MICHAEL WILSON & PARTNERS, LIMITED v JOHN FORSTER EMMOTT & Ors

A claim cannot proceed against defendants where the Particulars of Claim identify no recognisable cause of action against them. Further information may particularise a pleaded claim, but cannot introduce a new cause of action or extend an existing claim to new defendants without permission to amend.

Fraud and deceit must be specifically and sufficiently particularised. The pleading must identify the representation, falsity, knowledge or recklessness, reliance and loss, together with the primary facts supporting dishonesty. A party’s impecuniosity does not establish that it lacked liability for legal costs.

Where payments were made pursuant to subsisting court orders, unjust enrichment ordinarily cannot be recovered unless the orders are set aside for fraud. Summary judgment is appropriate where the central factual case is no more than fanciful.

The claimant brought proceedings arising from a long-running dispute with the first defendant. It alleged that costs orders obtained in earlier arbitration and court proceedings were contrary to the indemnity principle because the first defendant was not liable for his lawyers’ fees and was funded by a third party.

The claimant sought recovery from the estate of the first defendant’s former solicitor, related legal-services entities, the first defendant’s counsel and counsel’s company. The second to sixth defendants applied to strike out the claim under CPR r. 3.4(2)(a) and CPR r. 3.4(2)(b), and for summary judgment under CPR Part 24.

The central issues were whether a viable cause of action had been pleaded against the applying defendants, whether allegations of deceit and maintenance or champerty were properly pleaded, and whether the evidence gave the claimant a realistic prospect of proving that the first defendant was not liable for his legal costs.

1. Disposition. The claims against the second to sixth defendants were struck out and/or summary judgment was entered in their favour. Issues concerning certification as totally without merit and civil restraint orders were reserved.
2. Pleading. The only discernible cause of action was unjust enrichment against the first defendant. No claim was properly pleaded against the second to sixth defendants. The further information could not introduce assigned-debt, maintenance or deceit claims without permission to amend.
3. Unjust enrichment. The claimant did not allege direct payments to the second to sixth defendants or a retained proprietary interest in money paid pursuant to the costs orders. The claim against indirect recipients was therefore inadequately pleaded. A court order ordinarily justified the recipient’s enrichment while it remained in force. A judgment could be challenged in subsequent proceedings only through an equitable claim to set it aside for fraud.
4. Deceit. In principle, a lawyer might be liable in deceit to a non-client who sought costs for a client while knowing that the client was not liable under the indemnity principle. No such claim was pleaded. The representation, falsity, knowledge or recklessness, reliance and loss were not identified with the required particularity.
5. Maintenance and champerty. These allegations were absent from the Particulars of Claim. Litigation funding did not generally offend public policy. Facts showing a likely undermining of the administration of justice were required.
6. Summary judgment. The documents supported a conventional loan and third-party funding arrangement under which the first defendant remained liable for his legal costs. The contrary case was no better than fanciful. The defendants therefore obtained summary judgment.

This was a first-instance decision of the High Court (Commercial Court). No appeal from this decision is stated.