Hawk Recovery v Eustace & Brunswick Wealth (2016)
It was not appropriate to grant summary judgment in favour of the claimant in relation to its claim for the recovery of money allegedly paid in breach of trust. The defendant had a real prospect of successfully defending the claim, and there was another "compelling reason" why the claim should proceed to trial, namely its apparently abusive nature.
The claimant company sought summary judgment against the first defendant (E).
The claimant was the assignee of a cause of action said to be available to the trustee of a remuneration trust allegedly created in 2008 by a multidisciplinary partnership called Baxendale Walker MDP. Paul Baxendale Walker (B) was a well-known tax adviser. He also ran a company which made pornographic films. He made no secret of his playboy lifestyle and his relationships with multiple sexual partners. He had been in such a relationship with E. The claimant's case was that the trust had been created as a mechanism for the remuneration of beneficiaries associated with the partnership. The beneficiaries were, broadly speaking, employees of the partnership. E was not a beneficiary. The instant application concerned a large sum of money given to E to purchase a property. The claimant's case was that the money belonged to the trust and was provided to E by way of a loan, that the money had been paid to her in breach of trust and that the property acquired was subject to the trust's proprietary rights. E's case was as follows: the trust arrangements relied on by the claimant did not reflect the reality; B had provided the money to her during their relationship as a gift; B never mentioned any trust, and the money in question had been his to do with as he liked.
The claimant's application failed at the first hurdle. It had not produced credible evidence of its case. An action had previously been issued against E by a company (S) of which B was a director. That company had apparently been appointed as an "investment fiduciary" in relation to the trust. Before the instant action was brought, the existence of the trust was unknown and E had faced a claim by S as an entity which stated that it was beneficially entitled to the money and assets it dealt with. Not only did B omit to mention the trust in his evidence in the claim brought by S but he put forward a claim based on there being no trust. That of itself was sufficient to mean that the claimant was unable to prove to the requisite standard the initial premises of its claim as to the existence of a trust and the receipt of trust money by E. She had a real prospect of establishing at a trial either that the trust was, or at least became, a personal fund for B to deal with as he wished or that no trust money was disbursed to her. The court did not usually have to dwell on the second limb of CPR r.24.2, namely whether there was any "other compelling reason why the case should be disposed of at a trial". The notes in the White Book provided only very limited assistance about what might amount to a compelling reason. Such a reason might include a concern that the conduct of the applicant in the proceedings had been abusive. It was appropriate to consider the second limb of r.24.2 here in view of the unusual background to the claim. There were a number of compelling reasons why the claim should be tried. Among other things, there was powerful evidence to show that the claim was being pursued as part of a campaign of litigation against E. Further, the claim was based on a cause of action which was at odds with the claim pursued by S. B's evidence, and other evidence relied on in this claim, was in important respects impossible to reconcile with the evidence relied on in the claim brought by S. Moreover, it had been held in the previous action that E had at least an arguable case with a real prospect of success that the property in question was beneficially and legally owned by her and that B had indeed provided the money by way of a gift. This action bore all the hallmarks of a claim being conducted in circumstances which were an abuse of the court's process (see paras 61-63, 66-67, 69, 71-74 of judgment).