Clydesdale Financial Services Ltd & Ors v Smailes & Ors

Clydesdale Financial Services Ltd & Ors v Smailes & Ors

Focus is not a creditor of LLP for unpaid FGI premiums where no loan was made, as it was never on risk and thus not entitled to the premiums. For the 9 policies where loans were made, any claim is extinguished by set-off due to commissions owed to LLP. Focus's claim for audit fees fails for all but possibly one audit due to unreasonable delay and lack of demand. Focus is not entitled to amend its particulars of claim as it has no real prospect of establishing creditor status. However, Focus has a real prospect of being a 'victim' under ss.423-425 Insolvency Act 1986 due to its potential liability under the FGI policies, and Jiva's application to strike out or for summary judgment on this...

Parties
Claimant: Clydesdale Financial Services Limited; Claimant: Justice Capital Limited; Claimant: Focus Insurance Company Limited; Defendant: Robert Smailes; Defendant: Steven Ryman; Defendant: Jiva Solicitors LLP; Defendant: Alexander Samuel & Co (A Firm); Defendant: Alexander Samuel LLP
Jurisdiction
England and Wales
Judgment Date
08 December 2009
Procedural Posture
Civil (insolvency/commercial) / Interlocutory Applications (amendment of Claim, Summary Judgment, Strike Out)
Outcome
Application to amend particulars of claim by Focus refused; Focus's claim under paragraph 75 struck out; Jiva's application to strike out or for summary judgment on Focus's ss.423-425 claim dismissed.
Legal Topics
Creditors' Rights, Set Off, Assignment of Insurance Policies, Transaction at Undervalue, Standing to Sue, Summary Judgment, Amendment of Pleadings
Insolvency Contract Insurance Creditors' Rights Set Off Assignment of Insurance Policies Transaction at Undervalue Standing to Sue +2 more

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Parties

Clydesdale Financial Services Limited

Claimant

Justice Capital Limited

Claimant

Focus Insurance Company Limited

Claimant

Robert Smailes

Defendant

Steven Ryman

Defendant

Jiva Solicitors LLP

Defendant

Alexander Samuel & Co (A Firm)

Defendant

Alexander Samuel LLP

Defendant

Procedural Posture

Civil (insolvency/commercial) / Interlocutory Applications (amendment of Claim, Summary Judgment, Strike Out)

Legal Issues

  1. 1 Whether Focus Insurance Company Limited is a creditor of Alexander Samuel LLP for the purposes of standing under paragraph 75 of Schedule B1 to the Insolvency Act 1986
  2. 2 Whether Focus is entitled to amend its particulars of claim to plead new bases for creditor status
  3. 3 Whether Focus has a valid claim for unpaid premiums on Financial Guarantee Insurance (FGI) policies where no loan was made

Ratio Decidendi

Focus is not a creditor of LLP for unpaid FGI premiums where no loan was made, as it was never on risk and thus not entitled to the premiums. For the 9 policies where loans were made, any claim is extinguished by set-off due to commissions owed to LLP. Focus's claim for audit fees fails for all but possibly one audit due to unreasonable delay and lack of demand. Focus is not entitled to amend its particulars of claim as it has no real prospect of establishing creditor status. However, Focus has a real prospect of being a 'victim' under ss.423-425 Insolvency Act 1986 due to its potential liability under the FGI policies, and Jiva's application to strike out or for summary judgment on this...

Court Disposition

Application to amend particulars of claim by Focus refused; Focus's claim under paragraph 75 struck out; Jiva's application to strike out or for summary judgment on Focus's ss.423-425 claim dismissed.

Orders

  • Focus's application to amend particulars of claim refused.
  • Focus's claim under paragraph 75 of Schedule B1 struck out.