Walsh v Walsh & Ors

On an application for summary judgment, a claim alleging loss caused by the re-designation of trust assets has no real prospect of success where the assets remain intact and the alleged instruction was either genuine, in which case the transfer was authorised, or fraudulent, in which case it had no effect on the beneficial ownership. A claimant cannot establish loss merely by asserting that an administrative re-designation weakened its position in later ownership proceedings. Difficulties in assessing damages or the effect of a settlement do not themselves justify summary dismissal.

Separate proceedings may nevertheless be an abuse where substantially the same issues and parties were involved in earlier litigation, the claimant reserved a later claim without informing the earlier court, and the later claim inevitably reopens settled litigation and burdens other parties.

Sharon and Scott Walsh claimed against Redmayne-Bentley entities concerning two discretionary investment portfolios held by the defendants as nominees. They alleged that the defendants breached duties by acting on a forged 2010 instruction which re-designated the portfolios in favour of Joanne Raines. Earlier proceedings between the Walshes, John Hall and Joanne Raines concerned the beneficial ownership of the portfolios and the authenticity of the instruction. Those proceedings were compromised for £275,000, without determining the central issues.

The Walshes later pursued the claim against Redmayne-Bentley. The defendants applied for summary judgment and strike-out on the grounds that the claim had no real prospect of success and was an abuse of process. The court considered whether the alleged acts caused actionable loss and whether the later proceedings improperly revived matters which should have been dealt with in the earlier litigation.

1. Summary judgment. The defendants established that the claim had no real prospect of success. For present purposes breach of duty was assumed, but causation of loss was unsustainable. The portfolios remained intact and their value had not been diminished.
2. Only the true beneficial owner could transfer the beneficial interest. If the 2010 letter was genuine, the re-designation reflected the beneficial owner’s authority. If it was fraudulent, the re-designation could not alter the beneficial ownership. The legal title also remained with Redmayne-Bentley as nominees. The alleged loss of contractual rights was equally unarguable because, on the forgery hypothesis, any existing rights continued.
3. The court rejected the suggestion that re-designation weakened the Walshes’ ownership case or caused a recoverable loss of a chance. The dispute about beneficial ownership would have arisen in any event. The later compromise did not prevent the claim from being arguable, and the difficulty of assessing damages was not a reason to dismiss a claim if a fair assessment remained possible.
4. Abuse of process. Applying a merits-based assessment under Henderson v Henderson, Barrow v Bankside Agency Ltd and Johnson v Gore Wood, the proceedings were also abusive. The earlier litigation involved the same parties and substantially the same factual issues. The Walshes had reserved a possible claim against Redmayne-Bentley but had not informed the earlier court.
5. The guidance in Aldi Stores Ltd v WSP Group Plc applied. In complex multi-party litigation, a contemplated later claim should be referred to the court managing the earlier proceedings so that the efficient use of court resources and the appropriate trial structure can be considered. The failure to do so was an important factor, although not independently determinative.
6. The later proceedings inevitably required John Hall and Joanne Raines to re-enter litigation which they had reasonably believed was settled. There were no special circumstances justifying departure from the usual consequence of abuse. The claim was therefore summarily determined and, alternatively, would have been struck out as an abuse of process.