Iryna Gordiy v Jekaterina Dorofejeva
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 29 November 2023 |
| Neutral Citation | [2023] EWHC 3036 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2023-000431 |
[2023] EWHC 3036 (Comm)
Mr Justice Foxton
Case No: CL-2023-000431
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Ms Gordiy in person at both hearings
Tim Matthewson (instructed by Alston & Bird (City) LLP) for the Second Defendant at the hearing on 17 November 2023.
Dermot Woolgar (instructed by Latham & Watkins (London) LLP) for the First Defendant at the hearing on 24 November 2023
Hearing dates: 17 November 2023 (the Second Defendant's application) and 24 November 2023 (the First Defendant's application)
Judgment Approved by the court
for handing down
(subject to editorial corrections)
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Wednesday 29 November 2023 at 10:00am.
The Honourable
This judgment deals with two sets of applications, heard separately but brought in the same case:
i) The First Defendant's (“ D1's”) application to strike out the claim brought by the Claimant (“ Ms Gordiy”) against her, to strike out Ms Gordiy's reply on the ground that it has not been verified by a statement of truth and for a direction that “a document made by C and bearing many of the characteristics of a witness statement … is not admissible in evidence because it is not verified by a statement of truth”, and Ms Gordiy's application to strike out D1's strike out application.
ii) The Second Defendant's (“ Target's”) application for a declaration that it has not been validly served and that the court has no jurisdiction in respect of Ms Gordiy's claim (Target being a company incorporated in Grand Cayman in the Cayman Islands and served there), and Ms Gordiy's application to strike out that application.
The claim was issued by Ms Gordiy, who is acting in person, in the Commercial Court, even though the value of the claim is between £650,000 and £900,000. A claim in this amount should not have been commenced in the Commercial Court (as Mr Justice Andrew Baker J recently had cause to note in Bailey Ahmad Holdings Limited v Bells Holdings Limited [2023] EWHC 2829 (Comm), [31]–[32], another dispute worth less than £1m which was issued and the subject of a contested application in the Commercial Court). However, neither Defendant – both of whom do have legal representation – raised that issue with the court. Instead, they have issued applications in the Commercial Court which I heard over two half day hearings on consecutive Fridays, with time spent after the hearings preparing this judgment, and a further hearing to deal with (possibly substantial) consequential issues to come.
The Commercial Court faces formidable pressures on its time. It is important that its finite resources are deployed determining cases which have appropriately been commenced here, having regard to their subject-matter and value. It is as much the responsibility of defendants, as it is of those commencing proceedings, to ensure that the proceedings have been commenced in an appropriate court and, if they have not, to raise the issue of transfer with the court promptly. While there are some cases of lower value which it will nonetheless be appropriate to bring in the Commercial Court (e.g. because they raise an issue whose importance extends beyond the particular dispute), the decision that a case of that kind should remain in the Commercial Court should be a judicial one.
If this is not done, and instead hearings are listed in the Commercial Court in cases which should never have been commenced here, then in the future those cases will be transferred out, however close to the hearing the case might be, once the proceedings come to the attention of a judge. Parties who are keen to avoid the delay which might follow from having to re-fix a hearing in the court to which the claim has been transferred will only have themselves to blame, by failing to raise the issue of transfer at an appropriately early stage.
Finally, at the first hearing, I drew Ms Gordiy's attention to the Advocate “The Commercial Court and London Circuit Commercial Court Pro Bono Scheme”, and recommended that she approach the scheme to seek representation for the second hearing. She told me that she had been unable to make an accurate note of their contact details, and was without legal assistance at the second hearing. I would strongly suggest she contacts them before any further hearing.
THE BACKGROUND
Ms Gordiy was the sole shareholder and director of Remeeta Ltd (“ Remeeta”), which was authorised by the Financial Conduct Authority (“ FCA”) as a payment institution and which provided international payment services.
Part XII of the Financial Services and Markets Act 2000 (“ FSMA”) contains provisions which regulate the control of persons who are authorised by the FCA. Subject to modifications made by paragraph 5 of Schedule 6 of the Payment Services Regulations 2017 (SI 2017/752), s. 178(1) of FSMA provides that a person who decides to acquire or increase control over an authorised payment institution or a small payment institution must give a notice in writing (“ a section 178 notice”) to the FCA before making the acquisition. When served with a section 178 notice, the FCA must approve the acquisition (which it may do either conditionally or unconditionally) or object. There is an assessment period of 60 days for the FCA to reach its decision, with approval being deemed to have been given if the FCA does not respond within that period. There is a similar obligation on the part of a person proposing to transfer all or part of their holding in an authorised person to give notice to the FCA before making the transfer.
On 18 July 2022, Ms Gordiy entered into a contract (“ the SPA”) to sell her shares in Remeeta to Finadvant Ltd (“ Finadvant”), a company of which D1 and Target were shareholders. Target is an exempt limited partnership registered in the Cayman Islands. As at July 2022, D1 held 9,989 ordinary shares in Finadvant, Target held 8,272 preference shares and the balance of shares were held by a number of investors. Finadvant is a financial services company which provides a banking platform for corporate customers to make cross-border payments.
Under the SPA, Ms Gordiy was to be paid £650,000 in cash, and shares in Finadvant which it was estimated would be worth an additional £50,000, or thereabouts, in return for her shares in Remeeta.
There was a Subscription and Shareholders Agreement relating to Finadvant (“ the Finadvant SHA”) dated 22 September 2021 which regulated the relationship of its shareholders. This contained:
i) A restriction on the sale of shares, and provided that shares would not be transferred “without first obtaining from the transferee or subscriber a Deed of Adherence” in favour of Finadvant and the other shareholders.
ii) The effect of a Deed of Adherence was that the subscriber assumed the benefit of the rights and obligations under the Finadvant SHA.
iii) The Finadvant SHA was subject to English law and jurisdiction.
Reverting to the SPA:
i) By clause 2.1, completion was conditional upon the FCA approving Finadvant or any other person who on completion would become a controller of Remeeta (or being deemed to have done so) (“ the FCA Condition”) within 7 months of the date of the SPA (“ the Longstop Date”).
ii) By clause 2.2, Ms Gordiy and Finadvant agreed to use all reasonable endeavours to satisfy or procure the satisfaction of the FCA Condition as soon as possible following signature of the SPA, and in any event on or before the Longstop Date.
iii) By clause 2.4, if the FCA Condition was not satisfied on or before the Longstop Date, the SPA would become null and void and no party was to have any liability to the others in connection with the SPA except in relation to any antecedent breach.
iv) By clause 5, at or prior to completion, Ms Gordiy would provide, amongst other documents:
a) a disclosure letter, by way of disclosure against various warranties in the SPA;
b) a signed option agreement (“ the IG Option Agreement”) under which she would have the right to acquire 1% of the share capital in Finadvant;
c) a signed employment agreement (“ the IG Employment Agreement”) under which she would be employed by Finadvant;
and Finadvant was also to provide signed copies of the IG Option Agreement and the IG Employment Agreement on completion.
v) By clause 8.1, Ms Gordiy was obliged to notify Finadvant promptly of any material adverse change in Remeeta's business and by clause 9.5, she undertook to ensure that the warranties were not breached between the date of the SPA and Completion, and immediately to disclose any breaches to Finadvant.
Target was not a party to the SPA. Clause 16.3 of the SPA provided that “a party who is not a party to this agreement shall have no rights … to rely upon or enforce any term of this agreement”. Clause 19 provided for the application of English law and gave the courts of England and Wales exclusive jurisdiction.
On 22 August 2022, Finadvant, acting through D1, submitted a section 178 notice to the FCA together with supporting documents, notifying the FCA of its intention pursuant to the SPA to acquire all the issued share capital of Remeeta from Ms Gordiy.
On 14 September 2022, the FCA acknowledged receipt of that section 178 notice but contended that it was incomplete. The FCA further asked for section 178 notices to be given by D1 and Target, such information to be provided by 26 September 2022.
On 22 September 2022, Finadvant, acting through D1, submitted a revised section 178 notice to the FCA. In her...
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