BMF ASSETS NO. 1 LIMITED v SANNE GROUP PLC

Company proceedings commenced without the authority of the companies concerned may be removed from the proceedings. Claims by outsiders to have become directors through unilateral notices or purported assumption of office are legally ineffective. A de facto director is identified by what the person has actually done within the company; the status cannot be self-created.

For strike out and summary judgment, the practical question is whether the claim is realistic and carries some degree of conviction, rather than being merely arguable. A recusal application should be made promptly. Previous adverse decisions and robust judicial language do not, without more, establish apparent bias.

The claim arose from a series of disputes concerning securitisation structures and the authority of persons to act for the companies involved. Persons described as new or de facto directors purported to displace the existing directors, commence proceedings in the companies’ names, and arrange purported sales of assets.

The companies, acting through the directors recognised by the court, applied to remove their names from four proceedings. Defendants made strike-out or summary-judgment applications in several related claims. A separate application by BMF Assets sought the judge’s recusal or a stay pending a possible appeal.

The central issues were whether the existing directors had been displaced, whether the claims were authorised and realistically arguable, whether the remaining claimants had standing, and whether the recusal application disclosed apparent bias.

1. Authority to act. The only lawful methods of appointing directors were those provided by the companies’ articles, namely appointment by shareholder ordinary resolution or by the existing directors. Noteholders had no power to appoint directors. The purported first and second narratives therefore did not change the identity of the directors or their authority to act.
2. De facto directors. The concept of a de facto director is a legal label used principally when determining liability. It depends on a multifactorial assessment of the person’s actual participation in the company’s governing structure, including access to information, participation in meetings and decision-making, and how the company presented the person. A stranger cannot become a director merely by serving a notice of willingness to act or assuming responsibility. Such a result would circumvent the company’s constitutional and corporate-governance requirements.
3. Applications concerning the claims. The companies had been named as claimants without authority and were removed under CPR r.19.2(3). The remaining claims were dismissed or struck out. The purported asset sales had no authority and there was no realistic prospect of establishing that a valid sale had occurred. Claims by entities or individuals unconnected with the securitisations were unsupported by standing, contractual rights, or an intelligible cause of action.
4. Strike out and summary judgment. In the circumstances there was no practical difference between the relevant tests. A realistic claim must carry some degree of conviction and be more than merely arguable. The claims were legally unsustainable, abusive, or disclosed no reasonable grounds.
5. Recusal. The test was whether a fair-minded and informed observer, having considered the facts and context, would conclude that there was a real possibility of bias. Earlier adverse decisions, robust language, or the allocation of related cases to a docketed judge did not establish apparent bias. The application was also brought almost a year after some of the complaints and two months after the latest hearing, without explanation. That inordinate and unexplained delay was sufficient to dismiss it. The application would in any event have failed on its merits.
6. The court made the requested declarations, dismissed the listed proceedings, dismissed the recusal application, and declined to stay the proceedings pending a possible appeal.

The judgment is a first-instance decision. It records numerous earlier related decisions concerning the same securitisation structures, including decisions by the High Court and specialist judges, but does not describe an appeal from the present proceedings.