SERVICE OF PROCEEDINGS: SECTION 1140 OF THE COMPANIES ACT CAN BE USED TO SERVE A DIRECTOR RESIDENT ABROAD
In Abu Dhabi Commercial Bank PJSC v Shetty & Ors [2020] EWHC 3423 (Comm) [a case newly arrived on BAILII) Mr Justice Bryan held that s.1140 of the Companies Act 2006 can be used to serve proceedings on a director, even when that director is resident abroad.
THE CASE
The claimant bank was applying for a worldwide freezing order and disclose orders against various defendants. One of the issues related to service on the defendants. One of the defendants was resident abroad. However he was a director of various UK companies. The claimant argued, successfully, that s.1140 of the Companies Act 2006 can be used to serve even if the individual was not a UK resident.
THE JUDGMENT ON THIS ISSUE
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The primary argument of the Bank is based on the first defendant BR Shetty as an anchor defendant, being the registered director of two or, possibly now, three UK companies and so, further to section 1140 of the Companies Act 2006, he may be sued at the address he has given. It is then said that the other defendants go through a relevant gateway because they are necessary and proper parties to the Bank’s claim against Mr. Shetty, i.e. under 3.1(3).
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There have been a number of first instance decisions holding that the effect of section 1140 is that the director can be served at the registered address in the jurisdiction in respect of any claim even if the director is in fact outside the jurisdiction. In particular, there is the decision of Master Marsh in Key Homes Bradford v Rafik Patel [2015] 1 BCLC 402 ; a decision of Mr. Richard Salter QC (sitting as a Deputy High Court Judge) in Idemia v Decatur [2019] EWHC 946 (Comm) ; and a decision of Jacobs J in Arcelormittal USA LLC v Essar Steel [2019] EWHC 724 (Comm) The decision of Mr. Richard Salter QC, Idemia v Decatur, was the subject of an appeal, but I am told by Mr. Pillai that it is believed that in fact that action settled before any judgment of the Court of Appeal. There is also the judgment of Foxton J in Njord Partners SMA-Seal v Astir Maritime [2020] EWHC 1035 (Comm) in which he also followed that line of authority although he did say at paragraph 45:
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“It is fair to say that the statutory effect which section 1140 has been held to have or assumed to have is surprising, albeit when the wording of the section is read, it is easy to see why such findings or assumptions have been made, I have decided to follow those judgments at first instance.”
The most recent case that is relied upon is a decision of Waksman J in Republic of Mozambique v Safa, unreported, 30th July 2020 at [5] to [13] where, in robust terms, he also concluded that there was jurisdiction under section 1140 of the Companies Act even in circumstances such as those identified in the prior authorities.
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I too am satisfied that that is the correct interpretation of s.1140 of the Companies Act 2006 and in any event I would follow the other first instance judgments in that regard. I am therefore satisfied that there is a relevant gateway under s.1140 of the Companies Act in relation to the first defendant.
SERVICE – NOT JUST IN THE CAPACITY AS DIRECTOR
It is important to remember that someone who is a director can be served at the companies registered address regardless of the capacity in which they are being sued.
Subsection (3) states:
“(3)This section applies whatever the purpose of the document in question.
It is not restricted to service for purposes arising out of or in connection with the appointment or position mentioned in subsection (2) or in connection with the company concerned.”