Sasea Finance Ltd v. KPMG [2001] EWHC Ch 423 (10th May, 2001)

Sasea Finance Ltd v. KPMG [2001] EWHC Ch 423 (10th May, 2001)

SFL has an arguable case that it suffered loss as a result of the transaction involving the SFR 115m loan and the Renta share proceeds, as there is a triable issue whether the inter-company indebtedness was genuine or inflated by sham transactions, and whether the loan transaction was a fraud on creditors or otherwise improper. The approval of accounts by SFL's board does not conclusively amount to ratification. Therefore, the strike-out/summary judgment application is refused. The application for trial of preliminary issues is also refused due to overlap with liability issues and risks of inefficiency.

Citation
[2001] EWHC Ch 423
Parties
Claimant: Sasea Finance Ltd (SFL); Defendant: KPMG
Jurisdiction
England and Wales
Procedural Posture
Civil / Interlocutory Application (strike Out/summary Judgment and Preliminary Issues)
Outcome
strike-out/summary judgment application refused; application for trial of preliminary issues refused
Legal Topics
Strike Out Application, Summary Judgment, Fraud on Creditors, Ratification, Sham Transactions, Auditor's Duty of Care, Preliminary Issues, Company Insolvency, Unlawful Dividends
Company Law Insolvency Law Auditor Negligence Strike Out Application Summary Judgment Fraud on Creditors Ratification Sham Transactions +4 more

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Parties

Sasea Finance Ltd (SFL)

Claimant

KPMG

Defendant

Procedural Posture

Civil / Interlocutory Application (strike Out/summary Judgment and Preliminary Issues)

Legal Issues

  1. 1 Whether SFL suffered loss in relation to the Renta share proceeds given the inter-company account with Holding
  2. 2 Whether the loan of SFR 115m from Holding to SFL was genuine, enforceable, or a sham
  3. 3 Whether transactions orchestrated by Holding constituted a fraud on creditors or were otherwise improper

Ratio Decidendi

SFL has an arguable case that it suffered loss as a result of the transaction involving the SFR 115m loan and the Renta share proceeds, as there is a triable issue whether the inter-company indebtedness was genuine or inflated by sham transactions, and whether the loan transaction was a fraud on creditors or otherwise improper. The approval of accounts by SFL's board does not conclusively amount to ratification. Therefore, the strike-out/summary judgment application is refused. The application for trial of preliminary issues is also refused due to overlap with liability issues and risks of inefficiency.

Court Disposition

strike-out/summary judgment application refused; application for trial of preliminary issues refused

Orders

  • The application by KPMG to strike out or summarily dispose of part of the re-amended Statement of Claim is refused.
  • The application for the trial of preliminary issues as to loss is refused.