Atkinson v Corcoran & Ors

A claim should not be struck out for delay merely as a disciplinary sanction. The applicant must show serious prejudice or that a fair trial is no longer possible. The death of a material witness and destruction of documents do not necessarily satisfy that test. Their effect must be assessed in the context of the evidence available.

Allegations of fraud, fraudulent trading, conspiracy or dishonest assistance require sufficient particulars of the facts relied upon to establish dishonesty. A schedule of transactions may be adequate for a claim concerning preferential payments, but it is insufficient by itself for a fraud claim. Where the defect is capable of correction, striking out may be disproportionate.

Paul Atkinson, the liquidator of Fleetlite Limited, brought claims against members of the Corcoran family arising from payments made by Fleetlite to connected companies and family members before its creditors’ voluntary liquidation.

The claims included fraudulent trading, unlawful means conspiracy, dishonest assistance, wrongful trading, preferences, fraud, misfeasance and breach of duty. The respondents sought to strike out the claims on grounds of delay, alleged prejudice caused by the death of Mr Corcoran senior and destruction of documents, and inadequate pleading of dishonesty.

The court considered whether the proceedings should be struck out and, alternatively, whether further particulars should be ordered.

1. The respondents’ application to strike out was dismissed, save that the liquidator was ordered to provide further particulars of the transactions alleged to constitute fraudulent trading, conspiracy or dishonest assistance.

2. The older authorities on dismissal for want of prosecution had limited relevance after the introduction of the Civil Procedure Rules. The continuing requirement was that serious prejudice must be shown or that a fair trial must no longer be possible. Striking out was not a disciplinary sanction for delay: Biguzzi v Rank Leisure [1999] 1 WLR 1926. The decision in GJ v Luxembourg (2003) 36 EHRR 40 supported the conclusion that delay before issuing a claim did not provide immunity from that assessment.

3. The death of Mr Corcoran senior did not, by itself, make a fair trial impossible. The court should scrutinise evidence concerning a deceased person with care, applying the guidance in Re Garnett (1886) 31 Ch D 1. The death and destruction of the ACL documents, considered together, did not establish serious prejudice or prevent a fair trial.

4. Claims alleging fraud or dishonesty must distinctly plead the primary facts relied upon to support the inference of dishonesty. Facts consistent with innocence are insufficient. The principles stated in Three Rivers DC v Bank of England (No.3) [2003] 2 AC 1 applied.

5. The liquidator’s alternative calculation based on all payments to connected companies did not adequately particularise fraud. That defect did not justify striking out the proceedings. Within 42 days the liquidator was to serve a schedule identifying each relevant transaction and the facts relied upon to allege fraud or dishonesty. The application was otherwise dismissed.