Global Fintech Investments Holding AG v Linklaters LLP

MRS JUSTICE DIAS:

1. This is an application by the defendant pursuant to CPR part 7.7(3) for the claim in these proceedings to be dismissed in its entirety for noncompliance by the claimant with a notice served by the defendant on 12 June 2025 under part 7.7(1) requiring the claimant either to serve the claim form or to discontinue the proceedings. The claim form was issued on 12 May 2025 and, at the date of the notice, was still valid for a further three months.

2. So far as relevant to the present application the background can be summarised as follows. The defendant was the legal advisor to a public company, Finablr plc, in relation to an IPO which took place in May 2019. Less than a year later Finablr collapsed following the discovery of significant undisclosed debts indicative of widespread fraud and it went into administration on 11 March 2022. On 16 March 2022 the claimant took an assignment from Finablr’s administrators of any claims that the company might have against third parties including the defendant.

3. Since that date the claimant has been engaged in investigating all such claims but has been considerably hampered by the fact that it is an assignee and does not itself have direct access to relevant information and documentation. In particular it has not seen the due diligence report that it believes must have been prepared by the defendant in relation to the IPO.

4. The defendant was unaware of the assignment until 5 March this year when it was approached by the claimant with a request to agree a standstill as the limitation period was due to expire on 13 May. The defendant declined to enter into a standstill on the basis that it was unaware of any grounds for a claim to be made against it.

5. On 12 May, that is the day before the limitation period expired, the claimant issued the claim form. This was attested by a statement of truth signed by the claimant’s representative who is in fact an English solicitor although he was not acting in that capacity at the time. The claim form pleaded the following facts and matters. a. The defendant owed Finablr contractual and tortious duties of care in connection with the proposed IPO and related legal and corporate matters, including a duty to advise Finablr of any untrue statements or omissions contained in the IPO prospectus. b. The prospectus contained a number of untrue statements and omissions, including as to Finablr’s debt position. c. The defendant was in breach of its duties of care in failing to identify those matters or bring them to Finablr’s attention with the result that the prospectus masked Finablr’s serious financial difficulties due to the fraud. d. Finablr suffered loss as a result of the defendant’s breaches. e. The claim is advanced by the claimant in its capacity as assignee.

6. The claim form was not immediately served on the defendant nor was the defendant alerted to its issue. However it became aware of the proceedings as a result of two articles published in the legal press on 14 May noting the issue of a claim against it.

7. On 23 May the defendant served its notice under part 7.7(1) requiring either service of the claim form or discontinuance of the proceedings by 6 June. On 6 June the claimant wrote to the defendant explaining that it believed it had a claim against the defendant, that investigations were ongoing and that in the light of the defendant’s refusal in March to agree to a standstill the claimant had issued proceedings at the correct time. The claimant confirmed that investigations were still ongoing and that it was not yet in a position to serve the proceedings but it invited a meeting in the coming weeks to discuss the prospective claims.

8. It does not appear that any response was made to this letter. Instead the defendant issued the present application on 12 June. Its attempt to secure an expedited hearing was rejected by the courts and the application was listed before me on Friday 3 October.

9. Meanwhile the claimant served the claim form on 12 September which was the last day of its validity such that particulars of claim are currently due for service on 17 October. The defendant acknowledged service on 19 September. On 21 September the claimant indicated that it might apply for a three month extension of time for service of particulars of claim and invited pre-action disclosure of the due diligence report.

10. On 25 September the defendant responded, pointing out that pre-action disclosure was inappropriate as proceedings had now been commenced but confirming that it would comply with its disclosure obligations in the event that the claim was not dismissed.

11. On 30 September the claimant issued an application for an extension of time for its particulars of claim and on 1 October solicitors came on the record on its behalf. Rule 7.7

12. The parties were represented before me by Mr Watson Pringle for the claimant and Mr Craig Ulyatt for the defendant. It was common ground between them that rule 7.7 does not itself affect the period of validity of a claim form but that noncompliance with a rule 7.7 notice confers a discretion on the court to dismiss the claim or to make any other order that it thinks just. Where they did not agree however was as to the purpose and effect of rule 7.7 and as to the ambit of the court’s discretion thereunder.

13. As is obvious there is no obligation on the defendant to serve a notice under rule 7.7. Indeed in the vast majority of cases the defendant is unlikely ever to find out about a claim form that has been issued but not served. However it was Mr Ulyatt’s submission that where the defendant does find out about the issue and serves a notice, compliance with that notice either by serving or discontinuing the proceedings is mandatory and the claimant’s position that it is only optional is untenable.

14. I am not convinced that this is in fact the claimant’s position but, in any event, I do not consider that it is correct to analyse the rule in this way. I entirely agree with Mr Ulyatt that a notice under part 7.7 is a formal document which carries formal consequences. However this does not mean that compliance with the notice is mandatory. The position is simply that if the claimant does not comply, the court’s discretion is triggered - including a power to dismiss the proceedings if it thinks it appropriate to do so. A claimant who does not comply with the notice takes that risk but that is not the same as saying that it is under a positive obligation of compliance. In the end I did not understand either party to dissent from this proposition.

15. As to the ambit of the court’s discretion there is no express limitation in the wording of the rule itself. Rather the imperative of rule 7.7(3) is that the court must make the order which it thinks just. What is ‘just’ must necessarily be conditioned not only by the overriding objective but also by all the relevant circumstances in the case. There is accordingly no presumption either for or against dismissal as the appropriate order. The rule merely provides a mechanism for a defendant to demand early service in order to flush out whether the claim is going to be pursued and, if so, to get early sight of it: see the decision of Andrew Baker J in Brightside at paragraph 34.

16. Nonetheless it seems to me that, when exercising its discretion, the court must always have clearly in mind that the sanction to be imposed is that which is appropriate for non-compliance with the rule 7.7 notice. In my judgment, rule 7.7 was not intended to act as a proxy for obtaining dismissal on other grounds. For example, there may well be cases such as, indeed, the present where it is argued that the claim is so utterly unmeritorious and lacking in foundation that it discloses no reasonable cause of action or is an abuse and should be dismissed for that reason.

17. However if that is the argument which a defendant wishes to make then it should do so by way of application to strike out under part 3.4 supported by evidence rather than using part 7.7 as a vehicle for obtaining effectively the same relief. While I would not go so far as to say that the inherent weakness or abusiveness of a claim can never be a relevant factor in the exercise of the court’s discretion, the court must be astute not to allow a defendant to outflank any specific requirements and procedural safeguards which might apply to applications for strike out or dismissal bought under other provisions of the rules. The just order on the facts

18. In this case the defendant has chosen not to bring any application to strike out the claim. Moreover Mr Ulyatt confirmed that he was not basing his application on the inadequacy of the claim form. Nonetheless the principal thrust of his submissions was that the pursuit of the claim by the claimant was abusive. He submitted that the claim was tied solely to the IPO prospectus and yet the claimant had never identified exactly what it alleged the defendant knew, or how it was negligent in failing to uncover the fraud, or in the advice which it did or did not give. He pointed to the fact that the claimant had accepted explicitly on many occasions that it was unable to particularise its claim against the defendant fully either when the claim form was issued or when it was served or even now. The claim form had been issued on the last day of the limitation period and served on the last day of its validity with the explicit purpose of buying more time for investigation and, even now, the claimant was seeking a three month extension of time for service of particulars.

19. In these circumstances he suggested that the claim must be regarded as wholly speculative and based on three assumptions: (i) that there had in fact been a fraud; (ii) that the defendant was involved in advising on the IPO; and (iii) that the defendant should have, but failed, to uncover or advise in some as yet unspecified manner.

20. Drawing heavily on the decision of Cooke J in Nomura, Mr Ulyatt submitted that it is abusive to commence a claim where the claimant is not aware of any proper basis for doing so. In this case he says that the claimant has brought a claim, attested by a statement of truth, positively asserting a breach of duty which it is, however, completely unable to particularise. He argues that the situation is thus entirely analogous to Nomura and that in truth the claimant does not know whether it has a claim at all or not. This is accordingly a naked attempt to circumvent the limitation period which the court should not countenance.

21. He points out, correctly, that the law of limitation imposes an arbitrary cut-off for claims on public policy grounds, namely the avoidance of stale claims and uncertainty. Inevitably it works hardship in some cases but that is inherent in the very concept of limitation. It is therefore irrelevant that the claimant as assignee has experienced difficulty in investigating the circumstances of Finablr’s collapse. Every litigant is bound to commence its claim within the allowed limitation period and takes the risk that it may not be able to discover or articulate a viable claim in time. The claimant could have applied for pre-action disclosure within the limitation period but did not do so. It has therefore had the full benefit of the limitation period and the additional four months for service of the claim form. Yet even now it is unable to particularise its claim. The court is entitled to have regard to the abusive nature of the claim and should therefore dismiss it.

22. On the other side Mr Pringle argues that the claimant has articulated a coherent cause of action in the claim form and that it could serve particulars of claim here and now. Nonetheless, it recognises that making allegations of negligence against a responsible professional entity is a serious matter and it is desirable in the interests of all parties as well as efficient case management that the matter is fully investigated before particulars are served. Otherwise, he submits, it would only invite a request for further information and the near inevitability of having to replead the claim at a later date. That would achieve nothing except a waste of time and money on both sides - hence the issue of the extension of time application.

23. Mr Pringle points out that if the defendant wishes to apply to strike out the claim it is at liberty to do so but maintains that the alleged abusive nature of the claim is not a proper ground for applying for dismissal under rule 7.7.

24. The points made by Mr Ulyatt are very powerful and he makes them with his customary force and persuasiveness. However, it seems to me that he risks eliding non-compliance with a rule 7.7 notice on the one hand with the conceptually separate question of whether there is a proper basis for the claim on the other. While this case is procedurally very similar to Nomura , I do not consider the analogy to be exact. In particular there are to my mind two crucial differences from Nomura . First, in Nomura Nomura was unable even to articulate a claim against the defendant until the third party bank had identified a claim against Nomura itself. The bank had issued a claim form which asserted negligent misstatement but gave no indication of what the misstatements were or where they were to be found. By contrast in this case the claimant has pleaded a duty of care including a duty to advise specifically in relation to the IPO. It has pleaded a breach of duty in failing to advise in relation to untrue statements and admissions in the IPO and it has pleaded loss. There is therefore a degree of specificity in this claim form which was wholly lacking in Nomura . True it is that the claim form is not particularised, but it is not the function of a claim form to do more than give brief details of the claim. The appropriate place for particularisation is in the particulars of claim which are yet to be served.

25. The claimant says it can serve particulars now although they will not be as fully particularised as might be desirable after fuller investigation and, in particular, sight of any due diligence report. Whether or not the claimant can particularise its claim sufficiently to avoid an application to strike out is not a matter which was debated before me. As I have said, Mr Ulyatt’s submissions were not based on a contention that the claim form failed to disclose any reasonable cause of action but rather on the claimant’s own evidence that it is currently unable to particularise that claim by reference to specific advice given or not given by the defendant.

26. However, once it is accepted that the claim form discloses an apparently arguable cause of action, as it does, I agree with Mr Pringle that the claimant is entitled to the full period allowed by the rules in order to particularise that claim. He pointed out that insofar as Brightside held that the purpose of a 7.7 notice was to allow early sight of the claim form, that purpose had been achieved as the claim form had now been served anyway. He further submitted, and I agree, that the question whether the claim as subsequently particularised in the particulars of claim stands up to scrutiny is properly to be assessed after service of the particulars of claim when it can be made the subject of a strike out application if appropriate. In my judgment, the defendant should not be permitted in advance of the time for service of particulars of claim to rely on the current lack of particularisation as a reason for seeking dismissal where the cause of action is on the face of it plausible and coherent. That would be using the 7.7 application as a vehicle for a strike out without having to adduce any evidence in support.

27. The second ground of distinction from Nomura is that the decision in Nomura was actually made in the context of an application to strike out for abuse of process, not an application for dismissal under rule 7.7. It was in that context that Cooke J held that the key question was whether the claimant believed there was a valid basis for the claim at the date of issue. He held that it was abusive to issue a claim form in respect of a cause of action which a claimant might have in future unless it was able to do the minimum necessary to set out the nature of the claim it was making. In the context of a contractual claim this required it to identify the alleged contract, the alleged breach and the essential acts and omissions which constituted the breach or negligence or negligent misstatement as the case may be. Since Nomura had no sufficient idea of the claim it wished to pursue, it followed that it could have no present intention to pursue that claim and that was both an abuse and an illegitimate attempt to secure an extension of the limitation period by the backdoor.

28. However, as I have already stated, that is not this case. The claimant has, in my judgment, pleaded the minimum necessary to articulate a plausible and coherent cause of action. It has also stated that it intends to pursue that claim and that it is in a position to serve particulars of claim within the time allowed by the rules if required, although it would ideally want another three months. If in truth the claimant proves unable to put any more flesh on the bones of its case than appears in the claim form it may well be that the claim lends itself to an application to strike out. But, as Mr Pringle has argued, the time to make that assessment is after the particulars have actually been served. I also note that some particularisation has been provided in correspondence, albeit only by letter dated 21 September.

29. Moreover, Cooke J in Nomura did not dissent from the decision of Saville J in Barton v Henderson that there might be good reasons for a claimant to issue proceedings but not intend to prosecute them immediately and that it would only be abusive if the claimant was unaware of any valid basis for pursuing a claim.

30. For these reasons I reject the argument that the claim can be regarded as abusive simply because it has not yet been particularised beyond the brief details in the claim form. This cannot therefore be a factor in favour of dismissing the claim for non-compliance with the 7.7 notice.

31. In addition to the argument based on abuse, Mr Ulyatt relied on the following further matters as making it just and appropriate to dismiss the claim for noncompliance with the 7.7 notice.

32. First, he argued that the noncompliance was deliberate and flagrant. However this seems to me to prove too much. On the view I take of rule 7.7, there is no positive mandatory obligation on the claimant to comply with the rule 7.7 notice; it simply takes the risk of dismissal or some other sanction in the event of non-compliance. Indeed, the question of dismissal or other sanction cannot arise at all unless there has been non-compliance. The non-compliance itself is therefore a necessary precondition to the exercise of the court’s discretion rather than a factor which weighs in the balance either way. In any event, the claimant did not ignore the notice completely. It invited dialogue and early disclosure albeit, I accept, only on the last day of the period set by the defendant.

33. Secondly, Mr Ulyatt submitted that the claimant was securing ongoing benefits for itself. However once the argument on abuse has been rejected it is difficult to see how that can be the case in circumstances where the claimant is not in breach of any procedural time limits. If anything, it could be said that it is the defendant which is trying to secure the benefit of having the claim struck out while avoiding to have to serve any evidence in that regard.

34. Thirdly, he drew attention to other breaches of the rules by the claimant in relation in particular to the pre-action protocol process and the omission of a UK address for service in the claim form. Again I do not regard these as factors of any great weight in the context of this application. The latter has now been cured, and in relation to the pre-action protocol the claimant invited agreement on a standstill which, if the defendant had consented, might well have led to discussions akin to a pre-action protocol process. The claimant has also invited discussions more recently which the defendant declined in favour of bringing the present application. That was of course the defendant’s prerogative, but it hardly lies in its mouth then to complain that no informal discussion of the claim has taken place.

35. Finally, Mr Ulyatt submitted that the defendant was suffering ongoing prejudice as a result of the non-compliance. Again it seems to me that the lady doth protest too much. The prejudice relied upon is based on two articles published shortly after the issue of the claim form. The defendant says that this has led to speculation which it is unable to counter effectively without knowing the detail of the claim made against it. It necessarily also has to mention the existence of the proceedings in pitches to new clients.

36. However, as Mr Pringle pointed out with some force, none of this has anything to do with the rule 7.7 notice. It is simply a consequence of a claim having been issued at all and precisely the same consequences would have ensued even if the claim form had been served in July rather than September. The claimant itself has not courted any publicity. No further articles have been published and the most that can be said is that the non-compliance has delayed by some eight weeks the time which an application to strike out might have been made or some other step taken to have the proceedings dismissed.

37. Of all the matters relied on by Mr Ulyatt, the strongest seems to me to be the question of prejudice. It is undoubtedly prejudicial to a prominent professional firm to have a claim hanging over it which it believes to have no substance. Even so, I cannot see this as a valid reason for dismissing an otherwise coherent claim in its entirety prior to service of particulars of claim. That said, I do consider it sufficient reason to refuse the claimant’s application for an extension of time for service of the particulars of claim. The defendant was fully entitled to serve its rule 7.7 notice. The claimant did not comply with that notice although it has belatedly now served the claim form. Had it not been for the fact that the particulars of claim are in any event due in 10 days’ time I would have considered the just and appropriate order to be for service of particulars of claim in fairly short order. As it is, there is little purpose to be achieved by shaving a few days off the remaining period.

38. Nonetheless, it must be recognised that the claimant has had the full benefit of the limitation period plus the additional four months for service. It maintains that it can plead its claim now and, in my judgment, it should be required to put its money where its mouth is and do so, whether or not it also makes any application for early disclosure. At that stage it will be for the defendant to take whatever further steps it sees fit, whether that be by serving a request for further information or applying to strike the claim out, but only then does it seem to me that the court will be in a proper position to assess whether the claim is in fact so weak that it ought properly to be struck out.

39. In the result therefore both the defendant’s application under rule 7.7(3) and the claimant’s application for an extension of time are refused. ---------------