Saeed & Anor v Ibrahim & Ors [2018] EWHC 3 (Ch)

[2018] EWHC 3 (Ch)Case No HC-2015-004509
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building, Fetter Lane,Date 09/01/2018
London EC4A 1NL
Before
CHIEF MASTER MARSH
Between
(1) MOHAMMAD SAEEDClaimants(2) YAYMEEN SAEEDClaimant(1) MR MOHAMED IBRAHIMDefendants(2) MRS NAHEEDA KHANDefendant(3) MOOEENUDDIN IBRAHIMDefendant(4) SADEKA IBRAHIMDefendant(5) HISAMUDDIN IBRAHIMDefendant
Aidan Briggs (instructed by Miller Rosenfalck LLP) for ClaimantsStuart Adair (instructed by Westbrook Law Ltd) for 1 st and 3 rd to 5 th DefendantsHearing Hearing dates: 20 December 2017
Judgment ApprovedChief Master Marsh:
[1]This claim came before me on 20 December 2017 in the Masters’ urgent applications list to hear an application issued on 28 November 2017. The trial of the claim is in a window opening on 12 February 2018 and there is a pre-trial review listed for hearing on 17 January 2018. The first, third, fourth and fifth defendants (“the applicants”) seek an order striking out most of the particulars of claim. The claim has already been discontinued against the second defendant. Listing of the application was considered by Master Clark at a brief hearing on 8 December 2017 when she fixed the hearing date and gave directions for the filing of evidence. Both the terms of the application itself and what was said at the hearing before the Master on that occasion give rise to some controversy.[2]It is acknowledged by the applicants that the application has been made very late. There are real doubts about whether an application of this type should be entertained, unless there are compelling reasons, so close to the commencement of the trial. Practice Direction 23A para. 2.7 requires “… every application to be made as soon as it becomes apparent that it is necessary or desirable to make it.” This is reinforced in Practice Direction 3A which says “…[PD23A] requires all applications to be made as soon as possible and before allocation if possible.” I will consider later in this judgment how the court should deal with this application in view of its nature and timing.[3]The claim has its own peculiarities. The claimants are husband and wife. The first defendant is father of the third and fifth defendants. The fourth defendant is married to the third defendant. The fifth defendant is a convicted murderer who has limited contact with the other defendants. I was assured, however, at the outset of the hearing that the applicants’ solicitors are instructed on his behalf.[4]The applicants invite the court to deal with the application on the basis that the facts relied upon by the claimants are true. In essence, the claim arises out of a scheme concocted by the first claimant and the first defendant by which the first claimant would put his assets out of reach of the second claimant to prevent her obtaining an enforceable financial settlement in the divorce proceedings she had commenced against him. The first claimant and the first defendant entered into a course of conduct that involved a marked degree of dishonesty. It included(a) forging the second claimant’s signature on several documents,(b) dishonest representations being made to a lender for the purposes of obtaining two loans and(c) deceiving solicitors into believing they were acting for the second claimant in connection with the sale of a property in which she had an interest by means of a woman, who was not the second claimant, attending the solicitors’ offices wearing a hijab and posing as her.[5]Mr Adair, who appeared for the applicants, candidly acknowledged that that the application had been poorly drafted. In section 3 of the form, the applicants stated that they were applying to:
“… seek an order striking out paras 2,3,4,6,7,8,9,10,13,14,15,16,17,31,37,42,48,49,50,51,53,56,57,58 and the claims in the prayer for relief para 1(a)- 6 because the claims are based on claims of a constructive trust/etc and/or are relying on actions which were illegal all of which were statute barred 6 years” [sic] The draft order provided with the application notice, unhelpfully, refers to slightly different paragraph numbers and asks for them to be struck out “… as the claims are statute barred and/or are unenforceable by virtue of the illegality relied upon by the First Claimant.”
[6]Mr Adair confirmed at the hearing that the applicants were not proceeding with the application on the basis that the first claimant’s claims are statute barred, leaving limitation a live issue only in relation to the second claimant and illegality as an issue in relation both claimants.[7]It is possible to discern from the application notice that an order is sought pursuant to the court’s powers under CPR 3.4(2) but no indication is given about which of the three sub-paragraphs of that rule are relied upon. Mr Adair confirmed that the applicants rely on ground (a), namely that there are no reasonable grounds for bringing the claim. They are not relying on grounds (b) or (c). However, Mr Adair said in his skeleton argument the applicants are also relying on CPR 24.2 and seek summary judgement in their favour so as to dismiss the claim. Neither the application notice nor the witness statement in support of the application mentions Part 24 and there has not been compliance with the requirements of the rule and paragraph 2 of PD24 concerning the notifications that must be given to a respondent to a Part 24 application.[8]Mr Adair referred to the note in Civil Procedure 2017 (the White Book) at paragraph 3.4.6 where the editors discuss the overlap between the court’s powers under rule 3.4 and Part 24. The notes suggest that the court may treat an application under rule 3.4(2)(a) as if it were an application under Part 24. They refer to decisions of the Court of Appeal in Moroney v Anglo-European College of Chiropractice [2009] EWCA Civ 1560 and Ministry of Defence v AB [2010] EWCA Civ 1317. In both decisions the overlap between the two rules is accepted and the Court of Appeal acknowledged there are circumstances in which a court is entitled to treat an application as if it were made under Part 24 even though the requirements of the rule have not been complied with. However, that is some considerable distance from there being a principle that an applicant is entitled to request the court to deal with an application as if it were made under Part 24 without an application in proper form having been made. In Ministry of Defence v AB the Court of Appeal refused to grant summary judgement on purely procedural grounds even though the claimants had been informally put on notice that a particular issue would be raised in an application for summary judgement. However, that was a case of very much greater complexity and substance than this case.[9]It seems to me the court should be slow to waive the express requirements of Part 24 and practice direction 24 and should proceed with the overriding objective firmly in mind. Issues that are purely matters of form should not be permitted to stand in the way where the procedural safeguards achieve little or nothing. On the other hand, the respondent to an application is entitled to notice of the case that is to be put forward and to have a proper opportunity to prepare for the hearing with knowledge of the basis upon which it is said the court should summarily dispose of the claim (or part of it).[10]The only other procedural matter to mention at this stage is that when this claim was issued, the second claimant was not a party. She was joined as a party pursuant to the order of Master Clark dated 19 April 2016. The application to join her was made by the claimants, but only after the defendants said the claim was not properly constituted without her being made a party. The applicants now complain that she is a party and seek to strike out the claim she makes.[11]The background to the claim dates back to 2004 when the second claimant commenced divorce proceedings against the first claimant. Between 1 July 2005 and 22 July 2007, pursuant to what is said to be an express agreement between the first claimant and the first defendant (“the 2005 Agreement”), the first claimant transferred £419,499 to the first defendant on the basis that the first defendant would hold those funds on trust for the first claimant. In the particulars of claim, that money is described as the “transferred funds”. The claimants say that the first defendant used those funds to purchase properties belonging jointly to the claimants and then to effect a number of subsequent transfers of those properties to various individuals. They say that each subsequent proprietor of the properties holds the property either on a resulting or a constructive trust for the claimants, or alternatively for the first claimant alone.[12]The first claimant says the scheme to put assets outside the control of the claimants, with a view to defeating the second claimant’s ability to obtain ancillary relief, was the first defendant’s idea and he was the architect of the scheme. However, on any view, the first claimant was a willing participant in it and the intended beneficiary of the scheme.[13]The 2005 Agreement was an oral agreement made between the first claimant and the first defendant. This agreement is said to have six constituent elements namely:
“a. The First Claimant would liquidate a number of his and the Second Claimant’s joint property assets and transfer the proceeds to the First Defendant; b. The First Claimant will also transfer any available liquid funds to the First Defendant; c. The First Defendant would hold those funds on trust for the First Claimant; d. The First Defendant would use those funds to purchase two of the Claimants’ properties in the names of his children, and those properties would also be held on trust for the First Claimant; e. The First Defendant would hold any income from those properties on trust for the First Claimant; f. Upon his return, the First Claimant could call for the return of any sums or property at 4 to 6 weeks’ notice.”
The 2005 Agreement was implemented in a number of ways: i. The claimants’ matrimonial home was a property at 119 Plashet Grove held in the first claimant’s sole name. The first claimant re-mortgaged that property on two occasions (9 November 2005 and 26 June 2007) and remitted the net proceeds to the first defendant. The first claimant applied for that additional lending without the second claimant’s knowledge or approval and the first defendant forged her signature on forms signifying her consent to the mortgages. ii. The claimants sold a property at 259 London Road which was held in the joint names of the claimants and transferred the net proceeds of sale to the first defendant. That sale occurred with the second claimant’s knowledge and consent. However, she did not know of, or agree to, the net proceeds of sale being transferred to the first defendant. iii. A property at 37 Lansdowne Road, Manor Park, registered in the joint names of the claimants, was transferred to the third defendant and the transferred funds were used to pay the purchase price of £80,000. The transfer was executed without the second claimant’s knowledge or consent. The first defendant forged her signature. A draft trust deed was prepared by the first defendant which reflected the intentions of him and the first claimant, but it was not executed. iv. The claimants were the registered joint owners of 349 Ripple Road, Barking. That property was transferred from the claimants to another of the first defendant’s sons (who is not a party to this claim). The first claimant executed the transfer without the second claimant’s knowledge or consent. That property went through a subsequent series of transfers, the final transfer being to a Mr Salim Patel. Another draft trust deed was prepared but executed by Mr Patel in favour of the first claimant. A mortgage of £150,000 was obtained and the transferred funds were held by the first defendant.[14]A further agreement was made in relation to a property at 3 Victoria Road which is described in the particulars of claim as “The 2007 Agreement”. This involved the purchase of 3 Victoria Road using the transferred funds. The property was put in the name of the fifth defendant and was later sold by him for £180,000.[15]It is said that the first claimant, the first defendant and the other defendants who were involved with the transactions had knowledge that the second claimant’s property was being used and she had not consented.[16]Having completed this series of fraudulent acts in conjunction with the first defendant, the first claimant then went to Pakistan where he stayed for approximately six years. On his return in December 2013, the first claimant demanded that the first defendant return to him the transferred funds and any properties held by the defendants on trust for him. In what is alleged to be a part performance of the 2005 Agreement, the first defendant paid to the first claimant a total sum of £259,292.75.[17]Throughout the entire process that is summarised in the particulars of claim, the second claimant was an entirely innocent party. Her husband, with the first defendant, set out to defraud her. It is therefore surprising to find that she is co-claimant with him when her primary remedies lie against him. I am told that the claimants are still a married couple living together and act as one.[18]The trusts that are asserted by the claimants are: i. An express trust as between the first claimant and the first defendant to hold the transferred funds. ii. Where the transferred funds have been used to purchase properties and then to effect transfers, each subsequent proprietor is said to hold the beneficial interest on a resulting or constructive trust for the claimants. iii. 37 Lansdowne Road is said to be held on a resulting trust or a common intention constructive trust for the claimants, alternatively for the first claimant. iv. 349 Ripple Road is said to have been held by the second defendant on a resulting trust or a common intention constructive trust for the claimants, alternatively for the first claimant. v. 3 Victoria Road is said to have been held by the fifth defendant on a resulting trust or a common intention constructive trust for the claimants and the proceeds of sale are held on similar trusts.[19]There is a twist in relation to 349 Ripple Road. The claimants say that the proceeds of sale as between the second defendant and Mr Patel were distributed in breach of trust by transferring £100,500 to the fifth defendant, £103,500 to the first defendant and £25,139.50 to the second defendant. The claim against the second defendant has been settled. The first claimant says he did not know about the breach of trust.[20]For the purposes of the limitation argument, the nature of the trusts as between the second claimant and the defendants is important. The defendants rely upon the analysis set out in the judgment of Lord Sumption in Williams v Central Bank of Nigeria [2014] AC 1189 where the distinction between what were described as institutional trusts and a remedial formula made by Millett LJ in Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, 413 is explained. Lord Sumption distinguishes between two different types of constructive trust. In the first category, there are persons who have lawfully assumed fiduciary obligations in relation to trust property, but without a formal appointment. These include trustees under trusts implied from the common intention to be inferred from the conduct of the parties, but never formally created as such. Lord Sumption goes on to say at [9]:
“In its second meaning, the phrase “constructive trustee” refers to something else. It comprises persons who never assumed and never intended to assume the status of trustee, whether formally or informally, but have exposed themselves to equitable remedies by virtue of their participation in the unlawful misapplication of trust assets. Either they have dishonestly assisted in a misapplication of the funds by the trustee, or they have received trust assets knowing that the transfer to them was a breach of trust. In either case, they may be required by equity to account as if they were trustees or fiduciaries, although they are not. These can conveniently be called cases of ancillary liability. The intervention of equity in such cases does not reflect any pre-existing obligation but comes about solely because of the misapplication of the assets. It is purely remedial. The distinction between these two categories is not just a matter of the chronology of events leading to liability. It is fundamental.”
[21]Later in his judgment Lord Sumption considers knowing receipt and at [31] says:
“The essence of a liability to account on the footing of knowing receipt is that the defendant has accepted trust assets knowing that they were transferred to him in breach of trust and that he had no right to receive them. His possession is therefore at all times wrongful and adverse to the rights of both the true trustees and the beneficiaries. No trust has been reposed in him. He does not have the powers or duties of a trustee, for example with regard to investment or management. His sole obligation of any practical significance is to restore the assets immediately. It is true that he may be accountable for any profit that would have been made or any loss that would have been avoided if the assets had remained in the hands of the true trustees and been dealt with according to the trust. There may also, in some circumstances, be a proprietary claim. But all this is simply the measure of the remedy. It does not make him a trustee or bring him within the provisions of the Limitation Act 1980 relating to trustees.”
[22]It is an essential part of the claimant’s case that the second claimant neither participated in nor had any knowledge of the series of steps that were taken in relation to their joint family assets and particularly her share of those assets. The defendants say, therefore, that her only remedy lies on the basis of knowing receipt. They say: i. The second claimant had no contact or dealings with the defendants; ii. The defendants were involved by virtue of the first claimant’s actions which were nothing to do with the second claimant; iii. The defendants never assumed any duties to the second claimant; iv. The defendants’ possession of property was always adverse to the second claimant. Illegality[23]The second limb of the application is based upon the principle of illegality which has been recently thoroughly restated by the Supreme Court in Patel v Mirza [2017] AC 467. If the applicants are right, illegality is a bar to the entire claim and therefore affects both claimants. Lord Toulson’s judgement at [120] summarises the position:
“The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather than the application of a formal approach careful of producing results which may appear arbitrary, unjust or disproportionate.”
[24]During the course of submissions, I was also referred to paragraphs [95] to [101] of Lord Toulson’s judgement as well as paragraphs [107] to [110] but I do not consider it is necessary to set them out in this judgement. The defendants’ submissions on limitation as against the second claimant[25]The defendants’ starting point is that the second claimant’s claim can only be for knowing receipt (or possibly for knowing assistance). Her claims are of the remedial type and the trust relationship was not as between her and the defendants but between her and the first claimant. The point, put shortly, in relation to limitation, is that if the second claimant only has a remedy against the defendants on the basis of knowing receipt, or dishonest assistance, she is not entitled to claim the benefit of section 21(1) or (2) of the Limitation Act 1980. She is subject to a six-year limitation period under section 21(3) unless she is able to rely upon section 32 of the 1980 Act.[26]At paragraph 7g of the reply the claimants plead that the defendants deliberately concealed from both claimants the facts and matters set out in paragraphs 14, 35, 41 and 52 of the particulars of claim and from the second claimant the facts and matters of paragraph 6 to 53 of the particulars of claim within the meaning of section 32(1)(b) of the Limitation Act 1980. In support of those contentions they rely on three points:
“i. The matters alleged constituted the deliberate commission of a breach of duty in circumstances in which it was unlikely to be discovered for some time; ii. The defendants knew that the first claimant was unlikely to return to the United Kingdom and discover their various breaches of trust and/or contract for several years; iii. Each of the defendants knew or had reason to believe that the above concealment had taken place.”
[27]Section 32(1) of the 1980 Act prescribes that in the case of deliberate concealment “… the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.” The section provides for two alternatives:(i) actual discovery of the fraud, concealment or mistake;(ii) an objective test concerning whether with reasonable diligence the fraud, concealment or mistake could have been discovered.[28]Section 32(2) provides that “… deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.”[29]The defendants submit that the second claimant’s case in relation to limitation is hopeless and is bound to fail and should therefore be struck out. They say there will be significant savings as a result of the claim being restricted to claims made by the first claimant.[30]They also say: i. The case on concealment is pleaded only in the most general terms. The pleading is both vague and embarrassing. It does not differentiate between any of the defendants and it does not say what they concealed or how they concealed it. ii. The third, fourth and fifth defendants were not parties to the 2005 Agreement and, therefore, no duties in connection with it arose. The first claimant’s witness statement for the trial asserts that in the first defendant’s house his children would sign any document they were told to sign and they would not enquire into what it was they were signing. iii. There was no contact between any of the defendants and the second claimant and, therefore, there could be no duty owed to her. iv. Deliberate concealment by one party will not be deliberate concealment for other defendants – see Att Gen for Zambia v Meer Care & Desai (a firm) [2007] EWHC 952 (Ch) [399- 400]. v. If there was concealment, it was by the first claimant. It is the claimants’ case that the first claimant dealt with their joint property and as such he must have been acting in breach of trust in relation to her and concealing his actions as trustee from her. In the case of 119 Plashet Grove, the property was not held in joint names and therefore there was no trust. vi. The first claimant owed duties to the second claimant whereas the defendants owed no duties to her. Therefore section 32(2) does not apply to her. vii. In relation to concealment, the second claimant is not entitled to put forward a different position to that of the first claimant. It is not open to the first claimant to say that the second claimant knew what had happened whereas the second claimant’s case is that she did not know. viii. Critically, the second claimant had sufficient knowledge in 2007, when she consulted solicitors in relation to matrimonial matters, that certain of the key events had taken place. This becomes clear from her witness statement. She was told by the solicitors that 119 Plashet Grove had been recently re-mortgaged, that 37 Lansdowne Road had been sold to the third defendant and that 349 Ripple Road had been sold to the first claimant’s brother, Mr Nasir. So far as the sale of 259 London Road that had taken place in September 2005 was concerned, she recalled that she had no choice but to sign the transfer as her husband said he wanted to sell the property. ix. In the alternative, the defendants say in light of the knowledge the second claimant had, she could with reasonable diligence have discovered the entirety of the defendants’ conduct (and that of her husband) in about 2007. The claim was not issued until 2015.[31]The claimants also rely on section 29 of the Limitation act 1980 which has the effect of extending the limitation period where there is part payment. Paragraph 55 of the particulars of claim that pleads that the first defendant paid nearly £260,000 to the first claimant. However, that payment does not assist the claimants because they have not brought claims for liquidated sums. Their claims with a financial element are claims for damages.[32]Mr Adair points to the differences between the first claimant’s claims and the claims that may be made by the second claimant. He submits that: i. One claimant cannot disavow another part of the claim; ii. There must be a commonality between co-claimants; iii. There must be no conflict of interest between co-claimants; iv. The conduct relied upon by the claimants is conduct by the first claimant against the second claimant; v. The second claimant would be entitled to bring the claim on her own; vi. The fact that the second claimant was joined because the defendants said the claim was not properly constituted without her being a party, and consented to her joinder, makes no difference.[33]Mr Adair relies on the decision of the House of Lords in the Duke of Bedford v Ellis [1901] AC 1 where Lord Brampton said at p. 23:
“As a fundamental rule of practice, and of pleading, two or more different plaintiffs, each having a separate and different cause of action, cannot be joined in the same action. To cite authority for this proposition seems superfluous. I may, however, mention the case of Sandes and Another v Wildsmith and Another as an illustration. Under this rule no two of the plaintiffs in this case could have been joined in this action; for the grievance of each as claimed is separate and distinct, and no joint cause of action is disclosed.”
[34]For my part, I do not find that authority to be of any real assistance. It speaks of an era in which the form of pleadings and of actions was of rather greater significance than under the Civil Procedure Rules. There is nothing in CPR Part 19 that assists the defendant’s case on this point. CPR 19.3 required the second claimant to be joined as a party for the purposes of at least part of the relief that is sought. It is, in my experience, commonplace that claimants do not have precisely overlapping claims and that one claimant may have an additional cause of action to other claimants. Provided the subject matter of the claim is common, it is largely a matter of convenience having regard to the overriding objective whether the claimants can be part of the same claim. A cause of action may benefit one or more claimants.[35]But it is quite a different matter if there are separate claims between claimants that are mutually contradictory, or in relation to a common cause of action contradictory positions are taken. Either situation would give rise to a true conflict of interest and make it inappropriate for those claimants to be parties to the same claim. The claimants’ case on limitation[36]The claimants’ point to the scope of the application. The witness statement in support relies upon a limitation case in respect of both claimants and makes no distinction between them. The defendants have now conceded that the application only relates to limitation concerning the second claimant’s case. Furthermore, nothing was said in the application or in the witness statement about: i. There being a conflict between the two claimants; ii. The reply being inadequately pleaded; iii. The second defendant being able to discover the fraud with reasonable diligence.[37]The claimants also strongly object to the application being treated as if it were an application made under Part 24. Mr Briggs, who appeared for the claimants, recalled it being said on behalf of the applicants at the hearing before Master Clark on 8 December 2017 that the application was made only under CPR 3.4(2) to strike out the claim. This rule provides what is arguably a higher threshold for respondents to meet than under Part 24 and it would be unfair to the claimants, particularly this close to the trial, to deal with the application in a manner which had not been made clear before receipt of Mr Adair’s skeleton argument. The application came on very quickly at the request of the defendants and the claimants did not consider it necessary to serve full evidence in response. Had they known it was a Part 24 application, they might have taken a different approach.[38]There was a difference between the parties about what may or may not have been said at the hearing before Master Clark on 8 December 2017 and it was agreed that I would speak to her and establish whether she had any material recollection. Following the hearing I spoke to Master Clark and gave instructions for an email to be sent to the parties summarising what she said. She had only a limited recollection of the hearing and did not recall it being said in clear terms that the application was going ahead only as a strike out application. However, she dealt with the listing and gave directions for evidence on the assumption that this was so. Whatever else, nothing was said at that hearing about the defendants intending to treat the application as if it were made under Part 24.[39]The distinction between the two jurisdictions is an important one even though they overlap. In the case of a strike out application, based on there being no reasonable grounds for bringing the claim, the focus is almost exclusively on the statement of case. Under Part 24, the focus is on the claim itself, or the defence, and the court will take into account all relevant evidence. In addition, on a strike out application, if what may be termed a pleading point is taken, such as the complaint about the reply, it should be flagged clearly before the hearing so as to give the respondent to the application an opportunity to remedy the defect. The claimants say it would be quite wrong to deal with limitation without them having had an opportunity further to particularise their case in relation to concealment.[40]The claimants do not accept there is any conflict between them. The first claimant admits his wrongdoing. Mr Briggs submits that it is not a requirement of the CPR that claimants should have identical claims. By way of example, he points to the possibility of illegality being applied only to the first claimant’s claim without it barring the second claimant’s claim. Illegality is no longer a pleading point but a matter of policy. The second claimant has her own claims, he says, under resulting trusts and on the basis of knowing receipt.[41]Mr Briggs relies upon the defendants’ insistence that the second claimant should be joined as a claimant. They consented to the joinder and the claimants acceded to the request. It is unattractive for the defendants now to say that the claim of the second claimant should be struck out when the only reason she is a party is because they insisted upon it.[42]Furthermore, it is said that if the second claimant’s claim were to be struck out at this stage, there would be little or no saving in cost. The second claimant would still be needed as a witness at the trial and it seems unlikely that the trial would be shortened by any significant amount.[43]Mr Briggs also points to the pleaded claim that there are either resulting trusts or common intention trusts in relation to the claimants’ joint assets. On that basis, there is a complete answer to the limitation because the second claimant is entitled to rely upon section 21(1)(b) because resulting trusts fall on the right side of the line that is to be drawn between institutional trusts and a remedial formula. It also follows that the second claimant is entitled to rely upon section 32(2) because there was a deliberate breach of duty by the defendants which was unlikely to be discovered for some time. Should the application be treated as if made under Part 24?[44]In my judgement, although there is an overlap between the power to strike out and the power to enter summary judgment, the court should be careful to avoid a respondent to such an application being taken by surprise. There are safeguards built into Part 24 and the practice direction and although the court has power to waive those requirements, it is essential to ensure that the hearing can take place on a fair basis. It is incumbent upon the applicant to frame the application with sufficient accuracy so as to make the jurisdiction that is relied upon sufficiently clear to the respondent. There was no indication whatever in this application that summary judgement would be sought and I accept that there was no indication given at the hearing before Master Clark. The application has the hallmarks of an application to strike out the claim relying on rule 3.4(a). It seems to me that at this very late stage where the trial is close, it was particularly important for there to be clarity. Regrettably there was only confusion created by the way the defendants have proceeded. They seek to rely, in part, upon the claimants’ witness statements prepared for the trial. It will be rare that an applicant under rule 3.4(2)(a) will be entitled to rely upon such evidence to make out that the statement of case does not show reasonable grounds for bringing the claim. An application will usually succeed or fail by reference only to the content of the statement of case. If conclusions have to be drawn for evidence, Part 24 is the appropriate rule to use.[45]This is not a case where the application can safely be treated as if it had been made under Part 24 and, in my judgement, there is a real risk of unfairness to the claimants if the court were to do so.[46]I would add that it would not necessarily be to the applicants’ advantage if Part 24 were to be engaged. Although the second limb of Part 24.2 is not often in play, an application for summary judgement made close to the trial may well provide circumstances in which the court could conclude that, even if the first limb of Part 24.2 is met, there are compelling reasons why the case should go to trial. Amongst such reasons in this case would be the probability that(a) the second claimant would need to remain a party to the claim for the purposes of the relief that is sought and/or(b) it is unlikely there would be any significant saving of costs if the claim made by the first claimant proceeds alone.[47]I propose to treat the application only as if it is made under the first limb of CPR 3.4(2). Illegality[48]I can deal with this aspect of the application briefly. I accept Mr Briggs’s submission that illegality is no longer a pleading point. The court has to assess whether it is contrary to the public interest to permit the claim to proceed because to do so would be harmful to the integrity of the legal system. The application of this test must take into account the considerations that are summarised in paragraph 120 of Lord Toulson’s judgement in Patel v Mirza. On the hearing of a strike out application pursuant to rule 3.4(2)(a), the focus is directly on the statement of case. Such a hearing is very unlikely to be a suitable occasion for the delicate policy issues to be explored and determined. It is possible to see that illegality might be capable of being dealt with on the hearing of a Part 24 application, but it is likely to be the sort of issue that often will need to be dealt with at a trial.[49]I would add that if I had treated the application as made under Part 24, I would not have felt that I had sufficient information to determine it and, again, it is likely that the second limb of CPR Part 24 would have been in play. Limitation[50]It is extremely difficult to see how the claimants could succeed on their claim that there were common intention trusts created for the benefit of the second claimant. She had no knowledge of the transferred funds being applied. She had no relationship with any of the defendants so far as the transactions relied upon are concerned. She had no relevant intention.[51]I was not addressed by the parties at all in relation to the requirements for a resulting trust. It is, however, not easy to see how resulting trusts could have come into being as between the second claimant and the defendants. Lewin on Trusts 19th edition at 7-005 to 7-007 refers to the speech of Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669. Neither of the two sets of circumstances in which a resulting trust may arise, as explained by Lord Browne Wilkinson, has any bearing on the facts relied upon by the claimants. Rhetorically, how could a resulting trust have arisen as between the second claimant and the applicants when she had no knowledge of what the first claimant and the first defendant were doing with her assets? For there to be a resulting trust, the parties must knowingly deal with each other, albeit they may not be aware of the legal consequences that arise from that dealing. If, as is controversial on the authorities, intention has a role in connection with the creation of a resulting trust, plainly the second claimant did not form an intention at any time because she was unaware of what was happening.[52]The second claimant’s case relies upon what I may loosely term remedial trusts rather than institutional trusts and she is not entitled to the benefit of section 21 of the Limitation Act 1980. And she cannot rely upon there being a breach of duty with the consequence that section 32(2) of the Act is of no assistance to her.[53]The issue of concealment is a more difficult area. Although I accept Mr Adair’s submission that the applicants are entitled to know who concealed facts relevant to the second claimant’s right of action from her and how it was done, the complaint was not made in advance of the hearing and should not form the basis of a strike out of the claim. Furthermore, the issue about the second claimant’s knowledge, or what she ought with reasonable diligence to have discovered, is a fact sensitive enquiry that needs to be dealt with at a trial. It is not suitable for disposal where the focus is upon the statements of case. The second claimant has pleaded a case about limitation in the reply. The court cannot say, based upon that pleaded case, that the second claimant’s case has no reasonable grounds.[54]Mr Adair’s submissions concerning what he says are conflicts between the claimants gives rise to interesting issues. They highlight the unusual nature of this claim where the fraudster and the victim of the fraud are both claimants joined in a common cause. No doubt the extent to which the second claimant is truly a willing participant in this claim, as co-claimant with her husband, is a matter which will be explored at the trial. It is not, however, a matter that can be dealt with on the hearing of this application.[55]I accept that the issue of concealment shines a light on fissures in the claim when it deals with limitation. The first claimant appears to concede that he concealed information from the second claimant. They are not, however, putting forward cases that are so far out of alignment that the whole or part of the claim must be struck out. Although it will be a matter for the trial judge, it appears to me that their principal cases are different, but broadly complementary. The first claimant relies upon what he agreed with the first defendant and how their scheme was implemented. The second claimant relies upon knowing assistance and seeks remedies to which she may be entitled regardless of success or failure of the first claimant’s case. Steps taken by the first claimant to conceal facts from the second defendant may well be relevant to whether her case on concealment by the defendants can succeed, but I do not see that this tension between their cases is so fatal that her claim must be struck out, particularly bearing in mind(a) she is a party to the claim at the insistence of the applicants and(b) limitation is merely a defence to a claim but does not extinguish the cause of action.[56]It does seem to me, however, that the claimants should provide further particulars of their case on limitation, either on a voluntary basis, or pursuant to an order. I will consider whether an order is required on the handing down of this judgment. Conclusion[57]The application will be dismissed. By doing so, I give no encouragement to the claimants in relation to their claim at the trial. However, it is right that the application is dismissed. It was a highly ambitious application made very late and in a form that was unclear until the hearing.[58]I have expressed views about the trusts the claimants rely on. In other circumstances it might have been appropriate to prune aspects of the claimants’ case. I have some hesitation in making such an order in view of the lateness of the application and the fact that little oral argument was directed to the point at the hearing because the application was directed to illegality and limitation. I will hear counsel on the handing down of this judgment about whether the court should permit the claim to go forward to trial with the common intention and/or resulting trust claims pursued on behalf of the second claimant when her claim naturally lies on the basis of knowing assistance.[59]I would add that an application under rule 3.4(2)(a) should usually be brought at a much earlier stage of the claim. The particulars of claim were amended in April 2016 when the second claimant was added. The reply was amended to plead the claimants’ limitation case in March 2017. The court should have been asked to consider the claim at the latest at or after amendment of the reply rather than weeks before the trial.

Cited in 7 later judgments