230:
of fiduciary duty. The conspiracy is alleged to have been an unlawful means conspiracy, and the unlawful means are the directors' alleged breach of their fiduciary duties. As against
Jetivia and Mr Brunschweiler, Bilta claims damages for conspiracy or compensation for dishonest assistance in the directors' breach of their fiduciary duties. Since the matter comes before the court on Jetivia's and Mr Brunschweiler's application for the claims against them to be summarily struck out or dismissed, it is to be assumed for present purposes that the factual allegations made in Bilta's amended particulars of claim are capable of proof, and there is no need to repeat the word "alleged" whenever referring to the defendants' conduct. The liquidators also pursue a separate claim for fraudulent trading under section 213 of IA 1986. Jetivia is a Swiss company and Mr Brunschweiler, who is resident in France, is its sole director.
31:
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claim brought against the directors by the company's liquidator, in the name of the company and/or on behalf of its creditors, for the loss suffered by the company as a result of the wrong-doing, even where the directors were the only directors and shareholders of the company, and even though the wrong-doing or knowledge of the directors may be attributed to the company in many other types of proceedings."
301:("from a dishonorable cause an action does not arise"). In this case the claims of the company related to a carousel fraud, but because the directors conducted the fraud in the name of the company, their conduct should be attributed to the company, and therefore the company should not be able to make any claim in relation the conduct of the fraud.
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virtually from the outset. The money payable to Bilta, including the VAT due to HMRC, was either paid to Bilta and paid on by it to its overseas supplier, or was paid by the first line buffer (or a later company in the chain) directly to Bilta's supplier, or was otherwise paid to offshore accounts.
244:
In short, Bilta bought large numbers of EUAs from overseas suppliers, including
Jetivia, free of VAT, and sold them in the UK with VAT to companies described as "first line buffers", which immediately sold them on. The price for which Bilta sold the EUAs was lower before VAT than the price at which
229:
Bilta (UK) Ltd ("Bilta"), a company incorporated in
England, seeks through its joint liquidators, Mr Hellard and Mr Ingram, to recover damages or equitable compensation in respect of its alleged loss. As against the directors, Bilta claims damages for conspiracy or equitable compensation for breach
452:
In relation to the question of attribution, all seven judges similarly agreed that "Where a company has been the victim of wrong-doing by its directors, or of which its directors had notice, then the wrong-doing, or knowledge, of the directors cannot be attributed to the company as a defence to a
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Bilta was insolvent throughout the period of its trading in EUAs. In that three-month period, Bilta sold more than 5.7m EUAs for about £294m. Its liability for VAT on those transactions amounts to £38,733,444. It did not submit any VAT returns to HMRC. On the application of HMRC Mr
Hellard and Mr
282:
in law, the relevant facts had not been determined at this stage of the proceedings. Accordingly, for the purposes of the hearing and the subsequent appeals all of the facts alleged against the defendants were assumed to be true for the purposes of determining whether the claims were legally
204:
on behalf of a company against its former directors on the basis that, where the company was essentially the victim of a fraud by the directors, the conduct of the directors would not be attributed to the company thereby treating the company as a party to the illegality;
241:("EUAs"), which are commonly known as carbon credits. EUAs were treated as taxable supplies under the VAT Act 1994 until 31 July 2009. Since then they have been zero-rated. The VAT status of supplies of the EUAs at the relevant time explains Bilta's activities.
290:
Firstly, it was an accepted feature of
English law that a claimant will be unable to pursue legal remedy if it arises in connection with his own illegal act. This is sometimes referred to as the "illegality defence" and sometimes by the
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All seven judges agreed unanimously that the court's power to impose liability for fraudulent trading was extraterritorial. Relatively little judicial time was dedicated to the discussion of that subject in the judgments.
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English law had recently seen a number of judicial decisions relating to difficult issues of attribution of fraudulent conduct by a director to the company. This included the controversial decision of the
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was limited to actions within the jurisdiction of the United
Kingdom. As the conduct complained of occurred outside of the country, they alleged that the court had no power to make an award against them.
642:
233:
Bilta had two directors, Mr Nazir and Mr Chopra ("the directors"), who are the first and second defendants. Mr Chopra owned all the issued shares. Bilta was registered for the purposes of
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of Bilta on 29 September 2009. They commenced the company's claim against the defendants who were its directors and other parties, including the appellants. The company was
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The decision was handed down in April 2015 after the original hearing had concluded in
October of the previous year; an unusual length of time for the Supreme Court.
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At the end of the chain the EUAs would be resold to a company outside the UK, generating a right to a VAT refund. It is a familiar kind of carousel or
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up on 25 November 2009. The proceedings were amended on 13 October 2011 to include the liquidators' claims under section 213 of IA 1986.
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643:"Supreme Court dismisses appeal from the Court of Appeal in Jetivia SA and another v Bilta (UK) Ltd (in liquidation) and others"
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the case represents yet another missed opportunity to issue an authoritative statement on the thorny issue of illegality.
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Secondly, with respect to certain of the defendants only, it was alleged that the statutory power to impose liability for
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Because the appeal concerned an application by the defendants to strike out certain claims as disclosing no sustainable
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decision in turn had followed a number of other recent decisions in relation to the issue of illegality, including
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460:, Lord Toulson and Lord Hodge dissented from the majority in relation to the scope of the "illegality defence".
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would resolve these issues. Unfortunately their
Lordships declined to make an authoritative statement on
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has been subsequently applied by the courts in relation to attribution on various occasions, including
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further expounded that "section 172(3) cannot be defeated by the directors invoking the defence of
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Although most commentators agree with the emphasis of the decision, and applaud the move away from
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237:. Its only trading activity, which took place between 22 April and 21 July 2009, was trading in
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where the company is the victim of the unlawful act, and (ii) the extent to which liability for
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it bought, and Bilta was therefore never going to be in a position to meet its liabilities to
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The defendants applied to strike out various claims against them on two different grounds.
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liability for fraudulent trading under the
Insolvency Act 1986 had extraterritorial effect.
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520: (30 July 2014). Commentators had hoped that the decision of the Supreme Court in
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Singularis
Holdings Limited (in liquidation) v Daiwa Capital Markets Europe Limited
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Jetivia SA & Anor v Bilta (UK) Limited (in liquidation) & Others
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494: (30 July 2009), and the so-called "sole actor" exception. The
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in relation to (i) the attribution of unlawful acts of a
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2015 decision of the Supreme Court of the United Kingdom
595:"Jetivia SA v Bilta (UK) Ltd (In Liquidation) (2015)"
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could not operate to prevent a claim brought by the
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Crown Prosecution Service v Aquila Advisory Limited
463:Although it was not a point in issue in the case,
138:fraud, fraudulent trading, attribution, illegality
666:"Jetivia SA v Bilta (UK) Ltd [2015] UKSA"
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420:Jetivia SA v Bilta (UK) Limited (in liquidation)
146:Jetivia SA v Bilta (UK) Limited (in liquidation)
83:Jetivia SA & Anor v Bilta (UK) Ltd & Ors
24:Jetivia SA v Bilta (UK) Limited (in liquidation)
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217:Paragraphs 113 - 116 of the joint opinion of
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239:European Emissions Trading Scheme Allowances
708:Corporate governance in the United Kingdom
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698:Supreme Court of the United Kingdom cases
487:Moore Stephens v Stone Rolls Ltd (in liq)
225:summarised the alleged facts as follows:
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533:Stone & Rolls Ltd v Moore Stephens
506:Les Laboratoires Servier v Apotex Inc
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619:Per Lord Neuberger, at paragraph 7.
597:. Maitland Chambers. Archived from
169:Supreme Court of the United Kingdom
42:Supreme Court of the United Kingdom
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703:United Kingdom insolvency case law
14:
719:
641:Frances Coulson (22 April 2015).
380:Re Augustus Barnett & Son Ltd
392:Re a Company (No 001418 of 1988)
89:, 3 WLR 1167 (31 July 2013)
693:2015 in United Kingdom case law
664:Saleem Sheikh (24 April 2015).
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298:ex turpi causa non oritur actio
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187:has extraterritorial effect.
249:("HMRC"). Bilta had minimal
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512: (29 October 2014) and
409:[2003] EWCA Civ 289
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87:[2013] EWCA Civ 968
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347:Fraudulent trading cases
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268:provisional liquidators
550:[2019] UKSC 50
518:[2014] UKSC 47
510:[2014] UKSC 55
492:[2009] UKHL 39
426:[2015] UKSC 23
404:Morphitis v Bernasconi
266:Ingram were appointed
247:HM Revenue and Customs
151:[2015] UKSC 23
628:At paragraphs 18-20.
260:missing trader fraud
185:Insolvency Act 1986
601:on 2 December 2015
501:Tinsley v Milligan
306:fraudulent trading
272:compulsorily wound
181:fraudulent trading
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645:. LexisNexis
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111:Lord Clarke
687:Categories
582:References
504:1 AC 340;
223:Lord Hodge
161:UK company
127:Lord Hodge
107:Lord Mance
255:insolvent
560:See also
456:However
383:BCLC 170
313:Judgment
253:and was
173:director
133:Keywords
66:Citation
672:29 July
649:28 July
605:28 July
540:Jetivia
395:BCC 526
251:capital
177:company
175:to the
159:) is a
69:UKSC 23
58:Decided
371:QB 675
359:Ch 592
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213:Facts
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674:2015
651:2015
607:2015
552:and
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484:in
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235:VAT
205:and
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333:t
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