Solland Projects LLP v Nautiloides Comercio International E Servicos Sociedade Unipessoal LDA & Anor

A preliminary issue must be determined by reference to the pleadings and cannot be used to bypass an admission or introduce a materially different case without amendment. Where resolving the issue necessarily determines the existence of an agreement affecting a person’s personal liabilities, that person has a sufficient interest to justify joinder under Civil Procedure Rules 1998, rule 19.2(2). The court should adjourn a trial where a newly joined party cannot properly protect substantial interests, particularly where further pleadings, disclosure and evidence are required. Case-management decisions required by the overriding objective should not be displaced by unsupported assertions of financial prejudice.

The claimant and defendant were involved in proceedings concerning the refurbishment of 10 Belgrave Square under a management contract. A preliminary issue asked whether a £1 million payment was made under that contract or under an alleged separate joint venture agreement involving the claimant’s directors and Mr Moussa Salem personally.

The defendant applied to strike out the claimant’s case. Mr Salem applied to be joined as a defendant and sought an adjournment because the existence of the alleged joint venture could expose him to substantial personal liability. The court had to decide whether the claimant’s case was arguable, whether Mr Salem had a sufficient interest, and whether the trial could fairly proceed.

1. Strike-out application. The defendant’s application failed. Evidence made it arguable that the £1 million payment had been made by trustees for Mr Salem’s benefit rather than by the defendant company under the management contract. That case conflicted with the claimant’s pleaded admission that the defendant had made the payment. The claimant was therefore required to amend its pleading and explain its attempt to resile from the admission.
2. Nature of the preliminary issue. The existence of the alleged joint venture agreement was necessarily central to deciding whether the payment fell outside the management contract. The court could not realistically decide that issue while treating the result as non-binding on the individuals who were parties to the alleged joint venture.
3. Joinder. Mr Salem had a close personal interest in the outcome. A decision could affect later proceedings between him and the Sollands and could give rise to issue-estoppel or abuse-of-process arguments, including by reference to Johnson v Gore Wood & Co [2002] 2 AC 1. The test under Civil Procedure Rules 1998, rule 19.2(2), was therefore satisfied.
4. Adjournment. Joinder without an adjournment would not allow Mr Salem’s interests to be properly represented. His case differed from the defendant’s, further pleadings and disclosure might be required, and the evidence might have misstated his position. The trial was accordingly adjourned. Unsupported assertions that the claimant might lose funding did not justify proceeding in a manner likely to cause irredeemable prejudice to the other parties.