so that – again – this was a transfer of legal title only.

73. The 2025 transfers of shares from Mrs Aliotta to Mr Sleater and Mr Whitehead were for money consideration. The Claimants say (and it is accepted) that the consideration directly attributed to the purchase of the shares was significantly less than those shares’ actual value. The Fourth to Sixth Defendants say that the transaction involving the shares was simply one component of a larger transaction, and that it is the terms of the larger transaction which should be considered in determining whether the transaction was in fact at an undervalue.

74. In all these cases, it is accepted by those involved that no formal declaration of trust, oral or written, was ever effected. 6.1 The “Sufficient Consideration” argument

75. The Defendants suggest that Mr Sleater and Mr Whitehead did give consideration for the 2024 transfers by “settling the breach of Clause 2.10” (of the SHA). It is clear that the giving up of a claim can in principle constitute consideration for the purposes of a claim under section 238 or section 423: Papanicola v Fagan [2008] EWHC 3348 (Ch) at [30]. However in order for that to be the case here it is necessary to identify both the legal claim concerned and the precise mechanism by which it was discharged.

76. The Claimants say three things about this argument; i) AH was not in breach of clause 2.10 at all; ii) Even if Mr Sleater and/or Oakwood did have a claim against AH for breach of clause 2.10, it was worth nothing; and iii) Any such alleged claim was never in fact given up/extinguished.

77. Clause 2.10 of the SHA required AH to transfer Property B to [the Company] free of all charges and restrictions, within 12 months of the date of the execution of the agreement (20 March 2020), or earlier if the charges were discharged earlier. It also required the Company to pay consideration of £750,000 on or before the date of transfer.

78. It is accepted that the value of Property B was roughly £700,000.

79. The position under Clause 2.10 was therefore that AH was obliged to transfer Property B to the Company by 20 March 2021, and the Company was obliged to pay AH £750,000 on or before the date of transfer. It is uncontroversial that this did not happen.

80. The key point here is that although it is arguably correct that AH was in fact in breach of its obligations under the SHA by not transferring Property B, the value of that breach in damages was nominal. Had the clause been fully performed, the Company would have paid £750,000 for a building worth around £700,000 – a transaction in which it would have accrued a small loss. It is also notable that even the fact of the breach is questionable – the clause provides that the payment of the £750,000 is in fact a condition precedent to the performance by AH of its obligations. It is entirely arguable that since this condition precedent was never complied with, AH never in fact breached its obligations at all. In either case, it is not possible to say that this clause conferred any valuable right on the Company or its shareholders, and it is equally not possible to say that the surrendering of any claim under it conferred any valuable benefit on the Company.

81. I do not understand the Defendants to dispute this proposition. However, what they say is that I should not give Clause 2.10 the meaning which it bears on its face, but I should read it as if it embodied what they say is the true understanding between the parties.

82. In this regard they rely on the fact that Mr Aliotta, Mr Sleater and Mr Whitehead all say that what they meant to agree was that the transfer of Property B should be part of the consideration for Mr Aliotta’s shareholding, and that the reference to a price of £750,000 was simply a value ascribed to Property B for stamp duty purposes. Hence, they say, the obligation was to transfer Property B for no consideration, and Mr Aliotta was clearly in breach of that obligation.

83. I do not need to reiterate here some of the better-known principles of contract law whose effect is that the parties to a signed contract cannot go behind the words of that contract by retrospectively deciding that they meant something else. In particular, the parties to a contract can – of course – agree between themselves that the effect of a contract as between them can be varied so as to have been deemed to have been different from an earlier time. However, such a variation cannot affect the rights of third parties. If I agree with you that I will pay you £10 a month, and a few years later we agree to vary the contract between us so that I was only obliged to pay you £8 per month, then the money claims between us will be varied accordingly. However, if in the meantime you have sold your claims on me to a third party, that third party will not be retrospectively affected by the variation agreed between us. I think that this principle is broad enough to apply to claimants under s.423 as “third parties” for this purpose.

84. The approach urged upon me by Ms Sleeman (for the Fourth to Sixth Defendants) was that since – she said – the contract could clearly have been rectified if an appropriate application had been made at the relevant time, I should regard the contract as having been so rectified.

85. The Claimants make a number of points in response to this. The first – with which I have a great deal of sympathy – is that a party should not be permitted to run a rectification argument half way through trial, where such an argument has not been pleaded or the subject of disclosure and evidence.

86. However the stronger point is that the argument is hopeless in any event. Common mistake rectification requires proof: “that at the time of executing the written contract the parties had a common intention (even if not amounting to a binding agreement) which, as a result of mistake on the part of both parties, the document failed accurately to record.” FSHC Group Holdings Ltd v Glas [2019] EWCA Civ. 1361 at [46] per Leggatt LJ. It is entirely clear on the facts here that the reason the SHA says what it did is because Mr Aliotta instructed his lawyers to draw it up in the form in which they did. Mr Aliotta, Mr Sleater and Mr Whitehead were all parties to the email from Shaun Mary on 7 February 2020 in which Mr Mary suggested that AH would be paid for Property B in the form of preference shares – and indeed to the subsequent email from Mr Goodman on 13 February 2020 attaching a draft SHA to that effect. In other words: all the contracting parties knew that the Company was going to have to pay something/give consideration of some sort to AH in return for Property B; they all knew that AH would not simply be gifting Property B to the Company i.e. for no consideration in return.

87. Mr Aliotta spoke with Mr Goodman on 11 March 2020 on the question of how the Company was going to pay the consideration of £750,000 to AH. That conversation proceeded on the premise that there would be some consideration, the question then being how that consideration was going to be paid (i.e. where it was going to come from given that the Company would not have available funds of £750,000).

88. Mr Goodman records that, in terms of any loan mechanism in this regard, “We agreed to leave this silent”. Mr Aliotta, at any rate, knew very well that it was not simply going to be a case of AH gifting Property B to the Company (i.e. transferring it for no consideration). Necessarily therefore, whatever Mr Sleater and Oakwood thought, there was not the necessary “common intention” required for common mistake rectification.

89. The alternative argument would be that the SHA could have been rectified for unilateral mistake. Again, this was not pleaded. In particular, the Defendants would need to have pleaded and proved that Mr Aliotta knew that the SHA departed from what had previously been negotiated between the parties, and also that he knew that Mr Sleater and Mr Whitehead were under a misapprehension, but that Mr Aliotta (though aware of this) forbore from drawing this error to Mr Sleater and Mr Whitehead’s attention. This “requires convincing proof to displace the natural presumption that the written contract is an accurate record of what the parties agreed” FSHC at [106].

90. There is no evidence of those different elements here – not least because no-one has ever pleaded it so there has not been the necessary disclosure or evidence that would be required if the point was going to be run at trial. In any event the evidence on this issue – such as it is – does not come close to what would be required for a successful argument of unilateral mistake rectification.

91. The key point, however, is that no such application for rectification has ever been made. Rectification as a doctrine is a powerful legal tool, in that it is retrospective. Again, it seems to me that although it may be permissible to rectify the terms of an agreement as between the parties, and in an appropriate case it may be acceptable for a court to rectify an agreement so as to vary the accrued rights of third parties, the latter outcome could only be achieved where a court had had the benefit of full argument and disclosure from all parties – including any affected third party. As against any such third party, I do not think there is any scope at all for me to take the view that because the agreement could have been rectified, I should treat it as having been rectified. This is particularly the case as regards what I might call “collusive rectification”, where the parties to the original agreement agree that it should be rectified, and the effect of the rectification is to put assets out of the reach of a potential claimant. Such a rectification can only be contemplated where it has been ordered by a court in full possession of the relevant facts. It cannot be “deemed”.

92. Finally, I note that even if I were wrong on the rectification point and the contract should in fact be read as if it imposed an obligation on AH whose release would constitute a benefit to him, the giving up of a claim is only ever capable of constituting consideration if the claim is in fact given up. Here, there was no compromise agreement. None of the contemporaneous documents records any agreement by Mr Sleater or Oakwood not to sue Aliotta Holdings for its alleged breach of clause 2.10 of the SHA and to release it from any such claim. There is no evidence before me of any such compromise, and nowhere in Mr Sleater or Mr Whitehead’s witness statements or in any of the contemporaneous documents is it suggested that they that they ever gave up, extinguished and released any claim that they might have had against AH for breach of clause 2.10 of the SHA.

93. Ms Sleeman suggested that there was an oral agreement between the parties on 16 September 2022 whose effect was to compromise Mr Sleater’s and Oakwood’s claims against AH. However, the terms of this agreement as pleaded in the Defendants’ Defences do not include any such release. The Claimants also note that the SHA contained a no variation clause whose effect was that any variation to the SHA had to be in writing to be effective (Rock Advertising Limited v MWB Business Exchange Centres Limited [2018] UKSC 24), and no such written variation was ever created.

94. I therefore think that the “Sufficient Consideration” argument in respect of the 2024 transfers to Mr Sleater and Oakwood fails. These were dispositions for no consideration. 6.2 The “Settlement Trust” argument

95. The basis of this argument is that the Settlement had the effect of establishing a common intention constructive trust, under which AH held some of its shares on constructive trust for Mr Sleater and Mr Whitehead.

96. The essence of the common intention constructive trust is set out in Lewin on Trusts (20th ed.) at 10-062. “A constructive trust arises in connection with the acquisition by one party of a legal title to property whenever that party has so conducted himself that it would be inequitable to allow him to deny to another party a beneficial interest in the property acquired. This will be so where (i) there was a common intention that both parties should have a beneficial interest either at the date of acquisition or at a later date and (ii) the claimant has acted to his detriment in the belief that by so acting he was acquiring a beneficial interest. Some element of bargain, promise or tacit common intention must be shown in order to establish such a trust. The trust comes into existence at the time of the conduct relied on, not when the court declares its existence, a point very material in the bankruptcy of one of the beneficiaries”

97. Ms Sleeman accepts that the jurisprudence surrounding common intention constructive trusts has been developed primarily to accommodate domestic arrangements relating to shared homes (described in Stack v Dowden [2007] UKHL 17 as arising in the “domestic consumer context” (at [58] per Baroness Hale). However, in that case Lord Neuberger said (at [106]) that the same principles should apply, regardless of whether the parties were in a sexual, platonic, familial, amicable or commercial relationship. I am therefore prepared to accept for the purpose of this judgment that it is legally possible for a common intention constructive trust to arise in a situation such as that before me.

98. What needs to be shown to establish a common intention constructive trust is (a) that the parties had a common intention that they would each have an interest in the property which did not correspond to the legal ownership of the property and (b) one party relied on that common intention to his or her detriment. Common Intention

99. The establishment of such a trust on the facts before me would require (inter alia) proof that AH, Mr Sleater and Oakwood had a common intention that they would own the shares respectively owned by them following the allotment on 20 March 2020 (i.e. 116; 56; 28) differently at law to how they were owned in equity. But there is nothing to support the existence of any such common intention. On the contrary, in identifying the common intention, one looks to the SHA. There is no mention anywhere in that agreement (or the board minutes of the same date, 20 March 2020) that there was going to be some kind of variance between how the parties held their shares at law and in equity. This is not one of those joint ventures where there is no shareholders’ agreement such that the Court has to try to determine the parties’ rights and obligations inter se from the wider record: here the SHA answers that question. And indeed Mr Aliotta would never have agreed to what is now being proposed – see his exchange with Mr Mary as referred to above.

100. More importantly, where the parties are in a contractual relationship which creates a framework of obligations between them, there is no scope to impose a fiduciary relationship (as would be required to constitute any constructive trust) which conflicts with that contractual framework. In Kelly v Cooper [1993] AC 205 at 215 the House of Lords referred to Mason J’s observation in the High Court of Australia in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 97 per to the effect that: “ “it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them…” ”

101. Translated to the facts of this case, this would mean that if the parties to the SHA had wished to have some kind of mechanism whereby their shares were ‘rebalanced’ in the event of a failure by any of them to contribute what they had agreed to contribute to the joint venture, that would have to have been provided for in the SHA itself. There is no such mechanism and there can be no recourse to equity to try to re-write the agreement after the event. Detrimental Reliance

102. The clearest and earliest statement of the requirement for detrimental reliance to find a common intention constructive trust can be found in Lloyds Bank v Rosset [1991] 1 AC 107, where Lord Bridge stated that the partner asserting a claim to a beneficial interest must show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement. Detrimental reliance, paired with common intention, provides the justification for a trust arising by operation of law (see also Hudson v Hathway [2022] EWCA Civ 1648).

103. In this case there was no detriment. No alleged detriment has ever been pleaded. Ms Sleeman argued that Mr Sleater and Oakwood “acted to their detriment and allowed [AH] to be allotted additional shares to reflect the proposed transfer.” That was not detrimental reliance at all: AH received an additional 16 shares on 20 March 2020 (taking it to 116) in return for having paid £350,000. That was not to the other shareholders’ detriment but on the contrary was to their benefit because it enabled the Company (with the other funds invested and the loan from Kimberley Capital) to purchase the Main Property.

104. It is also impossible to identify any action which the Fourth to Sixth Defendants can be said to have taken in consequence of their agreeing to the Settlement. Their evidence is that, having agreed that the shares ought to be reallocated, they then did nothing at all for the intervening two years. They may argue that the fact of having arrived at the Settlement meant that there was no need to press forward with the transfer of shares, and that their detrimental reliance was constituted by their failure to pursue that transfer. However, that merely raises the question of whether complete inaction is capable of constituting detrimental reliance.

105. I think the proper approach to this question is to apply a “but for” test – what would Mr Sleater and Mr Whitehead have done had the Settlement not been entered into. On the basis of the evidence given, the only answer that I can arrive at is that they would have continued to press Mr Aliotta to enter into the Settlement. I therefore cannot find any detrimental reliance on their part.

106. I therefore find that there was neither a common understanding between the parties that the shares were to be held on trust on the amended basis as from 2022, nor would their conduct subsequent to the Settlement have been sufficient to show detrimental reliance had any such understanding been in place. The “Settlement Trust” argument therefore fails. 6.3 The “Moral Obligation” Argument

107. I think it was clear from the evidence that Mr Aliotta accepted that he had a “moral” obligation to Mr Sleater and Mr Whitehead to adjust the shareholdings in this way. As noted above, the consequences of his actions when the Company was established were that he had an ownership position in the Company out of all proportion to the amount he had contributed. Although this was a shabby trick, I do not think that Mr Aliotta ever had any intention to “run off with” this money – he simply regarded the outcome as giving him some negotiating leverage, and I have no doubt that he always expected that the position would have to be regularised at some point. However, it is in my view entirely clear that such a “moral” obligation, unsupported by any legal obligation, does not give rise to valuable consideration capable of being taken into account in determining whether a transaction is undertaken at an undervalue. Falk LJ made this clear in National Iranian Oil Company v Crescent Gas [2025] EWCA Civ 1211 at [260] in the context of express trusts, and it is a proposition which I think is generally applicable. 6.4 The “Specific Performance” Argument

108. Finally, it was (weakly) put forward that the Settlement might have given rise to a specifically performable obligation, so as to render AH a constructive trustee of the shares on that basis.

109. An obligation can only be specifically performable in equity where the parties have entered into a valid and binding contract to perform that obligation. The Claimants’ pleadings are curiously coy as to whether it is alleged that the Settlement was in fact an arrangement constituting a binding contract. Mr Head points out (correctly) that the requirements for pleading a contract set out in CPR 16 and PD 16 are not formally complied with in the Defences. However, in this regard I can content myself with the fact that nowhere in the Defences is it explicitly pleaded that the Settlement constituted an enforceable legal contract, and, although I pressed Ms Sleeman on this issue in her submissions, she did not agree to any particular characterisation of the arrangement. I am therefore satisfied that there is no case presented that the settlement was in fact a binding contract. I also note that an apparently insuperable obstacle to the idea that this arrangement was a contract is that it appears to have been an entirely unilateral arrangement – Mr Aliottta was to transfer shares to Mr Sleater and Mr Whitehead, but they do not appear to have agreed to do anything at all in return.

110. The e-mail and other documentation that I was presented with in respect of this agreement clearly does perform the function that a term-sheet or heads of terms perform in other types of agreements. However, there is a significant difference between a contract and a document setting out the terms on which a contract is proposed to be entered into. This document is the latter, not the former. If this is correct, then there can be no prospect of a right to specific performance of an obligation to transfer the relevant shares, and no constructive trust can arise on this basis (Howard v Miller [1915] A.C. 318 at 326, PC).

111. I also note in this regard that the Fourth to Sixth Defendants argued that a transaction that gives effect to an antecedent obligation or corrects a conditional allocation following failure of consideration is not a transaction for section 423 purposes, citing Phillips v Brewin Dolphin Bell Lawrie Ltd [2001] UKHL as authority for the proposition. The Claimants dispute that Phillips is authority for any such proposition, and I agree. There is no reason that a “transaction that gives effect to an antecedent obligation” could not itself be a transaction within the meaning of section 436(1). That is consistent with the approach referred to above in Credit Suisse (the need when identifying the transaction to give effect to the statutory purpose of protecting creditors), the approach in Invest Bank in the Supreme Court (meaning of transaction under s.436 is extremely broad) and Invest Bank in the Court of Appeal (whose decision the Supreme Court upheld) (need to interpret section 423(1) so as not to defeat the purpose of section 423 read as a whole).

112. Phillips is, however, potentially relevant to the 2025 Transactions, in that it holds that where assets are transferred in circumstances where the transferor receives a benefit not only under the immediate arrangement, but also under other collateral arrangements, the question of whether it is at an undervalue must be assessed by considering the entirety of the benefit received.

113. Finally, Ms Sleeman suggested that the mistake could have been remedied by agreement between the parties, since it does not require a court to rectify an agreement if the parties are agreed that there is a mistake. Leaving aside the absence of any evidence of any such agreement, the SHA contained a no variation clause whose effect was that any variation to the SHA had to be in writing to be effective (Rock Advertising). No such written variation was ever created, and this argument therefore necessarily fails. 6.3 The “Children’s Trust” argument

114. Mr Aliotta’s father-in-law, Mr Flanagan, effectively funded Mr Aliotta’s initial investment in the Company. He provided Mr Aliotta with £350,000 which Mr Aliotta then gave to AH and which AH then used to purchase shares in the Company. The argument for the Children’s Trust is that, when Mr Flanagan provided this money, he provided it on terms that it was to be used for the sole benefit of Mr & Mrs Aliotta’s children. The Aliottas say that they regarded the shares in the Company held by AH, being the proceeds of the investment of this money, as held on trust for their children at all times. A consequence of this was, they say, that the transfer of legal ownership of the shares in 2024 from AH to Mrs Aliotta did not effect any transfer of the beneficial ownership of these shares, which remained at all times vested in their children.

115. It is not argued that the alleged Children’s Trust was established by an oral or written declaration of trust of any kind – it can only therefore arise as a constructive trust.

116. As a preliminary point, I note that Mr Aliotta made an application on the first day of the trial for the admission of a witness statement from Mr Flanagan which – I assume – would have supported such an argument. However, the Claimants responded – I think reasonably – that if this evidence had not been raised at any earlier stage of the litigation, it was too late to raise it now. I agreed with their position. The basis for my decision was that CPR 32.10 provides: “If a witness statement or a witness summary for use at trial is not served in respect of an intended witness within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission.”

117. The prohibition imposed by CPR 32.10 on calling a witness whose statement has not been served within the specified time amounts to a “sanction” for the purposes of CPR 3.8(1), and so I was required to address the issue by reference to the well-known test in Denton v TH White Ltd [2014] EWCA Civ

906. I was therefore required to determine whether the breach of the rules was serious, why the default occurred, and to evaluate all the circumstances of the case, in order to decide whether to permit this evidence to be admitted. It would – I think – be impossible not to find that an application to admit a new statement from a new witness on the morning of a trial was serious. It would therefore require a persuasive explanation as to the circumstances to convince me that there was any justification for the request. The explanation put forward – that Mr Aliotta had only just been refused permission to represent his wife – did not come anywhere near that standard. I note that Mr Aliotta also suggested in oral submission that the reason for the late application was that Mr Flanagan had not previously been prepared to give evidence. However, this statement was unsupported, and – unsurprisingly – was not accepted by the Claimants. Finally, the application would unquestionably have required a delay to the trial, since Mr Flanagan is in the United States, and making arrangements to cross-examine him remotely would have required compliance with Annex 3 of PD32 and Appendix Z of the Chancery Guide.

118. There are a number of obvious logical problems with the Children’s Trust argument. One is that AH was in fact allotted only 16 new shares in the Company in return for its investment (since it already held 100 shares, and it is not suggested that these shares were also funded by Mr Flanagan). A second is that, if it is argued that all of the shares in the Company held by AH were held on trust for the children, the 2025 transfers of shares to Mr Sleater and Mr Whitehead must have been transfers of shares beneficially owned by the children, meaning that such transfers must have constituted either breaches of trust by AH as trustee or, if Mr Sleater and Mr Whitehead had had notice of the existence of the Children’s Trust, have resulted in their holding the shares as trustees for the children.

119. The evidence suggests that Mr Aliotta’s father-in-law provided the £350,000 by way of loan. Mr Whitehead says in his witness statement, “I seem to recall at some point later on Mario mentioned that he had borrowed the money from his father-in-law, and that he would have to service this loan and pay interest on it, but I cannot remember any more than that.”

120. It is perfectly possible for family members to enter into informal arrangements in which they provide other family members with funds which are intended to be used for the benefit of children. But those do not give rise to trusts. They simply give rise to hopes and expectations by the family members who have provided the funds that they will be used as was wished. A trust in favour of children (or anyone) cannot be created by a sidewind. All of this is consistent with the letter dated 19 January 2026 adduced by the Aliottas recently from the Flanagans in which they give (hearsay) evidence that the funds from Mr Flanagan were “dealt on an informal family basis in connection with the children.”

121. The Aliottas rely on the email correspondence in which Mrs Flanagan asked Mr Aliotta for an update on “the Lower Kings Road investment”. Mrs Flanagan says that this was because she (and it seems her husband) were having a meeting with their financial adviser. However if anything that email would be consistent with an investment having been made for the Flanagans. No-one is suggesting anyone has ever held any shares in the Company on trust for them. If the Aliotta Children’s Trust had genuinely existed, it would not be an investment for the Flanagans (and therefore a matter for their financial adviser) at all – instead it would be a matter for the Aliottas as the parents of the children (whilst they were still minors). In fact this correspondence is equally consistent with Mr Whitehead’s evidence that Mr Flanagan loaned the £350,000 to Mr Aliotta and the Flanagans were concerned to have an update on progress with the development insofar as that had a bearing on Mr Aliotta’s ability to repay them.

122. Mr Aliotta pleads that “Mr Flanagan indicated that he would be willing to provide funds, but only on the proviso that any funds advanced would be as a gift, only for the benefit of the Children of Mr and Mrs Aliotta (“The Children”)”, and that these funds were received by Mr Aliotta and invested in shares of the Company to be held by AH to be held for the benefit of the children. I think that it is at least possible that Mr Flanagan may have indicated something of the kind to Mr Aliotta. However, in order for such an indication to create a beneficial interest enforceable in equity, much more than a mere indication is required.

123. In addition to the problems with establishing common intention, there are also problems with establishing detrimental reliance. The only detriment that could be found on these facts would be if the settlor (Mr Flanagan) would only have paid the money in the first place if he was certain that the boys would be the beneficiaries, and that Mr Aliotta accepted the money on those terms, such that it would be unconscionable for him to retain it. The difficulty with this analysis is in fact Mrs Aliotta’s own evidence. She said – and I accept – that she was her parents’ favoured child, and that helping her and her husband out is something which her parents would have been inclined to do in any event. I think it is highly likely that Mr Flanagan may well have hoped that if the investment went well his grandchildren would benefit. However, the facts go nowhere near demonstrating that he would not have transferred the money had he not been certain that Mr Aliotta would hold it exclusively for the benefit of the children.

124. I do not think that the facts before me establish either common intention or detrimental reliance. Consequently I think that the idea of the “Children’s Trust” is no more than wishful thinking.

125. I note that it was not argued before me that the monies, having been advanced as a gift, were therefore held on a resulting trust for Mr Flanagan. I think that this was a wise decision. However, it is entirely clear to me that any such argument would have been defeated by the presumption of advancement. For the reasons that I set out in Kaur v Kaur [2025] EWHC 2806 (Ch) at [97], although the presumption of advancement between spouses may be regarded as an outdated doctrine, the operation of the presumption as between parent and child (or grandparent and child) is an integral part of modern family finance. 6.4 The 2024 Transfer to Mrs Aliotta

126. The question here is as to whether the transfer took effect either as a settlement of the shares for the benefit of the children, or gave rise to a resulting trust of the shares for the benefit of AH. As regards the first of these, it was common ground that no specific declaration of trust, oral or written, was made at the time of the transfer either by Mr Aliotta or by Mrs Aliotta. Thus, if the shares at that time belonged to AH, the transfer was a voluntary transfer by it. Its intentions are, for all practical purposes, Mr Aliotta’s intentions, and there is no evidence of any intention by him at that stage to create a trust of any form.

127. The law relating to resulting trusts gives effect to a default presumption about the intention of a person in making a gratuitous transfer of property. In such a case the law assumes that such a transferor would generally not intend the transferee to take the property beneficially. A voluntary transfer therefore only takes effect if that presumption can be rebutted. If it cannot, a resulting trust arises in favour of the transferor (Westdeutsche Landesbank Girozentrale v Islington LBC [1996] A.C. 669 at 708–709).

128. There are two ways in which this presumption can be rebutted. One is that where a transfer is from a husband to a wife, the “presumption of advancement” may be invoked. However, modern courts have generally been reluctant to apply this presumption, and as between husband and wife it has been said to be “on its death-bed” (Bhura v Bhura [2014] EWHC 727 (Fam) at [8]). I think the true position is that this should only be invoked in the absence of actual evidence as to what the true intentions of the parties actually were.

129. Mr Head persuasively argues that if the purpose of the transaction was in fact for Mr Aliotta to put assets outside the reach of creditors by transferring them to a third party, that is in itself sufficient evidence of an intention to transfer full ownership – if only because the creation of a resulting trust would have defeated the very purpose of the transfer. I agree with this argument. The issue therefore comes down to the reason that Mr Aliotta made the transfer.

7. Mr Aliotta’s motivation for the transactions

130. The critical issue for a s.423 application is the establishment of the mental state of the transferor of assets. I therefore turn now to the question of what motivated Mr Aliotta to enter into the transactions which are challenged.

131. I heard and read a great deal of evidence concerning the communications of and between the parties at the relevant time. For the reasons given above, I reject most of Mr Aliotta’s evidence about why he did what he did, on the basis that it is a product of a deliberate (albeit self-serving) attempt to protect his business partners and his family from the likely financial consequences if he loses the Main Action. I therefore need to consider the available evidence and draw the appropriate inferences.

132. In this regard the following exchange from Mr Aliotta’s cross-examination deserves to be recorded:- “Q. You want to make it, Mr Aliotta, as hard as possible for ISC ever to enforce any judgments against you or Aliotta Holdings, don't you? ” A. Absolutely. … Q. You'd prefer to see the lawyers paid than ISC paid. A. Absolutely. Q. And you'd even prefer to see Mr Sleater and Mr Whitehead get assets than [ISC] get assets. A. That was not the purpose for which that transaction happened, but absolutely. 7.1 Mr Aliotta’s Motivation for the 2024 Transactions

133. I think the position is this. When the company was established, it was Mr Aliotta’s sincere intention to transfer Property B into the Company. He therefore saw nothing wrong with allocating shares to himself on the basis that the property had – in effect – already been transferred. However, he also instructed the lawyer preparing the draft agreement to provide for the purchase of the property in order to “preserve optionality”. When he found that he was unable to transfer the property as he had intended – because he could not raise sufficient liquid funds to discharge the existing borrowing secured on the property – it then became necessary for him to decide what his alternative course of action actually was. His instinct – unsurprisingly – was to let the situation continue, since it improved his negotiating position as against Mr Sleater and Mr Whitehead. I think that at all times all three of them were clear that the shareholding would need to be adjusted, since the mismatch between the amounts contributed to the venture and the shareholdings received in it was so glaring. Any such restructuring would necessarily have involved a gratuitous transfer of shares in the Company from Mr Aliotta to Mr Sleater and Mr Whitehead.

134. The key question is as to why, having allowed the position to drift for 2 years, Mr Aliotta decided in September 2022 to agree a restructuring. The Claimants, unsurprisingly, say that this was a response to the commencement of the US Proceedings in July 2022. Mr Aliotta says that it was not, but his evidence cannot be relied upon on this point. The answer must therefore be inferred. The key points seem to me to be that (a) negotiations for a restructuring were ongoing well before the US Proceedings were launched, (b) Mr Aliotta’s evidence was that he had some suspicions that something was afoot before the formal issue of the proceedings, (c) that the information about the proceedings seems to have had a major impact on the partners, and (d) it was immediately clear to all parties that the Company could be caught up in them. In particular, a WhatsApp message sent by Mrs Sleater to Mr Aliotta on 1 September 2022 said “Mario obviously very concerned by todays news about [the Company] being listed as a majority shareholder asset you have against fraud law suits. I am sure we dont have all the facts and whilst I clearly empathise with your wider challenges etc – I would hope that its the sort of thing we all warrant having some sight off? It is all of our asset so we need transparency on any issues linked to it. We know the shareholding is wrong – the share ownership is not a majority, and whilst we are working through that in good faith I hope – this just underlines the serious concern of having such inaccuracies. Whether you end up at 32 or 40 or something between, the facts are its presenting huge and misrepresented risk to Trevor and I. Can you please confirm the current situation with the law suit and the risk to [the Company]? I am sure you will understand why this news has made me very nervous – as in reverse I am sure you or Trevor would be. Sara”

135. Mr Aliotta’s response to this was to say – wrongly – that there were no grounds for concern because the US Proceedings had been dismissed. However, by 16 September he had agreed the new share allocations and had begun discussing with professional advisers how this might be effected.

136. It is therefore entirely clear to me that it was felt that the restructuring of the shareholding was necessary, at least in part, to ensure that the Company did not acquire as a majority shareholder a potentially hostile party, and that the Claimants did not receive what Mr Aliotta, Mr Sleater and Mr Whitehead all regarded as an entirely unjustified windfall.

137. I am therefore satisfied that one of the purposes behind Mr Aliotta’s actions in agreeing to the Settlement was a desire to put assets beyond the reach of the Claimants. I think that he regarded his actions as morally justified, but I am nonetheless satisfied that that was his intention.

138. In April 2024 UK proceedings were commenced in the Chancery Division. In November 2024 this resulted in attempts to formalise the transfers. It does seem clear from the relevant WhatsApp messages that this was a response to a letter sent by the Claimants’ solicitors to all parties – in particular Mr Whitehead and Mr Sleater – and the following day Mr Aliotta gave instructions for the transfers to be finalised – the document prepared for this purpose being the forged board minutes. It is impossible to resist the inference that the steps taken to give effect to the transfer were taken in response to the letter, and were intended to complete the project of rectifying the position between the parties. It also seems clear that the purpose of backdating the board minutes was to make it appear that this process was completed before the solicitors’ letter was received, and had not been undertaken in response to it.

139. It was also at this point that the register of members of the Company was changed to represent that the shares which had in fact been issued to AH had been issued to Mrs Aliotta. This revised register was created on 21 November 2024.

140. I think that in assessing the intention behind these transfers, I need to look at the entire sequence of events from the signing of the initial SHA to the effecting of the transfers in November 2024. Having reviewed that sequence, it seems clear to me that the intention was to put the shares which AH had illegitimately but validly acquired on the establishment of the Company beyond the reach of the Claimants. As I say, I accept that Mr Aliotta may well have felt that this was simply a process of his giving back property which he had illegitimately acquired. However, I do not regard that as a defence to the s.423 action. Good consideration provides a defence to a s.423 action – the satisfaction of moral scruples does not.

141. The transfer to Mrs Aliotta can be dealt with in a more straightforward fashion. I think that it must be accepted that that transfer took place in November 2024, as part of the same set of proposals put into effect to reallocate the share issue. I do not believe that at that time Mr Aliotta believed that there was any “Children’s Trust”, and I therefore do not accept that he intended this to be a mere transfer of legal title which did not affect beneficial interests. AH owned the shares completely when it made the transfer, and it was a simple gift. I accept the argument that there is sufficient evidence of an intention to give to rebut the presumption of a resulting trust. However, that evidence is precisely the fact that the purpose of the entire scheme of which this transfer was a part was to put assets beyond the reach of the Claimants.

142. I also note in passing that if this was not the intention, then there is no other evidence to suggest that the transfer was not a simple gift that would give rise to a resulting trust. Thus, on the one hand, Mrs Aliotta held the shares on trust for AH, and on the other, she held them pursuant to a transaction reversible under s.423. In either case, I must treat the economic ownership of the shares as being vested in AH, and therefore in Mr Aliotta.

143. It follows from this that I find that the transfer of shares to Mrs Aliotta was neither a settlement of the shares for the benefit of the children, nor did it give rise to a resulting trust of the shares for the benefit of AH. It was a deliberate and intentional voluntary transfer, intended to put assets beyond the reach of creditors, whose effect was to vest legal ownership of the shares in Mrs Aliotta.

144. Finally, I note that the Fourth to Sixth Defendants say that evidence of the fact that Mr Aliotta was not seeking to put valuable assets beyond the reach of his creditors can be derived from the fact that he did not seek to deal with the shares of other companies that he owned in this way. This is however easily explained – the other companies were in fact worth nothing or nothing significant (as the CPR 71 process has revealed). There would have been no point in running the risk of improperly dissipating assets which were worthless. 7.2 Mr Aliotta’s Motivation for the 2025 Transactions

145. The position as regards the 2025 transfers is more complex. The transaction which is sought to be reversed is a transfer of the 64 shares held by Mrs Aliotta to Mr Sleater and Mr Whitehead (as to 36 shares and 28 shares respectively), so that they now own the Company between them.

146. I note that Mr Aliotta’s case before me was that he was impelled to these transactions by financial desperation, since he was in a position where he had to raise liquid funds as quickly as possible. He did not help his case by mischaracterising the position as involving “duress” – which, in the legal sense of the word, it did not – but I am clear that the primary motivating factor in his entry into the 2025 Transactions was simply to raise as much money as possible as quickly as possible, in a situation where he was under almost intolerable financial pressure. However, I also consider that – given his evidence as recorded in para 132 above – some part of his motivation must have been a desire to avoid the shares in the Company falling into the hands of ISC.

147. The transactions which the Claimants attack were part of a complex series of payments and transfers. The aggregate effect of this series of transactions was that some new cash was contributed by Mr Sleater and Mr Whitehead to the Company, that cash was used to repay Mr Aliotta’s director’s loan to the Company, and Mr Aliotta agreed to exit the Company by transferring the remaining shares to Mr Sleater and Mr Whitehead. The result of this was that the cash amounts paid by Mr Sleater and Mr Whitehead as consideration for the purchase of the shares were significantly less than the value of the shares which they received – Mrs Aliotta received £90,832. I have established at para 63 above that at the time of the transfers the value of these shares was £240,128. However, the Fourth to Sixth Defendants say that, if this transaction is looked at in the context of the wider series of transactions undertaken at that time, there is no undervalue.

148. The Claimants further submit that Mrs Aliotta in fact received no consideration at all, because the purchase price was paid into a joint account in the names of both her and Mr Aliotta. I should say that I do not accept this argument, which I think confuses the receipt of payment with the way in which it is dealt with after having been received. If I discharge a debt due to A by a payment into a joint account held by A and B, I do not think that it is in doubt that my payment obligation has been discharged. Indeed if Mr and Mrs Aliotta had had separate bank accounts, and the proceeds had been paid to Mrs Aliotta’s sole account and immediately transferred by her to Mr Aliotta’s sole account, I do not think that the subsequent transfer would permit an argument that she had not received the money paid to her.

149. I should note at this point that Mrs Aliotta’s evidence was that she did not take any active role in any of these transactions, and simply signed whatever pieces of paper her husband put before her. I think it is uncontroversial that he should be regarded as having acted as her agent throughout. In establishing the intention behind transactions in which she was involved, it is therefore his intention rather than hers which must be established.

150. The details of the 2025 transfers are set out at paras 35-39 above, and I do not repeat them here. As Mr Sleater and Mr Whitehead saw it, the overall effect of what was to be done was that Mr Aliotta was receiving £440,000 of benefit in total, and in exchange for this he was transferring his remaining shares in the Company to them. From the personal perspectives of Messrs Sleater and Whitehead, what was happening was that they were injecting a new £150,000 of funding into the company and paying a further £90,832 to Mrs Aliotta, in exchange for which they were getting the remaining 64 shares in the Company. I think it is clear that the price they were to pay for the shares was never calculated on the basis of the value of the shares per se, but was simply the balancing item left over after the other items had been calculated.

151. Part of the difficulty with analysing these transactions is that what Mr Aliotta was actually receiving was £125,000 of value paid by the Company (the £50,000 payment, the rent-free lease and the £50,000 receivable from Krilliot), the value of the shares in AH (£165,000) and the purchase price actually paid for the shares in the Company (£90,832). The repayment of the loan was – at least in theory – simply the substituting of one asset for another, and cannot be regarded as consideration received for this purpose. Thus the question of what consideration Mr Aliotta received for the shares therefore comes down to whether the amounts to be received by him from the Company constitute consideration for this purpose – if they do, he received £380,832 in consideration, if they do not, he received £255,832.

152. It is easy to see how, from the point of view of Mr Sleater and Mr Whitehead, they would have regarded payments made by the Company as in effect coming out of their own pockets – when the transactions were completed they would own 100% of the Company, and therefore any payment out made by the Company would directly reduce the value of the asset which they would end up owning.

153. However, the two questions which I have to answer are (a) whether I should look at the set of transactions as a whole, or only at the specific price paid for the sale of the shares, and (b) whether the transaction can in fact be said to have been at an undervalue.

154. As a preliminary issue, it is the case that the purpose of the transaction was to provide funds to Mr Aliotta at the expense of the surrender of property which was in effect owned by AH (see para 142 above). However, it is not disputed that AH was a single-owner company which was, in effect, an economic agent of Mr Aliotta. There is a great deal of company law which could be engaged here. However, none of this needs to be considered. The key point is that the Main Claim is against both Mr Aliotta and AH. Transfers between them, or transactions which benefit one at the expense of the other, are irrelevant from a s.423 perspective, since they do not affect the victim – they are the equivalent of a defendant moving money from one pocket to another. The position would, of course, be very different if one party were the subject of the Main Claim and the other was not. However, that is not the case here.

155. On the first question, I think it would be perverse to look only at the share component of the set of transactions. It was held in Invest Bank that for the purposes of s.423, a “transaction” can encompass an arrangement made by the defendant between two third parties. The position here seems to me to be simply the mirror image of the position reached in that case. In Invest Bank it was held that the owner of a wholly-owned company could be treated as being the economic owner of the assets held by that company, such that a disposal of the company’s assets effected by him could be viewed as a disposal by him. In this case, the wholly-owned company disposes of assets on the instruction of its owner pursuant to an arrangement by which the owner of the company receives a benefit. It would be contrary to the rationale of the decision in Invest Bank not to take such a benefit into account in evaluating whether the transfer made by the Company was in fact at an undervalue. Consequently I think that the value received by Mr Aliotta in respect of the 2025 transactions, taken as a whole, was £380,832.

156. Mr Head poses two challenges to this finding. One is on the basis of Millett J’s finding in Re M C Bacon Ltd [1990] BCC 78 at 92D to the effect that in applying s.238 of the Insolvency Act to a disposal by a company, it is only the consideration received by that company which should be taken into consideration, and the same principle should apply to the application of s.423. I do not accept this – as the Supreme Court said in Invest Bank “Although sharing some common features, the regimes for transactions at an undervalue and for preferences are clearly separate and are aimed at different types of transaction.” (at [74]). The other is on the basis of Miles J’s observation in Credit Suisse at [608] “I also consider that the fact that a party to the relevant transaction provides consideration to a third party should be disregarded in determining the value received by the “debtor” save to the extent that receipt by the third party inures to the benefit of the “debtor”. This is clearly correct as regards value received by unconnected third parties, but not where – as here – the debtor and the third party are economically the same.

157. On the basis of my findings above as regards valuation, the shares transferred were at that time worth £240,128. That does not constitute a transaction at an undervalue. I am therefore satisfied that s.423 does not apply to this transfer.

158. I also note that even if the higher valuations contended for by the Claimants were applied, the value to be attributed to the shares at that time would be either £362,000 or £456,000. None of these would, to my mind, support an argument that the transaction was “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” as required by s.423(1)(c).

159. My conclusion on this point is therefore that, even though one of Mr Aliotta’s purposes in entering into these transactions was to put assets beyond the reach of ISC, s.423 is not engaged, since the transaction was neither a gift (per s.423(1)(a)) nor a transaction for a consideration the value of which, in money or money’s worth, was significantly less than the value, in money or money’s worth, of the consideration provided by himself (per s.423(1)(c)). In this regard, I note that the applicability of this section does not turn on fine calculations as to exact valuation – the section is only engaged if the amount received is “significantly” less than the consideration delivered. None of the valuation evidence that I heard could have led to the conclusion that this was the case.

8. Remedies

160. Under section 425 of the Act, the Court has a wide range of orders that it can make. Generally however the remedy will be to require the relevant property to be transferred back to the transferor where it can be available to claims by creditors. That is an order “restoring the position to what it would have been if the transaction had not been entered into” (section 423(2)(a)); and see also section 425(1)(a) being an order that requires “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”.

161. The position where an asset has been transferred to an innocent transferee is that the Court will normally simply order the asset to be transferred back to the transferor. See 4Eng v Harper [2009] EWHC 2633 (Ch) per Sales LJ. at [14(2)]: “…where an asset has been transferred to a transferee who has no knowledge that the transferor acted with a relevant purpose in making the transfer, and then the transferee has simply held the asset while its value has fluctuated in line with market conditions, I think that ordinarily the appropriate order under s. 423(2) and s. 425 should be an order for the transfer of the asset (either to the creditors directly or to the transferee).” (this last must be a misprint for “transferor”).

162. Where the transferee is not innocent, the normal order will be as above but potentially with additional orders to protect the transferor’s creditors to the fullest extent. See 4Eng at [14(3)]: “At the other end of the spectrum, however, if the transferee has taken property knowing that it was transferred to him by the transferor for a relevant purpose, and has sought to further the fraudulent design by lying to the transferor's creditors to shield the property against their claims, the justice of the case will be very different. Then it may well be appropriate to make orders against the transferee to protect the creditors to the fullest extent – perhaps by a combination of orders to transfer property under s. 425(1)(a) or (b) with orders for payment of money under s. 425(1)(d), if the property has gone down in value in the hands of the transferee – by analogy with the approach to damages in cases of deliberate deceit exemplified by Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254.”

163. The Fourth to Sixth Defendants advance a curious argument on remedies. In effect, they say that the transfer of the shares back to AH would revive the claims which they claim were settled by the transfer of the shares in the first place. Thus, they say that if the shares transferred in 2024 were transferred back to Mr Aliotta, the Fourth to Sixth Defendants’ claim against him for non-transfer of Property B would revive. They then say that the Fourth and Fifth Defendants and Mr Aliotta could compromise the claim by AH transferring the shares back to the Fourth and Fifth Defendants. Hence they argue that if the shares are transferred back to AH, Mr Aliotta is in principle able to sell them for full value, and such a sale would not be challengeable under s.423. Hence, they argue, the making of a transfer order would serve no useful purpose.

164. It is perfectly correct that, once the shares are transferred back to AH, it would in principle be perfectly open to AH to sell them for full value, and such a sale would not be challengeable under s.423. However, the key here is “for full value”. The reason the s.423 order can be made in respect of the 2024 transfer is precisely because the compromise of the Property B claim would not in fact have transferred any value to AH, since it would have constituted a sale by AH for full value. The claim of the Company against him is therefore of negligible value, and a transaction under which that claim was compromised in exchange for a transfer of the shares would itself be a transaction at undervalue.

165. A final issue arises concerning the sequence of events. I have held that the transfer by AH of the 64 shares to Mrs Aliotta is potentially voidable

166. By s.423(2)(a), what I am required to do is to consider what order would be needed to restore the position to what it would have been if the transaction had not been entered into. This involves considering what the position would have been if the shares had not been transferred to Mrs Aliotta.

167. I am satisfied that after the transfer Mr Aliotta continued to deal with the shares exactly as he would have done had they not been transferred from AH to Mrs Aliotta. I am also satisfied that Mr Aliotta’s entry into the 2025 Transactions would have been exactly the same as it was whether title to the shares had been vested in AH or in Mrs Aliotta – I simply do not believe that the fact of legal ownership had any impact at all on his decision-making. Consequently, I am satisfied that if the transfer to Mrs Aliotta were to be voided under s.423, the result would simply be that the 2025 Transactions would have to be evaluated with AH as the owner of the shares. Since I am satisfied that this would have made no difference at all to the transaction as undertaken, I do not consider it necessary to make any order as regards this transfer.

168. As a result, (a) the 2024 transfers to Mr Sleater and Mr Whitehead of the shares purchased from AH in 2024 (34 and 18 respectively) are reversed, but (b) the 2025 transfers (36 and 28 shares respectively) must stand. In the latter case, Mrs Aliotta was at the time of the transactions the legal owner of the shares. However, as explained in para 142 above, she was either holding the shares on trust for AH as beneficial owner, or holding them by virtue of a transfer which should be reversed pursuant to s.423(1)(a). In the first case, the existence of the trust can be disregarded, and the question is simply one of what value accrued to AH and Mr Aliotta (who, on the facts of the instant case, form a single economic unit). In the second case, the transaction should be reversed under s.423. However, there is no need to do this, since the order I am required to make under s.423(2)(a) is to restore the position to what it would have been if the transaction had not been entered into. As noted above, if the transfer to Mrs Aliotta had not been made, the shares would have remained vested in AH, and the transaction would be evaluated as I have set out above.

169. Mr Sleater and Mr Whitehead therefore now own the holdings which they were initially allotted (56 and 28 shares respectively) and were entitled to delivery of (and now own) the 36 and 28 shares purchased from Mrs Aliotta, leaving them with 148 shares in total (74% of the Company) between them. AH retains 52 shares.