CLAVIS SECURITIES PLC & ORS v INTERTRUST MANAGEMENT LIMITED & ORS

A claim may be struck out, or summary judgment entered, where its essential factual foundation is invalid and the pleaded case cannot succeed on the documents. A claim founded on an ineffective purported appointment of a trustee cannot support consequential claims, including an unlawful means conspiracy claim against solicitors who acted on their clients’ instructions. Proceedings brought in manifest breach of an existing order, relying on allegations already rejected and incapable of being maintained, are outside the norm of commercial litigation and may justify indemnity costs. Guideline hourly rates remain relevant even on an indemnity assessment; complexity may justify additional hours, but does not by itself justify rates above the guidelines.

The claimants brought proceedings against trustees, management entities and solicitors. The defendants applied to strike out the claim or obtain summary judgment. The claim depended on an alleged restructuring under which Highbury Investments Limited had become share trustee, acquired shares and replaced directors and officers.

The defendants submitted that the relevant share trust deed conferred the power to appoint trustees only on the persons who were themselves trustees. Highbury had never held that status. The court also considered whether the proceedings were an abuse of process, a collateral attack on earlier orders, and in breach of an injunction. A further issue concerned indemnity costs and their summary assessment.

1. Disposition. The claim was struck out and, alternatively, summary judgment was entered for the defendants. The stay application failed because the proposed application to stay the earlier orders could not succeed after the Court of Appeal had refused a stay.
2. Trustee appointment. The claimants’ case depended on Highbury having validly replaced the existing share trustee. Under the share trust deed, the statutory power of appointing new or additional trustees was exercisable by the persons who were for the time being trustees. Highbury was not, and had never been, empowered to exercise that power. The alleged appointment, transfer and consequential corporate changes were therefore invalid and ineffective.
3. Consequences for the pleaded claims. The invalidity of the alleged appointment destroyed the essential foundation of the claim. The claims against the trustee and management defendants therefore had no reasonable grounds. The unlawful means conspiracy allegations against the solicitors were equally misconceived because the solicitors were entitled to take the impugned steps on their clients’ instructions while the alleged appointment remained invalid.
4. Abuse and injunction. The proceedings were also properly characterised as vexatious conduct and as having been brought in breach of an earlier injunction. They probably constituted a collateral attack on the earlier judgment and orders. The judge did not decide the separate Civil Restraint Order issue because it was unnecessary.
5. Costs. Applying the test identified in the Excelsior case, the proceedings were outside the norm expected in commercial litigation. The defendants were therefore awarded indemnity costs. Guideline hourly rates were applied. Complexity affected the reasonable number of hours, not the recoverable hourly rates, and work above guideline rates required specific justification. The claimed time for witness statements and bundle preparation was reduced, but the remaining costs and counsel’s fees were allowed.

This was a first-instance decision. The judgment refers to an earlier judgment and orders of Mr David Halpern QC and to the Court of Appeal’s refusal of a stay, but no appeal from the present decision is stated.