Taylor Goodchild Limited v Taylor & Anor

The court considered an application to strike out the claimant's particulars of claim as an abuse of process/res judicata and alternatively for summary judgment. The underlying dispute arose from an earlier section 994 Companies Act 2006 petition in which Barling J found that the first defendant breached his fiduciary and statutory duties and ordered a buy-out under section 996 CA. The present claim sought repayment of the first defendant's director's loan account, payment by the defendant company of receipts in respect of retained files work-in-progress, and an account of profits.

The judge applied established principles on res judicata, Henderson v Henderson abuse of process and summary judgment (CPR Part 24), and examined whether the claims could and should have been raised in the earlier petition. He held that the claim for repayment of the director's loan account could properly proceed and declined summary judgment or strike out in respect of that claim. By contrast he concluded that the WIP claim and the account of profits claim were an abuse of process under Henderson v Henderson because those matters could and should have been dealt with in the petition (in circumstances where the petitioner had previously sought related relief and did not follow the Aldi guidance). Those two claims were struck out.

This was a first instance application to strike out or obtain summary judgment in follow-on proceedings to a successful section 994 Companies Act 2006 petition. The claimant company (formerly jointly owned by the claimant director and the first defendant) sought repayment of the first defendant's overdrawn director's loan account (the DLA Claim), recovery of receipts in respect of retained files work-in-progress received by a company set up by the first defendant (the WIP Claim), and an account of profits in respect of diverted business (the Account of Profits Claim). The defendants applied to strike out the particulars of claim as res judicata/abuse of process and in the alternative sought summary judgment.

• Procedural posture: Application issued 10 July 2019; hearing before Snowden J.
• Nature of relief sought: repayment of the DLA, payment/accounting for receipts of retained-file work-in-progress, and an account of profits/damages for breaches of duty.
• Issues framed: (i) whether the company’s present claims were barred by cause of action estoppel, issue estoppel or Henderson v Henderson abuse of process having regard to the prior section 994 petition and buy-out order; (ii) whether the DLA claim had any real prospect of success so as to justify summary judgment; (iii) whether the WIP and account claims were properly pursued in fresh proceedings.

The judge reviewed authorities on res judicata and Henderson v Henderson and the summary judgment test under CPR Part 24. On the DLA claim he rejected the contention that it was an abuse of process, noting that the company was a nominal respondent in the petition and it was not obvious the company itself could have pursued the debt in those proceedings; he also rejected summary determination because there were substantive factual and legal disputes (contractual implication, estoppel/unconscionability and unjust enrichment) which could not fairly be resolved on the present application.

On the WIP and account claims the judge concluded they could and should have been pursued in the petition (the petitioner had framed relief dealing with diverted business and the joint expert valuation effectively assumed no future recovery), and the petitioner had not followed the guidance in Aldi to raise the possibility of follow-on claims with the trial judge. In a broad merits-based Henderson v Henderson assessment the judge struck out the WIP Claim and the Account of Profits Claim as an abuse of process, while permitting the DLA Claim to proceed.

First instance: the court struck out the Claimant’s WIP Claim and Account of Profits Claim as an abuse of process under Henderson v Henderson because those matters could and should have been dealt with in the earlier section 994 petition and the petitioner failed to raise the prospect of follow-on claims (contrary to Aldi guidance). The court refused to strike out or grant summary judgment on the director’s loan account claim; that claim may proceed because it was not shown to be barred and there were live factual and legal issues.