BMF Assets No. 1 Ltd v Sanne Group PLC

An injunction will not be granted where the applicant fails to establish a serious issue to be tried. In assessing that threshold, the court may scrutinise the legal foundation of the claim, the applicant’s standing, the admissibility and reliability of its evidence, and the authority of those purporting to act for companies. A person cannot become a company director merely by declaring an intention to assume that office. The court may also refuse relief where the application is a disguised attempt to obstruct existing litigation or where the proposed cross-undertaking in damages lacks substance. Under its inherent jurisdiction, the court may impose proportionate identity-verification requirements to protect its processes from abusive or proliferating litigation, consistently with Article 6 of the European Convention on Human Rights.

The first claimant sought an injunction preventing the defendants from obstructing the alleged redemption of notes issued by companies in a securitisation structure. It also sought to join counsel as a party. The application relied on an alleged sale of the issuers’ assets, alleged proceeds held for redemption, and purported changes to the issuers’ directors.

The court considered serious concerns about the applicant’s evidence, the identity and authority of the person presenting the application, the alleged sale, the applicants’ standing, the contractual securitisation arrangements, and the status of purported de facto directors. The court also considered directions for related strike-out applications and restrictions on further proceedings by named persons or entities.

1. Injunction application dismissed. The applicant failed to show a serious issue to be tried. There was no admissible evidence of the alleged sale or receipt of its proceeds, no convincing explanation for the absence of the sale agreement or financial records, and substantial inconsistencies in the evidence. The alleged sale was also inconsistent with the security and contractual arrangements governing the notes.
2. The alleged contractual foundation was unarguable because the early-redemption procedure in clause 5(d) of the terms and conditions had not been followed. The first claimant had provided no evidence that it had standing to enforce that provision. Beneficial owners of notes who were not recognised as Noteholders or Instrumentholders could not bypass the carefully structured contractual and corporate arrangements or assert direct fiduciary duties against the companies’ directors.
3. A de facto director is identified by a multifactorial assessment of what has occurred in substance and reality, including participation in the company’s governing structure, access to information, participation in meetings or decision-making, and how the person was presented by the company. A stranger cannot make themselves a director by unilaterally declaring that they assume the office. The purported appointments therefore did not displace the existing directors, and the alleged sale was ineffective because it was purportedly carried out by persons who were not directors.
4. Even if a serious issue had existed, the injunction would have been refused. It was in substance an attempt to prevent the issuers and Holdings from conducting existing litigation, including contempt proceedings. The court also found no reality in the proposed cross-undertaking in damages because there was no evidence of the first claimant’s assets or ability to meet it.
5. The application to join counsel was dismissed. The injunction application was certified as totally without merit, and the first claimant was ordered to pay the costs, including those of the issuers and Holdings, on the indemnity basis.
6. Applying the inherent jurisdiction described in Bhamjee v Forsdick & Ors [2003] EWCA Civ 1113, the court ordered that specified further proceedings or applications be accompanied by identity evidence. A prior hearing before an application could be pursued was rejected as an unnecessary obstacle and disproportionate use of judicial resources. The order was compatible with Article 6 of the European Convention on Human Rights.