Helen Mary Ross v Andrew John Phillips & Ors

The court allowed the claimant's application to substitute Bond 58 Homes Limited for the fifth defendant, Ms Phillips, and granted permission for the derivative claims in respect of two properties to be pursued against Bond 58 Homes Limited. The substitution was appropriate because legal title to the two properties (44 Albany Road and 130 Castle Road) had been transferred to Bond 58 Homes Limited on 15 June 2023, and derivative claims previously permitted against the original defendants could equally be pursued against the current legal owner.

On costs, the court ordered that the first defendant, Mr Phillips, pay the claimant's costs of the present application because of delay and late disclosure of the transfers. Costs already dealt with by earlier orders were not reopened. The court reserved the claimant's costs of any future amendments to add Bond 58 Homes Limited and reserved the question of the fifth defendant's costs, so that the trial judge can determine those costs in light of the trial outcome. The court noted the ordinary rule under CPR r.38.6(1) concerning costs on discontinuance but declined to apply it now.

Background and parties: This was an application in a derivative claim proceeding brought on behalf of HRP Complete Solutions LLP. The claimant, Ms Helen Mary Ross, sought an order substituting Bond 58 Homes Limited for the fifth defendant, Zoe Jayne Phillips, and sought permission to continue the derivative claims against Bond 58 Homes Limited together with related consequential orders.

Nature of the application: The application of 29 January 2024 sought substitution of the legal owner of two properties (44 Albany Road and 130 Castle Road) as a defendant and permission for the derivative claims to proceed against that entity. The application was made on paper and was agreed by the defendants apart from the question of costs.

Issues framed:

• Whether substitution of Bond 58 Homes Limited as defendant was appropriate.
• Whether permission to pursue derivative claims against Bond 58 Homes Limited should be granted.
• The appropriate allocation of costs arising from the application and related amendments, divided into: (i) costs already ordered following earlier amendments, (ii) costs of the present application, (iii) costs of any future amendments to add Bond 58 Homes Limited, and (iv) costs of the fifth defendant.

Court's reasoning and decision: The judge concluded substitution was appropriate because legal title to the two properties had been transferred to Bond 58 Homes Limited and derivative claims that could be maintained against the original defendants could likewise be maintained against the current legal owner. The order was made in the terms sought, subject to bringing parts of Schedule A into the main order and subject to the costs determinations set out in the judgment.

On costs, the judge refused to revisit costs already dealt with by an earlier order. The judge ordered Mr Phillips to pay the claimant's costs of the present application due to delay in responding and his late disclosure that title had been transferred. However, the judge reserved the claimant's costs of any future amendments to add Bond 58 Homes Limited and reserved the costs of the fifth defendant so the trial judge could balance those matters having regard to the ultimate outcome at trial, noting also the ordinary position under CPR r.38.6(1) for discontinuance.

Procedural note: The order was otherwise agreed by the defendants and the judgment provides that a final form of the order would be supplied to the parties.

Application allowed. The court made the claimant's proposed order substituting Bond 58 Homes Limited for the fifth defendant and granted permission for derivative claims against Bond 58 Homes Limited because it is the legal owner of the two properties in issue and derivative claims previously permitted against the original defendants could properly be pursued against the current owner. Costs: Mr Phillips was ordered to pay the claimant's costs of the present application for delay and late disclosure; costs already dealt with by earlier orders were not reopened; the claimant's costs of any future amendments to add Bond 58 Homes Limited and the costs of the fifth defendant were reserved for the trial judge to determine.