In the recent decision of Riley v Aidiniantz and another [2025] EWHC 3222 (Ch), the High Court has clarified that a claim for a remedy pursuant to section 423 of the Insolvency Act 1986 is a claim for a specialty, and thus subject to a 12 year limitation period.
It is not a claim to recover a sum by virtue of any enactment, which would hve had a 6 year limitation period under the Limitation Act 1980.
The background concerns long running litigation relating to the Sherlock Holmes Museum, in connection with a dispute between shareholders, with the claimant alleging that shares owned by the defendant were gifted to his wife for the purpose of putting assets beyond the reach of creditors, including herself. The claimant, who had the benefit of a costs order, sought an order to restore the position and vest the shares in her, which would have been possible had she enforced the costs order in her favour under the Charging Orders Act 1979, if the shares had not been so disposed of.
In assessing the correct limitation position, the learned judge set out that a claim made under s423 is not a money claim, but rather a claim to reinstate or make available for enforcement, assets wrongfully transferred or paid away by a debtor, or potential debtor, to preclude a creditor, or potential creditor, from enforcing a present, or a future, indebtedness against those assets. Therefore, this is a claim on a specialty, namely a claim to enforce an obligation under statute, and therefore the limitation period is 12 years.
As to when time starts to run, the Court found that the cause of action can only arose when the claimant became a 'victim' within the meaning of s423, which in this instance occurred when money paid into Court by way of security had been exhausted.
This December 2025 decision follows the February 2025 decision in El-Husseini v Invest Bank PSC [2025] UKSC 4, also on transactions defrauding creditors, and taken together these authorities show the potentially wide application of s423, including that the dispositions need not be in an insolvency context nor actually made by the debtor, and that a victim of the transaction will have 12 years from when s/he becomes a 'victim' to initiate proceedings. For an office holder, time would typically start to run from the commencement of the relevant insolvency.
