The Court of Appeal has unanimously allowed an appeal setting aside the judgment of Falk J which had held that the sale of the Comet electrical retailer in February 2012 had given rise to a voidable preference against the seller, the Kesa Group.
The case concerned a transaction which had taken place in February 2012 by which the then owners of Comet, the Kesa Group, sold it to a new owner as part of a “dowry” transaction. Comet subsequently went into administration and then liquidation. Comet’s additional liquidator alleged that a repayment of inter-company debt which had occurred as part of the transaction was a preference. That claim had been upheld by Falk J, entering judgment for £115 million against Kesa’s successor, Darty. This was billed as the largest ever successful preference claim.
The Court of Appeal has now set side that judgment in its entirety. In so doing, the Court of Appeal emphasised that the relevant decision to prefer taken by a company is the decision which is the ‘operative’ cause of the giving of the preference. Whilst an operative decision can be conditional, that had to be distinguished from something that did not amount to a decision at all. In this case, there was no evidence to support the Judge’s conclusion that the operative decision had been taken by Comet in November 2011 when the SPA was entered into and not at the completion board meeting in February 2012. Since it was accepted that the members of the board at the completion meeting had no desire to prefer, then the preference claim failed.
Tom Smith KC and Henry Phillips appeared for the successful appellant.
