Vol 15 (2018) - Issue 1

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Transactions at Undervalue in Guernsey

There is no codified law in Guernsey that deals with transactions at undervalue. Consequently, there is no statutory method by which a creditor can take action against a debtor who deliberately transfers property to a third party for little or no value for the purpose of defeating the claims of a creditor. In this article we will examine the circumstances where Guernsey law recognises the Action Paulienne (or Pauline Action) which has its origins in Roman law. In essence it enables the of victims of fraud to trace through the insolvent vehicle used to carry out the fraud into the hands of the recipients.

In the decision of Re Flightlease1 LB Southwell noted at paragraph 91 of his judgment that 'the concept of a limited company was imported into Guernsey law from English law; (2) since its importation into Guernsey law in the 1880s, it has naturally been appropriate to look to English law to help in the solution of problems concerning companies which are not covered by Guernsey statutes or customary law'.