Courtwood Holdings S.A. v Woodley Properties Ltd & Ors

At an interlocutory stage, a fact-sensitive proprietary and knowing-receipt claim should proceed where it is arguable and cannot be shown to be bound to fail. The court should avoid conducting a mini-trial on limited evidence, particularly where disputed inferences of knowledge or impropriety are material.

A mortgagee’s statutory sale transfers the mortgaged freehold title. It does not make it unarguable that the purchaser received property capable of being followed or traced. A purchaser aware of impropriety bringing about the sale may arguably hold the property or its traceable proceeds as constructive trustee.

A contractual relationship may give rise to fiduciary obligations when the agreement and factual matrix support an obligation of loyalty. A later assignment may cure a claimant’s lack of title to sue by amendment, subject to the overriding objective.

Courtwood sought continuation of a proprietary injunction and disclosure against Woodley Properties Limited, together with orders concerning claims against connected individuals and companies arising from the development and disposal of Sandford Farm.

The defendants applied to strike out the claim or obtain summary judgment. They argued that no fiduciary duty arose under the Property Advisory Agreement, no property had been received or could be traced, knowledge was inadequately pleaded, the proceedings were an abuse of process, and Courtwood lacked title to sue under an earlier assignment. Courtwood also sought permission to rely on a later assignment and to amend its pleading.

The central questions were whether the claims were arguable and suitable for trial, whether the injunction should continue, and whether the proposed amendments should be allowed.

1. Interim relief and case-disposal applications. The proprietary injunction was governed by the American Cyanamid approach. There was a serious issue to be tried, damages were inadequate, the balance of convenience favoured protection of the alleged trust property, and strike out under CPR 3.4 and summary judgment under CPR 24 were inappropriate where the issues depended on disputed, fact-sensitive inferences.
2. Fiduciary obligations. Whether the Property Advisory Agreement created fiduciary obligations could not be decided summarily. The relationship was primarily governed by the properly construed contract, but the pleaded obligations of good faith, protection and promotion of SFPL’s interests, avoidance of conflicts, specialist involvement and dealings with the lender made the claim neither fanciful nor unarguable.
3. Receipt, tracing and statutory sale. Sections 88, 101 and 104 of the Law of Property Act 1925 supported the conclusion that the full freehold title could be transferred by the mortgagee’s sale. It was therefore arguable that property capable of being followed or traced passed to WPL. A purchaser aware of impropriety which brought about the sale might hold the property or its traceable proceeds as constructive trustee.
4. Knowledge and abuse of process. The elements of knowing receipt identified in El Ajou v Dollar Land Holdings plc required disposal in breach of fiduciary duty, beneficial receipt of traceable assets and knowledge of that connection. The pleaded evidence and inferences concerning the defendants’ involvement were sufficient to require trial. The proceedings were not abusive because the relevant defendants had not been parties to the earlier Ludsin Proceedings.
5. Assignment and amendment. Properly construed, the Ludsin Assignment transferred causes of action existing when it was executed and did not include future knowing-receipt claims. The Second Assignment could nevertheless be relied on. A later assignment may cure a claimant’s lack of title to sue by amendment where the defect is legally curable and the overriding objective favours permission. Permission to amend was granted. Further amendments were required to clarify the property transferred, the defendants against whom fiduciary breach was alleged and that conspiracy was not relied on.
6. The injunction and undertakings were continued until trial or further order, with the precise relief to be determined after further submissions.