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Jetivia SA & Anor v Bilta (UK) Ltd & Ors

Jetivia SA & Anor v Bilta (UK) Ltd & Ors

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Case Copied 22 April 2015 167 min read

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Summary

Easter Term
[2015] UKSC 23
On appeal from: [2013] EWCA Civ 968

JUDGMENT

Jetivia SA and another (Appellants) v Bilta (UK) Limited (in liquidation) and others (Respondents)

before

Lord Neuberger, President
Lord Mance
Lord Clarke
Lord Sumption
Lord Carnwath
Lord Toulson
Lord Hodge

JUDGMENT GIVEN ON

22 April 2015

Heard on 14 and 15 October 2014

Appellants Alan Maclean QC Colin West (Instructed by MacFarlanes LLP)		Respondents Christopher Parker QC Rebecca Page (Instructed by Gateley LLP)

		Intervener Michael Gibbon QC (Instructed by Howes Percival LLP)

LORD NEUBERGER: (with whom Lord Clarke and Lord Carnwath agree)

Introductory

The facts giving rise to this appeal can be shortly summarised, although they are more fully set out in the judgments of Lord Sumption at paras 56-59 and of Lords Toulson and Hodge at paras 113-116 below.

Bilta (UK) Ltd is an English company which was compulsorily wound up in November 2009 pursuant to a petition presented by HMRC. Bilta's liquidators then brought proceedings against, inter alia, its two former directors, Mr Chopra, who was also its sole shareholder, and Mr Nazir; and Jetivia SA, a Swiss company and its chief executive, Mr Brunschweiler, who is resident in France ("the four defendants").

The pleaded claim alleges that the four defendants were parties to an unlawful means conspiracy to injure Bilta by a fraudulent scheme, which involved Messrs Chopra and Nazir breaching their fiduciary duties as directors, and Jetivia and Mr Brunschweiler ("the appellants") dishonestly assisting them in doing so. The liquidators claim (i) through Bilta, (a) damages in tort from each of the four defendants, (b) compensation based on constructive trust from the appellants, and (ii) directly from each of the four defendants, a contribution under section 213 of the Insolvency Act 1986.

The case against the four defendants is based on the contention that between April and July 2009, Messrs Chopra and Nazir caused Bilta to enter into a series of transactions relating to European Emissions Trading Scheme Allowances with various parties, including Jetivia, and that those transactions constituted what are known as carousel frauds. The effect of the transactions was that they generated (i) an obligation on Bilta to account to HMRC for output VAT and (ii) an obligation on HMRC to pay a slightly lower sum by way of input VAT to another company. While the input VAT was paid by HMRC, it was inherent in the fraud that Bilta would always be insolvent and unable to pay the output VAT to HMRC. The amount of output VAT for which Bilta consequently remains liable is said to be in excess of £38m.

The application to strike out

The appellants applied to strike out Bilta's claim against them on the ground that (i) Bilta could not maintain the proceedings in view of the principle ex turpi causa non oritur actio, or, to put it another way, the appellants were bound to defeat the claims against them on the basis of an illegality defence, and (ii) in so far as the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] UKSC 23
Decision Date