Case No: A2 2003 1748 CHBKF
Neutral Citation Number: [2004] EWCA Civ 800
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT
CHANCERY DIVISION – His Honour Judge Norris QC
(sitting as a judge of the High Court)
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Tuesday 6th July 2004
Before :

LORD JUSTICE JUDGE
 LORD JUSTICE WALLER
and
LORD JUSTICE JONATHAN PARKER

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Between :

	Ramlort Ltd	Appellant	
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	Michael James Meston Reid	Respondent	

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(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
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Gabriel Moss QC and David Alexander (instructed by Messrs Clintons) for the Appellant
Stephen Davies QC and Brian Watson (instructed by Messrs Peterkins) for the Respondent

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Judgment
Lord Justice Jonathan Parker : 
INTRODUCTION
1.	This is an appeal by Ramlort Ltd (“Ramlort”) against an order made by His Honour Judge Norris QC, sitting as a judge of the Chancery Division (in Bankruptcy), on 18 July 2003, in proceedings brought against Ramlort by Mr Michael Reid, as judicial factor of the estate of the late Allan Thoars (“Mr Thoars”), who died domiciled in Scotland on 19 September 1996.   Mr Thoars died intestate and insolvent.   
2.	By a Declaration of Trust dated 26 July 1996 Mr Thoars declared that he held the benefits of a whole life assurance policy (“the Policy”) effected on his life with Skandia Life Assurance Company Ltd (“Skandia”) on trust for Ramlort absolutely.   It is common ground that as consideration for the making of the Declaration of Trust Ramlort made two payments.   One was a payment of £1,100 to a third party.   The other was a payment of £1,900 which the judge found was made by way of loan to Mr Thoars (there is no challenge to that finding on this appeal).   
3.	By his originating application in the proceedings, Mr Reid seeks a declaration that the making of the Declaration of Trust constituted a transaction at an undervalue within the meaning of section 339 of the Insolvency Act 1986 (“the 1986 Act”), and an order setting the Declaration of Trust aside.  At an early stage in the proceedings a preliminary issue was directed as to the extent to which (if at all), in valuing the consideration provided by Mr Thoars to Ramlort by the Declaration of Trust, account should be taken of the fact that Mr Thoars underwent a liver transplant operation on 18 September 1996 and that he died the following day.   The preliminary issue was heard by The Rt. Hon. Sir Andrew Morritt V-C in November 2002, but he declined to decide it.  He took the view that the value of the consideration provided by Mr Thoars to Ramlort was a matter for the court to determine at trial, after considering all the available evidence.    
4.	The trial took place before Judge Norris QC.  The judge found that as at 26 July 1996 (the date of the Declaration of Trust) the Policy had a minimum value of £10,000.   As to the payments made by Ramlort as consideration, the judge valued each payment at nil.     He accordingly found that the making of the Declaration of Trust was a transaction at an undervalue within the meaning of section 339.
5.	By his order, the judge ordered that the proceeds of the Policy (amounting to some £186,000), together with accrued interest, be held on trust to repay to Ramlort the sums of £1,900 and £1,100 which Ramlort had paid as consideration, and subject thereto on trust for Mr Reid as part of Mr Thoars’ insolvent estate.   
6.	On this appeal, Ramlort challenges the judge’s findings as to the minimum value of the Policy and as to the value of the consideration provided by Ramlort, contending that as at 26 July 1996 the Policy was not worth significantly more than the value of the consideration which Ramlort gave for it, and accordingly that the making of the Declaration of Trust was not a transaction at an undervalue within the meaning of section 339.   In the alternative, should that challenge fail, Ramlort contends that the appropriate remedy is not to set aside the Declaration of Trust, but rather to order Ramlort to pay monetary compensation equal to the amount of the undervalue.
7.	Mr Reid has served a Respondent’s Notice inviting us to uphold the judge’s decision on additional grounds.
8.	Permission to appeal was granted by Carnwath LJ on the papers on 28 September 2003.
9.	I should record at this point that the version of the judge’s judgment which was before us at the hearing of the appeal contained a formatting error, in that paragraph 44 of the judgment was split into two paragraphs.   It now transpires that that error was at some stage corrected and a revised version of the judgment produced, with different paragraph numbering.   In this judgment I adopt the paragraph numbering in the revised version.    The judge’s judgment is now reported as Re Thoars (Dec’d) [2003] EWHC 1999 (Ch); [2003] BPIR 1444
THE BACKGROUND FACTS
10.	Mr Thoars took out the Policy on 1 February 1994.   He was then aged 47.   He had been a heavy drinker for many years, and had become alcohol-dependent.      Although he had in the past received treatment for his alcohol-dependency, by February 1994 he was once again drinking heavily and on a regular basis.   
11.	The terms of the Policy are summarised by the judge in paragraphs 4 to 9 of his judgment, as follows:
“4. Under the policy terms, referred to as the "Scandia Plan", the sum assured was fixed.  So, also, were the premiums.  Clause 2 of the terms provided that the premiums were payable until the death of the life assured and that there would be a thirty day period of grace allowed for the payment of premiums.  On non-payment of the premium the policy would be automatically paid-up, provided that it had acquired a surrender value.  If it had not acquired a surrender value it would lapse. 
5. Although expressed as a "whole life policy for a fixed sum assured", the policy is also described as a "unit-linked policy".  By clause 4 of the policy terms, units in selected funds were allocated out of the premium paid at a fixed percentage.  By Clause 5, during the life of the policy the number of units allocated could be reduced to reflect the charges of the company in setting-up and maintaining the policy and the cost of maintaining the level of life cover provided by the policy.  The premium payable by Alan Thoars was in fact only just sufficient to maintain the level of life cover provided. 
6. The units allocated to the policy were relevant only in two contexts.  First of all, if there was very substantial growth in the units allocated, then, in addition to the sum assured, the policy might pay an “investment addition”.  Secondly, by Clause 9, the policyholder had the right to surrender the policy.  Clause 9 provided that the policy might be surrendered, in whole, for a surrender value determined by the actuary to the company by reference to the value of the units allocated to the policy fund.
7. It should be noted that this definition of "surrender value" in the policy excludes any value to be attributed to the whole life element of the contract; that is to say, to the fact that at any given time the company was on risk to pay £180,000 were the policyholder to drop dead.  Clause 9 deals only with the unilateral right to surrender and does not preclude a negotiated surrender, by consent, in other circumstances, for a different value.
8. Clause 10 of the policy provided for it to be converted into a paid-up policy or to lapse in the circumstances that I have indicated.
9. Although the benefits provided by the policy were, on their face, fixed, as was the premium, the policy terms contain provision for variation.  By Clause 18 of the policy documents there was contemplated “a review”. At the review, if the actuary was of the opinion that the performance of the units to which the policy was linked were insufficient to sustain the sum assured, and the other benefits payable under the policy, then those benefits could be reduced provided that they were not reduced below 75 per cent of the premiums payable.”
12.	By the end of 1994, two companies owned and controlled by Mr Thoars, namely Hair Affair Ltd and DMT (Toiletries) Ltd, owed a total sum of about £185,000 to Ramlort.   Ramlort is owned and controlled by Mr Andre Frenkel.   From 1995 onwards, Mr Frenkel was pressing Mr Thoars to arrange for payment of this indebtedness.   Although, as the judge observed in paragraph 17 of his judgment, there is no evidence of any direct personal liability of Mr Thoars to Ramlort in respect of this indebtedness, it is clear that Mr Thoars nevertheless regarded himself as bound to do what he could to see that it was paid.   
13.	The judge takes up the story in paragraphs 49 to 60 of his judgment, as follows:
“49. The documents show that during the course of 1995 Mr. Thoars was in correspondence with Mr. Frenkel and was trying to explain to Mr. Frenkel how he was going to get the Hair Affair account cleared.  He told Mr. Frenkel that he, Mr. Thoars, had made himself ill and had put unfair pressure and strain not only on Mr. Frenkel but also on Mr. Thoars' own family, that he had troubles with the Commerzbank, the VAT people, the local police (through drink related incidents), plus numerous other small problems.  The reference to "trouble with the VAT people" was a reference to an impending trial of Mr. Thoars on charges of fraud relating to a VAT return. 
50. In the course of that correspondence, it is apparent that by the autumn of 1995 Mr. Thoars was proposing that he would use a pension policy, held for the benefit of himself and his wife, as a source of funds to repay Ramlort.  In September 1995 Mr. Thoars and his wife instructed the pension provider to communicate with consulting actuaries instructed on behalf of Ramlort with a view to seeing how the pension policy could be used.
51. By November 1995 Mr. Thoars' state of health had deteriorated sharply, and Mr. Fenkel was so informed.  By a letter dated 14th November 1995 Mr. Thoars' daughter gave this account to Mr. Frenkel of her father's condition: "To date the doctors are saying he has an ulcer, a problem with his liver, he is jaundiced and anaemic and there may also be a possibility of internal bleeding.  His blood is not clotting properly and his legs are covered in burst blood vessels."  Notwithstanding that condition, Mr. Thoars was proposing to meet with Mr. Frenkel, provided the VAT court case was finished, with a view to going through everything with Mr. Frenkel. 
52. However, during the week in which Mr. Thoars had proposed meeting Mr. Frenkel he was in fact admitted to Aberdeen Royal Infirmary with acute septicemia and liver failure.  The consultant physician who had the care of Mr. Thoars described this as "a very serious infection of the bloodstream that carries an appreciable mortality."  One of the complicating factors that Mr. Thoars suffered from was haemorrhaging as a complication of the liver disease.  He was kept as an inpatient for some three weeks and his condition was stabilised.  He was discharged home. 
53. At the beginning of January 1996 Scandia Life wrote to Mr. Thoars to offer him an automatic increase option with effect from the next policy anniversary.  This would increase the premium payable from £1,176-odd to £1,323-odd and would increase the sum assured from £180,000 to £185,600 (in round figures).  Mr. Thoars did not immediately send off a cheque.  According to the offer letter the closing date of the offer was 1st March 1996.  One possible reason for non-payment of the premium immediately was shortage of funds.  Another possible reason is readmission to hospital, for on 7th February 1996 Mr. Thoars was admitted to hospital again with a further complication, namely, fluid on the lung. 
54. The documents disclose that certainly by 26th February 1996 Mr. Thoars had been talking with Mr. Halberstadt not only about the pension policy but also about the Scandia policy, perhaps prompted by the Scandia renewal notice.  On 26th February there was faxed to Mr. Halberstadt [Ramlort’s accountant], at his request, a copy of a declaration of trust of the policy.  This was in the terms that were eventually adopted.
55. On 6th March, however, Mr. Thoars wrote a cheque for the increased premium payable on the policy as from 1st February.  It is clear, from the face of the cheque, that this cheque was not met when first presented and was only met on representation.  It remained unpaid on 14th March 1996.  On that date Mr. Frenkel wrote a long letter to Mr. Thoars, which he faxed to him.  In that letter Mr. Frenkel pleaded his case as to why the debts outstanding to Ramlort should be paid by Mr. Thoars.  Mr. Frenkel called on Mr. Thoars not to rely on the benefit of limited liability and to do the honourable thing and to pay the debt out of his own money.  He said: "You yourself came at one stage to realise that this is not the way to act when you wrote me that letter where you pledged to use everything you own to make sure I will not lose a penny.  You have sworn to me many times that come this or that date you will sign whatever is necessary to be able to repay me through your pension, and now are all these promises to be ignored?  Alan, I realise that there might be difficulties that you may have with your family; however, you must understand that it is with you that I dealt and I expect you to overcome whatever difficulties you might encounter."
56. Four days later, on 18th March 1996, Mr. Halberstadt faxed Mr. Thoars and asked Mr. Thoars to provide a letter of authority enabling Mr. Halberstadt to discuss the details of the policy with Scandia.  This Mr. Thoars immediately did. Although his authority is dated 15th March, it is clear, however, that it was faxed on 18th March. 
57. By 19th March Mr. Halberstadt had obtained from Scandia Life a projection of the policy.  The projection provided by Scandia gave the premium as the original £1,176 (not the increased premium, the cheque for which appears still not to have cleared).  It contained a section headed "Surrender Values".  It said: "Assuming your investment grows at 5 per cent, after five years your policy has a value of 0", and it gave the same figure assuming a 10 per cent growth over five years, a 5 per cent growth over ten years and a 10 per cent growth over ten years.  The letter said that the figures were only examples and not guaranteed.
58. On 20th March 1996 Mr. Thoars wrote to Mr. Frenkel making further proposals as to the way in which the pension policy could be used.  His proposal was for an immediate utilisation of 50 per cent of the pension fund by payment to Mr. Frenkel.  He proposed: "At a later date, once everything is clear and the net benefit to you is established, the balance still due by me to you, on a personal basis, which I would hope to pay bit by bit". 
59. The documents disclose that the original policy documents were lost and Mr. Thoars paid for duplicate documents to be issued; these he received in April 1996. 
60. His cheque for the increased premium was finally paid by his bankers on 18th April 1996, though he had been informed that his proposal had been accepted by a letter dated 4th April.  At this stage it appears that Mr. Thoars' VAT case, which had been adjourned because of his ill-health, was coming up for review again.  It was apparent that Mr. Thoars was not fit to continue with the trial and there are a number of medical reports, dated 1st May 1996, which indicate what his condition was at that date.”
14.	By this time, Mr Thoars was under consideration for a liver transplant.   A psychiatrist’s report obtained at about that time indicates that Mr Thoars was very anxious about his financial affairs and that he saw bankruptcy as inevitable.   The judge continues with the story in paragraphs 63 to 66 of his judgment, as follows:
“63. By the middle of May Mr. Thoars' medical advisers were discussing with him the prospect of a liver transplant.  They record that Mr. Thoars was aware that it was a very major undertaking.  By the end of May his medical advisers had concluded that the only therapeutic measure then available was liver transplantation, that Mr. Thoars had considered it and had accepted their conclusion. 
64. He was readmitted to hospital on 18th June and discharged on 28th June.  The purpose of this admission was to assess him for liver transplantation.  It was apparent that during that time he suffered from liquid in the lungs.  A current medical report indicated that his mind was extremely active, that he was thinking of planning possible new ventures, but that physically he was very easily exhausted and unable to take much exercise.  He was very focused on his liver transplant and was thinking very positively, but it was suspected that he was suffering a fair degree of anxiety. 
65. Within days of the assessment Mr. Thoars was readmitted to hospital for a blood transfusion.  As the documents make clear, whilst there were small improvements in his medical state, his underlying condition remained serious.  He was in hospital for the purposes of the blood transfusion from 15th July until 23rd July 1996.  When released, he was released on terms that he would return for a twice-weekly review.  
66. It is plain, from the documents, that by this time provisional liquidators had been appointed of some of Mr. Thoars' companies.  He was being pressed by the provisional liquidators to provide details to enable them to investigate the companies' affairs.  Mr. Thoars, in responding to their requests, made clear that he did not wish to avoid his responsibilities but that he was not prepared to sign documents in his then current state of health.  He so informed the provisional liquidators on 2nd July, on 15th July and on 24th July.  His letter of 24th July reads: "I wish to repeat that I have no desire whatsoever to avoid my responsibilities in this matter.  At present I am advised by the medical specialists I am involved with that I should not be signing any important documents at the present time.  This will change after my transplant."”
15.	On 26 July 1996 Mr Frenkel flew from Manchester to Aberdeen to see Mr Thoars at his home.   In her witness statement, Mrs Thoars describes this visit, as follows:
“5.   ….   [Mr Frenkel] arrived at at about 10am.   He had taken the first flight out of Manchester.   Allan [i.e. Mr Thoars] was due to go back into hospital in Aberdeen that day.
6.   Allan’s health was very bad and his judgment was very impaired.   Sometimes he would sit and speak total rubbish.   ….  I was not present during Mr Frenkel’s conversation with Allan, but at the end of it I was asked to sign a piece of paper.   I did not and still do not know what it was.  ….”
16.	In fact, the “piece of paper” which Mrs Thoars signed was the Declaration of Trust.   She signed it as a witness to Mr Thoars’ signature.
17.	As the judge observed in paragraph 20 of his judgment:
“The declaration of trust …. gave Ramlort the benefit of a policy which (if paid) would satisfy the debts of Hair Affair and DMT in circumstances where Ramlort otherwise had no prospect of recovery from the companies at all.”
18.	As I indicated earlier, it is common ground that consideration for the Declaration of Trust was provided by Ramlort in the form of two payments, each made by cheque drawn on Ramlort’s account.   A cheque for £1,900 was drawn in favour of Mr Thoars, and a cheque for £1,100 was drawn in favour of a third party, Nat Hawk Ltd.   
19.	The judge found that the payment of £1,900 was a loan by Ramlort to Mr Thoars, and, as mentioned earlier, there is no challenge to that finding.   As to the terms of the loan, the judge said no more than this (see paragraph 97 of his judgment):
“There is, however, no evidence as to what the terms of the loan were and I shall accordingly find, in the absence of other evidence, that it was a loan repayable on demand.”
20.	Given that finding, and in the absence of any reference in the judgment to the charging of interest on the loan, the appeal has proceeded on the footing that the loan was interest-free.
21.	As to the cheque for £1,100 in favour of the third party, Nat Hawk Ltd, Mrs Thoars’ evidence under cross-examination was to the effect that Mr Thoars received the payment in cash from the third party.   The judge did not refer expressly to this evidence in his judgment, beyond saying (in paragraph 76 of his judgment) that Mrs Thoars had recalled that “one of the cheques had to be cashed (rather than paid into the bank and the money passed through the bank)”.   In paragraph 110 of his judgment the judge, referring once again to the cheque for £1,100, said this:
“The incoming value was £1,100 payable to Nat Hawk.   But that did not come into the insolvency estate: it went to a third party and there is no evidence that Mr Thoars was thereby relieved of any obligation.”
22.	On 18 September 1996 Mr Thoars underwent a liver transplant operation.   Following the operation his condition deteriorated, and in the early hours of 19 September 1996 he died.   The immediate cause of death was asystolic cardiac arrest occurring during re-perfusion of his transplanted liver.
23.	Mr Thoars died insolvent, and on 16 September 1997 Mr Reid was appointed judicial factor of his estate.   According to Mr Reid’s estimated statement of affairs as at the date of his appointment, there was a total estimated deficiency in the estate of £711,000.   The major creditors were the Bank of Scotland (in a sum in excess of £175,000), and Commerzbank (in a sum of approximately £441,000).   In due course, a claim was made under the Policy by Ramlort.   The claim was duly met by Skandia.    A sum in excess of £200,000, representing the proceeds of the Policy together with accrued interest, is currently held on deposit in an account in the joint names of the parties’ solicitors.
THE 1986 ACT
24.	Section 339, in Part IX of the 1986 Act, is headed ‘Transactions at an undervalue’.   It provides as follows (so far as material):
“(1) Subject as follows in this section and sections 341 and 342, where an individual is adjudged bankrupt and he has at a relevant time (defined in section 341) entered into a transaction with anyone at an undervalue, the trustee of the bankrupt’s estate may apply to the court for an order under this section.

(2)  The court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction.

(3)   For the purposes of this section and sections 341 and 342, an individual enters into a transaction with a person at an undervalue if – 

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration,

(b) ….; or

(c) he enters into a transaction with that person 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 the individual.”

25.	Section 340 deals with the giving of preferences.   Section 341 defines the expression ‘relevant time’.   Neither of those sections is material for present purposes.
26.	Section 342 provides as follows, so far as material:
“(1)   Without prejudice to the generality of section 339(2) …., an order under [that subsection] with respect to a transaction …. entered into or given by an individual who is subsequently adjudged bankrupt may (subject as follows):
(a) require any property transferred as part of the transaction, or in connection with the giving of the preference, to be vested in the trustee of the bankrupt’s estate as part of that estate;
….
(d) require any person to pay, in respect of benefits received by him from the individual, such sums to the trustee of his estate as the court may direct;
….
(3)   Any sums required to be paid to the trustee in accordance with an order under section 339 …. shall be comprised in the bankrupt’s estate.”
27.	Sections 238 and 241 contain equivalent provisions in relation to transactions at an undervalue entered into by a company which subsequently goes into administration or liquidation, but with the additional requirement (in subsection 238(5)) that no order is to be made under that section if the court is satisfied that the company entered into the transaction in good faith and for the purpose of carrying on its business, and that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company.   
28.	Section 423 is directed at transactions defrauding creditors.   It provides that where a person has entered into a transaction at an undervalue, the court may, if it is satisfied that the person concerned entered into the transaction for the purpose of putting assets beyond the reach of a person who is making, or who may at some time make, a claim against him, or of otherwise prejudicing the interests of such a person, make such order as it thinks fit for restoring the position to what it would have been if the transaction had not been entered into, and for protecting the interest of persons who are victims of the transaction.
THE EVIDENCE BEFORE THE JUDGE
A.   The evidence of fact
29.	The judge heard oral evidence of fact from Mrs Thoars, Mr Frenkel and Mr Halberstadt.   He found Mrs Thoars to be open and spontaneous in her evidence and he had “not the slightest doubt about her honesty”, although he noted (in paragraph 74 of his judgment) that she had a clear antipathy to Mr Frenkel.   He went on to observe that since there was no allegation of duress, he had left out of account all evidence of pressure on Mr Thoars to execute the Declaration of Trust.   In paragraphs 75 and 76 of his judgment he said this about Mrs Thoars’ evidence:
“75. Mrs. Thoars told me that she was absolutely sure that she was not present at the meeting between Mr. Frenkel and her late husband but that she only came in at the end of the meeting to sign a document; that when she was asked to sign, Mr. Frenkel had said: "This is nothing for you to worry about, it is just to keep my accountant happy.  It will never be used."  She said that she saw, at the conclusion of that meeting, two cheques and that Mr. Thoars had told her that the money was a loan. 
76. When challenged about that, she said in cross-examination that Mr. Thoars had told her it was a loan and that she knew he had told her the truth.  She accepted that he was not always open and that he kept some things to himself, but said that he did so in order to keep the worry to himself because he did not want her to worry unnecessarily.  She specifically told me that when her husband told her the money was a loan, he also told her that the purpose of the loan was so that he, Mr. Thoars, could carry on the case with Mr. Lefevre.  She told me, in oral evidence, that she recalled that one of the cheques had to be cashed (rather than paid into the bank and the money passed through the bank).”
30.	The judge was very much less complimentary about the evidence of Mr Frenkel, finding him to be neither open nor spontaneous.   The judge continued (in paragraph 77 of the judgment):
“….  The characteristic of his evidence was that it was guarded.  Sometimes when care is taken in the giving of evidence the impression is formed that the witness is endeavouring to be sure that having trawled his memory the answer is truthful.  In Mr. Frenkel's case I formed the impression that he was careful because he wanted to consider the implications of the answer for the case that he was giving.”
31.	Having recited in some detail Mr Frenkel’s evidence about his course of dealings with Mr Thoars, culminating in the meeting on 26 July 1996 when the Declaration of Trust was executed, the judge concluded (in paragraph 90 of his judgment) that Mr Frenkel was not a credible witness and that his account of the meeting on 26 December 1996 was not to be accepted unless supported by the documents or by other evidence.   After specifically rejecting much of Mr Frenkel’s evidence about the meeting, the judge said this (in paragraph 95 of his judgment):
“Accordingly, and with regret, I find that I am not able to rely on the evidence of Mr. Frenkel as to what happened at the meeting.”
32.	Turning to the evidence of Mr Halberstadt, who played a subsidiary role in the history of the matter and whose evidence was not substantially challenged, the judge said this (in paragraph 89 of his judgment):
“Mr. Halberstadt also gave evidence, though he could give no direct evidence as to the content of the crucial meeting on 26th July.  He confirmed to me that there was a debate between himself and Mr. Frenkel as to whether or not it was worth taking the policy on.  He confirmed that it was his writing on the cheque stubs produced during the course of the trial.  He confirmed that he had written one of the stubs as payable to "Scandia Life" although the payee was actually a different payee, at the request of Mr. Thoars, and in relation to the initials "LN" on the second cheque for £1,900 he said he did not know what they meant and had no idea why they had been placed there.  In his evidence he confirmed that he had been telephoned by Mr. Thoars on 28th July, a Sunday, with instructions as to how the cheques totalling £3,000 should be made out and what should be done with them.  He said that he did not dispatch the cheques until such time as he had received back the signed two pages of the declaration of trust which had been faxed by Mr. Frenkel.”
B.   The expert evidence
B.1  The medical evidence
33.	Before the judge were two expert reports as to the prospects as at 26 July 1996 of Mr Thoars undergoing a successful liver transplant operation.   One report was by Mr Niall Finlayson, a Consultant Physician and President of the Royal College of Physicians of Edinburgh; the other was by Mr Bryon Jaques, a Consultant Hepatobiliary and Liver Transplant Surgeon.   Also before the judge were two reports by Dr A. W. McKinlay, a Consultant Physician/Gastroenterologist, as to Mr Thoars’ life expectancy as at that date.
34.	Mr Finalyson’s opinion was that, without a liver transplant, it was most unlikely that Mr Thoars would have survived a year beyond 26 July 1996.   He took the view that the cirrhosis of the liver from which Mr Thoars was at that date suffering would have brought about his death in the natural course of events had he not undergone the transplant operation which led, in the event,  to his death.
35.	Dr McKinlay’s opinion was that, had the transplant operation been successful, Mr Thoars would have had an 80-85 per cent chance of surviving one year, and a 75-80 per cent chance of surviving 5 years.   He pointed out that the majority of patients who had undergone liver transplants survived well in excess of 10 years and in some cases even achieved normal life expectancy.   By contrast, Dr McKinlay put Mr Thoars’ chances of survival without a liver transplant at no more than a 1 in 3 chance of surviving a further 3 months after 26 July 1996. 
36.	Mr Jaques referred in the course of his report to statistics contained in the UK and Ireland Liver Transplant Interim Audit Report for 2002, which showed that patients with chronic liver disease who received a first-time liver transplant performed at the Scottish Liver Transplant Unit between 1 March 1994 and 31 March 2002 had an average 3-month mortality of 6.3 per cent and a 3 month graft survival figure of 89.5 per cent.    In paragraphs 3.5 and 3.6 of his report, Mr Jaques said this:
“3.5   ….   The reperfusion process of a transplanted liver organ …. is a recognised complication leading to asystolic cardiac arrest in patients with ‘normal’ hearts.   With the Scottish Unit’s pre transplant assessment, patient screening and audited results, one must believe that at worst the likelihood of dying following reperfusion could be no higher than 6.3 per cent ….
3.6   ….   Had Mr Thoars survived the post-operative period, it is generally recognised that liver transplant recipients in the UK have a 1 and 5 year survival chance of 80 and 64 per cent respectively.   ….”
37.	Summarising his conclusions, Mr Jaques said this (in paragraph 4 of his report):
“At the time when patients are transplanted, a whole spectrum exists with some patients at one end being extremely ill because of disease severity and others being extremely well.   Transplantation mortality figures are based on the entire spectrum and are not at present stratified by disease severity.   If only patients like Mr Thoars were transplanted …. Then quoting a risk of 6.3 per cent would clearly be inappropriate.   In other words, if only patients like Mr Thoars were transplanted, the mortality because of severity of disease and inability to cope with complications which fitter patients may survive, would be higher than 6.3 per cent.  How high, and how to quantify the risk is contentious and not yet measurable but is under review by the UK and Ireland Liver Transplant Audit Subcommittee.”
B.2   The evidence as to the value of the Policy
38.	Before the judge was a report by Mr David Barclay-Miller, retained on behalf of Ramlort, supplemented by written responses to specific questions put to him on behalf of Mr Reid; and an actuarial report by Mr Colin Berman, Consulting Actuary, retained on behalf of Mr Reid.   Mr Berman was cross-examined, but Mr Barclay-Miller was not.   
39.	I turn first to the evidence of Mr Barclay-Miller.     He is the Managing Director of International Viatical Settlements (UK) Ltd (“IVS”), which operates in the ‘viatical settlements’ market in the United Kingdom.   We are told that a ‘viatical settlement’ involves the sale by a terminally ill person of a subsisting assurance policy on his or her life in consideration of an immediate payment representing a percentage of the face value of the policy.   
40.	In paragraph 2 of his Report, Mr Barclay-Miller recited his instructions, as follows:
“2.1  I am instructed …. to consider and comment upon the value in July 1996 of [the Policy], where the life assured and legal owner of [the Policy] was suffering from a liver disorder or serious impairment.   A transplant was envisaged at the date the analysis and valuation were to be considered.
2.2   In doing so, I have considered whether IVS would have been interested in purchasing [the Policy] based on the medical evidence and policy information which was known at the time, and if so, the amount of consideration IVS would have paid for [the Policy].”
41.	In paragraph 4.4 of his report, Mr Barclay-Miller noted that IVS’ clinical specialists had concluded that, given the possibility of a liver transplant, Mr Thoars was not to be regarded for ‘viatical settlement’ purposes as suffering from a terminal disease.   He went on to say that, since Mr Thoars was accordingly not a candidate for a viatical settlement, IVS would not normally have proceeded further in Mr Thoars’ case; but that it had done so in order to provide an opinion for the court.   He then went into some detail as to the procedures adopted by IVS in those cases where a viatical settlement is a possibility.
42.	In paragraph 5 of his report, under the heading “The Analysis of Mr Thoars’ Policy”, Mr Barclay-Miller said this:
“5.1   Neither the IVS specialist nor general overall Chief Medical Officer could determine a predictable mortality rate as there was a liver transplant being offered.   They stated that without a transplant Mr Thoars would have been eligible for a Viatical plan.
5.2   If the liver transplant were to have occurred and were to have been successful, the “mortality” would have been a ‘bet’ and very difficult to define.   Mr Thoars’ life would have been classified as “impaired” but not terminal, and …. he would have had a life expectancy beyond the eligibility criteria for IVS of 4-5 years.   Hence the value of [the Policy] is not some actuarially assigned value but can only be described as the value someone will actually give to Mr Thoars having understood all the relevant facts.   It is of note that in this case it was the issuing life office, Skandia, who offered the only viable consideration, namely the surrender value of just [£71].”
43.	In paragraph 6 of his report, under the heading “Conclusion”, Mr Barclay-Miller said this:
“6.1    In July 1996, IVS (or any other secondary market player) would not have made an offer to purchase [the Policy] under our Viatical plan.   The only attributable value to [the Policy] at this time would be the quoted Surrender Value of [£71].
6.2   It is our opinion that Mr Thoars’ life expectancy would not fall within our parameters of a maximum duration of life of 4-5 years.   He could have been expected, especially with a successful liver transplant, to survive 10 years beyond this term.   The illness is considered to be recoverable/manageable with a liver transplant operation.
6.3   I would therefore have considered Mr Thoars a seriously sub-standard or impaired life but not terminally ill.   On this basis the value of [the Policy] would have only been the quoted Surrender Value or encashment value offered in 1996 by Skandia ([£71]).”
44.	Mr Reid submitted a number of written questions to Mr Barclay-Miller, arising out of his report.   Question 5 was in the following terms:
“5.   Do you accept that for the purpose of valuing the Policy as at 26 July 1996, there is a spectrum which is directly referable to the health of Mr Thoars?   Thus, if Mr Thoars had been in robust good health with no record of illness at all, the value to Ramlort of the Policy would have been so reduced that it might conceivably have been disregarded altogether.    By contrast if, as in fact was the case, Mr Thoars was so ill that it was not unreasonable to contemplate his death, the risk of benefits under the Policy being paid out was high and its value to Ramlort may approach the full value of the sum assured?”
45.	Mr Barclay-Miller’s written response to that question was as follows:
“I agree that there is a value spectrum related to a number of factors, inter alia, the health of Mr Thoars, the level of confidence in any prognosis, the uncertainty of that prognosis, the willingness of an individual to purchase the risk.   If Mr Thoars were almost certain to die within a specific time scale, the value of [the Policy] would be high.   If his life expectancy was uncertain and dependent on a number of different factors, the willingness to pay for the risk, and its value, diminishes.   A good survival possibility rendering it necessary to continue to pay out premia in the future in order to maintain [the Policy] and postponing the date when payment might be forthcoming makes the purchase of the risk far less attractive and its value lower accordingly.”
46.	Mr Barclay-Miller was also asked whether he agreed with Mr Berman’s analysis as set out in his report (to which further reference is made below).   Mr Barclay-Miller’s response was he disagreed with Mr Berman’s analysis, since it made no allowance for the high degree of risk/uncertainty surrounding Mr Thoars’ life expectancy following a successful liver transplant.
47.	Although Mr Barclay-Miller was tendered by Ramlort for cross-examination, Mr Stephen Davies QC (appearing for Mr Reid, leading Mr Brian Watson of counsel) elected not to cross-examine him. 
48.	I turn next to Mr Berman’s report.   Mr Berman has considerable experience in the provision of actuarial services relating to occupational pension schemes and other types of pension scheme.   In relation to the surrender value of the Policy as at 26 July 1996 (£71), Mr Berman said this (in paragraph 3 of his report):
“3.1   One basis which is occasionally adopted to place a value on an insurance policy is to regard that value as the surrender value of the policy.   In this particular case, as is usual with policies under which the only benefit is a death benefit, the surrender value was negligible (£71, I am advised).
3.2   In reality, however, [the Policy] was clearly much more valuable than this.   Mr Thoars was 49 years old at the date of the Declaration ….   Provided he continued to pay the premium of £1,323.33 per annum, the benefit payable on his death would have been £185,598.   Even if he was in normal health for his age, the value of [the Policy] at the date of the Declaration was £33,710.   This value has been calculated as the difference between the present value of the sum assured and the present value of the future premiums, using the AM80 ultimate mortality table at a rate of interest of 5 per cent per annum.
3.3   The above value of £33,710, which is calculated on the basis that Mr Thoars was in normal health, is in my view the very least that [the Policy] was worth at the date of the Declaration.   But this is an understatement of its value, because Mr Thoars was, in fact, in very serious ill health at that date and had been so for at least 8 months.”
49.	After referring to the medical evidence, Mr Berman continued (in paragraph 3.5 of his report):
“3.5    It is clear from these reports that at the date of the signing of the Declaration Mr Thoars’ life expectancy was very short indeed although, understandably, neither of the Consultant Physicians (nor anyone else) would have been able to predict precisely when Mr Thoars would die.   It is therefore not possible to be precise about the value of [the Policy] at the date of the Declaration, but it is possible to calculate a range of values covering the probable range of life expectancies.   I have accordingly calculated the value of [the Policy], as at the date of the Declaration, assuming that one knew, at the time, that Mr Thoars would have died after
(a)   3 months
(b)   6 months
(c)   1 year
(d)   3 years
(e)   5 years.”

50.	In paragraph 3.6 Mr Berman set out those calculations, on the basis that the value of the Policy in each case is the value as at 26 July 1996 of the sum assured, less the then value of future premiums, all discounted at 5 per cent per annum.   On that basis, he calculated the value of the Policy to range from £183,348 (assuming death after 3 months) to £139,550 (assuming death after 5 years).
51.	Under cross-examination by Mr David Alexander (appearing for Ramlort), Mr Berman accepted that in valuing the Policy he had not taken into account the possibility that the sum assured might be reduced under the review provision in the Policy (referred to by the judge in paragraph 9 of his judgment, quoted in paragraph 11 above); nor had he taken account of the risk inherent in the liver transplant operation itself.
THE JUDGMENT
52.	Having set out the primary facts, the judge returned to the Declaration of Trust.   In paragraphs 96 to 98 of the judgment he stated his findings as to the nature of the transaction, as follows:
“96. I must find the primary source for what happened in the documents.  I am satisfied that the transaction that was entered into on 26th July 1997 was not as it appears on its face to have been, a gift.  I accept Mr. Frenkel's evidence that it was part of an overall arrangement, because that evidence is supported both by the correspondence that was passing between Mr. Frenkel and Mr. Thoars and by the cheques dated 30th July and by the evidence of Mr. Halberstadt that he did not send those cheques until he had received the signed declaration of Trust.
97. As to the nature of that overall arrangement I find that it was part of the consideration that Ramlort should pay 1,100 to a third party nominated by Mr. Thoars.  That third party turned out to be Nat Hawk Ltd.  I so find because that is evident from the cheque itself and is supported by the evidence of Mr. Halberstadt.  I find that it was also a term of the arrangement that Ramlort should make a loan of £1,900 to Mr. Thoars and that the purpose of the loan was the payment of legal fees to the Lefevre Practice to enable Mr. Thoars' claim for damages to proceed.  That is supported by the face of the cheque stub and the initials "LN" which I find are an abbreviation for "loan". It is supported by the clear recollection of Mrs. Thoars that the cheques did represent, at least in part, a loan and by the evidence from Mr. Thoars' bankers as to what actually happened to that cheque. There is, however, no evidence as to what the terms of the loan were and I shall accordingly find, in the absence of the other evidence, that it was a loan repayable on demand.  
98. I find that there was no agreement to reimburse the premium paid by Mr. Thoars in February 1996.  The premium paid by him was over  1,300.  I do not see why he should have asked only for 1,100 if that was intended as the reimbursement of the premium.  I can accept that Mr. Thoars may have said: "If you are going to have the policy you may as well give me what I paid for this year" or words to that effect, but that did not amount to a prior agreement to reimburse the year's premium.  I am not persuaded, from the documents and from what I know of Mr. Thoars, that he would have allowed the policy to lapse but for an agreement on the part of Ramlort that they would reimburse the premium.  No such agreement was made.  Furthermore, I am satisfied that no agreement was made to pay the future premiums. The primary liability remained with Mr. Thoars as a matter of law.   ….”
53.	The judge then turned to section 339 of the 1986 Act, saying this (in paragraph 99 of his judgment):
“In the light of my findings as to the transaction I can now turn to section 339.  Because I have found that the transaction was not a gift it is not wholly within subsection (a) of section 339(3).  There was no gift and although part of the consideration was paid not to Mr. Thoars but to a third party some of the consideration was paid to Mr. Thoars.  In those circumstances the challenge to undervalue falls to be addressed under section 339(3)(c).   That section has been familiarly analysed by Millet J. as he then was in [Re MC Bacon Ltd [1990] BCLC 324] (a case concerning section 238 but which it is accepted provides guidance on section 339).  Without repeating the familiar passage in that judgment … it is apparent that the section requires a comparison of incoming value, assessed in money or money's-worth with outgoing value assessed in money or money's-worth from the point of view of the insolvent estate.”
54.	The judge went on to accept Mr Alexander’s submission that the values of the Policy and of the consideration given for it had to be assessed as at the date of the transaction (26 July 1996).   He also accepted Mr Alexander’s submission (relying on an observation of Lord Scott in Phillips & Anor. v. Brewin Dolphin Bell Lawrie Ltd & Anor. [2001] 1 WLR 143) that the general rule is that the value is ascertained by reference to what a purchaser would have paid.    In that case Lord Scott said (at paragraph 30):
“The value of an asset that is being offered for sale is, prima facie, not less than the amount which a reasonably well informed purchaser is prepared, in arm’s length negotiations, to pay for it.”
55.	In accepting that general principle, however, the judge stressed that due attention must be paid to the words “prima facie” in Lord Scott’s formulation.   The judge continued (in paragraph 101 of his judgment):
“….   It may be that there is no actual market for a particular asset which are the subject of a transaction.  One example might be the shares in a private company which is subject to a right of preemption.  It may be necessary to assume a hypothetical purchaser in a notional market, or it may be necessary to adopt some other methodology in those circumstance, for example, to look at replacement costs.  What is the value in money or money's- worth of a custom-fitted kitchen which will be damaged on removal?  It will not fit anywhere else.  But the absence of a market in those circumstances does not mean that such a chattel does not have a value capable of being assessed in money or money's-worth.  It has, in those circumstances, a replacement cost which may, in an appropriate context, provide a true estimate of value.  Mr. Davies drew my attention to a decision of Mr. Justice Neuberger in Craven v. Secretary of State for Health, unreported, 28th October 1999.  This concerned a diminution in value of the reversion relevant to a dilapidations claim.  The evidence before Mr. Justice Neuberger was that the building was of such a nature and in such a state and subject to such condition that it would not have been saleable on the market.  One of the experts said there simply was no market for the property at the date of the valuation and the other expert did not disagree.  Mr. Justice Neuberger held that the fact that in reality a property may not have found a buyer at the date it falls to be valued did not mean that it had no value and that accordingly it was not open to the court to conclude that because the market was dead, in the sense that there was not likely to have been any buyer for the building, whether in repair or out of repair, the value of the building as of that date must be nil.  That provides a useful analogy on the facts before me.”
56.	In paragraph 102 of his judgment the judge addressed a submission by Mr Alexander that in comparing values for the purposes of section 339 the court must reach a specific value for each element of the transaction, based upon the expert evidence.    In support of this submission, Mr Alexander had relied on the decision of this court in National Westminster Bank plc v. Jones [2002] 1 BCLC 55, a case concerned with the application of section 423 of the 1986 Act (transactions defrauding creditors).   Giving the judgment of the court in that case, Mummery LJ said (at paragraph 30):
“….   [Section 423] requires a comparison to be made between two figures.   For that purpose the court must arrive at a conclusion based on actual values.   The evidence may, of course, disclose a range of suggested figures.   But the court must ascertain from the evidence the actual value against which the consideration for the transaction must be measured.    That was the approach adopted by the judge.   It is correct.”
57.	The judge accepted Mr Alexander’s submission, but with the qualification that he did not regard it as an absolute requirement in every case that the court should arrive at specific values.   He pointed out that in Phillips v. Brewin Dolphin itself the valuation exercise carried out by the House of Lords was not carried out on the basis of expert evidence.   He went on to cite the decision of this court in Agricultural Mortgage Corporation plc v. Woodward & Anor. [1995] 1 BCLC 1 (another case concerned with section 423) as a further example of a case in which the court was able to conclude that the transaction in question was at an undervalue without arriving at a precise value of the asset in question (a tenancy agreement).    
58.	In Woodward, the first defendant (the husband of the second defendant) had fallen into arrears under a mortgage which he had granted to the claimant.   Shortly before the deadline for the clearance of the arrears, the first defendant granted his wife a tenancy agreement of the mortgaged property.  The claimant applied for summary judgment on the basis that the grant of the tenancy was a transaction defrauding creditors.    The judge at first instance dismissed the application, but on appeal this court granted it.  In paragraph 103 of his judgment in the instant case, Judge Norris QC quoted a passage from the judgment of Slade LJ in that case (at p.11d-g).    The full paragraph in which the passage quoted by the judge appears reads as follows:
“Persuasively though these submissions were advanced, I am not persuaded by them.   In applying section 423(1)(c) to the facts of the present case, one must look at the transaction as a whole; the tenancy agreement cannot be considered in blinkers.   Due weight must be given (inter alia) to the facts not only that the agreement was entered into by the first defendant with his wife for the purposes outlined above, but that the land in question was mortgaged and that the wife, through the grant of the tenancy, would be placed in the ‘ransom’ position described above.   Accepting that she agreed to pay for her yearly tenancy which was the best rent reasonably obtainable for that tenancy viewed in isolation, and that she undertook the other tenant’s obligations imposed by the tenancy agreement, it seems to me nevertheless clear that, when the transactions are viewed as a whole, the benefits which the first defendant thereby conferred on her were significantly greater in value, far greater in value, in money or money’s worth than the value of the consideration provided by her.   To hold otherwise would seem to me to fly in the face of reality and common sense.   No further evidence was, in my judgment, required to establish that the transaction was one falling within s.423(1)(c); the agreed facts speak for themselves.   On the facts of this case, the substantial detriment incurred by the first defendant under the transaction was largely matched by a substantial benefit conferred on the second defendant beyond the rights specifically conferred on her by the tenancy agreement.”
59.	Having quoted from the above paragraph in the judgment of Slade LJ, the judge continued as follows (in paragraph 104 of his judgment):
“Accordingly, I do not accept that it is an absolute necessity to have specific figures for comparison which figures are established by expert evidence.  It must be possible to assess the value in  money or money's-worth and the question for the court is whether the value so assessed is significantly different. It may be that for the purposes of the comparison one of those elements is not capable of precise quantification but it is clear on the evidence that on any footing it is significantly more (or less) than the other element of the comparison.  I would hold that the section will nonetheless bite in those circumstances.”
60.	The judge turned next to Mr Alexander’s submission, based on the evidence of Mr Barclay-Miller, that the value of the Policy as at 25 July 1996 was its surrender value of £71.   After summarising Mr Barclay-Miller’s evidence, the judge continued (in paragraph 106 of his judgment):
“I do not disagree with the thrust of Mr. Barclay-Miller's evidence that I have just quoted. But it must be recognised (which he does not state) that the actuarially assigned value is one of the factors that any purchaser is likely to take into account.  Furthermore, the "someone" who is the potential purchaser is not necessarily equated with the open  market (which is the assumption Mr. [Barclay-Miller] makes) but be a special purchaser. It may well be that Mr. Thoars' policy would have had no appeal if offered to companies dealing with viatical settlements or if offered to companies dealing in second-hand endowment policies; but that does not mean it had no value.  Removing blinkers and looking at the reality of the situation there were a number of other people who would have been interested in the policy; e.g. Commerzbank, for whose benefit the policy had originally been taken out and who were owed £440,000.  Is it to be supposed that if Mr. Frenkel had said to [Commerzbank[: "At the moment the benefit of this policy forms part of Mr. Thoars' estate so that it is available in part satisfaction of your debt should he die, I am proposing to buy it for £71" the Commerzbank would have said: "By all means go ahead.  We would much rather have the certainty of your £71 than the prospective benefit of the policy, a policy written at a time when Mr. Thoars was in good health, written at a premium assuming normal mortality but being sold at a time when Mr. Thoars is in bad health and could only obtain a replacement policy on the basis of impaired mortality.”  I do not regard that evidence, if that is the evidence of Mr. Barclay-Miller as credible.  In addition to Commerzbank there was, of course, the Royal Bank of Scotland and there was the Bank of Scotland, which, as the documents show itself was interested in acquiring the policy.  Furthermore, quite apart from these special purchases I do not regard the surrender figure of £71 as quoted by Scandia to be the surrender value of the policy.  That is the figure that Scandia could be compelled to pay if the policyholder exercised the unilateral right to surrender the policy.  But if Mr. Thoars, facing a liver transplant and with severely impaired mortality had gone to Scandia and said: "At the moment you are on risk for £185,000, I have only paid two premiums but I am willing to release you from your obligation; what will you pay me?" that Scandia would have said: "£71 and not a penny more".  Again, removing the blinkers and looking at the reality of the situation, if Mr. Barclay-Miller's evidence is that the only value of the policy was £79 I do not accept it as credible.”
61.	In paragraph 107 of his judgment the judge commented on Mr Davies’ decision not to cross-examine Mr Barclay-Miller, describing it as “something of a high risk strategy”.   However, he went on to say:
“…. the mere fact that an expert has not been cross-examined does not mean that the trial judge is bound to accept his unsupported assertion which appears to fly in the face of reality as credible evidence at the trial and I do not do so.”
62.	In using the expression “fly in the face of reality” the judge clearly had in mind the passage from the judgment of Slade LJ in Woodward in paragraph 58 above.
63.	The judge then turned to the expert evidence of Mr Berman.  In paragraphs 108 and 109 of his judgment he said this:
“108. The Applicant relies on the evidence of Mr. Berman, an actuary.  He conducted actuarial valuations of the policy.  Having regard to the low level of premium he put the value of the policy, even on the basis that Mr. Thoars had normal mortality at some £33,000 odd.  If Mr. Thoars had impaired mortality and would not be able to purchase a replacement policy in the market he put the value substantially higher than £33,000.  Mr. Alexander cross-examined Mr. Berman as to the assumptions on which his estimate was based.  He established in cross-examination that Mr. Berman had assumed that the sum assured would continue to be £185,000, notwithstanding the fact that the policy terms themselves provide for a potential reduction at some stage during the life of the policy.  He also established that Mr. Berman had not taken into account in the figures that he had formulated that the risk inherent in liver transplant surgery itself, though Mr. Berman expressed the view that this would lead to an increase rather than a reduced value for the policy.  Nonetheless, Mr. Alexander has persuaded me that I cannot, on the evidence, find a specific value for the policy as at 26th July 1996. I can say that it would appear to be of the order of £25,000 to £35,000.  That takes into account something for the risk of reduction in the policy proceeds and something also for the fact that adjustments have to remain to take into account the risk of surgery itself.   But it seems to me that for present purposes if I could be satisfied, as I am, that the policy must have a minimum value, an absolute minimum value of £10,000 that will suffice for the purposes of the comparison that I have to make.
109. That comparison is as follows: first of all, what was the outgoing value?  The outgoing value was the benefit of a policy, written on the life of a man suffering from liver disease and with the prospect of a liver transplant in the offing. It secured £185,000 should he drop dead and did so on the basis of a premium which had been calculated on the footing that he was a healthy life.  I am satisfied that it had a minimum value of £10,000.  If Commerzbank (owed £440,000) had been asked to reduce its indebtedness by £10,000 in return for obtaining the policy I have not the slightest doubt that it would have taken that course.”
64.	Having found that the Policy had a minimum value as at 26 July 1996 of £10,000, the judge then compared the value of the consideration provided by Ramlort.   In paragraphs 110 and 111 of his judgment he said this:
“110. What was the incoming value?  The incoming value was £1,100 payable to Nat Hawk. But that did not come into the insolvency estate: it went to a third party and there is no evidence that Mr. Thoars was thereby relieved of any obligation. Accordingly its value to the insolvent estate is nil. In addition, Mr. Thoars received the benefit of a loan for £1,900. That £1,900 came into his estate but so also did the equivalent liability to repay £1,900 on demand.  In each case the incoming value is nil.  If I compare the value which has gone out, which I have assessed at £10,000 with the value that has come in, which is nil, I reach the conclusion that the difference is significant.  
111. I do not find this surprising. This was an off-market transaction where the property being offered was not offered to anybody else and where no advice was taken by either party as to the true value of the asset with which they were dealing.  If their private arrangement did not result in the true value being ascertained that is unremarkable.  Indeed, it would have been a remarkable coincidence if, without reference to any expert advice, the terms they had agreed had in fact correctly reflected the true value.”
65.	In paragraph 112 of his judgment, the judge stressed that (contrary to the submissions of Mr Davies) he had reached his conclusion as to the value of the Policy without taking into account any element of hindsight.   Having referred once again to the speech of Lord Scott in Phillips v. Brewin Dolphin, the judge noted that in the instant case neither valuer had found it necessary to refer to the actual death of Mr Thoars.   He also referred to the judgment of the Vice-Chancellor on the preliminary issue, in the course of which the Vice-Chancellor had observed that hindsight was to be exercised by the valuers, and not by the judge.   Accordingly, whilst noting what he described as the “hindsight principle”, he concluded that he would not in any event have applied that principle in the instant case.   
66.	By his Respondent’s Notice, Mr Reid contends (among other things), that the ‘hindsight principle’ is applicable in the instant case, and that in valuing the Policy as at 26 July 1996 the judge should have taken account of the fact that Mr Thoars had died shortly thereafter.    In the event, however, we did not find it necessary to hear argument on the Respondent’s Notice.   Accordingly I say nothing about the possible application of the ‘hindsight principle’ in the instant case; or, for that matter, about any of the other points raised in the Respondent’s Notice.
67.	In paragraph 113 of his judgment, the judge turned to the question of remedy, saying this:
“This leads me finally and at last to the remedy to be given.  Mr. Alexander said that if I formed the view that there was a transaction at an undervalue the correct course would be to let the estate have back the true value of the policy, £71.  I do not think that that is the correct approach. The correct approach is set out in section 339(2) of the Act.  This requires the court to make such order as it thinks fit "for restoring the position to what it would have been if the individual had not entered into the transaction".  If the individual had not entered into the transaction the benefit of the policy would have remained in Mr. Thoars' estate.  I shall accordingly order that the policy proceeds and all interest shall be held on trust (a) to repay the sum of £1,900 to Ramlort (b) to repay the sum of £1,100 to Ramlort. (c) subject thereto on trust for the estate of the insolvent deceased.  The payment of £1,900 should be made because that is money that went into the insolvent's estate and for which there is a liability to repay. I do not see that Ramlort should be put to proving for a dividend in the estate in respect of that sum. The sum of £1,100 will be ordered to be repaid because although that did not go into the deceased's estate I consider it fair that if I am unscrambling the transaction, as I believe I should, then this small sum should also be repaid to Ramlort.”
68.	The judge accordingly granted the relief sought by Mr Reid, setting aside the Declaration of Trust on terms as to repayment of the sums paid by Ramlort, as recorded earlier.
RAMLORT’S GROUNDS OF APPEAL
69.	By grounds 1 and 2 of the grounds of appeal contained in Section 7 of its Appellant’s Notice, Ramlort criticises the judge’s use of the words “from the point of view of the insolvent estate” at the conclusion of paragraph 99 of his judgment (quoted in paragraph 53 above).   It contends that his use of those words demonstrates that he fell into error in failing to compare the ‘incoming value’ with the ‘outgoing value’ looked at from Mr Thoars’ point of view as at 26 July 1996.
70.	By grounds 3 to 6 of its grounds of appeal Ramlort contends that the judge erred in valuing the consideration provided by Ramlort at nil.    As to the loan of £1,900 which the judge found was made by Ramlort to Mr Thoars, Ramlort contends (by ground 4 of its grounds of appeal) that its value as part of the transaction was £1,900.   As to the cheque for £1,100 drawn in favour of Nat Hawk Ltd, it contends (by ground 5 of its grounds of appeal) that on the judge’s findings its true value was £1,100; and that in any event the judge ought to have accepted Mrs Thoars’ evidence (referred to in paragraph 21 above) that Mr Thoars received the proceeds of the cheque in cash.
71.	By grounds 7 and 8 of its grounds of appeal, Ramlort challenges the judge’s reasoning and conclusion as to the value of the Policy as at 26 July 1996, contending (based upon Mr Barclay-Miller’s report) that its value as at that date was £71, alternatively not significantly more than £3,000.
72.	Grounds 9 and 10 of Ramlort’s grounds of appeal are directed to the question of remedy (assuming that the transaction was at an undervalue).  By ground 9 it is contended that, if this court concludes that the judge was in error in valuing the consideration provided by Ramlort at nil, the statutory discretion as to remedy falls to be exercised afresh by this court.   By ground 10 it is contended that in any event the judge adopted the wrong approach to his exercise of that discretion, in that the value of the Policy as at 26 July 1996 could not on any view be equal to the amount of the proceeds subsequently realised; and that in the circumstances any remedy other than that of ordering Ramlort to pay monetary compensation would result in Mr Thoars’ creditors receiving an unjustifiable windfall.
73.	Finally, by ground 11 of its grounds of appeal Ramlort contends, so far as may be necessary, that the judge ought to have accepted the evidence of Mr Frenkel.
THE ARGUMENTS ON THIS APPEAL
74.	Mr Gabriel Moss QC (leading Mr Alexander, for Ramlort) submits that, the judge having (correctly) found that the transaction was entered into by Mr Thoars for a consideration, and accordingly that it falls within section 339(3)(c), what is required is a comparison between the value of the Declaration of Trust and the value of the consideration provided by Ramlort, considered from Mr Thoars’ point of view.   
75.	In support of the above submission he relies on a passage in the judgment of Millett J in MC Bacon Ltd  at 340f-h to which the judge referred in paragraph 99 of his judgment (quoted in paragraph 53 above), where Millett J said:
“To come within that paragraph [i.e. subparagraph (b) of the definition of ‘undervalue’ in section 238(4) of the 1986 Act, being the equivalent of section 339 (3)(c)] the transaction must be (i) entered into by the company; (ii) for a consideration; (iii) the value of which is measured in money or money’s worth; (iv) is significantly less than the value; (v) also measured in money or money’s worth; (vi) of the consideration provided by the company.   It requires a comparison to be made between the value obtained by the company for the transaction and the value of [the] consideration provided by the company.   Both values must be measurable in money or money’s worth and both must be considered from the company’s point of view.”   (Emphasis supplied)
76.	Mr Moss submits that for the purposes of this comparison values are to be assessed as at the date of the transaction, and (relying on Lord Scott’s observation in Phillips v. Brewin Dolphin (quoted in paragraph 54 above) and an observation to similar effect made at first instance in that case by Evans-Lombe J) that the general rule to be applied is that the value of an asset is that which a purchaser having reasonably accurate information about the nature of the asset would pay for it.
77.	He submits (relying on the observations of Mummery LJ giving the judgment of this court in National Westminster Bank plc v. Jones (quoted in paragraph 56 above)) that in carrying out the valuation exercise the court must reach an ‘actual value’; that is to say a precise figure, based on the evidence before it.   Having done so, it must then determine whether the consideration provided to the individual in question is ‘significantly less’ than the consideration provided by that individual.   That, he submits (relying on an observation by Neuberger J at first instance in National Westminster Bank plc v. Jones at para 83) is a question of fact.   
78.	Turning to the value of the Policy, Mr Moss relies on the undisputed fact that as at 26 July 1996 the Policy had a surrender value of £71.   He submits that the only other evidence before the judge as to what a purchaser with reasonably accurate information about the Policy might be prepared, in arm’s length negotiations, to pay for it (see per Lord Scott in Phillips v. Brewin Dolphin, in the passage from his speech quoted in paragraph 54 above) was the unchallenged evidence of Mr Barclay-Miller.   There was, he submits, no other evidence before the court as to the actual value of the Policy.   
79.	Mr Moss suggests that Mr Reid had had ample opportunity prior to trial to obtain evidence from Mr Thoars’ creditors, from Skandia, from Mrs Thoars, or indeed from anyone else, as to how much (if anything) they would have been prepared to pay for the Policy as at 26 July 1996.   In any event, he submits that it is fanciful to suppose that as at 26 July 1996 Skandia would have been willing to pay more than the surrender value of the Policy as consideration for the release of its obligations under it.    
80.	As to the evidence of Mr Berman, Mr Moss points out that in his unchallenged evidence Mr Barclay-Miller had expressed the view that an actuarial valuation was not appropriate.   In any event, submits Mr Moss, Mr Berman’s evidence wrongly assumed that the amount of the death benefit was guaranteed.   Mr Moss also points out that in his evidence Mr Berman did not address the question whether anyone might have been prepared to purchase the Policy, and if so, how much they might have been willing to pay for it.
81.	Mr Moss notes that the judge accepted (rightly, in his submission) that the relevant values had to be ascertained as at the date of the transaction; and that the general rule is that the value of an asset is the sum which a purchaser would pay for it.   However, he submits that the judge erred in not finding a specific value for the Policy, and in comparing the values of the incoming and outgoing consideration from the point of view of “the insolvent estate”.  He submits that there was no proper ground for rejecting the evidence of Mr Barclay-Miller, and that the judge’s conclusion as to the minimum value of the Policy was not based on the evidence before the court but was the result of speculation on the judge’s part.   
82.	Mr Moss submits that had the judge adopted the correct approach to valuing the Policy as at 26 July 1996, he must, on the evidence before him, have concluded that it was not worth significantly more than the £3,000 which Ramlort paid for it; or even, for that matter, the £1,900 or the £1,100 considered separately.
83.	As to the ‘incoming’ consideration which the judge found had been provided by Ramlort, Mr Moss submits (relying on the observations of Millett J in  MC Bacon quoted in paragraph 75 above) that, in relation to both the loan of £1,900 and the payment of £1,100 to a third party, the judge once again fell into error in approaching the issue of valuation not from Mr Thoars’ point of view but from the point of view of the insolvent estate.   On that approach, the judge concluded, in effect, that the obligation to repay the loan rendered it valueless, whereas (as Mr Moss submits) on a correct approach it was necessary to consider the value of the loan to Mr Thoars taking into account all relevant circumstances existing as at the date when it was made.   These, he submits, would include the amount of the loan; the terms on which it was made (the judge having apparently treated it as being interest-free); the strength of the covenant to repay (in the instant case, submits Mr Moss, Mr Thoars’ ability to repay the loan was, at the very least, highly questionable); Mr Thoars’ need for cash (which, Mr Moss submits, was patently considerable); and the prospects of Mr Thoars being able to obtain a similar loan from some other source (Mr Moss submits that such prospects would  have been slim).
84.	Mr Moss submits that had the judge taken such factors into account he must have concluded that the value of the loan of £1,900 from Mr Thoars’ point of view as at 26 July 1996 was not significantly less than £1,900.
85.	As to the cheque for £1,100 drawn in favour of the third party, Mr Moss submits that, even if one ignores Mrs Thoars’ evidence that Mr Thoars received the proceeds of the cheque in cash, looked at from Mr Thoars’ point of view there is no basis for concluding that it was worth less to him than its full value.    In any event, Mr Moss  submits, the judge ought to have found, based on Mrs Thoars’ evidence, that the £1,100 was received in cash by Mr Thoars.
86.	Turning to the question of remedy, Mr Moss submits that the judge’s decision to, in effect, set aside the Declaration of Trust was both flawed and wrong.     It was flawed in that it proceeded on the (as Mr Moss submits) erroneous basis that the value of the ‘incoming’ consideration provided by Ramlort was nil.   For that reason alone, he submits, this court must exercise the discretion as to remedy afresh.   
87.	It was also wrong, Mr Moss submits, in that the correct course for the court to take in granting a remedy is to order Ramlort to make up the amount of any undervalue.   He points out that section 339(2) gives the court a discretion to restore the position to what it would have been had the transaction in question not taken place.   He submits that that in turn requires the court in the instant case to look at the position as it would have been as at 26 July 1996.  On that date, he submits, Mr Thoars had the value of the Policy as it was at that date; not its value at some later date.   Mr Moss accordingly draws a distinction for this purpose between the Policy and its proceeds.   He submits that for the court to produce a result in which the proceeds of the Policy are available for Mr Thoars’ creditors would be to create a windfall for the creditors.   By contrast, he submits, the fact that following the Declaration of Trust the ‘risk’ in relation to the Policy lay with Ramlort rather than with Mr Thoars supports the conclusion that Ramlort should be allowed to enjoy the benefits of that ‘risk’, subject only to making good any shortfall in the value of the consideration which it provided.
88.	Finally, Mr Moss submits that even if all his other arguments fail, the judge ought at least to have ordered the £3,000 to be repaid to Ramlort with interest.
89.	Mr Davies (leading Mr Watson, for Mr Reid) submits that the judge reached the right conclusions for the right reasons.
90.	Mr Davies submits that Mr Moss’s criticisms of the judge for looking at the issue of undervalue “from the point of view of the insolvent estate” are misplaced.    In using that expression, submits Mr Davies, the judge was doing no more than making it clear that the values had to be assessed objectively.   He submits that the judge was not using the expression “insolvent estate” as a term of art referring to a bankrupt’s estate distributable amongst his creditors: rather, he was referring to Mr Thoars’ insolvent estate as at the date of the Declaration of Trust.
91.	As to the value of the ‘incoming’ consideration provided by Ramlort, Mr Davies submits that the judge was fully entitled to treat the obligation to repay the loan of £1,900 as, in effect, cancelling out its cash-flow benefit.   As to the cheque for £1,100 in favour of the third party, Mr Davies submits that the onus was on Ramlort to establish that this cheque was of value, in money or money’s worth, to Mr Thoars; and that, the judge having rejected Mr Frenkel’s evidence (as he was entitled to do) there was no evidence before him to discharge that burden.
92.	As to the value of the Policy as at 26 July 1996, Mr Davies submits that it is clear from paragraph 108 of the judge’s judgment that, far from indulging in speculation, the judge based his finding as to the minimum value of the Policy on the evidence of Mr Berman, after discounting his valuation to take account of the two factors which the judge mentions.   The judge then discounted the resulting bracket of values (between £24,000 and £35,000) substantially in order to reach a minimum value of £10,000.
93.	Mr Davies submits, relying on Woodward, that the judge was right to conclude that for the purposes of section 339 it is not necessary for the court in every case to arrive at a specific figure for the value of the ‘incoming’ or ‘outgoing’ consideration.    It suffices, he submits, that the court is satisfied that there is a significant difference between them, resulting in an undervalue.
94.	As to the evidence of Mr Barclay-Miller, Mr Davies explained to us why it had been decided not to cross-examine him.     He told us that the view was taken that Mr Barclay-Miller’s experience in the area of ‘viatical’ settlements did not qualify him to express an expert opinion on the value of a policy in a case which, for the reasons given in his report, was not regarded as suitable for such a settlement; that he had not supported his opinion with adequate reasons; and that in the light of his response to question 5 (quoted in paragraph 45 above), it would serve no useful purposes to cross-examine him.
95.	Mr Davies submits that the absence of evidence as to the existence of another willing purchaser of the Policy does not lead to the conclusion that the value of the Policy had no value beyond its surrender value of £71.   In support of this submission he cites a passage from the judgment of Neuberger J in Craven (Builders) Ltd v. Secretary of State for Health, to which the judge referred to in paragraph 101 of his judgment (quoted in paragraph 55 above).   In that case the claimant landlord claimed damages for dilapidations against the defendant tenant on the termination of a lease of an industrial building.   Under the relevant statutory provision, damages recoverable for terminal dilapidations are limited to the amount by which the value of the landlord’s reversion is diminished owing to the tenant’s breach of covenant.   The judge heard expert evidence as to the value of the reversion.    The expert evidence adduced by the tenant was to the effect that, due to the decline of the property market, there was “no market” for the building at the relevant date, whether in repair or out of repair.    In the course of his judgment, Neuberger J said this:
“However, the fact that in reality a property may not have found a buyer as at the date it falls to be valued does not mean it has no value.   As [counsel for the landlord] say in their skeleton argument ….:
‘Valuing shares in private companies which may be in practice impossible to market or valuing shares in suspended listed companies is the sort of exercise which has to be undertaken and is undertaken frequently for capital gains tax or inheritance tax purposes.’
Accordingly it is not open to the court to conclude that, because the market was ‘dead’ as at [the relevant date], in the sense that there was not likely to have been any buyer for the building, whether in repair or out of repair, the value of the building at that date must be nil.   The fallacy in that argument is that it involves concluding that there would have been no transaction, whereas the valuation exercise required by [the relevant statutory provision], and indeed by any other open market valuation exercise, requires one to assume that there was a transaction.   It should be recorded in fairness that [counsel for the tenant] did not seek to argue otherwise.”
96.	As to remedy, Mr Davies submits that the object of section 339 is to prevent the dissipation of the estate to the prejudice of creditors.   Ordinarily, he submits, this object will be achieved by setting aside the transaction in question.   So much, he submits, is clearly indicated by the express terms of section 339(2), and by the absence of any express reference to setting aside in section 342(1).   
97.	In support of his submissions on the question of remedy, Mr Davies cites passages in the judgment of His Honour Judge Havelock-Allan QC in Walker v. WA Personnel Ltd [2002] BPIR 621.    In that case, the business and assets of a group of companies were sold.   Shortly thereafter, the group went into insolvent liquidation.   The liquidator commenced proceedings against the purchaser alleging (among other things) that the sale was at an undervalue.   The matter came before Judge Havelock-Allan QC on an application by the liquidator to continue an interlocutory injunction against the purchaser.   The judge concluded that there was a triable issue as to whether the sale was at an undervalue.   In the result, he appointed a receiver and manager of the business pending trial, but in the course of his judgment he considered what remedy the court would be likely to grant if the liquidator’s claim succeeded, and in particular whether it was seriously arguable that the court would set aside the sale and order the re-vesting of the assets.    On the question of remedy, counsel for the purchaser had submitted that, taking into account events which had occurred since the sale, the overwhelming probability was that the only remedy the court would grant would be an order that the purchaser pay compensation equivalent to the shortfall between the agreed consideration and a fair price, and hence that no further interlocutory relied should be granted.   Judge Havelock-Allan QC recorded the acceptance by counsel for the purchaser, based on the decision of this court in Chohan v. Saggar [1994] 1 BCLC 706, that section 238(3) of the 1986 Act (which corresponds to section 339(2)) is to be interpreted as requiring restoration of the former position ‘as far as possible’ or ‘as far as practicable’, and that accordingly subsequent events were not an absolute bar against setting aside the sale.   The judge continued (at p.634B):
“I accept that in broad terms the function of section 238 is …. to restore fair value to creditors.   But to pass from that proposition to the proposition that in any case where subsequent events have intervened so as to alter or vary the assets transferred, the court will invariably order monetary compensation rather than the revesting of the assets, is to lose sight of the express wording of section 283(3).   Section 283(3) says, in effect, that the purpose of any order under section 241 is ‘for restoring the position to what it would have been if the company had not entered into the transaction’.

….   The task of the court is to restore the status quo ante so far as is practicable.   Assets which have been lost in the normal course of business since the date of the transaction can be ignored as being irretrievable….   Post-acquired rights can also be protected …   
So, provided that there are no intractable and insuperable difficulties, and none are suggested in this case, the court does not start with the presumption that, unless the assets remain wholly or largely intact, the court will order payment of compensation rather than vesting of the assets back in the administrator or liquidator.   The court will look to see what orders the justice of the case requires in order to achieve restoration of the status quo ante.   To my mind, the court would be slow to allow a transferee, who has entered into a transaction with an insolvent company when on notice that the transaction may be challenged by the liquidator as being at an undervalue, to retain his purchase simply by means of paying a further sum at a later date.   I suggest that the court would look carefully at allowing a transferee in these circumstances to buy his way out of the problem if the court were to consider that he went into the transaction with his eyes open and took a calculated risk.”
98.	Mr Davies submits that those statements of principle apply equally to sections 339 and 342 of the 1986 Act.
99.	Accordingly, submits Mr Davies, the appropriate remedy in the instant case is that which the judge granted.
CONCLUSIONS
100.	Two issues arise on this appeal.   The first issue is whether the judge’s finding that the making of the Declaration of Trust was a transaction at an undervalue within the meaning of section 339 of the 1986 Act should be upheld (“the undervalue issue”).   The second issue, which only arises if the appellants fail on the undervalue issue, is what remedy the court should grant (“the remedy issue”).
The undervalue issue
101.	I turn first to section 339(3) of the 1986 Act (the relevant provisions of which are set out in paragraph 24 above).   Paragraph (a) of section 339(3) deals with transactions by way of gift; paragraph (c) of that subsection deals with transactions for a consideration.      The judge found that the transaction in question in the instant case falls within paragraph (c) in that it was for a consideration, albeit he found the value of the consideration to be nil.    However, for present purposes nothing turns on any perceived conceptual distinction between a gift and a transaction for a nil consideration since it is common ground that the transaction falls within subsection 339(3)(c).
102.	In all material respects, paragraph (c) of section 339(3) is in the same terms as paragraph (b) of section 238(4) of the 1986 Act (the paragraph which Millett J was considering in the passage in his judgment in MC Bacon quoted in paragraph 75 above).   For present purposes, the critical words in each of those paragraphs are the words ‘significantly less’.   For there to be a transaction by an ‘individual’ (whom I will call “the debtor”) at an undervalue within the meaning of those paragraphs, the value in money or money’s worth, from the debtor’s point of view, of the consideration for which he enters into the transaction (I will call it “the incoming value”) must be ‘significantly less’ than the value in money or money’s worth, again from the debtor’s point of view, of the ‘consideration provided’ by the debtor – that is to say, the value in money or money’s worth of the totality of whatever it is that the debtor is parting with under the transaction (I will call it “the outgoing value”).
103.	Thus, there is nothing in the express provisions of paragraph (c) of section 339(3) which requires the court to ascribe a precise figure either to the outgoing value or to the incoming value.    On the face of the paragraph, it will apply whenever the court is satisfied that, whatever the precise values may be, the incoming value is on any view ‘significantly less’ than the outgoing value.   Woodward was just such a case.
104.	Nor, in my judgment, is there any need to imply into paragraph (c) any further  requirement in relation to the determination of the incoming value or the outgoing value.    In particular, I can see no reason why the court, if it considers it appropriate to do so, should not address the issue of undervalue by taking from a range of possible values those which are most favourable to the party seeking to uphold the transaction.    If, even on that basis, the incoming value is ‘significantly less’ than the outgoing value, paragraph (c) will apply.   Thus I can see nothing in paragraph (c) to prevent the court from proceeding on the basis of a finding as to the maximum value for the incoming value, and/or a finding as to the minimum value for the outgoing value.
105.	At the same time, there can in my judgment be little doubt that it is preferable for the court to arrive at precise figures for the incoming value and the outgoing value in those cases where it is able to do so; if only because, in the absence of precise values the range of available remedies may be circumscribed in the sense that it may be more difficult to assess with precision the amount of any monetary compensation which the court may order to be paid by the other party to the transaction.
106.	In National Westminster Bank plc v. Jones (referred to in paragraph 56 above), Mummery LJ, giving the judgment of the court, concluded (in paragraph 29) that in applying section 423(1)(c) (the terms of which are for all practical purposes the same as those of section 339(3)(c)) the court “must ascertain from the evidence the actual value against which the consideration for the transaction must be measured”.    However, that observation must not be taken out of context.   What Mummery LJ was there addressing (and rejecting) was the contention advanced on behalf of Mr and Mrs Jones that in addressing the issue of undervalue the court should adopt the same general approach as it adopts in cases of allegedly negligent valuation (see Mummery LJ’s summary of the appellants’ submissions at p.61a).   As I understand it, that contention involves the proposition that, notwithstanding a finding by the court that the incoming value is significantly less than the outgoing value, nevertheless the transaction is not to be characterised as a transaction at an undervalue if the amount of the shortfall lies within some ‘acceptable’ range of values.   In rejecting that contention I do not understand Mummery LJ to be saying that, in making its findings as to value, the court may not take from a range of possible values those values which are most favourable to the party seeking to uphold the transaction and make findings to that effect, whether as to the maximum figure for the incoming value or (as in the instant case) as to the minimum figure for the outgoing value.
107.	This interpretation of Mummery LJ’s observations is in my judgment supported by the fact that in his judgment he expressly referred to Woodward (at p.60c-d), where Slade LJ made no findings as to the specific value of the tenancy agreement.       
108.	In the instant case, the judge made a finding as to the minimum value of the Policy in money or money’s worth as at 26 July 1996.   In other words he found that “the actual value” (to use Mummery LJ’s expression) of the Policy was at least £10,000.   In my judgment that was a sufficient finding as to the outgoing value for the purposes of paragraph (c); and if that finding stands (as to which, see below) it must in my judgment provide a sufficient basis for the judge’s further finding that the making of the Declaration of Trust was a transaction at an undervalue.
109.	I turn next to Mr Moss’s submission that the judge’s use (at the end of paragraph 99 of his judgment, quoted in paragraph 53 above) of the expression “…. from the point of view of the insolvent estate” betrays some misunderstanding of the issue which fell for decision.   In my judgment the judge was merely referring to Mr Thoars’ (insolvent) estate as it was at 26 July 1996.   He might just as well have said “…. from the point of view of Mr Thoars”.
110.	I now turn to the judge’s findings as to the incoming value and the outgoing value.   I start with his finding as to the outgoing value, viz. that the value of the Policy as at 26 July 1996, from Mr Thoars’ point of view, was at least £10,000.
111.	The expert evidence before the judge on the issue as to the outgoing value consisted of the written report of Mr Barclay-Miller and the written report and oral evidence of Mr Berman.
112.	So far as Mr Barclay-Miller is concerned, the fact that his expertise lies in the field of ‘viatical settlements’ – a field which (for reasons which he set out at some length in his report) does not cover the instant case – means, in my judgment, that his report can be of only negligible assistance to the court.    In particular, even assuming (which seems to me to be questionable) that issues as to the approach which the court should adopt to valuation are properly matters for expert evidence, Mr Barclay-Miller was not qualified to offer the opinion (in paragraph 5.2 of his report, quoted in paragraph 42 above) that “the value of [the Policy] is not some actuarially assigned value but can only be described as the value someone will actually give to Mr Thoars having understood all the relevant facts”. 
113.	The same considerations apply, in my judgment, to the opinion expressed by Mr Barclay-Miller in paragraph 6.3 of his report (quoted in paragraph 43 above) that the value of the Policy was its surrender value of £71.
114.	In any event, such persuasive force as those expressions of opinion might otherwise have had was, in my judgment, effectively neutralised by Mr Barclay-Miller’s answer to Ramlort’s question 5 (quoted in paragraph 45 above).    I accordingly conclude that the judge was fully entitled to attach no weight to Mr Barclay-Miller’s evidence, notwithstanding that it had not been formally challenged in cross-examination.    
115.	I turn next to the evidence (written and oral) of Mr Berman.   The judge dealt with his evidence in paragraph 108 of his judgment (quoted in paragraph 63 above).   He started with Mr Berman’s opinion (stated in paragraphs 3.2 and 3.3 of his report, quoted in paragraph 48 above) that the value of the Policy as at 26 July 1996, assuming Mr Thoars was in normal health, was £33,710.   The judge then brought into account two additional factors which Mr Alexander had established in the course of his cross-examination of Mr Berman.   The first was that Mr Berman had not taken into account the possibility that the amount of the death benefit payable under the Policy might be reduced, pursuant to the review procedure for which the Policy expressly provided.    The second was that Mr Berman had not taken into account the risk inherent in liver transplant surgery itself (although, on the face of it, as Mr Berman had asserted in evidence, this second factor would produce a higher rather than a lower value for the Policy).   After referring to these two factors, the judge made it clear that he could not, on the evidence, find a specific value for the Policy as at 26 July 1996.   Rather, he concluded that its value “would appear to be of the order of £25,000 to £35,000”.   However, he manifestly was not sufficiently confident of the correctness of Mr Berman’s evidence to make a positive finding that its value fell within that bracket, since he found instead that the Policy had “an absolute minimum value” of £10,000.    In making that finding, the judge effectively discounted Mr Berman’s evidence to a very substantial extent in favour of Ramlort.
116.	For reasons which I have already given (see paragraphs 104 to 108 above), in the context of section 339(3)(c) there is in my judgment no objection in principle to a finding in those terms.   Moreover, it was, in my judgment, a finding which the judge was fully entitled to make, based on his assessment of the expert evidence which was before him.
117.	In particular, I do not accept the proposition that, in the absence of direct evidence of the existence of a special purchaser for the Policy, the conclusion must follow that its value was no more than its surrender value of £71.   With all respect to Mr Moss, his submission to that effect seems to me, to adopt Slade LJ’s words in Woodward (in the passage from his judgment quoted in paragraph 58 above) to fly in the face of reality and common sense.   As the judge correctly pointed out (in paragraph 106 of his judgment, quoted in paragraph 60 above), the surrender value was the sum which Skandia was contractually obliged to pay on the surrender of the Policy.   It does not follow that it represented the value of the Policy as at 26 July 1996 in money or money’s worth, from Mr Thoars’ point of view.   In this respect there is, in my judgment, a direct parallel between the instant case and Craven (see paragraph 95 above). 
118.	In my judgment, therefore, the judge was fully entitled to find that the outgoing value was at least £10,000, and there is no basis for challenging that finding in this court.   
119.	I turn, then, to the issue as to the incoming value.  In one sense, this is something of a non-issue, since, as Mr Moss rightly conceded, even if (as he contends) the incoming value was in the region of £3,000, the judge would still have found that there was a transaction at an undervalue, on the footing that £3,000 is on any footing ‘significantly less’ than £10,000.   On the other hand, for reasons which will appear, it has a bearing on the remedy issue.   I must accordingly address it.
120.	In my judgment the judge was in error when, in paragraph 110 of his judgment (quoted in paragraph 64 above), he found the incoming value to be nil.   I accept Mr Moss’s submission that the loan of £1,900 must have had, from Mr Thoars’ point of view, more than a nominal value in money or money’s worth as at 26 July 1996, notwithstanding that it was repayable on demand.   And its value was no doubt greater if it was interest-free (as to which, see paragraph 20 above).  Similarly, absent any evidence as to the circumstances in which the payment came to be made, the payment of £1,100 to the third party at, presumably, the direction of Mr Thoars, has on the face of it a value to Mr Thoars equal to its face value.   Moreover, that conclusion is reinforced by Mrs Thoars’ evidence under cross-examination (referred to in paragraph 21 above).   I shall accordingly proceed on the footing, most favourable to Ramlort, that the incoming value was not substantially less than £3000.
121.	That said, for reasons already given I conclude that Ramlort fails on the undervalue issue. 
The remedy issue
122.	The remedy issue comprises two sub-issues.   First, can the judge’s exercise of his statutory discretion as to the appropriate remedy stand, given that he exercised it on the (as I have concluded) erroneous basis that the incoming value was nil?   Second, if not, how should this court exercise that discretion?
123.	As to the first sub-issue, in my judgment it must follow from the fact that the judge exercised his discretion on the basis of an erroneous finding as to the incoming value that his exercise of the discretion cannot stand; and I did not understand Mr Davies to contend seriously to the contrary.   The discretion as to remedy must accordingly be exercised afresh by this court.
124.	I turn, then, to the second sub-issue: how should this court exercise that discretion?   Section 342(1) (quoted in paragraph 26 above), which deals with remedies, is expressed to be ‘[w]ithout prejudice to the generality of section 339(2)’.   Section 339(2) provides that the court may make ‘such order as it thinks fit for restoring the position to what it would have been if [the debtor] had not entered into [the] transaction’.
125.	I respectfully agree with the observation of Judge Havelock-Allan QC in Walker v. WA Personnel Ltd (in the passage from his judgment quoted in paragraph 96 above) to the effect that, as a matter of general approach, in deciding what is the appropriate remedy where there has been a transaction at an undervalue the court does not start with a presumption in favour of monetary compensation as opposed to setting the transaction aside and revesting the asset transferred.     Indeed, in my judgment, in considering what is the appropriate remedy on the facts of any particular case the court should not start from any a priori position.   Each case will turn on its particular facts, and the task of the court in every case is to fashion the most appropriate remedy with a view to restoring, so far as it is practicable and just to do so, the position as it ‘would have been if [the debtor] had not entered into the transaction’.   In some cases that remedy may take the form of reversing the transaction; in others it may not.   In some cases it may take the form of an order for monetary compensation; in others it may not.
126.	Moreover, in deciding how to exercise the statutory discretion as to remedy the court must inevitably have regard to subsequent events, and to the facts as they are at the date of the order.    The court cannot turn the clock back or rewrite history.    In the instant case, therefore, in deciding what is the appropriate remedy the court must have regard to the fact that since the making of the Declaration of Trust Mr Thoars has unfortunately died, with the consequence that the Policy is now represented by the sum assured, plus accrued interest.   But it does not follow that by reason of Mr Thoars’ death and the consequent conversion of the Policy into money the court cannot restore the parties to the position they would have been in as at the date of the order had the Declaration of Trust not been made.   Had the Declaration of Trust not been made, Mr Thoars’ insolvent estate (in effect, his creditors) would now have the benefit of the sum on deposit, and Ramlort would not have paid out a total of £3,000 (I will return below to the question of interest on that sum).    There are, therefore, no obstacles to a straightforward reversal of the transaction.   I accordingly reject Mr Moss’s submission that, given Mr Thoars’ death, it is now too late to set aside the Declaration of Trust.    The question to be addressed, therefore, is whether (as Mr Reid claims) the Declaration of Trust should be set aside; or whether (as Ramlort contends) the most appropriate remedy is to allow Ramlort to retain the benefit of the Policy but to order it to pay compensation.
127.	Like the judge, I take the view that the most appropriate remedy in the particular and unusual circumstances of the instant case is to set aside the Declaration of Trust on terms that Ramlort recovers the payments which it made: in other words, to reverse the transaction.   That, as it seems to me, is the remedy which most effectively meets the justice of the case.   Had Mr Thoars been alive today, I would have had no hesitation in concluding that that was the right course for the court to take; and the fact of his death does not in my judgment alter that position.
128.	Lastly, I turn to Mr Moss’s submission that the £3,000 should be repaid to Ramlort with interest.   Given that, as explained in paragraph 126 above, in setting aside the Declaration of Trust the court is concerned to restore the parties to the position they would have been in as at the date of the order had the Declaration of Trust not been made, it must follow, in my judgment, that Ramlort is entitled to interest on the £3,000 as from the date on which that sum was paid.  No doubt the parties can reach agreement as to the appropriate rate.
RESULT
129.	Subject only to varying the judge’s order so as to provide for interest on the sums to be repaid to Ramlort, I would dismiss this appeal.
Lord Justice Waller:
130.	I agree.
Lord Justice Judge:
131.	I also agree.
Order:
1.	Paragraph 2 of the order of His Honour Judge Norris QC dated 18th July 2003 be varied so as to provide that the Appellant be entitled to interest upon the sums specified in paragraphs (a) and (b) thereof, calculated form 30 July 1996 at the applicable special investment account rates, such interest being agreed in the sum of £1,515.
2.	Save as to paragraph 1 above, the appeal be dismissed.
3.	The Appellant do pay the Respondent’s costs of the appeal to be subject to a detailed assessment (if not agreed), such costs to be assessed on the standard basis.
4.	The Appellant do pay to the Respondent by 3rd August 2004, the sum of £25,000 on account of costs.
(Order does not form part of the approved judgment)