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On appeal from: [2013] EWCA Civ 968

The Supreme Court unanimously dismissed the appellant’s case to strike out the respondent’s claim that they were parties to an “unlawful means conspiracy” to injure the respondents by a fraudulent scheme which involved the appellant’s directors breaching their fiduciary duties and the appellant’s dishonestly assisting them to do so.

The appellant’s applied to strike out the claim on the basis that they were bound to defeat the claim against them with the defence of illegality and, in relation to the Insolvency Act 1986, s 213, it could not be invoked against them because it did not have extra-territorial effect.

The Supreme Court ruled that on the first ground, the illegality defence could not bar the respondent’s claims against the appellants on the basis that the conduct of the directors could not be attributed to the company in the context of a claim against the directors for a breach of their duties. Lord Neuberger and Lord Mance, however, did state that although this was an inappropriate case in which to decide the proper approach to the defence of illegality, there was a need for review of the law of illegality by the Supreme Court.

In regards to the second ground it stated that s 213 of the 1986 Act did have extra-territorial effect and therefore could be invoked against the appellants. It reasoned that it would seriously handicap the efficient winding up of a British company in an increasingly globalised economy if the jurisdiction of the court responsible for the winding up of an insolvent company did not extend to people and corporate bodies resident overseas who had been involved in the carrying on of the company’s business.

 

For judgment, please download: [2015] UKSC 23
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII