Bilta (UK) Ltd (in liquidation) & Ors v

Bilta (UK) Ltd (in liquidation) & Ors v Tradition Financial Services Ltd

Citation: [2025] UKSC 18

Background Facts

Parties:
- Claimants: Bilta (UK) Ltd and other companies (in liquidation), and their liquidators.
- Defendant: Tradition Financial Services Ltd (“Tradition”).

Nature of dispute:
- The case arose out of a Missing Trader Intra-Community (MTIC) VAT fraud involving spot trading of EU carbon credits in 2009.
- Several companies (including Bilta) were left with large VAT liabilities and went into liquidation, with HMRC as the main creditor.
- Tradition acted as a broker in EUA trading, introducing parties and facilitating transactions that ultimately formed part of fraudulent chains.

The liquidators sued Tradition for:
- Dishonest assistance in breach of fiduciary duties by company directors.
- Liability under section 213 of the Insolvency Act 1986 for participation in fraudulent trading.

Key procedural points:
- The parties settled some issues, leaving two main legal questions:
  - The scope of liability under section 213: whether it applies only to insiders (e.g., directors) or also to third parties knowingly assisting fraud.
  - Whether certain dishonest assistance claims were time-barred, given the companies' periods of dissolution.

Section 213 liability:
- The Supreme Court confirmed a broad interpretation, holding that section 213 extends to any person who is a knowing party to the fraudulent carrying on of business, not only to insiders or those in managerial control.
- Outsiders (like brokers) who knowingly facilitate or assist fraudulent business can be held liable.

Dishonest assistance claims (limitation issue):
- Some claims were time-barred because the companies could, with reasonable diligence, have discovered the fraud before the critical limitation date.
- The court ruled that section 32 of the Limitation Act 1980 did not suspend time simply because a company was dissolved; the companies could not prove they could not have discovered the fraud in time.
- The court applied principles of statutory interpretation to confirm that the deeming effect of restoration (under section 1032 Companies Act 2006) does not negate limitation defences.

Outcome:
- Tradition found liable under section 213.
- Dishonest assistance claims by certain companies failed on limitation grounds, but this did not affect the overall financial outcome because of settlement terms.

Broad scope of fraudulent trading liability:
- Section 213 captures any persons, including third parties, who knowingly participate in fraudulent trading. It is not confined to directors or those managing the company.
- Aiding or facilitating a fraudulent business (with knowledge) is sufficient for liability.

Approach to statutory interpretation:
- The court reaffirmed a purposive approach, focusing on statutory language, context, and historical development.
- The phrase “knowingly parties” covers outsiders who are aware and actively further a fraudulent purpose.

Limitation and dissolved companies:
- Restoration of a dissolved company (via section 1032 Companies Act 2006) does not reset or suspend limitation periods automatically.
- A company seeking to rely on postponed limitation under section 32 must prove it could not with reasonable diligence have discovered the fraud sooner.

Objective standard for “reasonable diligence”:
- The test is objective and focuses on what could have been discovered by reasonable inquiry, not on actual knowledge or actions of fraudulent directors.

Consistency with policy:
- The law aims to prevent fraud and protect creditors by holding both insiders and knowing outsiders accountable.
- Encourages thorough compliance checks and discourages "turning a blind eye" to obvious fraudulent trading.