Riley v Aidiniantz: High Court refuses to strike out section 423 claim over share transfers

The High Court has declined to strike out claims under section 423 of the Insolvency Act 1986, rejecting arguments that the proceedings were time-barred and precluded by earlier settlement agreements. The decision in Riley v Aidiniantz & Anor [2025] EWHC 3222 (Ch) provides important guidance on limitation periods for section 423 claims and the scope of settlement agreements containing wide-ranging release provisions.

The claimant sought to set aside transfers of shares in Rollerteam Limited, owner of the Sherlock Holmes Museum, valued at £20 million. The defendant had transferred all shares to his wife in February 2014, retransferred half in December 2014, then retransferred them again in April 2016. The claimant alleged these transactions were designed to place assets beyond reach of creditors, given the defendant's outstanding costs liabilities exceeding £300,000.

Limitation issues

Master Bowles rejected the contention that section 423 claims are subject to a six-year limitation period under section 9 of the Limitation Act 1980. Following Hill v Spread Trustee Ltd [2007] 1 WLR 2404, the court confirmed that section 423 claims are claims on a specialty attracting the twelve-year limitation period under section 8. Crucially, these are not claims to "recover any sum recoverable by virtue of any enactment" but rather claims to reinstate wrongfully transferred assets.

The court further held that time only begins to run when a victim of the transaction emerges. In this case, the claimant arguably only became a victim when security monies paid into court pursuant to earlier orders were exhausted in June 2021, as she could not previously demonstrate adverse effect from the share transfers.

The alternative limitation argument—that section 423 constitutes an action to enforce a judgement under section 24—was also dismissed. Costs orders only become enforceable upon quantification through detailed assessment. Since the relevant costs certificates were issued in 2021-2022, no limitation defence arose.

Settlement agreement construction

The defendant relied on a 2013 Tomlin Order containing provisions that parties would not pursue claims "concerning the ownership (legal or beneficial) of the share capital" of Rollerteam. Applying the principles from Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, Master Bowles held that clear words are required before courts will infer parties intended to surrender unknown future rights.

The settlement was designed to confirm the defendant's ownership and preclude challenges to that ownership. The current claims, by contrast, were founded upon his ownership and the subsequent transfers. The section 423 claim did not question his ownership but rather sought to set aside disposals made from that position of ownership.

Realistic prospect of success

Refusing summary judgement, Master Bowles identified realistic inferences supporting both claims. The temporal correlation between the share transfers and litigation, the defendant's subsequent move to Germany, his failure to pay costs despite acknowledged capacity, and his continued access to company funds all provided evidential foundation.

Whilst the defendant offered explanations—marriage gifts, retirement planning, mortgage applications—the court found these insufficiently persuasive to justify summary disposal. Questions of intention regarding both the section 423 purpose and beneficial ownership required full investigation at trial.

The application for security for costs was also dismissed, with Master Bowles noting the injustice of requiring a judgement creditor seeking to recover assets to provide security, particularly when the defendant's existing costs liability provided natural security through potential set-off.

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