Helen Mary Ross v Andrew John Phillips [2025] EWHC 2058 (Ch)

[2025] EWHC 2058 (Ch)Case No PT 2023 000143IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESPROPERTY, TRUSTS AND PROBATE LISTVenue Royal Courts of Justice, The Rolls Building, Fetter LaneLondonEC4A 1NLDate 1 August 2025
Before
HHJ JOHNS KCSitting as a Judge of the High Court
Between
HELEN MARY ROSSClaimantAndrew John PhillipsDefendantHELEN MARY ROSSon behalf of HRP COMPLETE SOLUTIONS LLPDefendants
MR BARNABY HOPE (instructed by Colman Coyle LLP) for ClaimantMR ANDREW PHILLIPS the First Defendant in person and (with the permission of the court) for Second and Fourth Defendants
Hearing Hearing dates: 5, 6, 9 & 10 June 2025Written submissions: 11 & 13 June 2025This judgment is handed down by email to the parties’ representatives and release to TheNational Archives at 10.30am on 1 August 2025APPROVED JUDGMENT

HHJ JOHNS KC:

[1]This case is about the ownership of three properties in Chatham, Kent: 28 Grange Hill, Chatham, title number K227425 (28 Grange Hill); 130 Castle Road, Chatham, title number K477694 (130 Castle Road); and 44 Albany Road, Chatham, title number K756261 (44 Albany Road), together the Properties.[2]HRP Complete Solutions LLP (the Old LLP) was the beneficial owner of the Properties. But on 31 October 2015 there was a declaration of trust (the Declaration) in favour of HRP Complete Solutions (Kent) LLP (the New LLP). By this derivative claim, brought by Miss Helen Ross on behalf of the Old LLP, it is said that the Old LLP remains the beneficial owner of them despite the Declaration apparently made by the Old LLP.[3]The grounds for saying so are that:(1) In order to be effective, the Declaration required (but did not have) unanimous consent, not being within the ordinary business of the Old LLP and instead representing a change in the business of the Old LLP. That case relies on regulation 7 of the Limited Liability Partnerships Regulations 2001 (the 2001 Regulations);(2) There was, anyway, not even majority consent, as an apparent appointment of a third member of the Old LLP, namely HRP Total Solutions Ltd (the Old Company), was obtained by undue influence and so should be set aside.[4]The response of the First Defendant, Mr Andrew Phillips, on the first ground is that there were partnership agreements between Mr Phillips and Miss Ross which were contrary to the default provisions set out in reg.7 of the 2001 Regulations. And that the Declaration did not anyway change the nature of the Old LLP’s business. On the second ground, Mr Phillips contends that Miss Ross validly consented to the appointment of the Old Company as a member. Mr Phillips also says that the claim is an abuse of process or barred by limitation.[5]The current owners of the legal title to the Properties are the Fourth Defendant Bond 58 Homes Limited (Bond 58) in the case of 44 Albany Road and 130 Castle Road, and Mr Phillips in the case of 28 Grange Hill.[6]The derivative claim is continued against the active defendants (being those other than the Old LLP as nominal Third Defendant) with the permission of Jonathan Hilliard KC (sitting as a Deputy High Court Judge) given on 8 September 2023 and revised on 7 March 2024 so as to substitute Bond 58 for Zoe Phillips as the now Fourth Defendant. A proprietary estoppel claim by Miss Ross against Mr Phillips in respect of a further property, 2 Rose Cottage, Lower Hardres, Kent has been discontinued. And a claim on behalf of the Old LLP against HRP Complete Solutions Kent Ltd (the New Company) has settled.[7]I will set out some background before referring to applications made at trial and the evidence, and then turn to decide the question of ownership of the Properties. Background[8]The Old LLP was established on 5 December 2013. It had two members. Miss Ross and Mr Phillips. The Old Company was incorporated shortly afterwards, on 15 January 2014. It had two directors and two equal shareholders. Miss Ross and Mr Phillips. But there is also an apparent written resolution of the Old Company of that date, 15 January 2014, for 100 shares in the Old Company to be held as follows: 95 by Mr Phillips, 3 by Miss Ross, 1 by Janice Phillips (the mother of Mr Phillips), and 1 by Faye Phillips (his former wife). There is a dispute about that apparent resolution. It bears the signatures of Mr Phillips and Miss Ross though not the other two apparent shareholders. Miss Ross says that she did not knowingly sign such a document.[9]There were a pair of written declarations of trust made on 14 August 2014. One was made by Mr Phillips and Miss Ross together as owners of 74 Gilbey Road; a property they had bought together. They declared that it was held on trust for the Old LLP. The other was made by Mr Phillips as beneficial owner of the Properties; he having owned those before meeting Miss Ross. Again, it was declared that the Properties were held on trust for the Old LLP.[10]There are three documents dated 23 October 2014. Only one is not disputed; the minutes of a meeting of Mr Phillips and Miss Ross as members of the Old LLP recording a decision to contribute the Properties and 74 Gilbey Road to the Old LLP by way of a declaration of trust. This therefore appears to ratify what had been done by way of the two declarations dated 14 August 2014.[11]The other two documents dated 23 October 2014 are disputed. There are minutes of a further meeting of Mr Phillips and Miss Ross as members of the Old LLP which record a decision to appoint the Old Company as a third member of the Old LLP. There are also minutes of a meeting of Mr Phillips and Miss Ross as directors of the Old Company recording a decision for the Old Company to become a member of the Old LLP. Miss Ross says in relation to these documents that there were no such decisions and she did not knowingly sign either of them.[12]The relationship between Mr Phillips and Miss Ross sadly became a difficult one. It is common ground on the statements of case that it ended by separation in around March 2015; Mr Phillips moving out of the family home, 2 Rose Cottage. There were other events significant for this case around that time. It was on 11 February 2015 that forms were submitted to Companies House for updating the register to show the share dilution and the appointment of the Old Company as a member of the Old LLP apparently agreed on 23 October 2014. And the New Company, solely owned by Mr Phillips this time, was incorporated on 19 February 2015. On 16 May 2015, the New LLP was formed. Its members are Mr Phillips and the New Company.[13]It was to the New LLP that beneficial ownership of the Properties was at least purportedly moved. That was by way of the Declaration made on 31 October 2015. It stated it was made by the Old LLP in favour of the New LLP and is signed for the Old LLP by Mr Phillips for himself and as director of the Old Company. The validity of the Declaration is the central issue to be decided in this case.[14]The Declaration also included 74 Gilbey Road, but that property has since been sold and the proceeds shared; with Mr Phillips’s share going to discharge a liability to the Child Maintenance Service.[15]In early November 2015, Miss Ross made a complaint of fraud against Mr Phillips to the police. It is set out in detailed notes made by the police.[16]Both the Old Company and the Old LLP were allowed to die in 2016, being struck off for failures to file accounts.[17]There were proceedings under Schedule 1 of the Children Act 1989 (the 1989 Act). Mr Phillips completed a Form E financial statement as part of those proceedings, seen by Miss Ross in late 2018 or early 2019. He listed 28 Grange Hill as being beneficially owned by the New LLP. And, probably as a result of a typographical error, 130 Castle Road as being beneficially owned by the Old LLP; the word Kent not appearing in the name of the LLP. 44 Albany Road was not listed as an asset.[18]The proceedings were determined by District Judge Batey in the Family Court on 17 December 2019. He made a lump sum order in the sum of £22,547.23 against Mr Phillips representing payment of outstanding private school fees. From the note of judgment in the trial bundle, it appears that he treated 130 Castle Road and 28 Grange Hill, plus perhaps 44 Albany Road, as assets of Mr Phillips. He described Mr Phillips as “extremely evasive about his finances” and indicated that his “income and assets are more difficult to establish due to his lack of full and frank disclosure”.[19]Miss Ross obtained an order in the County Court at Central London on 15 July 2022 reviving the Old LLP by restoring it to the register.[20]These proceedings were issued on 24 February 2023 and permission was then given to continue them.[21]Between the issue of proceedings and such permission, 130 Castle Road and 44 Albany Road were transferred to Bond 58 by Mr Phillips and his sister, Zoe Phillips, respectively. Bond 58 is owned and directed by Mr Phillips. Trial and evidence[22]I gave Mr Phillips permission to appear on behalf of the New LLP as Second Defendant and Bond 58 as the current Fourth Defendant. This reflected the course taken at previous hearings, there was no objection from Mr Hope appearing as counsel for Miss Ross, and to do otherwise would have left the New LLP and Bond 58 unable to participate in the trial.[23]Mr Phillips requested an adjournment of the trial, including on behalf of the New LLP and Bond 58. I refused that request, with reasons to follow. I now set out those reasons. Mr Phillips’s principal point was that there should be an adjournment to allow the Old Company to be restored to the register and be given notice of the proceedings as it may be affected by the trial. However, one, no reason was given as to why this point was not made before. Two, no application to restore can be brought after 6 years anyway – see section 1030(4) of the Companies Act 2006. And, three, on Mr Phillips’s case, he is the 95% shareholder in the Old Company and so is the natural person substantially affected. Mr Phillips also prayed in aid of his request for an adjournment his life circumstances of the last few weeks, including the difficulty in obtaining representation by direct access counsel and becoming foster parents (with his wife) of a teenage girl. But these circumstances were subsidiary points, as he made clear, were not evidenced, and were no justification for any lack of preparation for a trial which has long been listed. Further, to adjourn would lead to significant delay and it must be a matter of speculation whether circumstances would be better at any adjourned hearing. Finally, while he also referred to having been kept out of his house, 2 Rose Cottage, until two months ago and so without access to his documents, he later told me there were no documents at the house anyway.[24]On the morning of the second day of trial, Mr Phillips sought permission to rely on a bundle of additional documents. That was opposed, and Mr Phillips pressed his request only in relation to two documents, namely an expert handwriting report relating to the 15 January 2014 resolution and a document evidencing the sale by Miss Ross of Mr Phillips’s car, an Aston Martin DB9, for £25,000. I refused permission for that late evidence. My reasons for taking that course were these. As to the expert report, there was no permission for expert evidence and so no opportunity for Miss Ross to obtain her own expert report, or to jointly instruct an expert. It was not anyway apparent that the handwriting evidence was reasonably required to resolve these proceedings. I would have evidence from the two apparent signatories, namely Miss Ross and Mr Phillips. As to the document relating to the sale of the car, this sale was not disputed by Miss Ross as Mr Hope made clear. Reliance on the document was therefore unnecessary. Any questions on this transaction would anyway go to credit only.[25]There was a trial witness statement from Miss Ross. And just two short trial witness statements of Mr Phillips expressed to be made for the New LLP and Bond 58. This evidence gave rise to trial management challenges.[26]Starting with the evidence of Miss Ross, this included very serious allegations of domestic abuse. As Mr Phillips was appearing in person, this raised the concerning prospect of him cross-examining Miss Ross on those allegations. Actual or perceived domestic abuse would seem likely to make Miss Ross a vulnerable witness, the quality of whose evidence might be diminished unless some measures were put in place. But no measures, such as appointing a legal representative to ask questions or having questions asked through an intermediary, had been directed under CPR PD 1A or otherwise.[27]I suggested to both sides a trial management course which was then accepted.[28]First, of the long list of allegations appearing in the Re-Re-Amended Particulars of Claim at [59] under the heading “Particulars of Domestic Abuse”, it seemed to me that there were just two on which the undue influence case made for Miss Ross might turn, being, “59.13 Mr Phillips controlled the family's finances upon which Miss Ross depended to survive”, and “59.15 Mr Phillips would threaten Miss Ross that he would kick her out of the house if she did not sign documents he put in front of her, and refused to explain what it was that she was required to sign”. Mr Hope accepted that, and both sides agreed to ignore the other allegations for the purposes of the trial.[29]Second, CPR 3.1A requires the court to have regard to the fact that one party is unrepresented and to adopt such procedure at any hearing that is appropriate to further the overriding objective. By CPR 3.1A(5) “At any hearing where the court is taking evidence this may include(a) ascertaining from an unrepresented party the matters about which the witness may be able to give evidence or on which the witness ought to be cross-examined; and(b) putting, or causing to be put, to the witness such questions as may appear to the court to be proper.” Given the alleged domestic abuse, my preliminary view was that the right procedure in this case was to ascertain from Mr Phillips what questions he wished to be put to Miss Ross by inviting him to prepare a list of questions. And then to frame those as questions from the bench so as to avoid a direct exchange between the two parties. Both sides adopted that suggestion, Mr Phillips gratefully so. He prepared a list of questions for the second day of trial. I put such of those as were relevant to Miss Ross, reframing them as questions from the bench. Any inflexibility which might result from that approach was avoided by then inviting Mr Phillips to identify orally any follow-up questions he would like asked. Again, I put such of those as were relevant to Miss Ross. Again, they were reframed as questions from the bench. As I saw it, this was not cross-examination by the court, but rather the only means of ensuring an effective and fair trial. Fairness to Mr Phillips required that there were put to Miss Ross those relevant questions which Mr Phillips wanted put. Fairness to Miss Ross required that they were put other than in direct cross-examination by Mr Phillips.[30]As for the evidence of Mr Phillips, his witness statements did not deal with many of the disputed questions of fact which I was expected to resolve. The skeleton argument for Miss Ross suggested Mr Hope was not proposing to put Miss Ross’s case on those issues to Mr Phillips, but instead invite the court to decide them on the basis of Miss Ross’s evidence alone. My preliminary view was that that was not the correct approach. I drew Mr Hope’s attention to what was said by Nicklin J in MBR Acres v McGivern [2022] EWHC 2072 (QB) at [90]. “In an adversarial system, an obligation falls on the party to put questions on any significant factual issue upon which that party intended to rely to any witness of his opponent who could reasonably be expected to have relevant evidence to give on the point.” Mr Hope did not press his approach and indicated that he would cross-examine Mr Phillips on the questions of fact arising from the statements of case, whether or not they had been tackled in Mr Phillips’s witness statements.[31]In his closing submissions, Mr Phillips suggested there had been some contempt of court by Miss Ross’s solicitors. If any such allegation is to be made by Mr Phillips fairness requires that it be made by a formal application supported by evidence complying with CPR Part 81, with the grounds being set out in full. I stress that I do not encourage any such application. Such applications involve serious allegations and so should not lightly be made. Further, they are often disproportionate and risk strike out with costs. Decision[32]The overall question to decide is the ownership of the Properties. Do they remain beneficially owned by the Old LLP despite the Declaration, as Miss Ross argues?[33]It is convenient to consider first the validity of the Declaration. Reg. 7(6) of the 2001 Regulations makes the following a default rule, subject to the terms of any LLP agreement:
“Any difference arising as to ordinary matters connected with the business of the limited liability partnership may be decided by a majority of the members, but no change may be made in the nature of the business of the limited liability partnership without the consent of all the members”
. There is no suggestion that the Declaration was made with Miss Ross’s consent. It was not therefore a decision of all the members. Accordingly, if the Declaration involved a change in the nature of the business of the Old LLP, absent any different LLP agreement it would be invalid.[34]It is my judgment that the Declaration did represent a change in the nature of the Old LLP’s business.[35]The Defence for Mr Phillips and the New LLP denied that. But gave no explanation for that denial. The simple reality is that, save perhaps for some invoicing of work done by Mr Phillips, the whole of the business of the Old LLP was the holding of the Properties and 74 Gilbey Road. That business ended with the Declaration; a fact reflected by the Old LLP then being allowed to die by being struck off the register and dissolved.[36]The conclusion I have reached is, in my judgment, supported by some of the learning under the equivalent provision in the Partnership Act 1890. Section 24(8) of that Act is in like terms to reg.7 of the 2001 Regulations. “(8) Any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners, but no change may be made in the nature of the partnership business without the consent of all existing partners.” The authors of Lindley & Banks on Partnership, 21st Ed give as an example of a change in the nature of a partnership’s business, a decision to convert it into an LLP. “It is inconceivable that such a far reaching decision, involving as it does committing the partners to a relationship which is fundamentally different to that of partnership, stripping out all or virtually all of the firm’s assets and, ultimately, bringing about its dissolution, could ever be regarded as an ordinary matter connected with the partnership business” - see Lindley & Banks at 15-15. Here, all or virtually all of the Old LLP’s assets were stripped out by transferring them in equity by way of the Declaration to a New LLP, bringing about the Old LLP’s striking off and dissolution.[37]The question then becomes whether there was a different LLP agreement displacing the default rule in reg. 7(6) of the 2001 Regulations. Mr Phillips says that there was. His oral evidence was that there was a comprehensive written signed LLP agreement running to many pages prepared by his accountants Alan Pink Tax (APT) but that it cannot now be found. He said it included an agreement that the Properties would be regarded as his while 74 Gilbey Road was to be treated as being held for the benefit of both he and Miss Ross in equal shares.[38]In my judgment, that case is not open to him. I am anyway satisfied that there was no such LLP agreement.[39]The professionally pleaded Defence for Mr Phillips and the New LLP does not allege any written signed LLP agreement. Inconsistently with any such case, it alleged a detailed oral agreement supplemented by an unsigned written partnership agreement; with the unsigned written agreement dealing only with limited matters, and not extending, for example, to changes in the nature of the Old LLP’s business. Such changes were said to be catered for in the oral agreement. There was no application to amend. Which would anyway have come too late. Further, this case did not feature in the questions Mr Phillips asked to be put to Miss Ross. Accordingly, the suggestion made in evidence of a detailed signed written agreement is not one open to the active defendants, being neither part of their pleaded case nor part of the case put to Miss Ross.[40]I have anyway reached the clear conclusion that there was no such detailed signed written LLP agreement. That such an agreement is inconsistent with the carefully and professionally pleaded Defence is obviously one factor pointing towards that conclusion. There are, in my judgment, two further weighty factors.[41]One, correspondence from the accountants APT is inconsistent with any detailed signed written LLP agreement for the Old LLP. That correspondence refers to no such thing. Worse than that for Mr Phillips’s case, when his solicitors wrote to APT by letter dated 7 August 2023 that, “you hold a copy of the partnership agreement that was signed between himself and Helen Ross”, Mr Phillips’s solicitors were firmly disabused of that idea. By an email of 18 August 2023, APT wrote that, “Your client has mis-informed you. The partnership agreement signed in May 2015 was for HRP Complete Solutions (Kent) LLP. The agreement is attached and is between Andy Phillps and HRP Total Solutions Kent Ltd.”[42]Two, Mr Phillips’s case involved a serious allegation against Miss Ross and possibly her solicitor which is inherently improbable, namely that Miss Ross, perhaps with her solicitor, had got rid of the signed written LLP agreement which had been at 2 Rose Cottage so that the court would not see it. The far simpler explanation for the lack of any copy of the suggested agreement is that no such agreement was made.[43]I should add that there was no proper evidential basis from which the pleaded partly oral, partly written, LLP agreement could be found. It did not feature in either the written or oral evidence of Mr Phillips. When he was taken to the unsigned document said, by his Defence, to be the written part of the pleaded LLP agreement, he said he was unable to comment on the document.[44]It follows from these conclusions that the Declaration was, in my judgment, invalid. It represented a change in the nature of the Old LLP’s business which, by reason of the application of reg.7(6) of the 2001 Regulations and in the absence of any different LLP agreement, had to be unanimous in order to be valid. It was not unanimous and so was invalid.[45]It follows from that decision on the Declaration that beneficial ownership of the Properties never left the Old LLP before its dissolution. The Properties remained, and remain (the Old LLP having been restored), owned beneficially by the Old LLP.[46]It was not suggested in argument by Mr Phillips for Bond 58 that that beneficial interest was defeated by the transfer of 44 Albany Road and 130 Castle Road to Bond 58, by overreaching or otherwise, during the currency of these proceedings. Nor does any such case appear from Bond 58’s pleaded Defence. I need not therefore consider what the answer to any such case may have been, and Miss Ross had no occasion to formulate any answer. But I would expect it to have been fatal to such an argument that the transfers appear not to have been for money or money’s worth or valuable consideration.[47]I would add that, even if there was no requirement for unanimity of members for the Declaration to be effective, I would still have found it to be invalid. That is because the Declaration was not even a decision by a majority of members.[48]The supposed majority rested on the appointment of the Old Company as a third member of the Old LLP. But, as I find, there was no valid appointment of the Old Company as a member.[49]There are minutes of a meeting of Mr Phillips and Miss Ross as members of the Old LLP dated 23 October 2014 which record a decision to appoint the Old Company as a third member of the Old LLP. But I am satisfied that there was no such meeting or decision. That was Miss Ross’s evidence. Which I accept. For these reasons.[50]There was at least one document signed by her which was not, as I find, signed knowingly. That was the written resolution of 15 January 2014. My reasons for that finding are these. First, she told me of such a document having been presented to her and her refusing to sign it. That is consistent with what she told the police relatively near the event, in an interview on 9 November 2015. And she would have good grounds for the refusal. Such ownership of the Old Company which received the rent would have been inconsistent with the ownership of the Old LLP. Second, the advice to Mr Phillips for such a written resolution comes after the document is said to have been entered into, casting obvious doubt on Mr Phillips’s case, pleaded at [30] of his Defence, that it was signed on 15 January 2014. There were letters dated 12 February 2014 and 30 April 2014 from APT to Mr Phillips which recorded that “At set up [of the Old Company], yourself and Helen were the directors and hold 1 ordinary share each”, before going on to say that “I have prepared paperwork to revise the shareholding”, and “I also enclose … a written resolution.” Third, Miss Ross described in her oral evidence circumstances in which some documents were presented to her for signature in the night. It was a description which accorded with her witness statement. “I can also recall that he would wake me up at night and wake our children as our boys and I co-slept, switch on the bed-side lamp and put documents in front of me and say that I had to sign them because he needed to leave early the next morning” – see her witness statement at [63]. Fourth, the written resolution raises the question as to why the shareholding was not done that way originally. There is no good answer to that question. Mr Phillips’s pleaded case was that it was a mistake. But that seems inherently unlikely, does not appear from APT’s letter, and an apparently different and certainly confusing explanation was given in Mr Phillips’s oral evidence; with APT said to have advised that the shareholdings didn’t matter as they could be changed later. Fifth, no form to update the register at Companies House was submitted until 11 February 2015; with no explanation being given for the delay from 15 January 2014.[51]Further, it is true that Miss Ross’s evidence was not without inaccuracies. For example, she referred in her oral evidence to emails having been sent asserting her ownership of the Properties through the Old LLP. But it turned out there were none. And whereas her initial oral evidence was that she did not report company or property dealings to the police in 2015, but rather she did so only in 2019, the police report from 2015 later shown to her contradicted that. However, Mr Phillips’s evidence was to be trusted less. As will already be apparent, I found myself unable to accept his evidence on a key question of fact, namely whether there was a detailed written signed LLP agreement.[52]As I find, there was no such meeting of 23 October 2014, and the minutes purportedly recording one were not signed knowingly by Miss Ross. Like the written resolution, they were a document to which her signature was obtained by actual undue influence; being presented, as I find, for signature in the night with no proper explanation given. Mr Phillips did not obtain her signature on the document fairly. Miss Ross would not otherwise have signed the document. Insofar as necessary, the minutes should be set aside for undue influence. But that is probably unnecessary. There was simply no such decision and no such meeting, despite the minutes.[53]It remains to consider whether the claim should nevertheless be struck out as an abuse of process, or is barred by limitation.[54]As to abuse of process, the Defence for Mr Phillips relies first on issue estoppel. It is pleaded that the allegations in this case have already been litigated in the Family Court and determined. That reflects one of the requirements for issue estoppel, namely that the issue was necessarily determined in the previous case. “When considering the issue of ‘necessity’, the court will consider whether the issue in question was ‘so fundamental to the substantive decision that the latter cannot stand without the former. Nothing less than this will do’: Spens v IRC [1970] 1 W.L.R. 1173 Ch D. at 1184D-E” – see the judgment of Mr Andrew Sutcliffe KC, sitting as a Deputy High Court Judge, in Baldudak v Matteo [2024] EWHC 167 (Ch) at [108][55]Alternatively, the principle in Henderson v Henderson (1843) 3 Hare 100 is said to apply insofar as Miss Ross failed to raise this case in the Family Court. The classic modern statement of the principle in Henderson v Henderson is to be found in the speech of Lord Bingham in Johnson v Gore Wood & Co [2002] 2 AC 1 at 30H-31F:
“The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the public interest in the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings, may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.”
[56]The proceedings in the Family Court were under schedule 1 to the 1989 Act, which provides at para.1(2)(c) that the court may make an order requiring either of the parents to pay a specified lump sum for the benefit of the child. By para.4, “(1) In deciding whether to exercise its powers under paragraph 1 … and if so in what manner the court shall have regard to all the circumstances including (a) the income, earning capacity, property and other financial resources which each person … has or is likely to have in the foreseeable future”.[57]There is, in my judgment, no issue estoppel here. Although Miss Ross is the claimant in these proceedings, they are brought on behalf of the Old LLP. She is not therefore suing in the same capacity. Further, I do not regard the issue in this case as necessarily determined in the Schedule 1 proceedings. As already noted, the pleaded case of Mr Phillips on issue estoppel is that the case in these proceedings was litigated and determined in the Schedule 1 proceedings. But it was not. Whether the Old LLP could challenge the New LLP’s apparent ownership of the Properties was not a question at all in the Schedule 1 proceedings. And the Old LLP did not then even exist, not being restored to the register until 2022. Further, given the very limited money order made, being for the outstanding school fees, it cannot be said with any confidence, and I am not satisfied, that the order depended upon the view taken by District Judge Batey as to ownership.[58]I have also decided that these proceedings do not represent an abuse of process under the principle in Henderson v Henderson. The starting point must be that a litigant is not to be denied the right to bring a genuine subject of litigation before the court without careful examination of the circumstances said to justify such a bar. Here, that examination reveals, in my judgment, that it is not a misuse or abuse of the court for Miss Ross to bring these proceedings on behalf of the Old LLP. It is unrealistic to suggest that the Schedule 1 proceedings were the proper home for the issues in this case. These proceedings are a derivative claim brought on behalf of a limited liability partnership which did not exist at the time of the Schedule 1 proceedings. They have required a 4-day trial, whereas the Schedule 1 case appears to have been a fairly summary process. That the New LLP had, on Mr Phillips’s case, actually become the owner of the Properties was only apparent in the course of the Schedule 1 proceedings; that being seen in Mr Phillips’s Form E financial statement. There would need to have been restoration of the Old LLP to the register, obtaining of the documents relevant to the claim, and permission to continue the derivative claim. Further, the apparent ownership was just one of many circumstances to which the court was to have regard in arriving at what ended up being a modest lump sum order. Ownership is, by contrast, the central issue in this case. Yet further, while the County Court certainly has jurisdiction to hear derivative claims (contrary to the assertion in the skeleton argument for Miss Ross), the Schedule 1 proceedings were in the Family Court and I was not shown anything to establish jurisdiction for such claims in that court. These may, therefore, even be proceedings which could not have been brought in that court. Overall, taking these considerations together, it is my judgment that it would be wrong to say this case should have been brought in the Schedule 1 proceedings such that this claim represents an abuse of process.[59]As to limitation, Miss Ross by her Reply to the Defence of Mr Phillips admits that the primary limitation period for the claim is that under s.21(3) of the Limitation Act 1980 (the 1980 Act). “… an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued.” It is also admitted that that primary limitation period expired on 30 October 2021, being six years from the making of the Declaration.[60]But reliance is placed on, among other things, s.32(1)(b) of the 1980 Act which provides for the running of the limitation period to be postponed where any fact relevant to the plaintiff’s right of action has been concealed from him by the defendant; time not running until the plaintiff has discovered the concealment or could with reasonable diligence have discovered it.[61]While there was some debate at trial whether that pleaded position, namely that s.21 applied in this case was correct, on reflection and as set out in written submissions, it remained Mr Hope’s position that s.21 applied to at least some of the relief claimed in these proceedings. I will therefore proceed on the pleaded basis.[62]Doing so, I am satisfied that the start of the limitation period under s.21(3) of the 1980 Act was postponed in this case until the end of 2018 or early 2019 when Miss Ross received the completed Form E of Mr Phillips in the Schedule 1 proceedings. I am satisfied that, until then, the attempted moving of the Properties to the New LLP using the Declaration had been concealed from her. As I have already found, the written resolution and the minutes of a meeting appointing the Old Company as a third member of the Old LLP, being the backdrop for the Declaration, were not documents Miss Ross was told about by Mr Phillips. And Mr Phillips altered the address of the Old LLP from 2 Rose Cottage to his accountants APT, so that documents relating to the Old LLP would no longer come to the house where Miss Ross was living. I infer from all that that the Declaration was likewise kept from her.[63]Mr Phillips suggested she knew of the Declaration back in 2015, pointing to complaints she made to the police about him. But I accept Miss Ross’s evidence that she did not know of the Declaration then. That is because had she known of the Declaration when speaking to the police in November 2015 she would have told the police about it. But she did not. Instead, the police notes reveal uncertainty on her part about what has happened; an uncertainty resulting from a lack of documentation. For example, “Now she has seen the documentation which has been sent to her by mistake she can see that he is trying to move the assets (properties) from the two old companies which they joint own and he is trying to close down to two new companies he has created where she is not a director and therefore would have no claim to the properties. She states she has not given him permission to do this as she owns half so would need it to move them. She therefore believes he must have forged her signature on documentation to be able to do this without her. She states she has never signed anything or agreed to any of this. There is no paper work or evidence to show this though. The only way this may be obtained is if all paperwork his account has regarding the matter is obtained and gone through to see if a fraud has occurred or not. I do not know if we have a power to do this or whether this would be classed as a civil issue?”. Mr Phillips also pointed to a letter from Miss Ross’s solicitor dated 29 October 2015 as indicating her knowledge. But that, of course, made no reference to the Declaration. It could hardly be expected to do so, coming before the date of the Declaration.[64]Mr Hope made an alternative limitation argument relying on s.21(1) on the basis that Mr Phillips was to be considered a trustee by virtue of being a member of the Old LLP. But I was shown no authority for this proposition and did not have the benefit of any argument on the point from a legal representative for Mr Phillips. I prefer to rest my decision on s.32 of the 1980 Act. Conclusion[65]Given my decisions set out above, there will be a declaration that the Properties are held on trust for the Old LLP. Their sale, and the division of the proceeds, will no doubt be a matter of winding up the Old LLP. In that winding up, Miss Ross and Mr Phillips will be entitled equally to the Properties as members. Written submissions of Mr Phillips following the trial seemed to suggest otherwise. But I consider that is wrong. Default rule (1) in reg. 7 of the 2001 Regulations provides that “All the members of a limited liability partnership are entitled to share equally in the capital and profits of the limited liability partnership.” As I have already found, there was no different written LLP agreement. Nor could any different agreement be inferred. On the contrary, Miss Ross told me repeatedly and I accept that the agreement between her and Mr Phillips was that the assets going into the Old LLP would be shared. I accept that evidence as it fits the documents (the declarations of trust not suggesting that the capital represented by the Properties or 74 Gilbey Road was to be shared other than equally), and provides an explanation for Miss Ross agreeing to 74 Gilbey Road being in joint names and going into the Old LLP despite having paid the bulk of the purchase price.[66]It will also be apparent from my decisions that the answers to the numbered list of questions identified for trial by Master Clark in her order of 2 May 2024 are as follows. The terms of question 7 are adjusted slightly to refer correctly to the current legal ownership of the Properties. Q1. Whether the claim is an abuse of process on the basis of issue estoppel or Henderson v Henderson abuse. A. It is not an abuse of process. Q2. Whether any part of the claim is statute-barred (too late) under section 21 of the Limitation Act 1980. A. It is not statute-barred. Q3. Whether any written or oral partnership agreements existed as between Miss Ross and Mr Phillips and, if so, their terms. A. They did not. Q4. Whether Miss Ross validly consented to the Old Company’s purported share dilution on 15 January 2014. A. She did not; the written resolution not being signed knowingly by her. Q5. Whether Miss Ross validly consented to the Old Company being purportedly made a member of the Old LLP on 23 October 2014. A. She did not. There was no such meeting or decision on 23 October 2014, despite the minutes. Q6. Consequentially upon the determination of issues(1) to (3) above, whether the declaration of trust entered into by the Old LLP on 31 October 2015 purporting to vest beneficial title of the Properties in the New LLP was void. A. The Declaration was not valid. Q7. If the Declaration was void, whether the Claimant is entitled to (1) a declaration against Bond 58 that it holds the Properties (except 28 Grange Hill) on trust for the Old LLP and/or(2) a declaration against Mr Phillips that he holds 28 Grange Hill on trust for the Old LLP. A. There should and will be such declarations against all the defendants.[67]I invite Mr Hope to prepare a draft order reflecting this judgment, and to give a time estimate for any consequential hearing which is required.