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

On jurisdiction and service applications, the court must decide whether the pleaded claim has a reasonable prospect of success without conducting a mini-trial. In a de facto director case, the question is fact-sensitive and turns on whether the person assumed the status and functions of a director, assessed objectively and in the round. For service out, the claimant must show a good arguable case within a gateway, a serious issue to be tried, and that England is the appropriate forum. Alternative service may be ordered where there is good reason, or exceptional circumstances if that higher test applies, even where a treaty service route exists. Forum conveniens is assessed globally, with particular weight given to the practical centre of the dispute, availability of witnesses, fragmentation, governing law and limitation consequences.

The claimant, a Guernsey investment vehicle in liquidation, brought claims against a Guernsey investment manager and three individuals concerning loans, a security-to-shares transaction and related payments. It alleged contractual, fiduciary and tortious breaches by the investment manager and breaches of Guernsey directors’ duties by the individuals.

The applications concerned service on the second defendant, permission to serve the fourth defendant out of the jurisdiction and by alternative means, challenges to that permission, and stays in favour of the courts of Guernsey. The court also considered competing jurisdiction clauses in 2014 and 2017 agreements, the prospects of the claim that the fourth defendant was a de facto director, and the effect of limitation in Guernsey.

1. Service on Mr Hofgren. The claim form was validly served under Civil Procedure Rules 1998. The address was properly addressed despite the erroneous addition of another street, because the flat number, street, house number and postcode identified the correct delivery location. Cleveland Square was the last known residence: reasonable diligence did not require treating a Companies House correspondence address, among several others, as his residence.
2. Service on Mr Ahmad. The claim had a reasonable prospect of success. The pleaded central allegation that Mr Ahmad performed directors’ functions was supported by particulars including an alleged final say in major decisions. Whether he was a de facto director, or otherwise owed equivalent duties, was a question of fact and degree to be decided at trial on the evidence viewed in the round. The existence of advisory agreements was relevant but not conclusive.
3. There was good reason, and if necessary exceptional circumstances, for alternative service under CPR 6.15. Evidence that Mr Ahmad had evaded service, uncertainty whether UAE authorities could serve electronically under the treaty, and the likely delay made it unjust to require an unsuccessful treaty process first.
4. The without-notice application did not fail for lack of full and frank disclosure. The claimant fairly identified the claim, the forum dispute, the treaty issue and the service challenge. It was not required to anticipate every argument later advanced by Mr Ahmad.
5. The Individual Defendants failed to establish that Guernsey was the clearly appropriate forum. Although the corporate structure, regulation and potentially applicable law had Guernsey connections, the real decisions, management, relevant witnesses, investors and an acquired English company connected the dispute materially with England. The non-exclusive 2014 jurisdiction clause carried little weight. It was also a significant injustice to stay proceedings when relevant claims would be time-barred in Guernsey and Guernsey had not been an available forum when proceedings began.
6. The applications of the Individual Defendants were dismissed. No order was made on D1’s Application.