[2025] EWHC 2480 (Ch)

The Direct Claims

Liability

I have held that HMRC did not have valid VAT Claims against three MTIC Companies (Xicom, Notebook and Comveen) and that FCIB did not assist the MTIC Directors of a further five MTIC Companies (ACEL, Leeds Smith, Star, Blue Fox and TCG) to commit the breaches of fiduciary duty which gave rise to the VAT Claims against those companies. I have, therefore, dismissed the Direct Claims of these MTIC Companies.

Nevertheless, I have held that HMRC had valid VAT Claims against the following eleven MTIC Companies and that FCIB assisted the MTIC Directors of those companies to commit breaches of fiduciary duty which caused those companies to incur the following liabilities to HMRC:

I have dismissed all of the allegations of dishonesty which the Claimants advanced against Mr Deuss. In particular, I have found that he did not know or suspect that MTIC fraud was prevalent in the T&C sector or turn a blind eye to this fact or deliberately choose not to investigate whether T&C customers of FCIB (including the MTIC Companies themselves) were engaged in MTIC fraud. I, therefore, dismiss the Direct Claims on the merits.

Limitation

I also dismiss the Direct Claims on the basis that all 19 claims were barred by S.21(3) of the LA 1980. In particular, I have held that the General Rolling Stock principle does not apply to a foreign insolvency process and, in particular, to the Emergency Measures of FCIB under Curaçao law. I have also held that the Court should not assist the Claimants and apply General Rolling Stock under the principle of modified universalism. Finally, FCIB also pleaded the doctrine of laches in its Defence. But it is unnecessary for me to decide that issue given my findings in relation to the statutory limitation period.

The Indirect Claims

Dishonest assistance

I have dismissed the eight Indirect Claims of Xicom, Notebook and Comveen and of ACEL, Leeds Smith, Star, Blue Fox and TCG for the same reason that I dismissed their Direct Claims, namely, that the HMRC did not have valid VAT Claims against the first three and that FCIB and TWPS did not assist the MTIC Directors of the remaining five companies to commit the breaches of fiduciary duty which gave rise to the VAT Claims against them.

I also dismiss the Indirect Claims of Kingswood and @tomic because TWPS did not assist the MTIC Directors of those companies to commit the relevant breaches of fiduciary duty. But I have found that TWPS assisted the MTIC Directors of nine MTIC Companies (MTL, MML, 385 North, Gold Digit, Eliyon, Northdata, ETP and Wood Works) to commit the breaches of fiduciary duty which caused those companies to incur the liabilities to HMRC set out in [795].

I have dismissed the allegations of dishonesty which the Claimants advanced against Mr Deuss for the same or very similar reasons to those which I gave in dismissing the Direct Claims. I have also dismissed the allegations that Mr Deuss was a de facto or shadow director of TWPS and that his knowledge and state of mind should be attributed to it for the purposes of imposing liability for dishonest assistance (or under S.213).

Finally, I have found that the Court and the Defendants are not bound by Mr Hunt’s decision not to take a limitation defence against any of the MTIC Companies both because that decision was res inter alios acta and not legally relevant and because it was not reasonable for the Court to rely on that decision in assessing the amounts (if any) for which TWPS is liable to the MTIC Companies. I have, therefore, approached the Indirect Claims “with a clean slate” and held that the claims of seven MTIC Companies (Blue Fox, TCG, Northdata, MTL, ACEL, MML and ETP) are barred by S.21(3) of the LA 1980. But I have also held that the claims of Kingswood, Leeds Smith, 385 North, Eliyon, Gold Digit and JDG are not barred by S.21(3) because the liquidators or Uninvolved Directors of those MTIC Companies could not have discovered the fraud alleged against TWPS with reasonable diligence before the Cut Off Date.

S.213

I have found that the MTIC Companies were carrying on business with intent to defraud HMRC but I have also found that Mr Deuss did not know that they were doing so or turn a blind eye to this fact and that the TWPS marketers were not party to the carrying on of that business. Finally, I have found that Mr Deuss was not a de facto or shadow director of TWPS. For these reasons I decline to declare that Mr Deuss is liable to make a contribution to the assets of the MTIC Companies under S.213.

I also dismiss the MTIC Companies’ Indirect Claims on the basis that no Application Notice was issued by any of their liquidators and that this is an essential condition of liability. Furthermore, it is now far too late for any of the liquidators of the MTIC Companies to issue such an Application Notice.

The TWPS Claims

Mr Deuss

I dismiss the claim for breach of fiduciary duty against Mr Deuss on the basis that he was not a de facto or shadow director of TWPS and did not owe fiduciary duties to the company. I also dismiss the claim on the basis that I have dismissed the allegations of dishonesty against him. Mr Deuss also ran a defence of laches in relation to this claim (as FCIB had done in answer to the Direct Claim). Given that I have dismissed the claim on the merits, it is unnecessary for me to consider that defence any further. Finally, I decline to declare that Mr Deuss is liable to make a contribution to the assets of TWPS under S.213 for the same reasons as I have dismissed the equitable claim. But I also do so because I have dismissed the Indirect Claims and found that TWPS was not liable to compensate the MTIC Companies for any of the VAT Claims. The Claimants did not allege that TWPS had any other liabilities (apart from to TC Catering and to fund this action).

FCIB

I decline to declare that FCIB is liable to make a contribution to the assets of TWPS under S.213 for the same reasons. The Claimants relied on the Court attributing Mr Deuss’s knowledge and state of mind to both TWPS and FCIB for the purpose of the S.213 claim by TWPS against FCIB and I have found that TWPS was not liable to compensate the MTIC Companies for any of the VAT Claims.

Curaçao Law

Issue Estoppel

I have dismissed the Defendants’ defence that the Claimants are bound by an issue estoppel based on the Curaçao Judgment both because there was not a complete identity of subject matter and because there were special circumstances which made it unjust to hold that the Claimants were bound by the findings of the Court of First Instance.

Forfeiture of rights

Finally, I have found that the law of Curaçao applies to determine the effect of the Claimants’ pre-contractual conduct under Article 12 of the Rome II Regulation and that the Claimants have forfeited their rights to bring the Direct Claims as assignee against FCIB and the TWPS Claims against both Mr Deuss and FCIB as a matter of Curaçao law. I, therefore, dismiss all of the Claimants’ claims in their entirety.