England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London. WC2A 2LL
		30 October 2009

The Deputy Judge :

Introduction

1. This Action was started by the Claimants, Mr Clifford Spencer and Mrs Janice Spencer, on 16 March 2009. The Claim Form indicated as brief details of the claim "Damages for breaches of fiduciary duty and negligence". Attached to the Claim Form are Particular's of Claim, the whole of which I set out a little later in this judgment.
2. Following service of the Claim Form the response of the Defendant, Barclays Bank pic ("the Bank") was to issue, on 12 June 2009, an application to strike out the Particulars of Claim in this Action under CPR Part 3.4(2) or alternatively for summary judgment under CPR Part 24. This is the application which I have to deal with.
3. The principal grounds relied upon in support of the Bank's application are that the Particulars of Claim disclose no reasonable grounds for bringing the claim and are so defective as to amount to an abuse of the court's process or to be otherwise likely to obstruct the just disposal of the proceedings. Also it is submitted the Action is an abuse of the process of the court. Shortly stated the Bank's submission is that:

i) The Particulars of Claim fail to state sufficient particulars of the facts supposed to give rise to the duties or breaches of duty claimed against the Bank

ii) On the face of the Particulars of Claim certain of the claims are precluded by the principle preventing shareholders claiming damages for reflective loss (that is to say, the principle expounded in Johnson v Gore Wood & Co [2002] 2 AC 1 and Gardner v Parker [2004] EWCA Civ 781, [2004] 2 BCLC 554)

iii) Also, having regard to the evidence supporting the Bank's application, any claims which are not precluded by the reflective loss principle are time-barred under the Limitation Act 1980

iv) Finally, the Action should not be permitted to proceed as, on the principle of Henderson v Henderson (1843) 3 Hare 100 as explained in the Gore Wood case, the claims sought to be made would amount to an abuse of process in that they could and should have been pursued by the Claimants in previous litigation.

4. I have come to the conclusion that the Particulars of Claim should be struck out, and that the Action should be dismissed.

Background

5. The witness statement in support of the Bank's application, that of Mr Ian Paul Battersby of the Bank's Solicitors, explains that before 1999 a farm comprising land and buildings was owned by the estate of the late George Spencer, but with a lease to a company called Springdale Farm Ltd ("SFL"). The Claimants were directors, and were and are shareholders of, SFL. The Bank were lenders to SFL.
6. In 1999 there was a reorganisation, described by Mr Battersby as being "to facilitate continued lending by the Bank". This involved the estate selling the farmland, while 100 acres (including the farm house and other buildings) was sold to SFL. According to Mr Battersby this allowed SFL to provide unencumbered security to the Bank of a freehold interest with vacant possession.
7. In 2002 there was a further reorganisation, when part of the land was transferred to a company called Springdale Crop Synergies Ltd ("SCS") of which, again, the Claimants were directors and were and are shareholders. SCS charged its land to the Bank to secure lending from the Bank, SCS and SFL at the same time entering into cross- guarantees.
8. On 4 April 2007 the two companies went into administration, the Bank having appointed the Administrators.
9. Following the appointment of the Administrators a dispute developed: the Claimants say that on 1 November 1999 SFL had granted a 30 year sub-lease of its leasehold interest in the farm to a partnership ("the Partnership") of which they were partners. A copy of the agreement is in evidence: in it the tenant is said to be "Clifford & Janice Spencer T/A Springfield Farms".
10. This led to one of the four sets of proceedings which have followed the Administration. This is referred to as "the Access Application". It was started by the Administrators in the High Court in the Leeds District Registry on 5 March 2008 against the Claimants and their three children. In the Access Application directions for trial were given; but in late July 2008 the trial was vacated and the proceedings were stayed until the conclusion of the later of the next two of the four sets of proceedings, the Bankruptcy Proceedings and the Possession Proceedings described below.
11. The second set of proceedings I refer to as "the Bankruptcy Proceedings". These began earlier in time, at the end of 2007, when the Claimants issued in the Scarborough County Court an application to set aside statutory demands made on them by the Bank for payment of rather more than £100,000 said to be due by the Claimants chiefly in their capacity as partners in the Partnership. Once the set aside application had failed, being dismissed by District Judge Hill on 21 April 2008, bankruptcy petitions against the Claimants were presented by the Bank and defended by the Claimants.
12. How this debt due from the Claimants as partners had arisen, and the basis on which the Claimants sought to resist the Bank's demand, I discuss later. It is sufficient at this stage to mention that before the end of 1999 the Claimants had been carrying on a business as partners, and that as such partners they had banked with and had the benefit of facilities from the Bank.
13. Also, in the course of these various proceedings the Claimants' case in relation to the Partnership was clarified: in affidavits of 3 December 2007 both of the Claimants explained that their daughters, Ria and Tara. had been partners in the Partnership. It is now said that they were partners from before 2000 and remained as partners. Also it appears that by about 2007 the Claimants' third child, Niki, may be said to have joined the Partnership, as the latest of the sets of accounts which I refer to later, those as at 30 April 2007, include him as a partner with her sisters and parents.
14. The third set of proceedings, "the Possession Proceedings", started a little after the Access Application, on 2 April 2008, when the Bank brought proceedings in the Scarborough County Court claiming possession in respect of the charged property: the Claimants were defendants to these proceedings, as were their three children.
15. The fourth and final set of proceedings to mention are in fact two actions, "the Money Actions", started on 2 May and 6 May 2008 in the Scarborough County Court, by "C and J Spencer t/a Springdale Farms" In the actions various sums of money were claimed from the Bank (as further explained later).
16. In the Bankruptcy Proceedings the Claimants made allegations against the Bank, putting forward in answer to the claimed debt the case that the Bank had misadvised them, by advising them "to use the partnership assets and money against the limited company", thereby causing monies of the Partnership to be paid to credit of the companies' accounts. As it was stated by the Claimants in their affidavits, "If the bank had advised us correctly those monies would have been allocated against the partnership bank account and my personal bank account. " This case was amplified in later evidence, when it was said that "the family was given no real choice in the matter of suppressing the partnership, clue to the overwhelming control and influence of the bank... ". This was essentially the case put before District Judge Hill at the hearing on 21 April 2008 when he refused to set aside the statutory demands. An application by the Claimants to appeal out of time was dismissed by HH Judge Langan QC on 4 August 2008.
17. By way of defence of the bankruptcy petition presented by the Bank the Claimants put forward the same case, albeit further developed. It was said by the Claimants in a statement of 18 June 2008 that one of the acts of control by the Bank involved the Bank, at a time when the Partnership had a significant overdraft, instructing a reduction in the borrowing of both the Partnership and SFL, insisting upon "the transfer of assets from the Partnership to the Company" the Partnership's assets at that time chiefly comprising plant, machinery and motor vehicles. In relation to this the Claimants exhibited various documents dating from a period starting in late 1999 and concluding in May 2001. The evidence explained how the Partnership sold machinery and vehicles at an undervalue of approximately £70,000, and how out of the net proceeds of sale of approximately £127,000 some £114,000 was repaid to the Bank "to clear out the balance on the Partnership loan account". The assertion was made that "the Partnership current account was then left with a balance of £90,298.81, when it should have been cleared. " This case was summarised as follows: "The Partnership transferred the assets to the Company at an undervalue on the express agreement with the Petitioner that the Partnership account would thereafter have a nil balance ".
18. On 2 September 2008, when the petitions were to be heard (by now having been transferred to the Leeds District Registry), the Claimants applied for an adjournment. It appears that on the adjournment application before HH Judge Behrens the Claimants produced the draft amended Particulars of Claim which had been put forward in the Money Actions (as I refer to later), and that the thrust of what was being sought by that draft document had to be explained to the Judge by Counsel by reference to the evidence of Mr Spencer.
19. When HH Judge Behrens refused the adjournment application, the Bankruptcy Proceedings came to an end, the petitions being dismissed on an undertaking by the Claimants' solicitor to pay the petition debt to the Bank.
20. Meanwhile the Possession Proceedings were under way, in due course being transferred to the Leeds District Registry. In these the Claimants defended by reference to the partnership lease: they and their children were amongst the defendants. But they also pleaded in their Defence a case against the Bank by reference to alleged breaches of duty to SFL and SCS causing damage to those companies and to the Claimants "as directors and majority shareholders" and proposed both (a) to amend the statements of case in the Money Actions to make similar claims and (b) to have the Money Actions consolidated with the Possession Proceedings. In response, by letter dated 24 July 2008, the Bank's solicitors pointed out to the Claimants' solicitors that the reflective loss principle in Gore Wood made the pleaded case unsustainable and liable to be struck out. At an oral hearing on 28 July 2008, the Claimants' Counsel had confirmed that no counterclaim was to be made in the proceedings, and in the event none was. Thereafter the Claimants filed an amended Defence in which the material claims were deleted, this being agreed by the Bank to be allowed without any costs being pursued.
21. At a pre-trial review on 5 December 2008 HH Judge Behrens refused to adjourn the trial, then due to start in early January 2009. The Judge made a number of other directions, including (importantly for this present application) for specific discovery of partnership accounts from 1999 to date "including all draft, interim and final accounts". The orders made by the Judge are the subject of an outstanding application by the Claimants for permission to appeal.
22. In January 2009, just before the trial of the Possession Proceedings was due to start, there was an adjournment application made by the Claimants; and in the event the trial was adjourned to 20 April 2009. Shortly before that date there was a further adjournment application by the Claimants, the application being heard and refused on the first day of the trial. The following day the trial proceeded in the absence of the Claimants or any representation on their behalf, and the possession orders were made in favour of the Bank. However the Claimants are seeking to appeal these orders too.
23. While the Bankruptcy Proceedings and the Possession Proceedings were going forward in the Spring of 2008 the Money Actions had been started. As mentioned, these were actions by "C and J Spencer t/a Springdale Farms " as claimants against the Bank. The claim was that the Bank (a) "advised C and J Spencer t/a Springdale Farms to pay in all their partnership monies from early 1999 onwards into the account of [,SFL]", it being alleged that £43,457 was paid in this way in respect of grass seed sales at dates in late 2003 and early 2004; and (b) "instructed me to pay in monies due to me and cheques made payable to me personally for my family farming partnership into the account of" SFL, it being alleged that an aggregate of £49,155.06 was dealt with in this way in two financial years, to 30 April 2003 and 30 April 2004.
24. The response of the Bank to the initial claim forms in the Money Actions was to point out that they lacked proper particulars. In July 2008 the Claimants by their solicitors sought to address this, providing draft amended Particulars of Claim. These now alleged that the Bank acted "grossly negligently and/or recklessly towards the interests of the Partnership and the Companies, in a manner which was intended to and in fact did solely benefit the interests of the Defendant itself". The basis for this allegation is said to be that the Bank "exercised effective control over the organisation and the running of the business of the Partnership and the Companies " and "decided to heavily promote the Companies at the expense of the Partnership and thereafter in particular [SCSJ at the expense of [SFL], and for both the companies to undergo major staff recruitment and to pursue business plans which required immediate and very heavy indebtedness to the Claimant (sic) in excess of £4,500,000".
25. As mentioned earlier in this judgment, the Money Actions were at one stage, in mid- 2008, sought to be deployed by the Claimants in connection the Possession Proceedings. The letter dated 24 July 2008 to which I have already referred from the Bank's solicitors drew attention to defects in the draft amended Particulars of Claim, both as to lack of essential particularity but also as to the defect that the proposed pleading was putting forward impermissible reflective loss claims.
26. I have also explained how the proposed amended Particulars of Claim in the Money Actions, and the claims sought to be made thereby, were put forward before HH Judge Behrens when he was considering the Claimants' application for the adjournment of the bankruptcy petition.
27. On 17 September 2008 the Claimants discontinued the Money Actions. This was the day before the two actions were due to come before the court for a directions hearing.
28. I now turn to the grounds put forward by the Bank for having the Particulars of Claim in the present Action struck out and the Action dismissed.

The nature of the pleaded statement of case

29. The first ground relied upon by the Bank is, as I have said, that the Particulars of Claim are on their face defective because they fail to provide any approach to appropriate particularisation.
30. What is pleaded in the Particulars of Claim is as follows:

"1. The Claimants are majority shareholders, former directors, guarantors, creditors and, in partnership, tenants inter alia of Springdale Group Limited, Springdale Farm Limited and Springdale Crop Synergies Limited and (hereinafter referred to as "the Companies").

2. At all material times between January 1999 and April 2007 the Defendant through its servants or agents acted as (i) banker (ii) financial adviser and (Hi) shadow director of the Companies.

3. At all material times the Defendant through its servants or agents including exercised ejfective control over the organisation and the running of the business of the Companies and the Claimants' partnership.

4. In the premises the Defendant had a duty to act with reasonable skill, care and diligence to promote the interests of the Companies and the partnership.

5. Furthermore, acting as a shadow director through its servants or agents, the Defendant owed the Companies the partnership and the Claimants ci fiduciary duty of good faith and a duty to avoid conflicts of interest.

6. The Defendant, in breach of its duties, acted grossly negligently and/or recklessly towards the interests of the Companies, their shareholders and creditors and the Claimants and their partnership and in a manner which was intended to and in fact did solely benefit the interests of the Defendant itself

7. Without prejudice to the generality of the foregoing; in particular the Defendant created and heavily promoted Springdale Crop Synergies Limited at the expense of Springdale Farm Limited and for both companies to undergo major staff recruitment and to pursue business plans which required immediate and very heavy indebtedness to the Defendant in excess of £4,500,000.00.

8. On 4^th April 2007 the Companies were placed into Administrative Receivership by the Defendant.

9. Arising from the foregoing it is averred that the Companies and third parties thereby suffered losses and have a cause of action against the Defendant for damages.

10. The Claimants, inter alia in their capacity as directors, majority shareholders, guarantors, creditors and tenants of the Companies, individually and in partnership, have suffered substantial losses by reason of the foregoing breaches of duty, negligence and or recklessness. "

31. What is set out in the Particulars of Claim bears a close resemblance to what had been proposed as the pleading in the Money Actions, although there are some differences. For example, paragraph 7 of the Particulars of Claim does not contain the averment, to be found in the draft amended Particulars of Claim in the Money Actions, that the Bank decided to promote the two companies at the expense of the Partnership. In other words seemingly the Claimants are no longer pursuing that specific claim. Again, the Particulars of Claim lack the identification of individuals through whom the Bank is said to have acted in exercising effective control over the organisation and running of the business of the partnership and the companies.
32. I am satisfied that the Bank's submission concerning the lack of particularity in the Particulars of Claim is correct. For example, other than the assertion of gross negligence and recklessness, and other than the general assertion of misconduct, there is no single act said to have been done by the Bank in relation to the Claimants or anyone else which could be reasonably understood to justify either adjective, "negligent" or "reckless". The only specific acts alleged are those in paragraph 7 of the Particulars of Claim. However what the Bank is supposed to have done to promote one company at the expense of the other is not stated. Nor are the acts, which in that paragraph it is said the Bank caused both companies to do, self-evidently negligent much less grossly so or reckless; and no facts are stated to explain what it was that caused the acts to have the claimed character.
33. In other words the Particulars of Claim fail to meet the basic requirement in CPR Part 16.4(1), that they should include "a concise statement of the facts on which the claimant relies". As they stand they are not such as to enable the Bank or the Court to see the case which the Bank is supposed to meet. In that sense they are embarrassing: it would not be right to allow the Action to go forward with the Particulars of Claim in this state. Within CPR Part 3.4(2) the Particulars of Claim are an abuse of process and likely to obstruct the just disposal of the Action.
34. However, it does not follow from this that the Action should be dismissed out of hand, as the consequence of the striking out of the Particulars of Claim. One possibility would have been for the Bank's application to be stood over to allow time for amendment to be proposed and considered, to see whether the Claimants put forward a proper statement of case.
35. However. I have to deal with the case as it has been presented to me. At the hearing of the Bank's application the Claimants were represented by Counsel, Mr Jonathan Rule. Despite the obvious inadequacy of the Particulars of Claim no proposal for amendment was made by the Claimants at the hearing, much less before the hearing. Not only was no draft amended statement of case put forward, but no offer was made to put one forward and no application was made for the hearing of the application to be adjourned to allow time in which to put one forward. Rather the submission was that indulgence should be given to the Claimants as litigants in person, this indulgence in effect leaving the Action to continue with the present Particulars of Claim and to require the Bank to answer claims asserting gross negligence and recklessness without the case against it being given any form it could possibly plead to.
36. From this it seems to me that the Claimants, despite having the benefit of advice and assistance from Counsel, had no intention of trying to amend their statement of case to put forward a coherently pleaded and intelligible claim. Making every allowance for the fact that the Claimants are conducting the Action as litigants in person, that is not a proper approach to litigation. It is calculated to frustrate the objective of enabling the court to deal justly with the case.
37. However, this consideration does not stand by itself. A little earlier I drew attention to the draft amended Particulars of Claim in the Money Actions. As it seems to me the fate of the Money Actions is relevant to the exercise of the power to strike out the Particulars of Claim and dismiss the Action. This is because the Bank's solicitors had, in the letter of 24 July 2008, drawn attention to the lack of particularisation, among other defects, in the draft statement of case. In the formulation in the present Particulars of Claim no worthwhile steps have been taken to address the point correctly made by the Bank's Solicitors in relation to the Money Actions. In other words the Claimants served up in this Action a statement of case which suffered from the same defects as a previous one, despite having had the defects pointed out to them.
38. As a further point, I have come to the conclusion that substantively the Action, based as it is on the present Particulars of Claim, is an abuse of process and should for that reason be struck out. This has two aspects, to which I now turn.

Reflective loss

39. It may be assumed (although the point is not expressly pleaded) that the Particulars of Claim assert that the Bank owed duties to SFL and SCS and to the Claimants and the Partnership. These it is said the Bank broke by its gross negligence and recklessness.
40. However, so far as discernible, the actions of the Bank which are relied upon are those in paragraph 7 of the Particulars of Claim, namely the promotion of SCS at the expense of SFL, and the causing of both companies to pursue certain business actions. As I have already pointed out, those are the only acts on the part of the Bank which have been stated, other than the general assertions of misconduct.
41. This in my judgment demonstrates that the damages claimed by the Claimants are for losses they have suffered in their various capacities by reason of injury the Bank did to the two companies. These capacities were pleaded in paragraph 1 of the Particulars of Claim. Other than capacities which quite obviously the Claimants held in relation to the companies (that is, majority shareholders, and so on), there is reference to the Claimants' capacity "in partnership, as tenants ...". In other words the Partnership's relevance is because the Partnership was a tenant of the companies. It must therefore be assumed that the Partnership is alleged to have been harmed, and to have a claim, by reason of a loss incurred by it as tenant consequential on and reflective of the loss suffered by the two companies by reason of the alleged wrongs done by Bank to the companies as set out in in paragraph 7 of the Particulars of Claim.
42. In the letter of 24 July 2008 the Bank's solicitors drew attention, as I have mentioned, to the fact that the proposed amended Particulars of Claim in the Money Actions, like the Defence in the Possession Action, sought to put forward claims for damages apparently suffered by the Claimants by reason of wrongs done to SFL and SCS. They pointed out, correctly, that the claims were barred by the principle explained in the Gore Wood case.
43. In the Particulars of Claim substantially the same claims are put forward. Mr Rule conceded, in my judgment correctly, that the Action cannot be pursued insofar as it involves a claim for reflective loss through the two companies; that is to say insofar as the Claimants seek to recover damages from the Bank for a loss suffered by them by reference to some position or involvement with the company, which loss is reflective of loss suffered by the company in circumstances where the company could recover in respect of that loss.
44. The consequence, it seems to me, is that if the Action were to be proceeded with the Particulars of Claim would need to be redrafted to eliminate so much of the Claimants' case as is for loss suffered by them by reason of injury done to and suffered and actionable by the two companies, where their loss is in their various capacities in relation to the companies and is reflective of what has been lost by the companies.
45. In my judgment the Particulars of Claim, fairly construed, do not properly put forward any claim which is not for reflective loss. True, paragraph 6 contains an allegation that the Bank acted grossly negligently and recklessly towards the interests of the Claimants and the partnership. But, as mentioned, paragraph 7 does not allege any act all by the Bank in relation to the Partnership or the Claimants individually.
46. The Particulars of Claim may be contrasted with the pleading in the draft statement of case in the Money Actions, which made an express allegation that the Bank promoted the companies at the expense of the Partnership. Although paragraph 7 is said to be stated "in particular" and to be "without prejudice to the foregoing" (and therefore to what is in paragraph 6), it is only in paragraph 7 that any attempt is made to state anything which was actually done by the Bank; and all that is stated is directed towards the two companies.
47. As a further contrast with the Money Actions, this Action is brought by the Claimants as individuals, and not by the Partnership for wrong done to it by the Bank: the Partnership's name is not mentioned in the title (as would be required by CPR Part 7.2A and paragraph 5A.3 of the Practice Direction supplementing Part 7), neither are the other partners joined as claimants. This further suggests that the Action was for loss suffered by the Claimants by reason of injury done to the two companies, and was not for loss suffered by the Partnership from a breach of duty and injury to the Partnership by the Bank separate and distinct from the acts of the Bank, involving alleged breach of duty to the two companies, as set out in paragraph 7 of the Particulars of Claim.
48. One is therefore left, as a matter of pleading, with the injury to the Claimants as partners in the Partnership by reason of the Bank's acts, admittedly said to be a breach of duty to them as partners, but also a breach of duty to the companies and giving rise to loss to them by reason of the fact that the Partnership was a tenant of the companies and in that capacity suffered loss. This loss alleged to have been suffered by the Claimants is, as it seems to me, no different in kind from their alleged loss as shareholders or creditors of the companies, which loss is reflective of the companies' losses.
49. If, then, the Action as a whole is only for loss which is reflective of that suffered by the two companies, both the Particulars of Claim and the Action as a whole are to be struck out.

Limitation

50. However, making the assumption (contrary to my conclusion) that the Particulars of Claim do indeed make a claim for loss suffered by the Claimants as partners by reason of a breach of duty owed by the Bank to them as partners in the Partnership and suffered by them from something done to the Partnership independently of any actionable injury to the companies, the Bank submits that any cause of action is now time-barred under the Limitation Act 1980, having accrued before April 2003 and so more than six years before the start of the Action and outside the period prescribed for ordinary tort claims (section 2). contract claims (section 5) and claims for compensation for breach of fiduciary duty (section 21(3)).
51. The Bank points out that shortly after the 1999 reorganisation the Partnership was wound down and ceased carrying on business, so that claims for mismanagement and such like by the Bank must necessarily be for matters done before April 2003.
52. In response to this application the Claimants made witness statements on 6 July 2009 in which they stated that the Partnership "was continuing to farm " in the April 2000 year end, and was still trading long after April 2002. In support of this they exhibited what they described as "the accounts for the partnership". These are annual accounts prepared by accountants for the Partnership comprising the Claimants and R and T Spencer.
53. These accounts show that in the four years ended 31 April 2000 to 2003 inclusive each year's turnover from sales declined (using round numbers) from £470,000. to £93,000, to £53,000, to nil. In the year to April 2003 there was, for the first and only time, "other income" of £20,000. From then on until after the year ended 30 April 2007 (the last of the accounts) there was no income whatsoever. These accounts convey that by April 2002 the Partnership's trading had ceased.
54. Meanwhile, the accounts show at the various year ends starting on 30 April 2000 and ending on 30 April 2003 current bank loans and overdrafts on the one hand and long- term bank loans on the other of (in round terms) £251,000 and £110,000 (2000), £217,621 and £nil (2001), £94,000 and £nil (2002), and £90,000 and £nil (2003). From then on the current bank loans and overdrafts increased year by year with the addition of interest, and there was no long-term bank loan.
55. In their statements dated 6 July 2009 the Claimants sought to explain the case which they wanted to make in the Action. This is not a claim, I am satisfied, which finds any expression in the Particulars of Claim. Nevertheless, making the assumption that it is included in the Action, I understand it to be as follows (my summary being extracted from the evidence of the Claimants in opposition to the Bank's application):

i) In 1999 the Bank instructed the Claimants to wind down the Partnership and transfer its assets to the Companies.

ii) In this process of transfer the Partnership's plant and equipment was to be sold to the Companies during 2000, and "this should virtually repay the Partnership debt by transferring the loan of £127k to the limited company in consideration for the fixed assets''. The quotation is from an internal file note of the Bank of 14 March 2000. In the context of the document the "transfer" of the loan was because the Bank was to finance the relevant company in making the purchase.

iii) The transfer of the plant took place, so that (as the Claimants state in their evidence) "the overdraft debt to the [Bank] was owed by the limited company " and not by the Claimants.

iv) Believing that the "the company was responsible for the partnership debt to the [Bank]" the Claimants allowed "partnership funds to be diverted to assist and support the company".

56. This claim, as is apparent, is essentially the same as a claim which was advanced in the evidence in the Bankruptcy Proceedings.
57. In my judgment it faces insuperable hurdles.

i) The alleged undervalue transfer took place more than six years before the Action was started. The cause of action for transferring at an undervalue or for breaking an agreement to treat the transfer as discharging the whole of the debts (overdraft and loan) owed by the Partnership to the Bank will have therefore accrued outside the relevant limitation period. There was no serious argument to the contrary advanced on behalf of the Claimants.

ii) The Partnership accounts demonstrate quite obviously that all that was discharged on the transfer was the bank loan, not the overdraft, and also that that fact must have been perfectly obvious at all times after the transfer. The seeming absence of any complaint from the Claimants over the years following the transfer is difficult to reconcile with the alleged agreement.

iii) The internal bank documents relied upon by the Claimants, in particular that which I have already quoted, give no support either for the proposition that there was ever an agreement that the transfer would eliminate all debt due to the Bank from the Partnership, regardless of the value ascribed to the assets sold, or that either SFL or SCS would be "responsible" to the Bank for the debts owed by the Partnership so that there was 110 debt from the Partnership, that debt having been discharged. As to the Bank's internal documents:

a) The file note of 14 March 2000 had, shortly before the passage relied upon by the Claimants and quoted above, set out a table giving the Partnership's financial position. There was an overdraft of £305,000, reductions on which were anticipated by reason of various activities, while the loan was stated at £127,000. It was the figure of £127,000 which was referred to in the note as the "loan" to be transferred.

b) A later note exhibited by the Claimants and dated 17 August 2000 showed the overdraft to have by then been reduced to £180,000, and contained the comment that it had been, and still was, anticipated that the overdraft was to be reduced by the receipt of outstanding insurance proceeds, while the loan along with appropriate assets was to be transferred to SFL.

iv) The Partnership's accounts, to which I have referred, are altogether inconsistent with the proposition contended for by the Claimants, namely that the disposition of assets of the Partnership had brought about the discharge of all indebtedness of the Partnership to the Bank. They speak for themselves, showing the loan to have been discharged and the overdraft to have been reduced over time but to have remained outstanding at all times after 2002. No attempt was made by the Claimants to explain why the Partnership's accounts are not to be believed on this point.

58. During the course of the hearing Mr Rule submitted that the internal Bank documents had only been disclosed by the Bank during the Possession Proceedings, and that they had in effect changed the landscape from that which had obtained during 2008 when the Bankruptcy Proceedings and the Money Actions were on foot. However I am unable to see anything revealed in these documents which gives any material support for any claim (if made) in this Action concerning harm done to the Partnership on the disposition of its assets in 2001, or which could have affected any such claim when made by the Claimants in the Bankruptcy Proceedings.

Henderson v Henderson abuse

59. The Henderson v Henderson principle, as explained in the Gore Wood case, is no more than a particular instance of the wider principle that the Court will not allow its process to be abused. This appears from the fact that in describing the Henderson v Henderson principle Lord Bingham in his speech in the Gore Wood case made particular reference to a passage in the speech of Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536 which made reference to the "inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people...".
60. The specific instance of abuse of process with which Henderson v Henderson is concerned is the multiplication of unnecessary proceedings which have the effect of taking a disproportionate share of the court's resources while unfairly harassing the opposing party. So when a matter becomes the subject of litigation between parties in a court of competent jurisdiction, they ought to bring their whole case before the court at the same time so that all aspects of it may be finally decided upon once and for all. If a party to proceedings fails to bring his whole case before the court when he could reasonably have done so, a second set of proceedings to bring further parts of the case may be struck out as an abuse.
61. When the court is being invited to consider striking out proceedings on the ground that they amount to an abuse within the Henderson v Henderson principle, the premise is that there is a genuine cause of action which the claimant is putting forward. There is no need to appeal to the principle when what is being put forward is a claim which is otherwise an abuse of process or which is not seriously arguable.
62. So far as concerns the claims sought to be made in the present case which are discernible in the Particulars of Claim and which are simply reflective of loss suffered by the two companies, it is unnecessary for the Bank to appeal to the Henderson v Henderson principle. One can see that in past proceedings the Claimants have propounded the relevant claims, either pleading them and then amending the statement of case to remove the claims (as in the Possession Proceedings), or proposing to plead them (as in the Money Actions), but have never pursued them to any formal decision. This no doubt was because the claims were obviously doomed. And, for reasons I have already given, it is an abuse to put them forward again in this Action.
63. However, that still leaves the question whether it would be an abuse of process within the Henderson v Henderson principle for the Claimants to put forward claims of the Partnership referred to in the previous part of this judgment. This question, however, is hypothetical for two reasons, and therefore does not arise for decision. First, the Action as constituted at present is not an action by the Partnership asserting claims belonging to the Partnership. In this it is to be contrasted with the Money Actions. Second, and more important, I consider that the claims are not seriously arguable, so that it is artificial to suppose that they should have been pursued in the previous proceedings.

Conclusion

64. For this reasons I have decided that the Particulars of Claim should be struck out and the Action dismissed.