Helen Mary Ross v Andrew John Phillips & Ors

Where derivative claims have properly been permitted against an individual, and it later emerges that the relevant property is legally owned by another entity, substitution of that legal owner may be appropriate so that the claims can proceed against the correct defendant.

Costs relating to amendments and the effective discontinuance of a claim may be reserved where responsibility for the procedural developments is disputed and the ultimate merits remain unresolved. The trial judge can then determine costs in light of the result and all relevant circumstances.

The claimant pursued derivative claims on behalf of HRP Complete Solutions LLP. The application sought substitution of Bond 58 Homes Limited for Zoe Phillips, permission for the derivative claims to proceed against Bond 58 Homes Limited, and related costs orders.

The application followed disclosure that two properties relevant to the claims had been transferred to Bond 58 Homes Limited before an earlier consent order was signed. The defendants agreed the substantive order but disputed the appropriate allocation of costs. The court therefore determined substitution, permission and four components of costs.

1. Substitution and permission. The court made the order sought, subject to bringing the relevant parts of schedule A into the body of the order. Since it had previously been appropriate for the relevant claims to proceed derivatively against the individual defendants, it was equally appropriate for them to proceed against Bond 58 Homes Limited once it was shown to be the legal owner of the properties.
2. Earlier amendment costs. The application to revisit costs arising from the earlier amendment was rejected. Those costs had already been dealt with by a previous order, and the original pleading remained inadequately particularised against the fifth defendant irrespective of the later transfer of the properties.
3. Costs of the present application. Mr Phillips was ordered to pay these costs. He took time to agree the substantive order, gave no explanation for the delay, and had signed the earlier consent order without disclosing that legal title had already been transferred.
4. Future amendment costs and Zoe Phillips’s costs. Those costs were reserved. Although Mr Phillips’s earlier conduct was relevant, the claims against Bond 58 Homes Limited might ultimately fail. The trial judge could then balance the competing considerations by reference to the final result and the circumstances known at trial. The ordinary position under Civil Procedure Rules 1998, r 38.6(1), was not imposed immediately.