Raffermati v Capello Hair Designs Ltd & Anor

A defence or counterclaim may be struck out where, even on a benevolent reading, it discloses no sustainable cause of action or defence. However, a pleading is not defective merely because it advances alternative causes of action or does not use a particular label, provided that it pleads the material facts supporting the claim. A claim to a beneficial interest in shares may be sufficiently pleaded through an alleged agreement or representations as to future ownership, reliance and a pleaded trust consequence. Verified statements of case may provide evidence at trial when confirmed by the witness, subject to the court’s control and any real prejudice. Striking out a claim concerning beneficial ownership does not necessarily determine the quantum of a separate damages claim.

The appellant appealed from an order of HHJ Melissa Clarke in the County Court at Oxford. The judge struck out her defence and counterclaim and her third party claim against the company’s sole director and shareholder. The proceedings concerned the ownership of a hairdressing business and shares in the company operating it.

The appellant alleged that the shares were held on trust for her, or jointly for her and the director, following an agreement or representations that they would be joint shareholders. She also disputed liability for a specific damages sum. The central issues were whether the claims were sufficiently pleaded and evidenced, whether they had a real prospect of success, and whether the specific damages claim could be determined summarily.

1. Defence and counterclaim. The appeal against striking out the defence and counterclaim was dismissed. Once the claim that the business itself was held on trust, together with claims in contract and deceit, had been abandoned, the remaining allegation that the shares were held on trust could not provide a defence to the company’s claim. The company was a separate legal entity and owned its assets; ownership of shares did not entitle a shareholder to the company’s assets. The counterclaim disclosed no sustainable cause of action because its only pleaded relief and supporting basis had been abandoned.
2. Third party claim. The appeal was allowed. The particulars of additional claim pleaded an express agreement that the parties would be equal shareholders, representations that the director would arrange that result, reliance by investment of time and money and abstention from drawings, and a trust consequence. Those matters sufficiently pleaded a claim to a beneficial interest in the shares. A pleading need not use the words common intention trust where the necessary facts and the alleged trust consequence are clear. Alternative claims may be confusing, but that is distinct from failing to plead the material facts. If genuine uncertainty existed, clarification could have been sought.
3. Evidence. The verified particulars of additional claim were evidence capable of supporting the pleaded case. The procedural rules did not prevent a witness at trial from confirming the accuracy of relevant factual matters in a statement of case, particularly where the opposing party was already on notice and no sufficient prejudice was shown.
4. Specific damages. The appeal against the order to pay £44,041 was allowed. Striking out the beneficial-ownership case did not necessarily dispose of a defence to quantum. The claim was based on an approximate 2008 expenditure figure, whereas the alleged misappropriation occurred in 2014. That disclosed an arguable issue as to valuation and damages.
5. The court made no determination on the merits of the third party claim, beyond finding that it was sufficiently pleaded and had a real, rather than fanciful, prospect of success.

• County Court at Oxford: HHJ Melissa Clarke struck out the defence and counterclaim and the third party claim, and ordered payment of £44,041.
• High Court (Chancery Division): The appeal was dismissed as to the defence and counterclaim, allowed as to the third party claim, and allowed as to the order for £44,041.