Ashley & Anor v Jimenez

The court may give judgment on the merits before trial where the circumstances make that a proper exercise of discretion. Relevant considerations include the strength of the evidence, the parties’ conduct, the efficient use of court resources, enforceability and the interests of justice.

A payment made for a specific purpose, and not intended to be freely disposable, may be held on a Quistclose trust. Misuse of the money constitutes a breach entitling the payer to equitable compensation. A solicitor remains the address for service while on the court record unless the required notice or court order is made. Alternative service may be authorised where there is good reason and the interests of justice require it.

The claim arose from a payment of the euro equivalent of £3 million by Michael Ashley to South Horizon Trading Limited, a company treated as the defendant’s alter ego. The claim alleged deceit and breach of a Quistclose trust arising from an intended investment in the Les Bordes project.

Following an earlier jurisdiction hearing, the defendant did not file a further acknowledgment of service or defence and was not represented at the present application. The claimants sought judgment on the merits, declarations concerning service, permission for future alternative service outside the jurisdiction, and costs. The issues were whether judgment should be entered without a full trial, whether the application had been properly served, and what consequential orders should be made.

1. Judgment on the merits. The application was suitable for determination on the merits. The court had jurisdiction, had reviewed a substantial body of evidence, and had to balance the interests of justice and proper use of court resources against the cost and delay of a full trial. The defendant had had a proper opportunity to present his case but had chosen not to participate further.
2. Deceit. The defendant made representations which were false, knew them to be false, intended that the claimant should rely on them, and thereby induced payment. The claimant proved reliance and loss on the balance of probabilities. The defendant’s unsupported account and alleged agreements were rejected.
3. Quistclose trust. The payment was made for the specific purpose of funding the Les Bordes investment and was not freely disposable by the recipient. The defendant received the money as trustee through his alter ego company. Applying it for another purpose and failing to restore it constituted a fraudulent breach of trust, for which equitable compensation equal to the payment was payable.
4. Interest and costs. The court had power to award compound interest and considered that course just in light of the fraudulent conduct. The claim costs were ordered on the standard basis. The service application costs were ordered on the indemnity basis because the defendant’s conduct and the position taken on service were out of the norm.
5. Service. Under CPR 11(7)(a), the acknowledgment of service ceased to have effect, but that did not automatically remove the defendant’s solicitors as the address for service. Under CPR 6.23, CPR 6.24 and CPR 42, the solicitors remained on the record until notice of change or an order under CPR 42.3. Service at that address was therefore valid. In the alternative, service by leaving documents at the defendant’s Dubai address was authorised under CPR 6.15. Although caution was required because of the applicable service treaty, the circumstances and the likely six-month delay justified alternative service.