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12 June 2015 / Richard Highley
Issue: 7656 / Categories: Features , Commercial
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Crime does not pay

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Or at least the so-called “illegality defence” will not protect rogue directors, explains Richard Highley

The Supreme Court delivered its long-awaited judgment in Jetivia SA and another (Appellants) v Bilta (UK) Limited and others (Respondents) [2015] UKSC 23 in April. It made clear that a fraudulent director of a company, and third parties complicit in a fraudulent scheme, cannot rely on the 2009 decision in Stone & Rolls Ltd (In Liquidation) v Moore Stephens (A Firm) (Stone & Rolls) [2009] UKHL 39, [2009] 4 All ER 431, and invoke an “illegality defence” to the claim.

Background

Following a period of trading in carbon credits in early 2009, Bilta (UK) Ltd (Bilta) owed HMRC £38m in unpaid VAT. Unable to pay, Bilta was compulsorily wound up in late 2009 on an HMRC petition.

Bilta and its liquidators brought a claim against its two former directors, one of whom was also its sole shareholder, as well as against a Swiss company, Jetivia SA, and Jetivia’s chief executive (the appellants). It was alleged that the appellants

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