Queensgate Place Limited v Solid Star Limited (in liquidation) & Ors

Summary judgment may be granted in a dishonesty case where the defendant has no real prospect of success, but allegations affecting personal integrity ordinarily require careful scrutiny at trial. A compelling reason to refuse summary judgment may arise where disputed issues require oral evidence, the trial is imminent, quantum remains unresolved, or similar issues remain against another party.

On an application for security for costs, the court has a broad discretion and must balance the claimant’s ability to pursue a proper claim against the defendant’s risk of irrecoverable costs. Delay may be taken into account by limiting security to costs incurred after the application.

Queensgate Place Limited petitioned under section 994 of the Companies Act 2006, alleging unfairly prejudicial conduct in the affairs of Solid Star Limited and seeking the purchase of its shares for more than £10 million.

Queensgate sought summary judgment against Viking World Investments SA and Prakash Bhundia. Minesh Bhundia separately sought security for costs. The summary judgment application concerned alleged dishonest transfers of company assets and related transactions. The security application concerned Queensgate’s incorporation outside the jurisdiction, alleged inability to pay costs, the merits of the claim, and delay.

1. The application for summary judgment was dismissed. Under CPR Part 24, dishonesty does not create an absolute bar to summary judgment. However, the court must exercise particular caution where the proposed judgment depends on disputed allegations affecting a party’s integrity. Even assuming that the documents showed no realistic prospect of a successful defence, there were compelling reasons for determination at trial.

2. The reasons included the need to determine several different allegations after oral evidence and cross-examination; the fact that the trial was only weeks away; the realistic prospect that the trial would proceed in any event; the unresolved and potentially contestable question of quantum; and the risk of affecting the defence of Minesh Bhundia, against whom related issues remained. The principle in Iliffe v Feltham Construction Ltd [2015] EWCA Civ 715 supported refusing summary judgment where similar issues remained for determination at a full trial involving another party.

3. The court made no findings on dishonesty. Those allegations, and the claim against Minesh Bhundia, were left for the trial judge.

4. The conditions for security under CPR Part 25.13 were satisfied. Applying the principles in Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534, the court considered the merits, the risk of injustice, the claimant’s financial position, and the delay in applying. The delay did not defeat the application but justified limiting security to future costs from the date of application.

5. Security was ordered in the sum of £280,000, comprising adjusted allowances for witness statements, trial preparation and trial costs. It was to be provided within 14 days by solicitors’ undertaking. If it was not provided, the claim against Minesh Bhundia would be stayed.