Blue Side Services SA & Ors v BMF Holdings Limited

A Part 8 claim may be struck out under CPR 3.4(2) where its essential legal foundations are incoherent or hopeless. In a securitisation structure, beneficial or contractual interests in notes do not, without an express legal basis, confer rights to control a shareholder’s exercise of voting rights or to appoint the issuer’s directors. Articles protecting purchasers against irregularities in forfeiture or sale apply to acts of the company’s organs, not purported acts of corporate interlopers with no authority. Non-parties may be bound by orders made under the court’s inherent jurisdiction to protect its processes. A claim pursued in breach of such an order and in circumstances amounting to an abuse of process may also be struck out and may attract indemnity costs.

The defendant applied to strike out a Part 8 claim brought by three Marshall Islands companies. The claim sought declarations concerning alleged beneficial interests in notes issued by companies in BMF securitisation structures, alleged ownership of shares acquired through a forfeiture and onward sale, and alleged appointments of directors following extraordinary general meetings.

The claimants did not attend the hearing. They sought an adjournment pending an appeal in related committal proceedings and raised matters concerning the judge’s recusal. The adjournment application was refused. The central issues were whether the claim had any legally arguable foundation and whether the claimants had failed to comply with an earlier order requiring identity evidence when commencing further proceedings.

1. Adjournment. The application was refused. The claimants had given no good reason for failing to attend, and the pending appeal in related committal proceedings did not justify delaying determination of a claim which, if legally hopeless, should not remain on foot. Fairness to the defendant and the efficient use of judicial resources also supported refusal. The application was certified totally without merit (paras 23–32).
2. Strike out under CPR 3.4(2). The court accepted that a claim should not be struck out where a serious factual issue requires trial, but found that the claim’s three essential pillars were legally unsustainable (paras 33–37).
3. The alleged trust in favour of the claimants, as ultimate account holders, could not realistically be implied from the securitisation structure. Even noteholders had no right to control the affairs of the defendant shareholder or change the issuers’ boards. The claimants’ asserted position was further removed from the contractual structure, and the alleged trust and direction rights were legally unintelligible (paras 38–45). The court relied materially on the analysis in Mansard Mortgages 2007-2 Plc & Anor v Beyat Holdings Limited & Ors [2021] EWHC 3355 (Ch).
4. The claimants could not obtain title through Highbury because the earlier judgment had established that the purported forfeiture and sale were nullities. Articles 13 and 23 of the issuers’ articles protected titles arising from irregularities in acts of the company’s board. They did not validate purported acts of persons who were complete strangers to the companies and lacked any authority (paras 46–57).
5. Because the claimants were not members, they had no power to convene or vote at the extraordinary general meetings. They also had no right to direct the defendant’s voting and shareholder powers. The purported direction was a legal nullity, and the alleged appointments could not have been made lawfully otherwise than under Articles 70 and 71 (paras 58–60).
6. The claim was therefore legally unintelligible and hopeless and was struck out. Independently, the claimants’ failure to provide adequate identity evidence under the earlier order, together with the surrounding conduct and non-attendance, amounted to an abuse of process. The Part 8 claim was dismissed, the defendant received indemnity costs, and both the claim and adjournment application were certified totally without merit (paras 61–77).