Christian Evans v Gennaro Pucci & Anor

On applications for reverse summary judgment, strike out and amendment, the central question is whether the pleaded case has a real prospect of success. A case must carry some degree of conviction, be coherent and properly particularised, and have an evidential foundation. The court must avoid a mini-trial, but should decide a short point of law or construction where the necessary material is available.

Contractual estoppel arising from an entire agreement clause may prevent reliance on alleged collateral promises or pre-contractual representations. A party who has agreed that it has no proprietary interest in partnership property cannot subsequently claim an entitlement to that property based on earlier representations. Amendments introducing new claims after limitation are permissible only where the claims arise from the same or substantially the same facts already in issue.

The claimant brought proceedings concerning alleged promises relating to 15% of performance fees generated by a hedge-fund business operated through an LLP and associated companies. The defendants applied for reverse summary judgment or strike out of the Particulars of Claim. The claimant informally cross-applied for permission to amend by proposed Amended Particulars of Claim.

The proposed amendments introduced claims involving constructive and express trusts, proprietary estoppel, a Pallant v Morgan equity, collateral contracts, personal liability as agent, profit shares, psychiatric injury and loss of income. The court considered whether those claims had a real prospect of success and whether the new claims could be added under the applicable limitation provisions and CPR 17.4.

1. The applications were determined by asking whether the pleaded allegations had a real prospect of success. The test required more than an arguable case: the pleading had to carry some degree of conviction, be coherent and properly particularised, and be supported by evidence establishing a sufficiently arguable factual basis. The court was not to conduct a mini-trial, but should decide a short legal or construction point where the evidence and argument were sufficient.

2. The entire agreement provision in the LLP agreement, applied through the deed of adherence, gave rise to contractual estoppel. The claimant agreed that he had no proprietary interest in LLP property and that the managing member retained a discretion over profit allocations. Earlier alleged representations could not establish a proprietary entitlement to the performance fees. The alleged collateral contract and re-joining contract were also within the scope of the entire agreement clause.

3. The trust claims were unsustainable on the pleadings. There was no allegation that the defendants had knowingly received the relevant money or traceable proceeds. The proposed express trust lacked a pleaded basis for the alleged trustee to have received the supposed trust property. The alleged fiduciary and common-intention constructive trusts likewise lacked particularisation and a pleaded receipt of relevant property. The Pallant v Morgan equity was unavailable because the claimant did not allege conduct conferring an advantage on the acquiring party or prejudicing his ability to acquire the property.

4. The proposed contractual claims were subject to the six-year limitation period under section 5 of the Limitation Act 1980. They were new claims and did not arise from the same or substantially the same facts already in issue. The proposed first-period claims were also out of time under section 11, or, absent the personal-injury claim, under the twelve-year period applicable to an action on a deed.

5. The court rejected the proposed reliance on the so-called Mastercard exception. That principle concerned a continuing wrong where part of the claim fell within the existing limitation period. It did not apply where no continuing wrong had occurred during the relevant period. Section 35(3) and CPR 17.4 therefore prevented the proposed amendments.

6. The claims based merely on membership, without pleading a default in the exercise of the profit-allocation discretion, had no prospect of success. The allegations of personal liability as agent were insufficiently particularised and did not carry the required degree of conviction. The claims concerning the re-joining contract failed for contractual estoppel. The claim as pleaded and the proposed amendments could not proceed, save that the court required further submissions concerning certain claims not based on the re-joining contract, including the alleged personal liability and one-month profit-share claims.