November 2023 Judgment (Foxton J)

The court considered two separate sets of applications in first instance: (i) the First Defendant's application to strike out parts of the Claimant's case and to strike out certain of the Claimant's filings for want of a statement of truth, and the Claimant's cross-application to strike out that application; and (ii) the Second Defendant's application for a declaration that it had not been validly served and that the court lacked jurisdiction, and the Claimant's cross-application to strike that application.

Key legal principles and grounds for the decision:

• The court applied the principles governing strike-out of pleadings and the requirement for properly verified statements of truth. The Claimant was given the opportunity to rectify deficiencies in statements of truth rather than having all documents struck out.
• The court addressed the contention that untrue section 178 notices under Part XII of the Financial Services and Markets Act 2000 could give rise to claims by a third party; the court recognised potential relevance of the tort of causing loss by unlawful means but found that such a tort was not adequately pleaded and, as pleaded, many allegations did not disclose an arguable cause of action against the First Defendant.
• On service and jurisdiction, the court held that the Claimant could not rely on the English jurisdiction clause in the Finadvant shareholders' agreement to permit service out of the jurisdiction because the Claimant was not a party to, nor entitled to adhere to, that agreement and the present claims did not arise out of that agreement. Accordingly permission to serve the Second Defendant out of the jurisdiction was required but had not been obtained.

The result was that significant parts of the Particulars of Claim were struck out as disclosing no arguable cause of action against the First Defendant (including the claim to recover the default judgment debt against her), the Claimant was permitted to attempt amendment to plead any arguable unlawful means claim, and the court declared that the Claim Form had not been duly served on the Second Defendant because service out of the jurisdiction had been effected without the court's permission.

This was a first instance hearing in the Commercial Court involving two related procedural applications arising from a dispute about non-completion of a share purchase agreement (the SPA) under which the Claimant agreed to sell her shares in Remeeta Ltd for £650,000 plus other consideration. The SPA was subject to a condition precedent that the purchaser and its controllers obtain approval from the Financial Conduct Authority under Part XII of the Financial Services and Markets Act 2000 (notably s.178). The factual matrix included a subsequent subscription/acquisition transaction involving a Dutch entity (Fintech BV / Finom) and various filings and communications with the FCA and Companies House. The Claimant litigated in person.

Nature of the applications and procedural posture:

• The First Defendant applied to strike out the Claimant's claim against her, to strike out the Claimant's Reply for want of a statement of truth, and for directions excluding certain unverified material from evidence. The Claimant cross-applied to strike out that application.
• The Second Defendant (a Cayman exempt limited partnership) applied for a declaration that it had not been validly served and that the court had no jurisdiction in relation to the claim because the Claimant had purported to serve out of the jurisdiction without obtaining permission; the Claimant cross-applied to strike that application.

Issues framed by the court:

• Whether service of the defendants' applications had been validly effected and whether the Claimant's documents contained the required statements of truth.
• Whether the Particulars of Claim disclosed any tenable causes of action against the First Defendant, including allegations about fraudulent or misleading section 178 notices to the FCA, alleged misrepresentations to the Claimant, alleged deficiencies in Companies House filings and an alleged promise to pay compensation.
• Whether the court had jurisdiction over the claim versus the Second Defendant, including whether the English jurisdiction clause in the Finadvant shareholders' agreement permitted service out of the jurisdiction or whether permission was otherwise required (for example on the "necessary or proper party" basis).

Court's reasoning and conclusions:

• Service: The court concluded that the First Defendant's application had been validly served by delivery to the address shown on the claim form and did not strike that application out on service grounds. The Claimant was afforded the opportunity to rectify missing statements of truth rather than having relevant documents struck out.
• Strike-out merits against the First Defendant: The court accepted that many of the pleaded allegations were inadequately particularised and that, on the material before it, there was no tenable legal foundation for many personal claims against the First Defendant (who was not a party to the SPA). Claims that plainly related to an obligation of Finadvant (for example the alleged promise to pay compensation and the default judgment arising against Finadvant) were struck out as claims against the First Defendant personally. The court recognised that the tort of causing loss by unlawful means might, if properly pleaded, provide a route to recovery against a non-contracting defendant, but held that no such cause of action had been properly pleaded. The court therefore struck out the Particulars of Claim in their current form insofar as they sought to establish personal liability of the First Defendant, while leaving open the possibility of an amendment to plead an unlawful means claim with appropriate particulars.
• Jurisdiction and service out in relation to the Second Defendant: The Claimant could not rely on the English jurisdiction clause in the Finadvant shareholders' agreement because she was not a party and had not adhered to that agreement, and the present claims did not arise out of that agreement. The court therefore declared that the Claim Form had not been duly served on the Second Defendant because permission to serve out of the jurisdiction had not been obtained. The court left open the possibility that the Claimant might seek permission to amend and to seek permission to serve out on the basis that the Second Defendant was a necessary or proper party, but noted the difficulty that the Claimant had no direct dealings with the Second Defendant comparable to those with the First Defendant.

The judge made ancillary directions: the Claimant must rectify statements of truth, she was strongly encouraged to obtain pro bono representation under the Commercial Court pro bono scheme, and the court indicated that if the Claimant sought to amend there would be an application process at which the defendants could challenge permission to amend and permission to serve out.

This was a first instance disposition. The court struck out significant parts of the Particulars of Claim insofar as they sought to establish personal liability of the First Defendant, including the claim to recover the default judgment debt from the First Defendant, on the basis that the pleaded case did not disclose an arguable cause of action and was inadequately particularised. The court allowed the Claimant an opportunity to rectify statements of truth and left open the possibility of permission to amend to plead an unlawful means claim, subject to proper particulars. The court declared that the Claim Form had not been duly served on the Second Defendant because permission to serve out of the jurisdiction had not been obtained, and so the Second Defendant's jurisdictional application succeeded. The judge explained the route open to the Claimant to seek permission to amend and to seek permission to serve out, but presently there was no viable pleaded claim against either defendant.