Bilta (UK) Ltd (in liquidation) and others (Respondents) v Tradition Financial Services Ltd (Appellant)
Case ID: UKSC 2023/0033
Case summary
Issues
UKSC 2023/0033: Is it possible to make a person liable as a party to the carrying on of a business for fraudulent purposes (under Section 213 of the Insolvency Act 1986) if they did not exercise management or control of the company in question?
UKSC 2023/0034: Where a claimant company has been struck off and then subsequently restored to the register of companies, what is required for the limitation period to be extended (pursuant to Section 32 of the Limitation Act 1980) on the basis that it could not with reasonable diligence have discovered a fraud during the period it was dissolved?
Facts
These appeals relate to a claim regarding a form of VAT fraud known as missing trader intra-community fraud ("MTIC Fraud"). MTIC fraud involves companies importing goods VAT-free from another EU country, selling them with VAT, incurring enormous VAT liabilities and then becoming insolvent. The claim involved trading in carbon credits under the EU Emissions Trading Scheme in 2009, which at the time attracted VAT. The claimants in this case are five companies (Nathanael Eurl Ltd ("Nathanael"), Inline Trading Ltd ("Inline"), Bilta (UK) Ltd ("Bilta"), Weston Trading UK Ltd ("Weston") and Vehement Solutions Ltd ("Vehement"), together the "Claimant Companies"), which engaged in this trading and are now in liquidation, and their respective Joint Liquidators (together the "Claimants"). In November 2017 the Claimants issued the present claim against Tradition Financial Services Ltd ("TFS"). This was on the basis that TFS brokered the trades that constituted the MTIC Fraud knowing or suspecting the trades were not legitimate. This included: (i) claims by the Claimant Companies alleging that TFS dishonestly assisted in the breach of fiduciary duty owed by the directors of the Claimant Companies; and (ii) claims by the Joint Liquidators for relief pursuant to section 213 of the Insolvency Act 1986 alleging TFS participated in the fraudulent trading of the Claimant Companies. There was a confidential partial settlement of the claims which provided for two issues to be determined by the High Court (on the basis of assumed facts). These issues were: (1) whether the dishonest assistance claims were time-barred; and (2) whether TFS was within the scope of Section 213 of the Insolvency Act 1986. The High Court held that each of the dishonest assistance claims was time-barred as were the Section 213 claims brought in respect of Bilta, Weston and Vehement. The claims in respect of Bilta, Weston and Vehement failed in their entirety and no appeal was pursued in respect of them. However, the High Court held that TFS could in principle fall within the scope of Section 213 of the Insolvency Act 1986. This meant that the Section 213 claims brought by the Joint Liquidators of two of the Claimant Companies (Nathanael and Inline), which were not time-barred, succeeded. TFS appealed the High Court's decision that it was within the scope of Section 213. The Claimants cross-appealed the High Court’s decision that the dishonest assistance claims by Nathanael and Inline were time-barred. There was also an appeal in respect of the costs order (which is not pursued in this application). The Court of Appeal dismissed each of the appeals and refused permission to appeal to the UK Supreme Court. In UKSC 2023/0033 TFS seeks permission to appeal the decision that it is within the scope of Section 213. The Claimants oppose permission being granted on this issue. In UKSC 2023/0034 Nathanael and Inline seek permission to appeal the decision that their dishonest assistance claims are time-barred. TFS requests that the Court dismiss the appeal on this issue (although it appears to accept that if permission is granted in respect of its appeal it should also be granted in respect of Nathanael and Inline's appeal).
Judgment appealed
Parties
Appellant(s)
Tradition Financial Services Ltd
Respondent(s)
Bilta (UK) Ltd (in liquidation) and others
Appeal
Justices
Lord Hodge, Lord Briggs, Lord Hamblen, Lord Burrows, Lord Richards
Hearing start date
11 December 2024
Hearing finish date
12 December 2024