Marcus Smith J today handed down judgment in Bilta (UK) Ltd v Tradition Financial Services Ltd (“TFS”) [2022] EWHC 723 (Ch). The claim was brought by the liquidators of companies that were used as vehicles for VAT fraud in the carbon credit market during 2009. The liquidators (and the companies under their direction) alleged that TFS had dishonestly assisted the former directors in breaches of their fiduciary duty by acting as a broker in relation to carbon credit trades which were carried out to further directors’ fraud. The issues before the court were whether the claims were time-barred and whether the liquidators’ claims under Section 213 of the Insolvency Act 1986 were valid.
The Court held that all of the claims in dishonest assistance, and some of the claims under Section 213, were time-barred. The liquidators sought to argue that they could not with reasonable diligence have discovered the claims before November 2011 (i.e. six years before the issue of the claim form) but this was rejected. But, the Court held, the liquidators had not discharged the burden of proof; and in any event the evidence showed that they could have placed themselves in a position to plead a claim some time in 2009 or 2010. The judgment includes a detailed and up-to-date synthesis of the law governing Section 32 of the Limitation Act 1980; and is a good illustration of how the law is to be applied in practice.
On Section 213, the Court said that TFS’s arguments (i.e. that the powers in relation to Section 213 could be exercised only against someone who was an “insider” to the insolvent company) would require existing policy to be unwound, and which is something for the Court of Appeal. On that basis, although the Court resolved the issue in favour of some of the claimants it was minded to give permission to appeal. There is likely to be further argument on the proper scope of this important provision.
TFS was represented by David Scorey QC (of Essex Court Chambers) and Laurence Emmett QC of One Essex Court.
Link to the judgment can be found here.