Durnont Enterprises Ltd v Fazita Investment Ltd
| Jurisdiction | England & Wales |
| Judge | Tom Smith |
| Judgment Date | 26 May 2023 |
| Neutral Citation | [2023] EWHC 1294 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2022-001347 |
[2023] EWHC 1294 (Ch)
Tom Smith KC
(sitting as a Deputy Judge of the High Court)
Case No: CR-2022-001347
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (Ch D)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Philip Riches KC, Andrew Dinsmore and Richard Greenberg (instructed by Peachey & Co) for the Claimant
The Defendants did not appear and were not represented
Hearing dates: 11–12 May 2023
Tom Smith KC:
Introduction
There are two principal applications made by the Claimant which are before the Court:
(1) First, for ‘second stage’ permission pursuant to CPR r. 19.15 to continue a derivative action against the First to Eighth Defendants (the “ Permission Application”);
(2) Secondly, for permission, insofar as necessary, to serve the Amended Claim Form out of the jurisdiction pursuant to CPR rr. 6.36 and 6.37 and other documents pursuant to CPR r. 6.38 (the “ Service Out Application”).
The Claimant, Durnont Enterprises Limited (“ the Claimant”), was represented by Philip Riches KC, Andrew Dinsmore and Richard Greenberg.
The Company (as defined below) did not file any evidence or appear at the hearing. However, I am satisfied that the Company was served with the Permission Application on the basis of the evidence of service which I have seen and which was included in the hearing bundles. Permission to serve the Permission Application on the Company out of the jurisdiction was not sought by the Claimant because it relied on the jurisdiction clause in the SSA (as defined below). In addition to service of the Permission Application, the Company was provided with notice of this hearing.
The Defendants did not appear at the hearing. So far as they are concerned, the Service Out Application was in the usual way made on a without notice basis.
The hearing took place on 11 and 12 May 2023. For the reasons explained below, I grant in part the relief sought by the Claimant under the Permission Application and the Service Out Application essentially in relation to the claims made against the First to Fifth Defendants. However, I also refuse in part the relief sought essentially in relation to the claims sought to be made as against the Sixth to Eighth Defendants.
Prior to the hearing, the Claimant had applied for permission to amend the existing Particulars of Claim. During the hearing, the Claimant indicated that it wished to make further amendments to the draft amended Particulars of Claim which was before the Court. Following the hearing a further draft amended Particulars of Claim was provided by the Claimant under cover of a note dated 19 May 2023. This is the document which I refer to below as the “ APOC”.
Background
It is necessary to set out the relevant parts of the facts so far as they appear on the evidence available at this stage. The claim relates to Polish Real Estate Investment Limited (“ the Company”), the Ninth Defendant. The Company is incorporated under the law of Cyprus. However, its business was investment in property located in Poland.
The Claimant says that the Company is a joint venture between its shareholders, which are or represent certain groups of Norwegian and Polish investors, for the purpose of making such investments in property in Poland. The Claimant, which is also a Cypriot company, says that it is a 27.94% shareholder in the Company. The Claimant is an investment vehicle for Norwegian investors including two Norwegian individuals, Peter Gram (“ Mr Gram”) and Kim Steimler (“ Mr Steimler”).
The Company's investments were made through a closed-ended investment fund called Alpha Real Estate Fundusz Inwestycyjny Zamkniety (the “ Fund”). The Company held 100% of the investment certificates (the “ Certificates”) in the Fund, which in turn owned real-estate assets through subsidiary companies. As I understand it, the Certificates represent ownership interests in the Fund.
It is said that, prior to the matters which form the subject of the claim, the Company's assets in the form of the Certificates had an approximate value of around €100 million. This is supported by evidence in the form of a witness statement from Mr Steimler dated 13 May 2016 which explains that the net assets at that time were worth about €87.5 million to €103.5 million. Those assets mainly comprised a shopping centre in Bialystok, a shopping centre in Grudziadz, some development land in Gdansk and some cash.
The First Defendant (“ Fazita”) was one of the original investors in the Company. Fazita is said to be associated with Wladyslaw Jaroszewicz and Michael Jaroszewicz, who are the Second and Third Defendants to the Claim. Michael Jaroszewicz is the son of Wladyslaw Jaroszewicz. Specifically, it is said that they control Fazita which is said to be their investment vehicle. Fazita has a 19.65% interest in the Company.
One of the other original investors in the Company was Sazia Investments Limited (“ Sazia”) controlled by Jan Jaroszewicz, who is the brother of Wladyslaw and the uncle of Michael. Sazia has a 19.47% interest in the Company. It is said that Jan Jaroszewicz and Sazia support the Permission Application.
The Eighth Defendant, BNP Paribas Bank Polska S.A. (“ the Bank”), was also one of the investors in the Company and holds a 11.19% interest. The Sixth and Seventh Defendants, Jan Czeremcha and Maciej de Makay, are or were directors of the Company nominated by the Bank. As explained below, there is a question as to whether the Bank has now sold its interest.
There are also certain minority Norwegian and Polish investors in the Company.
The Fourth Defendant (“ M-JWK”) is a company incorporated under the laws of Poland, and is an indirect subsidiary of the Fund. It is said that at all material times Wladyslaw Jaroszewicz and Michael Jaroszewicz also had effective control and/or influence over M-JWK.
The Fifth Defendant, Anna Bandurska, is said to be an associate of Wladyslaw Jaroszewicz and Michael Jaroszewicz. In particular, Ms Bandurska is the sole board member of a company called JWK Management Sp. z.o.o. (“ JWK”). Until 2019, JWK was the entity with the sole right to represent M-JWK and with control and conduct of its affairs.
Although not a defendant to the claim, another relevant entity is A-JWK Management Sp. z o.o. S.K.A. (“ A-JWK”). A-JWK was also an indirect subsidiary of the Fund and was the owner of the Bialystok shopping centre. As I understand it, JWK also had the right to represent A-JWK and to control and conduct its affairs.
The Company
The shares in the Company are divided into three classes: A Shares, B Shares and Ordinary Shares. The A Shares are held by Fazita and Sazia. The B Shares are held by the Claimant. The remaining shares held by the Bank and other investors are Ordinary Shares.
Under the terms of the SSA (as defined below) and the Articles of Association (the “ Articles”), each A and B shareholder may appoint up to 4 directors of the Company. The A and B shareholders then have in effect a right of veto over both resolutions of the Board and resolutions of the Company's members. So far as the Board is concerned, this is because as a matter of quorum it is necessary for at least one A director and at least one B director to be present at each meeting. Moreover, under the Articles (Regulation 81), a resolution may be passed only if consented to by all of the A and B directors present and entitled to vote. As for members resolutions, there are also quorum requirements which require a minimum number of A and B shareholders to be present (Regulation 41) and any resolution requires the affirmative vote of all A and B shareholders present and entitled to vote (Regulation 53).
The present directors of the Company are Wladyslaw Jaroszewicz (with Michael as his nominated alternate), Jan Jaroszewicz, Mr Gram nominated by the Claimant, Mr Steimler also nominated by the Claimant, and Mr de Makay nominated by the Bank. Wladyslaw Jaroszewicz and Jan Jaroszewicz are A Directors, Mr Gram and Mr Steimler are B Directors and Mr de Makay is an Investor Director. It is said that Mr de Makay replaced Mr Czeremcha as a director on 7 March 2016, although Mr Czeremcha has continued to represent the Bank on various occasions. I was also told that there is a question over the validity of Mr de Makay's appointment.
The SSA
The relationship between the parties is, at least in part, governed by a share subscription agreement dated 9 July 2007 (“ the SSA”) between the Company, the original shareholders in the Company including Fazita, and the Bank. Under the SSA, the parties thereto agreed the terms upon which the Bank would subscribe for convertible bonds, and the terms upon which the joint venture between them would be conducted.
The SSA is governed by English law and contains an exclusive English jurisdiction clause (see Clause 32). This is relevant to the Service Out Application.
Under Clause 3 of the SSA, the Bank agreed to subscribe for, and the Company agreed to issue, convertible bonds with a total nominal value of €20 million (the “ Convertible Bonds”). They initially had a maturity date of 27 July 2010, but that was subsequently amended to 31 December 2016 (with a further possibility of extending to 31 December 2018 with the Bank's consent). In...
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Durnont Enterprises Ltd v Fazita Investment Ltd
...AND PROPERTY COURTS OF ENGLAND AND WALES INSOLVENCY AND COMPANIES LIST (ChD) Tom Smith KC (sitting as a Deputy High Court Judge) [2023] EWHC 1294 (Ch) Royal Courts of Justice Strand, London, WC2A 2LL Philip Riches KC and Andrew Dinsmore (instructed by Peachey & Co LLP) for the None of the R......