On 8 May 2025 the Court of Appeal (King LJ, Asplin LJ and Males LJ) handed down judgment in Vatistas (appellant) v Betta Oceanway and Tomini (Respondents) [2025] EWCA 595.
The Court of Appeal allowed an appeal from an order rejecting Mr Vatistas’s application to be joined as a defendant in the proceedings brought by Betta against Tomini. Mr Vatistas is a shareholder and former director of Tomini. The basis for his application was that the proceedings were part of a fraudulent scheme whereby Betta’s claim for a debt was being admitted by Tomini (both parties ultimately controlled by the same person) even though no such debt was due. The application was based on CPR 19.2(2). The Court of Appeal allowed Mr Vatistas’s application and directed that he be added as a defendant.
The case is noteworthy for four reasons. First, it is a rare example of a case where a shareholder in a company is permitted to be heard by the court in their own name to present a different defence and case to that which the company is presenting. The Court of Appeal’s reasoning is based on preventing abuse of process that would otherwise occur if it issued a judgment on the basis of a debt which was not due. Second, the Court of Appeal lays down guidance on the test and approach to CPR 19.2(2), laying down a three-step process [35-41]. Third, the Court of Appeal accepted that even if the various elements of CPR 19.2(2) are satisfied the court still retains a discretion on whether to permit joinder [41]. As part of that discretion the court could order security as a condition for joinder, which the Court of Appeal did in this case [62]. Fourth, the dispute arose out of an underlying arbitration, which at the time involved Mr Vatistas as the person chosen by the shareholders to conduct Tomini’s defence. After the parties exchanged the first round of submissions, Tomini then sought to revoke Mr Vatistas’s authorization to conduct Tomini’s defence and the parties jointly sought to discontinue the arbitration, and commence proceedings in court. The tribunal agreed to allow discontinuance without prejudice to Betta’s claim but only on the condition that the parties would not object to Mr Vatistas intervening in the court proceedings. In that context the tribunal expressed concerns about the circumstances of the discontinuance and the potential abuse of process at play in seeking to exclude Mr Vatistas. While the tribunal’s comments were not treated as binding on the court (and ignored by the first instance Judge), they were treated as fortifying the Court of Appeal’s decision that without Mr Vatistas’s involvement the court may be endorsing a false declaration about a non-existent debt [61].
The judgment can be found here.
Tariq Baloch KC appeared for Mr Vatistas, together with Georgios Petrochilos KC and Paul Bonner Hughes. They were instructed by Joshua Coates-Paliès and Nicole Geldenhuys of Three Crowns LLP.
