BMF ASSETS NO. 1 LIMITED v SANNE GROUP PLC

The court determined that the only directors authorised to act for the BMF securitisation companies were Ms Bidel and Mr Speight (and until August 2021, Mr Surnam) and that steps taken by various third parties since March 2021 did not lawfully change control of those companies. The applications by the BMF companies (acting by the Sanne Directors) to remove their names from a number of claims were allowed under CPR r.19.2(3) and the remaining claims (including those advanced by Kipling, Tilman, BMF Assets and individual claimants) were struck out or dismissed as having no realistic prospect of success. Key legal principles applied include the limits on noteholder powers under the transaction documents (including Schedule 5 to the Trust Deed), the legal meaning and limits of a de facto director, the tests for removal of parties and strike-out/summary judgment under the Civil Procedure Rules (notably CPR r.3.3, r.3.4 and r.24), and the Companies Act 2006 remedies to rectify the register (sections 790V and 1096). The recusal application against the judge was dismissed for inordinate and unexplained delay and, in any event, on its merits as wholly without substance.

This case concerned a series of interrelated proceedings arising from attempts by various third parties to assert control of a group of securitisation companies (the BMF securitisations). The principal applicants in the hearing were the BMF issuers and related companies acting by two Sanne-employed directors (the Sanne Directors). Numerous later claims were commenced in 2021 by entities calling themselves BMF Assets, Kipling, Tilman and others, seeking damages, injunctive relief and declarations to overturn earlier court orders and to prevent the Sanne Directors and their lawyers from acting for the companies.

Nature of the applications:

• Applications under CPR r.19.2(3) to remove the BMF companies as claimants from various 2021 claims on the basis they had been added without authority;
• Strike-out and summary judgment applications against the remaining claimants (Kipling, Tilman, BMF Assets and certain individual claimants) on the basis of lack of standing, abuse of process and no real prospect of success;
• Applications for declaratory relief as to (i) the identity of the true directors, (ii) the unauthorised commencement of the 2021 claims in the BMF companies’ names and (iii) the invalidity of the alleged sales to Tilman;
• A recusal application against the docketed judge alleging apparent bias.

Issues framed and reasoning:

• Who was authorised to act for the securitisation companies? The court concluded (applying the companies’ constitutional documents, earlier authority including Oyekoya v BMF4 plc and prior orders and considering ICC Judge Jones' rectification decision) that the Sanne Directors were and remain the only true directors and that the alleged changes effected by various third parties were legally ineffective.
• Were the documents and evidence relied on by the new claimants sufficient to show noteholder status or effective corporate acts? No: evidence claimed for purported Noteholder holdings was not satisfactory (notes were held in global form via Clearstream/Euroclear and BNY Mellon as trustee); the requirements of the transaction documents (for example para. 23 of Schedule 5 to the Trust Deed) were not satisfied; and there was no credible documentary proof of any purported Trade Sale to Tilman or receipt of sale proceeds.
• Could individuals or outsiders become de facto directors merely by serving notices of willingness to act? The court applied the established multifactorial test and held that a unilateral statement of willingness to act cannot of itself make a person a director; the “de facto director” concept requires substantive participation and acceptance, which was absent.
• Do the claims by Kipling, Tilman, BMF Assets and individual claimants disclose realistic causes of action or standing? No: the claims were struck out or dismissed as abusive, vexatious or without realistic prospect, including claims against professional advisers who had acted for the companies on the authority of the Sanne Directors.
• Recusal: the recusal application was dismissed principally for inordinate and unexplained delay in making the application and, in any event, because the fair-minded and informed observer would not conclude a real possibility of bias given the forensic context, prior rulings and the evidence.

Outcome reached: The BMF companies were removed as claimants where they had been improperly added; the related 2021 claims were dismissed or struck out; declarations were made confirming the identity of the true directors and the invalidity of the alleged Trade Sale; and the recusal application was dismissed.

This first-instance hearing disposed of the applications as follows: the court allowed the applications to remove the BMF companies as claimants and dismissed/struck out the remaining new claims (Kipling, Tilman, BMF Assets and certain individual claims) for lack of authority, standing and realistic prospect. The court granted declaratory relief confirming that the Sanne Directors are the true directors and that the alleged Trade Sale(s) were unauthorised and void. The recusal application against the judge was dismissed for inordinate and unexplained delay and, on the merits, as wholly without substance. The rationale was that the purported changes to registers and purported appointments were legally ineffective, the evidential foundation for alleged Noteholder actions and the Trade Sale was absent, and the claims advanced were abusive or unsustainable under the Civil Procedure Rules and the companies’ constitutional documents.