Ultimate Bridging Finance Limited v 4 Fairweather Close Limited & Ors

The defendants' application for summary judgment on their Part 20 claims against Crimson Phoenix Solicitors Limited (CPS) and Wilkes Partnership LLP (Wilkes) is dismissed. The court applied the summary judgment test in CPR 24.2 and concluded that the defendants had not shown that the third and fourth parties had no real prospect of successfully defending the claims.

The court held that (i) CPS pleads that the TA13 forms and associated undertakings were not signed with its authority and raises a real triable issue about forgery and actual authority; (ii) Wilkes would be liable for breach of trust if it released the purchase monies absent authority or a genuine completion, but Wilkes has a real prospect of success on a defence under section 61 of the Trustee Act 1925 because issues of honesty, reasonableness and the exercise of the court's discretion are fact-sensitive; and (iii) the defendants' contribution claims under the Civil Liability (Contribution) Act 1978 are insufficiently particularised and, in any event, do not establish liability for the "same damage" as the defendants' contractual debt to the lender.

Accordingly, summary disposal was inappropriate: CPS has a triable defence of lack of authority/forgery; Wilkes has a triable section 61 defence; and the contribution claims are both inadequately pleaded and unlikely to meet the "same damage" requirement without further particularisation.

Background and parties. The lender advanced about £2 million to five single-purpose companies (the defendants) to buy five properties. The sellers' solicitors in the transaction were represented in the proceedings by Crimson Phoenix Solicitors Limited (CPS) (third party) and the purchasers' solicitors were Wilkes Partnership LLP (Wilkes) (fourth party). Completion monies were routed through Wilkes to CPS but the defendants were never registered as proprietors and the existing charges were not discharged. CPS admits it paid away the completion monies but denies it gave the relevant undertakings. The Solicitors Regulation Authority intervened into CPS in April 2023. The lender obtained summary judgment against the defendants in June 2024.

Nature of the application. The defendants sought summary judgment under CPR 24.2 on their Part 20 claims for contribution and indemnity against CPS and Wilkes, alleging breach of trust and breaches of undertakings given in TA13 forms and related correspondence, and invoking the Civil Liability (Contribution) Act 1978.

Issues for decision. The court framed the principal issues as: (i) whether CPS had authority to sign and give the undertakings in the TA13 forms or whether the signatures/undertakings were forged (affecting liability for breach of trust); (ii) whether Wilkes was in breach of trust by paying away completion monies and, if so, whether Wilkes could be relieved under section 61 of the Trustee Act 1925 (honesty, reasonableness, and discretion); and (iii) whether the defendants could establish a contribution claim against CPS and/or Wilkes under the Contribution Act in respect of the "same damage" suffered by the lender.

Court's reasoning and conclusions. The court applied the established summary judgment principles and held that:

• On CPS: CPS pleads forgery and lack of authority to sign the TA13 forms. The defendants had not pleaded an alternative basis of apparent or ostensible authority. The existence of actual authority is a triable issue, so CPS has a real prospect of successfully defending the claim.
• On Wilkes: Wilkes accepted that if the transaction was not genuine it would be liable for breach of trust in releasing the funds. The court found there was no real prospect that the transaction was genuine, so Wilkes had no real prospect of defending liability on that factual point. However, Wilkes advanced a realistic section 61 defence: it acted honestly and there is a real prospect of showing it acted reasonably in relying on CPS, given professional practice, the Code for Completion by Post and anti-money-laundering expectations. Reasonableness and the discretionary balancing under section 61 are fact-sensitive, so summary judgment was inappropriate on that defence.
• On contribution: the defendants' particulars were insufficiently particularised as to the breaches and the damage allegedly caused; moreover the defendants' contractual liability to repay the lender is not the "same damage" as the types of loss for which CPS or Wilkes might be liable for breach of undertakings or trust. Accordingly the defendants could not establish entitlement to summary judgment on a contribution claim.

Other matters. The court noted CPS was struck off and dissolved under the Companies Act 2006 after the hearing, meaning its assets had vested bona vacantia and that no judgment can presently be entered against it without restoration.

The defendants' application for summary judgment against CPS and Wilkes is dismissed. CPS raises a triable issue that the TA13 undertakings were not signed with its authority (forgery/actual authority), and Wilkes has a real prospect of success on a section 61 Trustee Act 1925 defence because questions of reasonableness and the exercise of discretion are fact-sensitive. The defendants' contribution claims are inadequately particularised and do not establish liability for the "same damage" required by the Civil Liability (Contribution) Act 1978.