Eurohome UK Mortgages 2007-1 PLC & Ors v Deutsche Bank AG, London Branch & Anor

A person cannot become a company director, or acquire authority to act for the company, merely by declaring a willingness to assume that office. Whether someone is a de facto director depends on what has actually occurred, including participation in the company’s governing structure and the company’s treatment of that person.

Where strangers to a company have not been appointed under its constitution and the properly constituted board has rejected their purported authority, they cannot validly enter contracts or commence proceedings in the company’s name. Claims dependent on that alleged authority may disclose no reasonable grounds, constitute an abuse of process, and lack any real prospect of success.

The defendants applied to strike out claims under CPR 3.4(2)(a) and (b), or alternatively for reverse summary judgment under CPR 24.2.

The first and second claimants were securitisation vehicles. The third claimant alleged that it had consultancy agreements with them and claimed substantial sums from the defendants. The defendants contended that persons described as alleged de facto directors had never been appointed, lacked authority to act for the companies, and had purportedly commenced the proceedings without authority.

The properly constituted directors supported the application. No claimant appeared at the hearing. The central issues were whether the alleged de facto directors had authority to bind the companies and whether the claims should be struck out or dismissed.

1. Disposition. The claim was struck out under CPR 3.4(2)(a) because it plainly and obviously disclosed no cause of action, and under CPR 3.4(2)(b) as an abuse of process. It was also dismissed under CPR Part 24 because it had no real prospects of success. The claim was certified as totally without merit.
2. The claims depended on the alleged de facto directors having authority to act for the first and second claimants. Without that authority, they could not enter the consultancy agreements, direct payments, or commence proceedings in the companies’ names. The third claimant’s standing likewise depended on the validity of those agreements.
3. The alleged de facto directors had not been appointed under the companies’ articles. Their purported self-ratification could not create authority because they had already purported to remove the existing directors. A person cannot confer authority on themselves by relying on their own unauthorised acts.
4. Following the approach in BMF Assets No. 1 Ltd & Ors v Sanne Group PLC & Ors (Rev 1) [2021] EWHC 3306 (Ch), the concept of a de facto director requires examination of what actually happened, including participation in the company’s governing structure, access to information, involvement in meetings or decision-making, and the company’s presentation of the person. A unilateral assertion of willingness to become a director is insufficient.
5. The court agreed with the reasoning in the related authorities, including Mansard Mortgages [2021] EWHC 3355 (Ch) and Eurosail-UK 2007-4BL & Ors v Wilmington Trust SP Services (London) Limited & Anor [2022] EWHC 1019 (Comm). The alleged directorships and resulting corporate acts were legally unsustainable.
6. The court did not need to decide whether Mr Hussain’s involvement would independently establish abuse of process, since the claims were already liable to be struck out. The third claimant was ordered to pay the defendants’ costs on the indemnity basis, summarily assessed at £60,000 plus VAT.