Neil Leslie Humphrey & Anor v Paul Craig Bennett & Ors

At an interlocutory stage, a claim should not ordinarily be struck out, or an amendment refused, where the issue concerns developing law and depends on facts that require trial. A claim may proceed if it has a real prospect of success and is adequately pleaded, even where the pleading is concise and legal questions remain unsettled.

The court held that [2024] AC 1191 did not determine whether registration under Land Registration Act 2002, section 29, extinguishes or merely postpones an equitable interest for knowing receipt purposes. Proposed claims in unjust enrichment, dishonest assistance, unlawful means conspiracy and under sections 190 and 195 of the Companies Act 2006 were sufficiently arguable to proceed.

The claimants brought a derivative claim on behalf of Esprit Land Limited against its former directors, Paul Bennett and Alison Murphy, and against Esprit Homes Construction Limited. They alleged diversion of company property and of a development opportunity, including the transfer of land to Esprit Homes Construction Limited.

The court considered an application to strike out the knowing receipt claims against Esprit Homes Construction Limited and an application to re-re-amend the particulars of claim to add claims in unjust enrichment, dishonest assistance, unlawful means conspiracy and under sections 190 and 195 of the Companies Act 2006. The central issues were whether the existing claims were unsustainable after [2024] AC 1191, and whether the proposed causes of action had a real prospect of success and were adequately pleaded.

1. Knowing receipt and registered land. The strike-out application was dismissed. [2024] AC 1191 established that knowing receipt requires a continuing equitable interest in the property transferred, but it concerned shares transferred under foreign law and did not decide the meaning or effect of section 29 of the Land Registration Act 2002. The Supreme Court had expressly preferred to say nothing further about that question. Section 29 refers to postponement of an interest, and it was arguable that this meant the interest remained in existence without priority. The effect of postponement on knowing receipt required full argument and factual findings.
2. Strike out principles. A short point of law may be determined summarily, but claims in developing areas of jurisprudence should generally proceed where resolution depends on facts. A defective pleading should ordinarily be capable of amendment before strike out.
3. Amendment test. The proposed causes of action had to have a real prospect of success and be coherent and adequately particularised. Because they relied on existing factual averments already in issue for trial, further supporting evidence was not required at this stage. The court would not conduct a mini-trial or assess the weight of evidence.
4. Proposed claims. The unjust enrichment claim contained the necessary elements and was arguable, although thinly pleaded. The allegations of dishonesty in the dishonest assistance claim were sufficient at this stage. The unlawful means conspiracy claim adequately alleged combination, intention to injure and unlawful means. Each claim was permitted to proceed.
5. Sections 190 and 195. The transfer of the Wyken Grange Land was arguably a substantial property transaction requiring members’ approval. It was arguable that a claim under section 195(3) could be brought derivatively because the directors’ failure to obtain approval could involve default or breach of duty within section 260(3). A later resolution could, at most, affect avoidance under section 195(2), and did not necessarily affect the remedies under section 195(3).
6. The proposed amendments were allowed, with permission under section 263 to continue them derivatively. The application to strike out paragraphs 13 to 27 was dismissed. Paragraphs 21 to 23, containing submissions and criticism of earlier decisions, should preferably be removed from the pleading.

The judgment records earlier procedural decisions in the same litigation. The Court of Appeal allowed Mr Bennett’s appeal against summary judgment and dismissed the claimants’ cross-appeal concerning Ms Murphy: [2023] EWCA Civ 1433. The present court then allowed the proposed amendments and dismissed the strike-out application.