Stratton Mortgage Funding 2019-1 PLC & Ors v Stratton Hawksmoor 2022-1 PLC & Ors

Strike-out and summary judgment applications are governed by whether the claim has a realistic, rather than fanciful, prospect of success. The court must avoid a mini-trial, but may analyse the available evidence and resolve a short point of law or construction where the relevant evidence is before it. Claims brought in the name of a company without proper authority may be struck out. Claims under sections 423 and 424 of the Insolvency Act 1986 require an identified transaction capable of falling within those provisions.

The defendants applied on notice to strike out claims under CPR rule 3.42, alternatively for summary judgment under CPR rule 24.2. The claimants alleged unlawful means conspiracy, causing loss by unlawful means, breaches of fiduciary duty, and transactions defrauding creditors under sections 423 and 424 of the Insolvency Act 1986.

The court considered whether the proceedings had been authorised by the first and second claimant companies, whether the proceedings breached prior court orders, and whether the claims had a realistic prospect of success.

1. The claims brought in the names of Stratton Mortgage Funding 2019-1 PLC and Clavis Securities PLC were commenced without authority. The evidence established that the Intertrust companies and Ms Whitaker remained the companies’ directors, while Mr Kumar was neither a director nor an attorney. Only the companies’ current directors had authority to commence proceedings in their names. Those claims were therefore struck out.
2. The governing test under CPR rule 3.42(a) and CPR rule 24.2(a) was whether the claims had a realistic prospect of success. A realistic prospect is more than fanciful and carries some degree of conviction. The court must not conduct a mini-trial, but need not accept a party’s case at face value. It must consider existing evidence and evidence reasonably expected to become available, exercising caution where the evidence may be incomplete. It may resolve a short point of law or construction where the relevant evidence is available, as explained in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at paragraph 15.
3. The claims for breach of fiduciary duty brought by the first and second claimants necessarily failed because those companies had not authorised the proceedings.
4. The claims by the third and fourth claimants under sections 423 and 424 of the Insolvency Act 1986 also had no viable basis. No transaction had been identified, and there was no evidence that any transaction had been entered into, still less one capable of producing the alleged statutory effects.
5. The proceedings had also been commenced in breach of prior identification-evidence orders and an extended civil restraint order. Taking the claims in the round, the court concluded that they had no legal or factual merit and struck them out.