Limitation in respect of dishonest assistance claims and s.213 claims were the subject of the judgment in Bilta (UK) Ltd v Tradition Financial Services Ltd (“TFS”) [2022] EWHC 723 (Ch). The claimant companies (now in liquidation) had previously engaged in MTIC VAT fraud in the summer of 2009 in respect of the importation and onward sale of carbon credits. The liquidators (appointed by HMRC) advanced two claims: first, that TFS had dishonestly assisted the former directors in breach of their fiduciary duty by acting as a broker in relation to carbon credit trades, thereby ‘assisting’ the directors’ fraud; secondly, claims under s.213 of the Insolvency Act 1986, based upon the same facts.
The liquidators argued 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). This was rejected: the Court concluded that the liquidators had not discharged the burden of proof. In so doing, the Court provided a detailed synthesis of the relevant legal principles applicable to limitation defences, including the issue of ‘deemed’ knowledge of a company whilst struck of the register pursuant to s.1032. As a result, all dishonest assistance claims were time-barred (as were a number of the s.213 claims where time ran from the appointment of the liquidators).
On the remaining section 213 claims, the Court concluded that it was not in a position to say that that provision was restricted to an ‘insider’ and therefore did not apply to TFS’s actions, as TFS had argued. That was a policy issue for the Court of Appeal, although the Court was minded to give permission to appeal to TFS. There is likely to be further argument on the proper scope of this important provision.
Read the full judgment here.
David Scorey QC, with Laurence Emmett QC of One Essex Court, represented TFS instructed by Masoud Zabeti of Greenberg Traurig LLP.
