Ultimate Bridging Finance Limited v 4 Fairweather Close Limited & Ors

Summary judgment requires the applicant to show that the opposing party has no real prospect of success and that no other compelling reason requires a trial. A solicitor’s compliance with the Code for Completion by Post may give rise to trust obligations over completion money. Whether a professional trustee acted reasonably, and whether relief under section 61 of the Trustee Act 1925 should be granted, are fact-sensitive and usually unsuitable for summary determination. A contribution claim requires both defendants to be liable, or potentially liable, to the same claimant for the same damage. A contractual debt and loss caused by a solicitor’s breach of trust or undertaking are not necessarily the same damage. Inadequately pleaded breaches, loss and damage will ordinarily prevent summary judgment.

The defendants purchased five properties with bridging finance. The completion money was transferred through Wilkes Partnership LLP, acting for the purchasers, to Crimson Phoenix Solicitors Limited, acting for the purported sellers. The properties were not transferred to the defendants, existing charges were not removed, and the completion money was paid away.

The defendants brought Part 20 claims against CPS and Wilkes for breach of trust, breach of undertakings and contribution or indemnity. They applied for summary judgment. The central issues were whether CPS had authorised the relevant undertakings, whether Wilkes had a real prospect of obtaining relief under section 61 of the Trustee Act 1925, and whether the alleged liabilities were in respect of the same damage under the Civil Liability (Contribution) Act 1978.

1. Summary judgment. The applications were dismissed. The burden lay on the defendants to establish both that CPS or Wilkes had no real prospect of successfully defending the relevant claim and that there was no other compelling reason for trial.
2. CPS. The alleged Forms TA13 and undertakings would, if authorised, give rise to trust obligations over the completion money. However, CPS raised a triable issue as to whether the forms and letter had been signed or provided with its authority. The defendants had pleaded only actual authority, not apparent or ostensible authority or holding out. They therefore could not show that CPS had no real prospect of success.
3. Wilkes’ breach of trust. Wilkes accepted the trust obligations identified in P&P Property Limited v Owen White & Catlin LLP and Dreamvar (UK) Limited v Mishcon de Reya (a firm) [2018] EWCA Civ 1082. It had no real prospect of establishing that completion of a genuine sale had occurred. That did not resolve its section 61 defence.
4. Section 61. The defence required honesty, reasonableness and a discretionary decision whether relief ought fairly to be granted. Reasonableness meant reasonableness, not perfection. The fact that Wilkes were professional trustees was not determinative. The evidence disclosed a real prospect that Wilkes had acted reasonably in relying on CPS to verify the sellers’ identity and in paying the money on the footing that completion would occur or the money would be returned. The financial consequences for Wilkes and the possible lack of recourse against CPS were also relevant to the discretion.
5. Contribution. Applying URS Corporation Limited v BDW Trading Limited [2023] EWCA Civ 772, the court asked whether each proposed contributor was liable or potentially liable to the lender and whether both liabilities concerned the same damage. Applying Howkins & Harrison v Tyler [2001] PNLR 27, the defendants’ contractual liability to repay the debt was not the same damage as loss caused by breach of the solicitors’ undertakings. The claims were also inadequately particularised.
6. After judgment was circulated, CPS was dissolved following striking-off. Subject to restoration, no judgment could be entered against it.