Corporate Insolvency – jurisdiction – IR PD – rule 7.51A(1) – service out – applications to set aside
The applicants applied for an order setting aside the permission given to the respondent liquidators to serve them with proceedings outside the jurisdiction in Guernsey. The application to set aside was made on the basis that there was no serious issue to be tried or claim with a reasonable prospect of success and that there had been misrepresentation or material non-disclosure at the ex parte hearing of the application for permission to serve out.
Registrar Jones first considered how the rules for service outside the jurisdiction in insolvency cases interacted with those in the CPR. He observed that rule 7.51A(1) of the Insolvency Rules, Chapter 3 of Part 12A of the Rules and the Practice Direction: Insolvency Proceedings [2014] BCC 502 were not always seamless.
Applying a purposive approach and following Ahuja v Politika Novine I Magazini D.O.O. [2015] EWHC 3380 the Judge held that in order to obtain service out in insolvency cases an applicant needed to show: (1) a serious issue to be tried; (2) a good arguable case that the claim falls within one or more classes of case in which permission will be given; and, (3) that England is clearly or distinctly the appropriate forum for trial and that the discretion should be exercised to permit service.
The Judge noted that it was already well established that claims to set aside transactions defrauding creditors or involving wrongful trading were within the categories for which permission to serve out would be given, subject to the other requirements being fulfilled: see Bilta (UK) Ltd v Nazir [2016] AC 1 and Erste Group v JSC “VMZ Red October” [2015] EWCA Civ 379.
Dismissing the application, the Judge found the application satisfied all the limbs of the test and, although there had been material non-disclosure, it did not warrant setting aside the order. The Judge reiterated that applications for service out required witness statements that, whilst not being overly lengthy, should not be too general or rely simply on exhibited documents.
This is an invaluable case for practitioners attempting to navigating the, often not straightforward, insolvency rules for permission to serve out. The Judge provides a clear explanation of how the applicable tests under the insolvency provisions relate to their counterparts in the CPR.
