Robert Vacek v Triload Invest s.r.o ((in Liquidation)) and 40 others
| Jurisdiction | England & Wales |
| Judge | Kyriakides |
| Judgment Date | 13 November 2020 |
| Neutral Citation | [2020] EWHC 3264 (Ch) |
| Date | 13 November 2020 |
| Docket Number | Case No: CR-2018-009638 |
| Court | Chancery Division |
[2020] EWHC 3264 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES COURT LIST (ChD)
IN THE MATTER OF TRILOAD CAPITAL LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Deputy Insolvency and Companies Court Judge Kyriakides
Case No: CR-2018-009638
Dirk van Heck (instructed by IMD Solicitors LLP) for the Applicants
Michal Hajek (Solicitor Advocate) for the Respondents
Hearing dates: 13 November 2020
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para. 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down shall be treated as authentic.
DEPUTY I.C.C. JUDGE Kyriakides
Deputy I.C.C. Judge Kyriakides
Introduction
The application before me is an application for security for costs (“ the Application”). It is brought by Robert Vacek, Daniel Krivanek and Jiri Kubelka, who are three of six respondents to proceedings issued against them by Triload Invest s.r.o and forty individuals pursuant to section 212 of the Insolvency Act 1986 (“ the Main Proceedings”)
In this judgment, I shall refer to:
2.1. Mr Vacek, Mr Krivanek and Mr Kubelka as “ the Respondents”;
2.2. Triload Invest s.r.o as “ Triload Invest”;
2.3. the forty individual applicants as “ the Individual Applicants”; and
2.4. Triload Invest and the Individual Applicants as “ the Applicants”.
The Application against Triload Invest is made pursuant to CPR 25.13(1) and 25.13(2)(c) and/or CPR 3.1(a) and 3.1(5). The Application against the Individual Applicants is made pursuant to CPR 3.1(3)(a) and 3.1(5) only. I shall consider the two separate bases separately. Before I do this, however, it is necessary to summarise the claims in the Main Proceedings and what has happened to date in the proceedings.
The Main Proceedings
Triload Capital Limited (“ the Company”) was incorporated in England and Wales on 10 February 2012 under the name of Red Square Partners Ltd. It subsequently changed its name to BANCIBO UK Ltd, then on 18 April 2016 to KKIG Capital UK Ltd and finally, on 14 August 2017 to Triload Capital Ltd.
The Company was dormant until about May 2016. Between June 2016 and June 2017 the Company issued notes to individual investors in amounts totalling CZK 103,500,000 (about £3 million) at an interest rate of 12% per annum, payable quarterly with a final repayment date in June 2019 (“ the Notes”). In the Points of Claim it is alleged that most of the proceeds from the Notes were transferred to KKIG UK Ltd (the Company's parent company, now in liquidation (“ KKIG UK”)), KKIG Foodmarket s.r.o, Jiri Kunelka, Robert Krejci, BANCIBO, SE and Martin Welsch.
After September 2017 the Company defaulted on its interest payments to the holders of the Notes and subsequently, in June 2019 failed to repay the principal due. Prior to this, on 23 January 2019 the Company went into compulsory liquidation and Paul Barber and Paul Stanley of Begbies Traynor were appointed as liquidators by the Secretary of State (“ the Joint Liquidators”).
The Applicants are all holders of Notes of various amounts and have all filed proofs of debt in the liquidation of the Company.
The Main Proceedings were commenced on 11 June 2020. In summary, the Applicants claim that the respondents to those proceedings, including the Respondents, were either directors, de facto directors and/or promotors of the Company and that in breach of their statutory duties to the Company, they have misapplied Company assets, including the proceeds of the Notes.
On 28 March 2020, prior to the issue of the Main Proceedings, Triload Invest issued an application for permission (“ the Permission Application”) to commence proceedings under section 423 of the Insolvency Act 1986 (“ IA”). On 6 May 2020 the Applicants applied for permission to serve the Main Proceedings out of the jurisdiction (“ the Service Application”) and on 11 August 2020 the Respondents issued this Application and an application to Strike out the Main Proceedings (“ the Strike-Out Application”). The first hearing of this Application was on 25 August 2020, when the court gave directions for evidence and for the hearing of the Application
On 16 October 2020, the court:
10.1. granted the relief sought in the Permission Application;
10.2. determined that permission to serve the Main Proceedings outside the jurisdiction was not necessary in respect of those respondents who were resident within the EU, but granted permission to serve the Main Proceedings on those who were resident outside the EU; and
10.3. ordered the Applicants to pay the Respondents' costs on the basis that in relation to the Service Application, whereby the Respondents had been compelled to file evidence, the Applicants had failed to make full and frank disclosure.
On 26 October 2020, the court dismissed the Strike-Out Application and gave directions on the Main Application.
The Claim for Security for Costs under CPR 25.13(1) and 25.13(2)(c)
Under CPR 25.13(1) and 25.13(2)(c) an order for security for costs will be made if the court is satisfied:
12.1. first, that the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so (“ the Jurisdictional Hurdle”); and
12.2. secondly, having regard to all the circumstances of the case, that it is just to make such an order (“ the Discretionary Hurdle”)
The Jurisdictional Hurdle
The Law
The cases establish the following principles:
13.1. the court does not have to be satisfied on balance of probabilities that a company will be unable to pay a defendant's costs. It must, however, have reason to believe that it will be unable to do so. This will require the court to look at all the evidence before it as a whole and form an assessment on the basis of that evidence as to whether there is reason to believe that the company will not be able to pay the costs ordered against it ( Jirehouse Capital v Beller [2008] EWCA Civ 908 at [26], [29] and [34]);
13.2. the fact that a company is in liquidation is sufficient reason to believe that it will be unable to pay costs awarded against it unless evidence to the contrary is produced ( Northampton Coal, Iron & Waggon Co v Midland Waggon Co [1878] 7 Ch D 500, 503).
Discussion
Triload Invest, which is a company incorporated in the Czech Republic, is currently in liquidation. I was told by the Respondents' counsel that under Czech insolvency law, the Respondents would have to prove as unsecured creditors in the liquidation should a costs order be made in their favour.
The liquidation of Triload Invest gives rise to the presumption that it will be unable to pay the Respondents' costs, if ordered to do so. The onus is, therefore, on Triload Invest to satisfy me by credible evidence that this will not be the case.
Mr Hajek, a solicitor advocate representing the Applicants, referred me to paragraph 6 of his witness statement dated 10 September 2020, in which he states that Triload Invest will be able to pay the Respondents' costs, because the debts owed to it, which total about 75.7 million CZK (about £2.5 million) and which the liquidator, Mr Jan Langmeier (“ the Czech Liquidator”) is actively pursuing, are significantly greater than the creditors' claims against the company, which total about 38.5 million CZK (about £1.3 million). Consequently, Mr Hajek submits, there is no reason to believe that Triload Invest will be unable to pay the costs of the Respondents if ordered to do so.
However, whilst Triload Invest might be owed the debts asserted, it has not produced any credible evidence that these debts are likely to be realised or that they will realise sufficient funds to pay the total amount of any costs ordered in the Respondents' favour. In his third witness statement dated 29 September 2020, Olexandr Kyrychenko of IMD Solicitors LLP, the Respondents' solicitors, exhibits an updated Inventory of Assets filed with the Czech court. This inventory shows that the only potential assets of Triload Invest are the following receivables:
17.1. a claim in the sum of £850,000 against Sklarna Zihle s.r.o for advance payments made to purchase a recreation area in the Sklarna Zihle area;
17.2. a further claim in the sum of £5,567.28 against Sklarna Zihle s.r.o in respect of a loan allegedly provided;
17.3. a claim in the sum of £115,124.33 against Igor Osvald in respect of an advance payment made to purchase the shares in Pokrov s.r.o;
17.4. a claim in the sum of £12,342.33 against Triload, Pliciní stredisko Bilovec s.r.o for a loan allegedly provided to the company;
17.5. a claim in the sum of £117,740.76 against KKIG UK seeking a refund of the purchase price of shares in the Company after allegedly withdrawing from a contract;
17.6. a claim in the sum of £183,531.55 against Radek Petrzilka for the alleged purchase price for the transfer of shares in SAM-bau, a.s;
17.7. a claim in the sum of £2,502.70 against Triload, Hotel Lucany s.r.o for a loan provided to the company;
17.8. a claim in the sum of £1,226,324.43 against the Company in respect of bonds entitled “KKIG Capital UK 12%/2019”; and
17.9. a claim in the sum of £43,750.97 against Tak Dost s.r.o. relating to a contract of purchase.
However, it would appear from Mr Kyrychenko's evidence, which is not disputed by Triload Invest, that Sklarna Zihle s.r.o, Triload, Pliciní stredisko Bilovec s.r.o, Tak Dost s.r.o, the Company and KKIG UK are all in liquidation. Therefore, even if Triload Invest's claims against these companies are good claims, there is no evidence that their respective liquidations will...
To continue reading
Request your trial