Tradition Financial Services Ltd v Bilta (UK) Ltd & Ors
[2023] EWCA Civ 112
Andrew Anderson Kelsall & Anor (as joint liquidators of Gamenation (UK) Limited) v Biljana Stajic & Anor
29 November 2023
[2023] EWHC 3020 (Ch)
High Court
Two people were sued for messing up a company's finances. One was accused of directly causing problems, the other of helping. The court decided that helping someone to cause problems was covered by the law (Insolvency Act 1986), even if the helper didn't directly owe the company a duty. The court also split the legal costs fairly between the two sides because the initial lawsuit against the helper was rushed.
Key Facts
- •Gamenation (UK) Ltd (the Company) operated gaming subscription services, breaching the Phone-paid Services Authority Limited (PSA) Code of Practice.
- •The PSA fined the Company £200,000 plus expenses.
- •Joint Liquidators (Applicants) sued the First Respondent (Biljana Stajic, sole director) and Second Respondent (Jelena Tomic Filipovic, alleged de facto director) for breaches of duty and dishonest assistance.
- •The Respondents applied to strike out the dishonest assistance claim under section 212 of the Insolvency Act 1986.
- •The Applicants sought to amend their Points of Claim.
Legal Principles
Section 212 of the Insolvency Act 1986 provides a summary procedure for office holders to bring proceedings.
Insolvency Act 1986, section 212
Section 212 does not create new liabilities but provides a procedural mechanism; liability must exist outside of section 212.
Manolete Partners PLC v Hayward and Barrett Holdings Ltd [2022] BCC 159
Dishonest assistance requires: (i) a trust or fiduciary obligation; (ii) a breach by the trustee/fiduciary; (iii) the third party assisted in the breach; (iv) the third party acted dishonestly; (v) the test for dishonesty is subjective (actual state of mind) and objective (standards of ordinary decent people); (vi) the circumstances known to the defendant are considered.
FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm); Iranian Offshore and Construction Company v Dean Investment Holdings SA [2019] EWHC 472; Lewin on Trusts (20th edition)
Re B Johnson & Co (Builders) Ltd [1955] Ch 634 interpreted section 333(1) of the Companies Act 1948 as not covering all wrongful acts, particularly common law negligence. The case focused on the distinction between a company officer and a receiver/manager appointed under a debenture.
Re B Johnson & Co (Builders) Ltd [1955] Ch 634
Applications to strike out should be made as soon as possible under the CPR.
Civil Procedure Rules
The general rule for amendments is that the amending party bears the other side's costs of the amendment.
Not explicitly sourced in the judgment but implied
Outcomes
The Respondents’ application to strike out the dishonest assistance claim was dismissed.
The court held that dishonest assistance falls within section 212 of the Insolvency Act 1986. The wording of the section, allowing for misapplication of assets or being accountable for them, encompasses dishonest assistance.
Costs of the amendment application were split.
The Respondents were entitled to costs up to the CCMC (12 October 2022). After this date, the Applicants were entitled to costs due to the Respondents' unnecessary delay in consenting to the amendments.
No order for costs was made for the remainder of the strike-out application.
The application was issued prematurely and ultimately the court believed that the strike-out application would not have succeeded overall based on the pleadings.
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