LUCY BURNFORD OLIVER ASTLEY GILES FITZPATRICK MICHAEL SYMONS KEVIN GASKELL v AUTOMOBILE ASSOCIATION DEVELOPMENTS LIMITED [2022] EWHC 368 (Ch)

"58. As regards the need for oral evidence, Mr Ashworth reminded us that it is well-settled practice that if a court finds itself faced with conflicting statements on affidavit evidence, it is usually in no position to resolve them, and to make findings as to the disputed facts, without first having the benefit of the cross-examination of the witnesses. Nor will it ordinarily attempt to do so. The basic principle is that, until there has been such cross-examination, it is ordinarily not possible for the court to disbelieve the word of the witness in his affidavit and it will not do so. This is not an inflexible principle: it may in certain circumstances be open to the court to reject an untested piece of such evidence on the basis that it is manifestly incredible, either because it is inherently so or because it is shown to be so by other facts that are admitted or by reliable documents. Mr Ashworth referred us in support to Re Hopes (Heathrow) Ltd, Secretary of State for Trade and Industry v. Dyer and others [2001] 1 BCLC 575, at 581 to 582 (Neuberger J). He also referred us to paragraphs 17 and 18 of the judgment of Mummery LJ in Doncaster Pharmaceuticals Group Ltd and Others v. The Bolton Pharmaceutical Company 100 Ltd [2006] EWCA Civ 661 , which provides a reminder of the caution the court should exercise in granting summary judgment in cases in which there are conflicts of fact which have to be resolved before judgment can be given. Mr Ashworth said that these principles apply equally to the case in which the evidence is given by witness statement rather than by affidavit, and I agree. I said as much in my summary of the principles in Long v. Farrer & Co and Farrer [2004] EWHC 1774 (Ch); [2004] BPIR 1218, at paragraphs 57 to 61."

"The Claimant accepts the Settlement Monies in full and final settlement of the Claims and of all and any other claims, whether statutory, contractual and at common law which the Claimant has or may have against the Respondents and/or any associated or subsidiary company, business, partnership or undertaking; their directors, officers or employees, whether arising out of the Claimant's employment with the Respondents, its termination or otherwise excluding claims of personal injury of which he is unaware of [sic] at the date of this settlement, accrued pension rights and claims to enforce the terms of the agreement and any High Court claim in relation to the claims specifically referenced in the letter from Stewarts LLP to AA PLC on 27 August 2020 ('the Excluded Claims')."

"48. In light of the facts and circumstances set out above, the Claimants have actionable claims for fraudulent and/or negligent misrepresentation and/or pursuant to section 2 of the Misrepresentation Act 1967. The Claimants reserve the right to plead any additional cause of action in due course."

"3.1 … AA Developments expressly represented to the Claimants and Motoriety inter alia that upon the conclusion of AA Developments' proposed investment agreement, AA Developments would be in a position to, and would, provide Motoriety with immediate access to the AA's customer base of 4 million personal members and 9 million B2B customers ('the Immediate Access Representation'). 3.2 Further, in making the Immediate Access Representation, AA Developments also impliedly represented that AA Developments (in particular through Ms. Lloyd-Jukes and Mr. Bruce) honestly and reasonably believed the Immediate Access Representation to be true ("the Honesty Representation"). [ … ] 3.4 These representations were made by AA Developments with the intention that the Claimants and Motoriety would rely upon them in (1) preferring the AA Developments' investment proposal to that of Solera, (2) concluding the proposed Agreements with AA Developments and (3) procuring that Motoriety would conclude the proposed Agreements with AA Developments. As more particularly set out below, the Heads of Terms, the Investment Agreement and the Licence Agreement were concluded by the Claimants and Motoriety in specific and intended reliance upon the Immediate Access Representation and the Honesty Representation. [ … ] 4.5. In the premises, AA Developments represented: (1) That the Claimants and Motoriety could realistically expect that over a 12-month period (or Year 1 in the Business Plan) approximately 5,000,000 of the AA's customers would receive an email reminder that the MOT on their vehicle was due. (2) That it was reasonable and realistic to expect that, of those 5,000,000 customers, 600,000 customers a year (i.e. 50,000 customers a month) would sign-up to Motoriety's Automyze product in response to the MOT reminder email referred to in paragraph 4.5(1) above. (together 'the Business Plan Representations'). The Business Plan Representations reflected an annual customer sign-up conversion rate of 12%. 4.6. The Business Plan Representations and the Customer Forecast remained in the final version of the Business Plan which as intended formed part of the Investment Agreement (as to which see further paragraph 7 below). It was consistent with the other representations made to the Claimants by AA Developments and continued at the date of the Heads of Terms being adopted and confirmed by AA Developments in each subsequent iteration of the Business Plan. 4.7. The Business Plan was prepared, contributed to and accepted by the Claimants and Motoriety in specific and intended reliance upon the Immediate Access Representation and the Honesty Representation. 5. THE HEADS OF TERMS 5.1. The Agreement On or about 19 May 2015, pursuant to the discussions between the Claimants/Motoriety and AA Developments and the other events referred to above, Heads of Terms were concluded between (1) Motoriety and (2) the AA ("the Heads of Terms"). The Heads of Terms took the form of a letter dated 18 May 2015 addressed to the directors of Motoriety, signed on behalf of AA Developments by Rob Scott and signed by Ms. Burnford confirming Motoriety's agreement. 6. RELEVANT EVENTS BETWEEN THE HEADS OF TERMS AND THE AGREEMENTS 6.1. Further Discussions 6.1.1. Following conclusion of the Heads of Terms on 18/19 May 2015 and pursuant to its terms, discussions continued between AA Developments and the Claimants/Motoriety for the purpose of concluding the envisaged formal Agreements. In relation to these discussions, the parties were represented as set out in paragraph 1.5 above. 6.1.2. These discussions were in substance a continuation of the discussions referred to in paragraph 2 above which had continued between February and 18 May 2015 and involved AA Developments on numerous occasions confirming the Immediate Access Representation and associated implied representations with the intention that the Claimants and Motoriety would rely upon them in concluding the intended Agreements. [ … ] 6.3. Further Drafts of the Business Plan During the same period, between May and August 2015, at no time did AA Developments seek to correct the Business Plan Representations, the Honesty Representation or the Customer Forecast. As far as the Claimants and Motoriety are concerned, the Business Plan was prepared in good faith and on the basis of the Immediate Access Representation and the Honesty Representation. By 28 August 2015, the parties had produced a final agreed form of the Business Plan to be included as part of the Investment Agreement. 6.4. Failure to Correct Representations Throughout the period from 11 May to 28 August 2015, AA Developments failed to correct or revise the Immediate Access Representation, the Honesty Representation, the Business Plan Representations or the Customer Forecast. On the contrary, these were either expressly or impliedly confirmed, repeated and adopted during all of the parties' discussions. 7. THE INVESTMENT AGREEMENT 7.1. The Agreement 7.1.1. Pursuant to the discussions referred to above, the Heads of Terms and having agreed a final version of the Business Plan, an agreement was concluded on 28 August 2015 between (1) Ms. Burnford and Mr. Astley as the Managers (2) Mr. Fitzpatrick, Mr. Symons, Mr. Gaskell, Mr. Ramsden, Mr. Vohra, Mr. Knox and Mr. Nash (as Shareholders), (3) Motoriety and (4) AA Developments providing for the basis upon which the AA would be allowed to invest in Motoriety ('the Investment Agreement'). 7.1.2. The Investment Agreement was written and included a number of agreed and attached Schedules (described on page 2 of the Agreement as 'agreed form documents') which included the Business Plan (in its final agreed form) and the proposed Licence Agreement. It will be referred to hereinafter as 'the Investment Agreement' and the Claimants will rely upon it as necessary for its full meaning, terms and effect. [ … ] 7.5. Services Representation 7.5.1. The Claimants concluded the Investment Agreement in reliance upon an express or implied representation by AA Developments that it would provide to Motoriety the agreed services referred to in the Licence Agreement, which was also attached to the Investment Agreement and which services had (as above) already been referred to in the Heads of Terms ('the Services Representation'). 7.6. Reliance Upon Representations The Claimants and Motoriety concluded the Investment Agreement in intended and specific reliance on the Immediate Access Representation, the Honesty Representation, the Business Plan Representations and the Services Representation. 8. THE LICENCE AGREEMENT 8.1. The Agreement Also on 28 August 2015, the same date as the Investment Agreement, a licence agreement was signed by (1) Motoriety and (2) AA Developments pursuant to which Motoriety granted to AA Developments a licence to use software applications and IP rights relating to the Hub ('the Licence Agreement'). The Licence Agreement was written and reflected the draft version which was appended as an agreed form document to the Investment Agreement. The Claimants will rely upon the Licence Agreement as necessary for its full meaning, terms and effect. [ … ] 8.2.3. Schedule 1 to the Licence Agreement (referred to in Clause 9.1 as set out above) was similar to the annexure to Heads of Terms referred to above and provided expressly inter alia that AA Developments had responsibility for 'the marketing of the website to AA members and customers …'. 8.2.4. In the premises, as provided for in the Heads of Terms and intended by both parties throughout the discussions, AA Developments was responsible for the marketing to its own members and customers and information provided by AA Developments was to be accurate in all respects. This reflected the representations made by AA Developments prior to the Licence Agreement, and reflected the subject matter of the Investment Agreement including the Business Plan. [ … ] 8.4. Reliance Upon Representations The Claimants and Motoriety concluded the Licence Agreement in intended and specific reliance on the Immediate Access Representation, the Honesty Representation, the Business Plan Representations and the Services Representation. [ … ] 16. LOSS, DAMAGE AND REMEDY 16.1. Misrepresentation/Deceit 16.1.1. But for the misrepresentations referred to above, the Claimants would not have entered into the Investment Agreement (and Motoriety would not have entered into the Heads of Terms or the Licence Agreement) but would have concluded the envisaged venture with Solera on the terms of Solera's proposal on 11 May 2015 or substantially similar terms. As a result of entering into the Investment Agreement, the Claimants have suffered loss and damage. 16.1.2. Solera is a renowned global automotive data and software company and an expert in digital services. Through its HPI brand, Solera had a database of about 1 million customers and the proposed customer acquisition for Motoriety would have been to this customer base and also through pay-per-click marketing and third party partnerships. Solera also offered considerable operational costs savings and the potential to become part of its SAAS offering to garages and dealerships in the UK. The proposed venture involving Solera was in some respects similar to that with AA Developments and, under the Solera venture, Motoriety's product would have retained its two key elements of (1) digital car ownership portal for drivers/consumers and (2) an online garage network/ portal. 16.1.3. In relation to the claim for deceit, the Claimants' case is that, but for the wrongdoing of AA Developments, the Claimants and Motoriety would have proceeded to conclude with Solera the transaction substantially agreed by 11 May 2015 (or very similar terms). In this context, Solera had already provided two term sheets in April and May 2015. Solera's proposal was in direct competition to that of AA Developments and was in any event preferred by some of the Motoriety Board, including Chairman Mr. Gaskell. Further, when Motoriety went into administration in 2017, Solera expressed continuing interest in the business. Subsequently, in 2019, Solera launched its own equivalent of Motoriety known as 'My HPI'. 16.1.4. Solera was and remains a very substantial world market leader in its field with a longstanding and proven strategy of acquisition and innovation. Under the proposed venture with Solera: (1) Motoriety's business would have involved two core products namely a car ownership hub and an online garage booking platform (essentially the same as the Automyze and Garage Guide services under the venture with AA Developments). (2) Motoriety would have benefitted from significant reduction in headcount/costs relating to building its garage network as Solera had a team in place already and an existing garage network which covered 90% of UK garages (building the garage network was a considerable cost to Motoriety under the venture with AA Developments). (3) The launch of Motoriety's garage subscription product or its integration with one of Solera's existing garage products to enhance both would have materially accelerated the development of Motoriety's business. (4) There would have been no or very little delay in launch to consumers because inter alia rebranding was not required, access to Solera/HPI's database would have been immediate and Google pay-per-click marketing would have continued. 16.1.5. The value of the Claimants' shareholdings in Motoriety will be the subject of expert evidence as necessary and pursuant to the Court's Directions. Without prejudice to this, the adjusted EBITDA for Motoriety for the relevant period is likely to have been in the region of at least £5.45 million and the appropriate multiple range is at least 7.5 to 9.7 producing an approximate enterprise value for Motoriety at the relevant time of between £40.7 and £53 million and an approximate equity value of between £46.9 and £59.2 million. 16.1.6. In the premises, the value of each Claimant's shareholding, reflecting the multiple range referred to above, is as more particularly set out in Table 1 of Schedule 1A hereto. 16.1.6A. Further or alternatively, Mr Fizpatrick, Mr Symons and Mr Gaskell were unable to recover their investments in Motoriety. Had it not been for AA Developments' misrepresentations, they would have been able to do so. The quantum of such loss is particularised in Table 2 of Schedule 1A hereto. 16.2. Breach of Contract 16.2.1. In relation to the claim for breach of contract, the Claimants are entitled to damages on the basis that the venture would have proceeded in accordance with the intended and agreed terms of the Investment Agreement and Licence Agreement and more particularly the Business Plan, which would have resulted in Motoriety: (1) obtaining immediate access to the AA customer base in the volume and on the basis agreed in the Business Plan, (2) meeting or exceeding forecasts as set out in the agreed Business Plan, (3) becoming cash flow positive by Year 2 at the latest and (4) surpassing the EBITDA threshold of £1.3m at the latest by Year 3 (enabling exercise of the call option). 16.2.2. Further, the agreed performance would have expedited the launch of complementary products and revenue lines, enabled further related business opportunities, allowed for a more streamlined and cost efficient operation ensuring that the earnout period would have exceeded that of the agreed forecast. 16.2.3. In this context, Motoriety's actual performance from May 2017 onwards – after the AA had acquired full ownership and control of the business following the pre-pack administration – itself demonstrates that the business was viable and successful in the absence of the delays, interference and failures resulting from the breaches of contract by AA Developments as more particularly set out above. 16.2.4. Furthermore, Motoriety would not have needed to take up the marketing facility loan at such an early stage and would not have faced any financial distress. 16.2.5. The value of the Claimants' shareholdings in Motoriety will be the subject of expert evidence as necessary and pursuant to the Court's Directions. Without prejudice to this, the adjusted EBITDA for Motoriety for the relevant period is likely to have been at least in the region of £4 million 5 million for the year ended 31 August 2018 and 14 million for the year ended 31 August 2021, the future maintainable earnings are likely to have been around £9 million and the appropriate multiple range is 7.0x and 10.6x 6 x 50% of the mean average EBITDA producing an approximate enterprise value for Motoriety between £67 million and £100 million and an approximate equity value between £98 million and £132 million of around £31.5 million . 16.2.6. In the premises, the value each Claimant's shareholding, reflecting the multiple range referred to above, is as more particularly set out in Schedule 1B Table 1 of Schedule 1B hereto. 16.2.6A Alternatively, had it not been for AA Developments' breach of contract, it would have exercised the call option under clause 12 of the Investment Agreement and paid the Claimants the Initial Option Payment and the Earn-out Consideration as defined therein. Due to AA Developments' breach of contract, the Claimants suffered loss consisting of the Initial Option Payment and the Earn-Out Consideration (alternatively, they lost the chance to earn these amounts). Pending expert evidence, the quantum of such loss is particularised in Table 2 of Schedule 1B hereto ."

"(2) The court may strike out a statement of case if it appears to the court— (a) that the statement of case discloses no reasonable grounds for bringing or defending the claim; (b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; or (c) that there has been a failure to comply with a rule, practice direction or court order."

"1.4 The following are examples of cases where the court may conclude that particulars of claim (whether contained in a claim form or filed separately) fall within rule 3.4(2)(a): (1) those which set out no facts indicating what the claim is about, for example 'Money owed £5,000', (2) those which are incoherent and make no sense, (3) those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable claim against the defendant. 1.5 A claim may fall within rule 3.4(2)(b) where it is vexatious, scurrilous or obviously ill-founded."

"The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if— (a) it considers that— (i) that claimant has no real prospect of succeeding on the claim or issue; or (ii) that defendant has no real prospect of successfully defending the claim or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial."

"20. The Appellant's application before the judge sought an order pursuant to r.3.4(2)(a) that the particulars of claim disclosed 'no reasonable grounds' for bringing the claim and should be struck out and, in the alternative, a claim for summary judgment pursuant to r.24.2(a)(i) that the Respondent had no real prospect of succeeding on the claim. There can sometimes be procedural consequences if applications are made under the 'wrong' rule (which do not arise here) but, in a case like this (where the striking-out is based on the nature of the pleading, not a failure to comply with an order), there is no difference between the tests to be applied by the court under the two rules. 21. Accordingly, I do not agree with the judge's observation at [4] that somehow the test under r.24.2 is 'less onerous from a defendant's perspective'. In a case of this kind, the rules should be taken together, and a common test applied. If a defendant is entitled to summary judgment because the claimant has no realistic prospect of success, then the statement of claim discloses no reasonable grounds for bringing the claim and should be struck out: see Global Asset Capital Inc v Aabar Block SARL [2017] EWCA Civ 37 ; [2017] 4 WLR 16 at [27]. 22. As to the applicable test itself: (a) The court must consider whether the claimant has a "realistic" as opposed to a 'fanciful' prospect of success: Swain v Hillman [2001] 1 All ER 91 . A realistic claim is one that carries some degree of conviction: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 . But that should not be carried too far: in essence, the court is determining whether or not the claim is 'bound to fail'": Altimo Holdings v Kyrgyz Mobil Tel Ltd [2012] 1WLR 1804 at [80] and [82]. (b) The court must not conduct a mini-trial: Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 , in particular paragraph 95. Although the court should not automatically accept what the claimant says at face value, it will ordinarily do so unless its factual assertions are demonstrably unsupportable: ED & F Man Liquid Products v Patel; Okpabi and others v Royal Dutch Shell Plc and another [2021] UKSC 3 , at paragraph 110. The court should also allow for the possibility that further facts may emerge on discovery or at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 ; Sutradhar v Natural Environmental Research Council [2006] 4 All ER 490 at [6]; and Okpabi at paragraphs 127-128. 23. The other principle relevant to the present appeal is that it is not generally appropriate to strike out a claim on assumed facts in an area of developing jurisprudence. Decisions as to novel points of law should be based on actual findings of fact: see Farah v British Airways (The Times 26 January 2000, CA). In that case, the Court of Appeal referred back to the decision of the House of Lords in Barrett v Enfield DC [2001] 2 AC 550 where Lord Browne-Wilkinson said at 557e-g: 'In my speech in the Bedfordshire case [1995] 2 AC 633 , 740 – 741 with which the other members of House agreed, I pointed out that unless it was possible to give a certain answer to the question whether the plaintiff's claim would succeed, the case was inappropriate for striking out. I further said that in an area of the law which was uncertain and developing (such as the circumstances in which a person can be held liable in negligence for the exercise of a statutory duty or power) it is not normally appropriate to strike out. In my judgment it is of great importance that such developments should be on the basis of actual facts found at trial not on hypothetical facts assumed (possibly wrongly) to be true for the purposes of the strike out'. I note that the judge cited this passage and relied on it at [64]. 24. The same point arose more recently in Vedanta Resources PLC & Another v Lungowe & Others [2019] UKSC 20 . That was a case where the underlying duty of care was alleged against a parent company, rather than the company involved in the day–to–day running of the mine said to have caused the pollution. Lord Briggs said: '48. It might be thought that an assertion that the claim against Vedanta raised a novel and controversial issue in the common law of negligence made it inherently unsuitable for summary determination. It is well settled that difficult issues of law of that kind are best resolved once all the facts have been ascertained at a trial, rather than upon the necessarily abbreviated and hypothetical basis of pleadings or assumed facts'."

"The Victoria Park Company is an incorporated body, and the conduct with which the Defendants are charged in this suit is an injury not to the Plaintiffs exclusively; it is an injury to the whole corporation by individuals whom the corporation entrusted with powers to be exercised only for the good of the corporation. … And … it may be stated as undoubted law that a bill or information by a corporation will lie to be relieved in respect of injuries which the corporation has suffered at the hands of persons standing in the situation of the directors upon this record. … It was not, nor could it successfully be, argued that it was a matter of course for any individual members of a corporation thus to assume to themselves the right of suing in the name of the corporation, In law the corporation and the aggregate members of the corporation are not the same thing for purposes like this; and the only question can be whether the facts alleged in this case justify a departure from the rule which, prima facie, would require that the corporation should sue in its own name and in its corporate character, or in the name of someone whom the law has appointed to be its representative."

"It is also correct that if directors convene a meeting on the basis of a fraudulent circular, a shareholder will have a right of action to recover any loss which he has been personally caused in consequence of the fraudulent circular; this might include the expense of attending the meeting. But what he cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a 'loss' is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only 'loss' is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3 per cent. shareholding. The plaintiff's shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company. A simple illustration will prove the logic of this approach. Suppose that the sole asset of a company is a cash box containing £100,000. The company has an issued share capital of 100 shares, of which 99 are held by the plaintiff. The plaintiff holds the key of the cash box. The defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key. The defendant then robs the company of all its money. The effect of the fraud and the subsequent robbery, assuming that the defendant successfully flees with his plunder, is (i) to denude the company of all its assets; and (ii) to reduce the sale value of the plaintiff's shares from a figure approaching £100,000 to nil. There are two wrongs, the deceit practised on the plaintiff and the robbery of the company. But the deceit on the plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company. The deceit was merely a step in the robbery. The plaintiff obviously cannot recover personally some £100,000 damages in addition to the £100,000 damages recoverable by the company. Counsel for the plaintiffs sought to answer this objection by agreeing that there cannot be double recovery from the defendants, but suggesting that the personal action will lie if the company's remedy is for some reason not pursued. But how can the failure of the company to pursue its remedy against the robber entitle the shareholder to recover for himself? What happens if the robbery takes place in year 1, the shareholder sues in year 2, and the company makes up its mind in year 3 to pursue its remedy? Is the shareholder's action stayed, if still on foot? Supposing judgment has already been recovered by the shareholder and satisfied, what then? [ … ] The plaintiffs in this action were never concerned to recover in the personal action. The plaintiffs were only interested in the personal action as a means of circumventing the rule in Foss v. Harbottle. The plaintiffs succeeded. A personal action would subvert the rule in Foss v. Harbottle and that rule is not merely a tiresome procedural obstacle placed in the path of a shareholder by a legalistic judiciary. The rule is the consequence of the fact that a corporation is a separate legal entity. Other consequences are limited liability and limited rights. The company is liable for its contracts and torts; the shareholder has no such liability. The company acquires causes of action for breaches of contract and for torts which damage the company. No cause of action vests in the shareholder. When the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and that he can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meeting."

"These authorities support the following propositions: 1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company's assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss. … 2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. … 3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. … These principles do not resolve the crucial decision which a court must make on a strike-out application, whether on the facts pleaded a shareholder's claim is sustainable in principle, nor the decision which the trial court must make, whether on the facts proved the shareholder's claim should be upheld. On the one hand the court must respect the principle of company autonomy, ensure that the company's creditors are not prejudiced by the action of individual shareholders and ensure that a party does not recover compensation for a loss which another party has suffered. On the other, the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation. The problem can be resolved only by close scrutiny of the pleadings at the strike-out stage and all the proven facts at the trial stage: the object is to ascertain whether the loss claimed appears to be or is one which would be made good if the company had enforced its full rights against the party responsible, and whether (to use the language of Prudential at page 223) the loss claimed is 'merely a reflection of the loss suffered by the company.' In some cases the answer will be clear, as where the shareholder claims the loss of dividend or a diminution in the value of a shareholding attributable solely to depletion of the company's assets, or a loss unrelated to the business of the company. In other cases, inevitably, a finer judgment will be called for. At the strike-out stage any reasonable doubt must be resolved in favour of the claimant."

"79. Summarising the discussion to this point, it is necessary to distinguish between (1) cases where claims are brought by a shareholder in respect of loss which he has suffered in that capacity, in the form of a diminution in share value or in distributions, which is the consequence of loss sustained by the company, in respect of which the company has a cause of action against the same wrongdoer, and (2) cases where claims are brought, whether by a shareholder or by anyone else, in respect of loss which does not fall within that description, but where the company has a right of action in respect of substantially the same loss. 80. In cases of the first kind, the shareholder cannot bring proceedings in respect of the company's loss, since he has no legal or equitable interest in the company's assets: Macaura and Short v Treasury Comrs . It is only the company which has a cause of action in respect of its loss: Foss v Harbottle . However, depending on the circumstances, it is possible that the company's loss may result (or, at least, may be claimed to result) in a fall in the value of its shares. Its shareholders may therefore claim to have suffered a loss as a consequence of the company's loss. Depending on the circumstances, the company's recovery of its loss may have the effect of restoring the value of the shares. In such circumstances, the only remedy which the law requires to provide, in order to achieve its remedial objectives of compensating both the company and its shareholders, is an award of damages to the company. 81. There may, however, be circumstances where the company's right of action is not sufficient to ensure that the value of the shares is fully replenished. One example is where the market's valuation of the shares is not a simple reflection of the company's net assets, as discussed at para 32 above. Another is where the company fails to pursue a right of action which, in the opinion of a shareholder, ought to have been pursued, or compromises its claim for an amount which, in the opinion of a shareholder, is less than its full value. But the effect of the rule in Foss v Harbottle is that the shareholder has entrusted the management of the company's right of action to its decision-making organs, including, ultimately, the majority of members voting in general meeting. If such a decision is taken otherwise than in the proper exercise of the relevant powers, then the law provides the shareholder with a number of remedies, including a derivative action, and equitable relief from unfairly prejudicial conduct. 82. As explained at paras 34–37 above, the company's control over its own cause of action would be compromised, and the rule in Foss v Harbottle could be circumvented, if the shareholder could bring a personal action for a fall in share value consequent on the company's loss, where the company had a concurrent right of action in respect of its loss. The same arguments apply to distributions which a shareholder might have received from the company if it had not sustained the loss (such as the pension contributions in Johnson ). 83. The critical point is that the shareholder has not suffered a loss which is regarded by the law as being separate and distinct from the company's loss, and therefore has no claim to recover it. As a shareholder (and unlike a creditor or an employee), he does, however, have a variety of other rights which may be relevant in a context of this kind, including the right to bring a derivative claim to enforce the company's rights if the relevant conditions are met, and the right to seek relief in respect of unfairly prejudicial conduct of the company's affairs. 84. The position is different in cases of the second kind. One can take as an example cases where claims are brought in respect of loss suffered in the capacity of a creditor of the company. The arguments which arise in the case of a shareholder have no application. There is no analogous relationship between a creditor and the company. There is no correlation between the value of the company's assets or profits and the 'value' of the creditor's debt, analogous to the relationship on which a shareholder bases his claim for a fall in share value. The inverted commas around the word 'value', when applied to a debt, reflect the fact that it is a different kind of entity from a share. 85. Where a company suffers a loss, it is possible that its shareholders may also suffer a consequential loss in respect of the value of their shares, but its creditors will not suffer any loss so long as the company remains solvent. Even where a loss causes the company to become insolvent, or occurs while it is insolvent, its shareholders and its creditors are not affected in the same way, either temporally or causally. In an insolvency, the shareholders will recover only a pro rata share of the company's surplus assets, if any. The value of their shares will reflect the value of that interest. The extent to which the company's loss may affect a creditor's recovery of his debt, on the other hand, will depend not only on the company's assets but also on the value of any security possessed by the creditor, on the rules governing the priority of debts, and on the manner in which the liquidation is conducted (for example, whether proceedings are brought by the liquidator against persons from whom funds might be ingathered, and whether such proceedings are successful). Most importantly, even where the company's loss results in the creditor also suffering a loss, he does not suffer the loss in the capacity of a shareholder, and his pursuit of a claim in respect of that loss cannot therefore give rise to any conflict with the rule in Foss v Harbottle . 86. The potential concern that arises in relation to claims brought by creditors is not, therefore, the rule in Foss v Harbottle . On the other hand, the principle that double recovery should be avoided may be relevant, although it is not necessarily engaged merely because the company and the creditor have concurrent claims against the same defendant. In International Leisure Ltd v First National Trustee Co UK Ltd [2013] Ch 346 , for example, the principle was not engaged where the company and a secured creditor had concurrent claims against an administrative receiver whom the creditor had appointed, since the company could only claim in respect of any loss remaining after the secured creditor had been paid in full. 87. Where the risk of double recovery arises, how it should be avoided will depend on the circumstances. It should be borne in mind that the avoidance of double recovery does not entail that the company's claim must be given priority. Nor, contrary to the view expressed in a number of authorities, including the decision of the Court of Appeal in the present case, does the pari passu principle entail that the company's claim must be given priority. That principle requires that, in a winding up, a company's assets must be distributed rateably among its ordinary creditors. The proceeds of its recovery from a wrongdoer will form part of its assets available for distribution (subject to the claims of secured and preferred creditors). But the pari passu principle does not give the company, or its liquidator, a preferential claim on the assets of the wrongdoer, over the claim of any other person with rights against the wrongdoer, even if that claimant is also a creditor of the company. In other words, the pari passu principle may restrict a creditor of an insolvent company to the receipt of a dividend on the amount which the company owes him, but it does not prevent him from enforcing his own right to recover damages from a third party, or confer on the company's right against the third party an automatic priority. In the event that the third party cannot satisfy all the claims made against him, the position will be regulated by the law of (his) insolvency. 88. It is also necessary to consider whether double recovery may properly be avoided by other means than the prioritising of one claim over the other, such as those mentioned in paras 5–7 above. The judgments of Gibbs CJ and Brennan J in Gould v Vaggelas 157 CLR 215, at pp 229 and 258–259 respectively, raise the possibility that subrogation, in particular, may provide a solution to issues of double recovery arising in connection with creditors' claims. That question has not, however, been discussed in the present proceedings, and I express no view upon it. 89. I would therefore reaffirm the approach adopted in Prudential [1982] Ch 204 and by Lord Bingham in Johnson [2002] 2 AC 1 , and depart from the reasoning in the other speeches in that case, and in later authorities, so far as it is inconsistent with the foregoing. It follows that Giles v Rhind [2003] Ch 618 , Perry v Day [2005] 2 BCLC 405 and Gardner v Parker [2004] 2 BCLC 554 were wrongly decided. The rule in Prudential is limited to claims by shareholders that, as a result of actionable loss suffered by their company, the value of their shares, or of the distributions they receive as shareholders, has been diminished. Other claims, whether by shareholders or anyone else, should be dealt with in the ordinary way."

"99. The Court's reasoning [in the Prudential case] on p 223, which Lord Reed has quoted at paras 27 and 29 above, has been criticised because the stark assertion, that the shareholder 'does not suffer any personal loss' by the diminution in the value of its shares or of the distributions which it received, cannot be taken at face value - clearly the shareholder suffers economic loss - and because the example of a non-trading company whose only asset was a cash box containing £100,000 is an oversimplification. But the reasoning is nonetheless clear where the Court asserts (a) that the deceit on the shareholder causes the shareholder 'no loss which is separate and distinct from the loss to the company' (p 223), (b) that 'when the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and that he can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meeting' (p 224), and (c) that '[a] personal action would subvert the rule in Foss v Harbottle' , a rule which 'operates fairly by preserving the rights of the majority' (p 224). I agree with Lord Reed (para 28 above) that what the Court was saying is that where a company suffers a loss as a result of wrongdoing and that loss is reflected to some extent in a fall in the value of its shares or in its distributions, the fall in the share value or in the distributions is not a loss which the law recognises as being separate and distinct from the loss sustained by the company. 100. That is the full extent of the 'principle' of reflective loss which the Prudential case established. It was not articulated as a general principle to be applied in other contexts; it is a rule of company law arising from the nature of the shareholder's investment and participation in a limited company and excludes a shareholder's claim made in its capacity as shareholder."

"48. The difference between the parties lies in the question of how that rule is applied in the present case. Shortly put, Pinsent Masons' submission is that the loss and damage pleaded by Naibu Jersey turns almost entirely upon the loss suffered by Naibu HK, since the alleged loss consists of a fall in the value of the shares in Naibu HK (to nil) and a consequent diminution (to nil) of the value of Naibu Jersey's investment in Naibu HK. That is, Mr Smith says, a paradigm example of a situation in which the rule against reflective loss will be engaged, as confirmed by the Supreme Court in Marex . Mr Smith accepts, however, that this does not encompass the separate losses that are now pleaded in the revised amended Particulars of Claim in respect of the costs of steps taken by Naibu Jersey to assert control over and investigate losses suffered by Naibu HK and Naibu China. 49. Mr Davidson, in response, acknowledges that the claim as originally pleaded did not distinguish between the losses of Naibu HK and Naibu Jersey, pleading a loss to Naibu HK of RMB 1,649,326,000, "being the value of its shares in Naibu China", and a loss to Naibu Jersey of an identical amount, "being the value of its shares in Naibu HK"

"There is no question of the principles of natural justice having been breached or of there being any procedural unfairness. It cannot be said that the integrity of the litigation process had been fatally undermined, so that an essential precondition for a successful application under CPR 52.30 cannot be satisfied in this case and, on that ground alone, this application must fail ." (Emphasis supplied.)

"44. Mr Davies QC's second point was that the problem which Nectrus' argument faces is that, from the express terms of the judgments in the Supreme Court, it is clear that the rule does not apply to a claim by an ex-shareholder. Despite Mr Butler QC's valiant attempt to argue the contrary, that is clearly correct. The passages in the judgments of Lord Reed at [9] and [89] and Lord Hodge at [100] which I underlined in [9] to [11] above make it clear that the general rule as to recoverability of loss is subject to the highly specific exception of the case which falls within the narrow principle of Prudential . As the last sentence of [89] makes clear, all other claims (which must include claims by an ex-shareholder) are to be dealt with in the ordinary way, in other words the rule against reflective loss does not apply to such claims. It is quite clear, from all the judgments, that the Supreme Court was intent on limiting the scope of the rule against reflective loss to the narrow principle or rule in Prudential. There is simply no warrant for extending the rule in the way for which Nectrus contends."

"50. … As Mr Davies QC correctly submitted, the rule in Foss v Harbottle manifestly does not apply to an ex-shareholder, so there is no reason for the rule against reflective loss to apply. Although Mr Butler QC sought to argue that, because UCP had voluntarily given up its rights as a shareholder, so that the rule should still apply, I agree that there is nothing in that point. As Mr Davies QC said, why should UCP be penalised for selling its shares at a discount, a fortiori where that crystallised the loss it had suffered as a consequence of Nectrus' breach of contract. Once UCP had sold its shares, in my judgment there was no unity of economic interest between UCP and Candor and the claim was not made in the capacity of a shareholder."

"55. In my judgment, despite the eloquence and ingenuity of Mr Butler QC's submissions, the contention that the Supreme Court has left open the possibility that the rule against reflective loss is applicable to an ex-shareholder in the position of UCP is unarguable."

"57. Even if Nectrus had been able to overcome the high hurdles imposed by CPR 52.30, there remains the delay in the making of this application. … The delay in making the application is inimical to the public interest in finality. This would be a factor weighing heavily against allowing the application, even if it otherwise had any merit, which it does not."

"58. For all these reasons, this application under CPR 52.30 is dismissed."

"94. … Normally, remarks made when refusing (or granting) permission to appeal are of no weight because a variety of matters are relevant to such decisions. However, I have been informed that Flaux LJ's intention was that his ruling may be cited and so counsel was entitled to refer to it. [ … ] 97. Counsel for the Claimants said that Nectrus v UCP was distinguishable because it did not involve a distribution by Candor but a reduced payment by a third party for the shares in Candor. That is of course a distinction on the facts (and may have been the factual circumstances which Lord Sales [in Marex ] had in mind). But if Flaux LJ is right that the applicability of the rule in Prudential is to be determined at the time the claim is made and that a claim made by an ex-shareholder is not made in his capacity as a shareholder then the factual distinction would not appear to be a material distinction. However, Flaux LJ was not dealing with the circumstances of the present case and his decision does not have the authority of a decision by the Court of Appeal determining an appeal which has been fully argued. It was not, I think, said to be binding on me. Nevertheless, it does provide support for the Defendants' argument. Counsel for the Claimants was bold enough to say that Flaux LJ was wrong. I do not think it would be appropriate for me, a first instance judge, to enter into that debate, even if his remarks are not binding upon me. I do not have to consider the facts of Nectrus v UCP ."

"99. In deciding which argument to prefer I think that I must have regard to the justification for the rule in Prudential . Lord Reed referred to that at paragraphs 37 and 38 of his judgment. The rule avoids subverting the rule in Foss v Harbottle pursuant to which the only person who can seek relief for an injury done to a company, where the company has a cause of action, is the company itself; see paragraph 10. Subversion of that rule would make it difficult for the company to deal with a claim in the best interests of the company. Respect for the rule would prevent shareholders acting contrary to the interests of the company. There is no justification for concurrent claims because of the unity of economic interests which bind the shareholder and the company. Concurrent claims would also give rise to the need to avoid double recovery. 100. The context of the present case is one in which the company has (it is assumed) passed on its loss to the shareholder who has redeemed or withdrawn his investment. The context is therefore not one in which the company would be expected to be dealing with a claim for compensation in respect of that particular loss (although the company of course retains the right of action to sue in respect of damage caused to the remaining property of the company and for the benefit of existing shareholders). In such context the stated justification for the rule in Prudential has little, if any, traction. There is no risk of the rule in Foss v Harbottle being subverted, there will be no concurrent claims and there will be no risk of double recovery. 101. I have therefore concluded that in the context of the present case, which concerns loss being passed on or transferred by the company, there is no justification for applying the rule in Prudential. That rule does not, in my judgment, bar claims by former shareholders against third parties for damages in respect of the losses transferred or passed on to them by the company. 102. For these reasons the allegation of pass-on cannot be shown to be impossible or bound in law to fail on account of the company point."

"For the present hearing, the parties are agreed that Cayman Islands law regarding the reflective loss rule is the same as English law, which is to say the law as determined by the majority in Marex Financial Ltd v Sevilleja (All Party Parliamentary Group on Fair Business Banking intervening) [2020] UKSC 31 ; [2021] AC 39 (' Marex ')."

"What is the relevant time to determine whether the reflective loss rule applies? Is it the time when the relevant claimant (here, Primeo) issued proceedings against, in particular, R2 - ie 2013, by which time Primeo was a shareholder in Herald, which had its own similar claims against R2 and Primeo's loss could be said to reflect Herald's loss in the limited sense referred to above - or is it the time when Primeo acquired its causes of action against R1 and R2, when it acted on its own behalf and was not a shareholder in any relevant sense in Herald? ('the timing issue')."

"54. … On misappropriation of the money by BLMIS, Primeo suffered an immediate loss measured by the value of the money misappropriated, less any money actually recovered (see the judgment of the Court of Appeal, para 217). That loss was suffered by Primeo in its personal capacity and had nothing to do with Herald. It was not loss suffered by Primeo in its capacity as a shareholder in Herald, nor could it be said that it was "merely the result of a loss suffered by [Herald]" ( Marex , para 39 per Lord Reed), that is as a knock-on consequence of a wrong suffered by the company itself."

"55. It is important to note that the reflective loss rule is, as was made clear in the majority judgments in Marex , a rule of substantive law associated with the rule in Foss v Harbottle and concerned with the recognition in law of particular types of loss. It is not a procedural rule concerned only with the avoidance of double recovery. Applied as a substantive rule of law, whether the reflective loss rule is applicable or not falls to be assessed as at the point in time when the claimant suffers loss arising from some relevant breach of obligation by the relevant wrongdoer. In this case, on each occasion when Primeo suffered loss on placing funds with BLMIS for investment it did so in circumstances where the law recognises its loss as real and of a type which is recoverable. In principle, on each occasion Primeo invested by paying money to BLMIS and had its money misappropriated as set out above, Primeo could have sued R1 and R2 in respect of their breaches of duty which caused such loss, which was of a form recognised in law according to ordinary principles and did not arise in circumstances which brought the exclusionary reflective loss rule into operation. 56. As Mr Smith submitted, according to the analysis of the majority in Marex the focus is on the nature of the loss, which involves consideration of the capacity in which the claimant suffered the loss and the form of the loss (ie whether it was suffered as a diminution in the value of shares held by the claimant or as a reduction in the dividends payable to them). The issue is one of the characterisation of the loss, which depends upon its status (that is, whether it is recognised or not by the law) at the time it is suffered. The test of whether the substantive rule is engaged or not in relation to a cause of action which arises as property in the hands of a person is to look at the nature of the loss at that time: see Marex , paras 79 and 89 per Lord Reed. 57. The same point can also be made in another way. On each occasion when Primeo made a direct investment in BLMIS it suffered loss at a time when it was not subject to any agreement to 'follow the fortunes' of any company (let alone Herald) arising from membership of the company, which is the foundation and justification for the reflective loss rule: see para 52 above. So there is no sound reason to apply the reflective loss rule to preclude Primeo from being recognised in law as being able, in principle, to make recovery in respect of such loss pursuant to usual general legal principles."

"61 … Flaux LJ held that the possibility that the rule was applicable to an ex-shareholder in the position of UCP was unarguable; and the applicability of the rule should be assessed when the claim is made, at a time when the loss claimed has crystallised. But in the Board's view, that case is wrongly decided. Indeed, it serves to illustrate the very odd results to which Mr Gillis's submission would lead. A shareholder which suffers a loss in the form of a diminution in value of its shareholding which is not recoverable as a result of the application of the reflective loss rule cannot later convert that loss into one which is recoverable simply by selling its shareholding. It is necessary to focus on the nature of the loss in respect of which the shareholder's claim is made. It is not enough to consider the position as at the date of the issue of proceedings without regard to the nature of the loss and a consideration of whether it is, in the eyes of the law, separate and distinct from that of the company."

"63. Overall, to test the application of the reflective loss rule at the time when proceedings are brought rather than when the loss is suffered would have the effect of making the wrongdoer very wary of settling with the company, if the practical outcome of doing so is made uncertain and precarious by the future conduct of the company and shareholder and the vagaries of procedural law. That would undermine the intended effect of the rule (reflecting the rule in Foss v Harbottle ), which is to ensure that the company has a full opportunity to decide how to pursue its own cause of action, where properly identified as such, and to obtain as good value from it as is possible. It would also undermine the certainty of effect which the reflective loss rule is intended to achieve, as a bright line rule of law: cf Marex¸ para 38 (Lord Reed)."

"48. It might be thought that an assertion that the claim against Vedanta raised a novel and controversial issue in the common law of negligence made it inherently unsuitable for summary determination. It is well settled that difficult issues of law of that kind are best resolved once all the facts have been ascertained at a trial, rather than upon the necessarily abbreviated and hypothetical basis of pleadings or assumed facts."

"60. This was not a case of the assertion, for the first time, of a novel and controversial new category of case for the recognition of a common law duty of care, and it therefore required no added level of rigorous analysis beyond that appropriate to any summary judgment application in a relatively complex case."

"Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other . … " (Emphasis supplied.)

"5. … High Court Judges are bound by decisions of the Court of Appeal and the Supreme Court … [ … ] 16. There is no doubt that, unless there is a decision of a superior court to the contrary effect, a court in England and Wales can normally be expected to follow a decision of the JCPC, but there is no question of it being bound to do so as a matter of precedent. There is also no doubt that a court should not, at least normally, follow a decision of the JCPC, if it is inconsistent with the decision of a court which is binding in accordance with the principles set out in paras 5, 8 and 9 above. 17. The difficult question is whether this latter rule is absolute, or whether it is subject to the qualification that it can be disapplied where a first instance judge or the Court of Appeal considers that it is a foregone conclusion that the view taken by the JCPC will be accepted by the Court of Appeal or Supreme Court (as the case may be). … I have concluded that it is more satisfactory if, subject to one important qualification which I deal with in paras 19 and 20 below, the rule is absolute - ie that a judge should never follow a decision of the JCPC, if it is inconsistent with the decision of a court which is otherwise binding on him or her in accordance with the principles set out in paras 5, 8 and 9 above."

"94. Counsel for the Defendants pressed upon me the considered and clear remarks of Flaux LJ when refusing permission to appeal in Nectrus v UCP . Normally, remarks made when refusing (or granting) permission to appeal are of no weight because a variety of matters are relevant to such decisions. However, I have been informed that Flaux LJ's intention was that his ruling may be cited and so counsel was entitled to refer to it."

" … it is impossible to treat a proposition which the Court declares to be a distinct and sufficient ground for its decision as a mere dictum, simply because there is also another ground stated upon which, standing alone, the case might have been determined."

"In that case two reasons were given by all the members of the Court of Appeal for their decision and we are not entitled to pick out the first reason as the ratio decidendi and neglect the second, or to pick out the second reason as the ratio decidendi and neglect the first; we must take both as forming the ground of the judgment."

"But, however this may be, there is in my opinion no justification for regarding as obiter dictum a reason given by a judge for his decision, because he has given another reason also. If it were a proper test to ask whether the decision would have been the same apart from the proposition alleged to be obiter, then a case which ex facie decided two things would decide nothing."

"It is well established that if a judge gives two reasons for his decision, both are binding. It is not permissible to pick out one as being supposedly the better reason and ignore the other one; nor does it matter for this purpose which comes first and which comes second. But the practice of making judicial observations obiter is also well established. A judge may often give additional reasons for his decision without wishing to make them part of the ratio decidendi; he may not be sufficiently convinced of their cogency as to want them to have the full authority of precedent, and yet may wish to state them so that those who later may have the duty of investigating the same point will start with some guidance. This is a matter which the judge himself is alone capable of deciding, and any judge who comes after him must ascertain which course has been adopted from the language used and not by consulting his own preference."

"be understood more broadly as indicating that the ratio is (or is regarded by the judge as being) part of the best or preferred justification for the conclusion reached: it is necessary in the sense that the justification for that conclusion would be, if not altogether lacking, then at any rate weaker if a different rule were adopted."

"it seems to me desirable and to accord better with judicial practice to use the term ratio decidendi to refer to a proposition which a lower court is bound to apply."

"100. … There is no risk of the rule in Foss v Harbottle being subverted, there will be no concurrent claims and there will be no risk of double recovery."

"all and any other claims, whether statutory, contractual and at common law which the Claimant has or may have against the Respondents … whether arising out of the Claimant's employment with the Respondents, its termination or otherwise excluding … claims to enforce the terms of the agreement and any High Court claim in relation to the claims specifically referenced in the letter from Stewarts LLP to AA PLC on 27 August 2020 ."

"An order that: (1) the Claim (or parts thereof) be struck out under CPR rule 3.4(2)(a) or (b), alternatively the Claim or (or parts thereof) be dismissed under CPR rule 24.2; and (2) the Claimants pay the Defendant's costs of the application and of the claim because (1) the particulars of claim disclosed no reasonable grounds for bringing or defending the claim, alternatively (2) the particulars of claim are an abuse of the court's process, alternatively (3) the claimants have no real prospect of succeeding on the claim or issue and there is no other compelling reason why the case should be disposed of at trial."