Xenfin Fund 1 Trading Limited (in liquidation) v GFG Limited & Ors

The court determined multiple interlocutory applications concerning service and forum. It held that service on the Second Defendant, Mr Hofgren, by first class post to his last known residence (Flat 4, 28 Cleveland Square) was properly effected despite an erroneous street name, because the flat number, house number, street and postcode were correct and Royal Mail would have delivered to that postcode. The court held that the Claimant had taken reasonable steps to ascertain Mr Hofgren’s address.

As to the Fourth Defendant, Mr Ahmad, the court refused to set aside Master Pester’s order permitting service out of the jurisdiction and by alternative means. The Claimant had shown a serious issue to be tried that Mr Ahmad was a de facto director (or otherwise owed equivalent duties) and had shown good reason, and in the alternative exceptional circumstances, to permit alternative electronic service given evidence of evasive conduct and realistic doubts about the effectiveness and delay of service under the UAE treaty channels.

On the appropriate forum applications, the court provisionally concluded that, although there were competing Guernsey contractual connections, the balance of relevant factors (management from England, locus of decision-making, English-based witnesses and investors, Vordere being an English company, and the risk that Guernsey claims would be time-barred) pointed to England as the most appropriate forum. Consequently the Individual Defendants’ applications to decline jurisdiction or to stay were dismissed and no order was made on D1’s application.

Background and parties. The Claimant is a Guernsey incorporated protected-cell SPV (Xenfin Fund 1 Trading Limited) in liquidation which alleges that GFG Limited (D1), directors (the Second and Third Defendants) and a putative de facto director (the Fourth Defendant) breached contractual, fiduciary and tortious duties in relation to two loans (the DC158 and 7EP Loans) and the conversion of security into shares in Vordere in 2019. The Claimant and certain defendants are in liquidation.

Nature of the applications. Four interlocutory applications were determined: (i) Mr Hofgren applied for a declaration that he had not been validly served and that the court had no jurisdiction over him for service-related reasons; (ii) Mr Ahmad applied to set aside an order permitting service out of the jurisdiction and by alternative means (SMS/WhatsApp/email); (iii) the three Individual Defendants sought a stay under CPR 11(1)(b) on forum non conveniens grounds, seeking Guernsey as the appropriate forum; and (iv) D1 sought a stay of the claims against it if the Individual Defendants’ stay were granted.

Issues framed. The court framed issues of (a) whether service on Mr Hofgren complied with CPR Part 6 and the Interpretation Act 1978 s.7; (b) whether the Claimant demonstrated a serious issue to be tried against Mr Ahmad (principally whether he was a de facto director) and whether there were good reasons or exceptional circumstances to permit alternative service in view of the UAE-UK treaty; (c) whether the Claimant had given full and frank disclosure on the without-notice application; and (d) which forum was appropriate having regard to competing contractual jurisdiction clauses (the 2014 Guernsey Agreement and the 2017 English-law Agreement), connecting factors and limitation risks.

Court reasoning on key issues.

• Service on Mr Hofgren: The court found the package was "properly addressed": the flat, house number, street name and postcode were correct and Royal Mail attempts supported delivery to the correct address. The Claimant had taken reasonable steps to ascertain his last known residence and was not obliged to find the later Kyrle Road address by further searches; a Companies House correspondence address search would not reliably identify a private residence. CPR provisions and Interpretation Act principles were applied to conclude valid service.
• Mr Ahmad — serious issue to be tried: The court applied the reasonable-prospect-of-success test for permission to serve out and concluded there was a triable issue that Mr Ahmad performed directorial functions in relation to the Loans and Vordere Transaction. While some particulars were borderline when viewed individually, cumulatively and given the likely further disclosure and evidence at trial the Claimant had shown reasonable prospects of success.
• Mr Ahmad — alternative service and Treaty: The court accepted evidence that Mr Ahmad had taken steps to evade service and that there were serious doubts whether the UAE Central Authority could effectively or promptly effect electronic service under the treaty; given delays at the Foreign Process Section, the court found good reason (and, if necessary, exceptional circumstances) to permit alternative electronic service under CPR 6.15.
• Full and frank disclosure: The court held the without-notice material was sufficiently candid and did not omit material matters which would have affected Master Pester’s decision.
• Forum: Although the 2014 Guernsey Agreement potentially connected the dispute to Guernsey, the court provisionally found England to be the forum with the most real and substantial connection (management and key decisions in England, English witnesses and investors, Vordere an English company), and it would be unjust to deprive the Claimant of English proceedings given the risk of time-bar in Guernsey. Thus the Individual Defendants failed to show Guernsey was the clearly appropriate forum.

Result. The court dismissed the Individual Defendants' jurisdiction and forum applications, upheld service on Mr Hofgren and refused to set aside permission for alternative service on Mr Ahmad; no order was made on D1’s contingent application.

The court dismissed the Individual Defendants’ applications and made no order on D1’s application. The judge held that service on the Second Defendant, Mr Hofgren, was valid under CPR Part 6 (the claim form having been properly addressed and sent to his last known residence), that there was a serious issue to be tried against the Fourth Defendant, Mr Ahmad, that Master Pester’s order permitting service out of the jurisdiction and by alternative means was properly made (good reason/exceptional circumstances existed given evasive conduct and realistic doubt about effectiveness and delay under the UAE Treaty), and that England was the appropriate forum for trial because the balance of connecting factors and limitation risks made England the forum with the most real and substantial connection.