Summary
On strike-out and summary-judgment applications, a court should not determine complex fact-sensitive issues summarily where there is a real prospect that fuller evidence will affect the outcome. Under the Rome II Regulation, the place of direct damage and any manifestly closer connection must be assessed with care. The exceptional escape clause in article 4(3) may require consideration of the whole factual picture.
Section 423 of the Insolvency Act 1986 has a broad scope. The relevant claimant need not be the specific creditor whom the transaction was intended to defeat, and sufficient connection with England is a discretionary, fact-sensitive question. A secured creditor’s claim for diminution in the value of its security is arguable as a claim distinct from reflective loss.
Factual background
The claimants were investors and lenders in an investment structure centred on an English limited partnership. They alleged that the defendants had dishonestly reorganised the structure, diminishing their interests and security. The applications sought strike-out, summary judgment on the applicable law of tort claims, and opposition to amendments.
The principal issues were whether the applicable law could be decided summarily under the Rome II Regulation; whether the claim for diminution in the value of loan security was barred by the rule against reflective loss; whether claims assigned under a security assignment were arguable; whether amendments could be made despite Stepstone’s Luxembourg insolvency; whether claims under sections 423 to 425 of the Insolvency Act 1986 were sustainable; and the costs consequences of discontinued claims.
Held
- Applications generally. The strike-out and summary-judgment procedures were inappropriate for resolving disputed factual questions or conducting a mini-trial. The applicable threshold was whether the claims were bound to fail or lacked a real prospect of success.
- Applicable law of tort. The court declined to decide summarily which law governed the tortious claims. The claimants had a real prospect of establishing that the Fund was run from London, that direct damage occurred in England, or that the torts were manifestly more closely connected with England under article 4(3) of the Rome II Regulation. The issue required disclosure, evidence and, if necessary, cross-examination.
- ZBS loss. The claim that the value of ZBS’s security had been diminished was arguable. A secured creditor was materially distinguishable from an unsecured creditor for reflective-loss purposes, and the pleaded claim was properly analysed as diminution in the value of security rather than reflective loss.
- Security assignment. The wording of the assignment, including rights connected with the assigned property and the wide definition of Rights, made it arguable that all relevant contractual and non-contractual claims had been assigned to Fortress. Construction should not be decided before disclosure and evidence where the clause formed part of a network of related transactions.
- Stepstone’s insolvency. Article 15 of the Insolvency Regulation governed the effect of the Luxembourg insolvency on proceedings pending in England. The English court was therefore to apply English procedural law when deciding whether the indemnity amendments could be made. The analogy with article 27 of the Judgments Regulation was rejected. Permission to amend was granted.
- Sections 423 to 425. Section 423(3) was not confined to direct claims by the particular person bringing proceedings. The statutory concepts of a person who may make a claim and a victim were broad enough to encompass indirect claims. Sufficient connection with England was a discretionary question depending on all the circumstances and was unsuitable for summary determination. The claims were fully arguable.
- Costs and disposal. The defendants were entitled to the usual costs of the discontinued claims, to be assessed at the conclusion of the proceedings. Subject to that order and the later determination of the Actio Pauliana claim, the applications were dismissed and the proposed amendments were permitted.
The court’s approach to earlier authorities
Available to signed-in members.
Key cases cited
23 authorities cited.
- Johnson v Gore Wood & Co [2002] 2 AC 1
- Alliance Bank JSC v Aquanta Corporation & Ors [2012] EWCA Civ 1588
- Stribog Ltd v FKI Engineering Ltd [2011] EWCA Civ 622
- Syska & Anor v Vivendi Universal S.A. & Ors [2009] EWCA Civ 677
- Doncaster Pharmaceuticals Group Ltd.& Ors v The Bolton Pharmaceutical Company 100 Ltd [2006] EWCA Civ 661
- Hill v Spread Trustee Company Ltd & Anor [2006] EWCA Civ 542
- Gardner v Parker [2004] EWCA Civ 781
- Hughes & Ors v Richards (t/a Colin Richards & Co) [2004] EWCA Civ 266
- Bord NA Mona Horticulture Ltd & Anor v British Polythene Industries Plc & Ors [2012] EWHC 3346 (Comm)
- International Leisure Ltd & Anor v First National Trustee Company UK Ltd & Ors [2012] EWHC 1971 (Ch)
- Alliance Bank JSC v Aquanta Corporation & Ors [2011] EWHC 3281 (Comm)
- Hillside (New Media) Ltd v Baasland & Ors [2010] EWHC 3336 (Comm)
- Teasdale v HSBC Bank PLC [2010] EWHC 612 (QB)
- Clydesdale Financial Services Ltd & Ors v Smailes & Ors [2009] EWHC 3190 (Ch)
- 4Eng Ltd v Harper & Ors [2009] EWHC 2633 (Ch)
- Dornoch Ltd & Ors v Westminster International BV & Ors [2009] EWHC 1782 (Admlty)
- Underwriting Members of Lloyd's Syndicate 980 & Ors v Sinco SA [2008] EWHC 1842 (Comm)
- Nigeria v Santolina Investment Corp & Ors [2007] EWHC 437 (Ch)
- London Helicopters v Heliportugal [2006] EWHC 108 (QB)
- Jyske Bank (Gibraltar) Ltd v Spjeldnaes [1999] 2 BCLC 101
- Razzaq v Pala [1997] 1 WLR 1336
- Marinari v Lloyds Bank Plc (Zubaidi Trading Co intervener) Case C-364/93
- In re Paramount Airways Ltd (Powdrill v Hambros Bank (Jersey) Ltd) [1993] Ch 223
Sign in to see how the court treated each authority. A free account is enough.
Cases citing this case
13 later cases · 6 positive · 4 neutral · 2 caution · 1 negative
Most senior citing decisions:
- Shenzhen Senior Technology Material Co Ltd v Celgard, LLC (Rev 1) [2020] EWCA Civ 1293 distinguished
- Erste Group Bank AG London Branch v J 'VMZ Red October' & Ors [2015] EWCA Civ 379 disapproved
- Importers Service Corporation & Anor v Mario Aliotta & Ors [2026] EWHC 533 (Ch) followed
- AON UK Limited & Ors v Howden Group Holdings Limited & Ors [2025] EWHC 1148 (KB)
- Commercial Bank of Dubai PSC & Ors v Abdalla Juma Majid Al Sari & Ors [2023] EWHC 1797 (Comm)
- MF Tel Sarl v Visa Europe Ltd [2023] EWHC 1336 (Ch)
- Akhmedova v Akhmedov & Ors (Rev 1) [2021] EWHC 545 (Fam)
- Gordian Holdings Ltd v Sofroniou & Anor [2021] EWHC 235 (Comm)
- Celgard, LLC v Shenzhen Senior Technology Material Co Ltd [2020] EWHC 2072 (Ch)
- Swift Advances Plc v Ahmed & Anor [2015] EWHC 3265 (Ch)
Sign in for the full treatment table, including the other 3 cases. A free account is enough.