Fanmailuk.com Ltd & Anor v Cooper & Ors

Where proceedings contain distinct claims, the court may order one claim to be tried as a preliminary issue if its outcome will materially affect the procedural basis or necessity of another claim. This is an application of active case management under Civil Procedure Rules 1998, rule 1.4, including identifying issues early and deciding the order in which they should be resolved. The court may adjourn a permission application where the preliminary issue could remove the need for permission or materially inform its determination. A case-management decision does not amount to a concluded view on the merits of the adjourned application.

Fanmailuk.com Limited claimed that the shares in Dialtime Plus Limited were held on trust for it. Paul Burtenshaw brought a derivative claim for Dialtime against former directors, alleging that they diverted a business opportunity to MCashback Limited.

The court was hearing an adjourned application for permission to continue the derivative claim under CPR 19.9. Permission had previously been granted, but the claim had since been re-amended. The issue was whether Fanmail’s share-ownership claim should be tried first, with the permission application adjourned pending its outcome.

1. The court directed a trial of Fanmail’s claim as a preliminary issue and adjourned the application for permission to continue the derivative claim. The decision was made as a matter of case management and did not determine the merits of the derivative claim.
2. Under CPR 1.4, active case management includes identifying issues at an early stage and deciding the order in which issues are to be resolved. The two claims were factually and legally distinct. Fanmail’s claim concerned the parties’ intentions and any agreement about beneficial ownership of Dialtime’s shares. The derivative claim concerned alleged breaches of fiduciary duty by Dialtime’s directors. There was no factual overlap in the ingredients of the claims.
3. The outcome of Fanmail’s claim nevertheless had considerable procedural significance. If Fanmail succeeded, it would control Dialtime and could procure that its directors decided whether Dialtime should pursue the claim. There would then be no need for the court to determine permission by reference to the exception to the rule in Foss v Harbottle. If Fanmail failed, the derivative claim would remain dependent on permission, and the beneficial ownership issue might still be material to that application.
4. The court had regard to sections 260–263 of the Companies Act 2006, the transitional provisions, and the continuing supervisory role over derivative claims noted in Fraser v Oystertec. It expressed no concluded view on whether permission should ultimately be granted or refused, including the significance of the approach discussed in Airey v Cordell.
5. The parties were directed in accordance with the agreed Minute of Order. Consequential matters were reserved.

The judgment records earlier procedural steps but is a first-instance case-management decision.

• High Court (Chancery Division): Lightman J granted unopposed permission on 3 May 2007. On 19 March 2008, Floyd J permitted re-amendment by consent and adjourned the permission application, granting permission over the adjournment.
• High Court (Chancery Division): the present court directed a preliminary trial of Fanmail’s claim and adjourned the derivative-claim permission application.