## Facts

- Mr. Wishart transferred property into a trust shortly before encountering financial difficulties.
- Credit and Mercantile plc, a creditor, argued the transfer aimed to place assets beyond creditors’ reach, including its own claims.
- The property was a valuable asset that could have been used to satisfy Mr. Wishart's debts.
- The court examined the timing of the transfer, Mr. Wishart's financial situation, and relationships among involved parties.
- It was found that the transfer occurred when Mr. Wishart was aware of impending insolvency, supporting an inference of fraudulent intent.

## Issues

1. Whether the transfer of property into a trust with intent to defraud creditors can be set aside under Section 423 of the Insolvency Act 1986.
2. Whether the creation of a trust can shield beneficial interests from claims under insolvency law when fraudulent conduct is found.
3. What evidential requirements are necessary to establish fraudulent intent under Section 423.

## Decision

- The court found the transfer to the trust constituted a transaction at an undervalue as no meaningful consideration was received by Mr. Wishart.
- It was determined that Mr. Wishart’s intent was to put the property beyond the reach of his creditors.
- The requirements for a fraudulent transfer under Section 423 were satisfied, making the transaction voidable.
- The court ordered the property to be restored to Mr. Wishart’s estate for creditor satisfaction.

## Legal Principles

- Section 423 of the Insolvency Act 1986 permits setting aside transactions defrauding creditors when made at an undervalue with the intent to prejudice creditor interests.
- Claimants bear the burden of proving both undervalue and fraudulent intent.
- Trusts, while effective for asset protection, do not preclude assets from being restored to an insolvent estate if the transfer is found fraudulent.
- Equitable principles in trusts yield to statutory protections for creditors in fraud contexts.
- Circumstantial evidence, such as transfer timing and debtor financial position, can establish fraudulent intent.

## Conclusion

The Court of Appeal clarified that assets transferred into a trust with the purpose of defrauding creditors can be set aside under Section 423 of the Insolvency Act 1986, ensuring that attempts to use trusts as a shield against creditor claims are ineffective where fraudulent intention is demonstrated.

Wishart v Credit & Mercantile plc [2015] 2 P & CR 322