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Area of Law: Max Marenbon
Permission to appeal was granted in China State Construction Engineering Corporation (Middle East) (L.L.C.) v Zaya Living Real Estate Development L.L.C and others [2023] DIFC ENF 316 (10 July 2024) this month, leaving the Court of Appeal of the Dubai International Financial Centre (“DIFC”) to decide who can be forced to answer questions about a company’s means of satisfying an unpaid judgment debt. The appeal relates to the scope of RDC 50.2(2), which states that the court may require an “officer” of a corporate body to attend court to answer questions about its means or other matters about which information is needed to enforce a judgment or order against a corporate judgment debtor. The appeal is therefore expected to have implications for the interpretation of the identical English provision of CPR 71.2(b). The DIFC Court of Appeal will review the decision of the DIFC Court of First Instance that a partner in a UAE-incorporated LLC holding 99% of its share capital – who has also held herself out as its ‘CEO’ – was not an “officer” under RDC 50.2(2). The appeal will therefore determine the meaning of “officer” in that RDC 50.2(2), joining a line of authorities on its English equivalents including Société Générale du Commerce et De L’Industrie en France v Johann Maria Farina & Co[1904] 1 KB 794 and Vitol SA v Capri Marine Ltd [2009] Bus. L.R. 271 (QBD). Creditors seeking to enforce judgments against companies will no doubt be hoping that the result of this appeal, expected to be heard later this year, improves their overall chances. Rupert Reed KC and Max Marenbon represented China State in its application for permission to appeal in the DIFC Court of Appeal, instructed by Daniel Xu, Gillian Flannighan and Hala Haddad of Eversheds Sutherland (International) LLP.
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The High Court gave guidance on the procedure for setting aside default judgment last week in Gilbert & BG Projects v Broadoak Private Finance [2024] EWHC 2046 (Comm). Andrew Hochhauser KC, sitting as a Deputy High Court Judge, confirmed that a draft Defence should be filed well in advance of the hearing. He did so in a costs judgment following his recent decision in Gilbert & BG Projects v Broadoak Private Finance (unreported, 28 June 2024) to affirm a substantial default judgment in part, rejecting an application by the Defendant to set it aside completely (the “Set-Aside Application”). The substantive proceedings concerned claims for repayment of various loans made by the Claimants to the Defendant for onward lending to a third party. The Claimants accepted that the defence to repayment of certain loans should be allowed to go to trial. However, they maintained that the Default Judgment should be preserved in relation to four loans, with a cumulative value of approximately 58% by value of the Default Judgment (the “Opposed Loans”).
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People facing bankruptcy, and their advisers, will gain more clarity on the long-term legal risks involved thanks to an appeal judgment handed down this morning. In Kennedy v The Official Receiver [2022] EWHC 1973 (Ch), Mr Nicholas Thompsell (sitting as a Deputy High Court Judge) clarified the Court’s approach to determining the length of a Bankruptcy Restrictions Order (“BRO”) under S 281A and Schedule 4A of the Insolvency Act 1986.
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Minority shareholders in plcs will welcome a judgment handed down this morning which has broadened their options. For the first time in this jurisdiction, the Court has ordered the winding up of a listed plc on the just and equitable ground under section 122(1)(g) of the Insolvency Act 1986 for loss of substratum. In a reserved judgment following a two-week trial in February 2022, in Re Klimvest plc [2022] EWHC 596 (Ch) the High Court clarified and modernised English law in line with more recent Australian authorities. HH Judge Cawson QC (sitting as a High Court Judge) held that the identification of a company’s purpose or substratum is a matter of equity between the company – even a listed plc – and its shareholders, rather than a formalistic exercise in construing the corporate constitution. The purpose is lost, potentially triggering winding-up by the Court, not only where carrying it out is “practically impossible” for the company, but also where it has been, or will be, abandoned. Judge Cawson QC applied the dictum of Jenkins J in Re Eastern Telegraph Co., Ltd [1947] 2 All ER 104 that “if a shareholder has invested his money in the shares of the company on the footing that it is going to carry out some particular object, he cannot be forced against his will by the votes of his fellow shareholders to continue to adventure his money on some quite different project or speculation”.
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