Chancery Judgments
The judgments of notable cases decided in the Division will be published here.
Notable cases:
- Darwall and Darwall -v- Dartmoor National Park Authority
- Harrington and Charles Trading Company Limited -v- Jatin Rajnikant Mehta
- DKH Retail and others -v- City Football Group
Judgment summaries:
The Tintometer Limited v Pitmans (Bacon J)
Civil procedure – Strike out – Limitation – Extension of time – Substitution of parties
In 2021, the claimants sued for negligent advice given in 2008–2009 by their solicitors. The claim originally named two defendants: Adcamp and BDBP. BDBP had acquired Adcamp in 2018.
The deadline to serve the claim form was extended several times for various reasons, including that Adcamp had been struck off the Companies Register before later being restored to the Register. In August 2023, the Claimant’s solicitors discovered that the disputed advice had in fact been given by Pitmans, which Adcamp had acquired in 2011. The Claimants therefore substituted Pitmans for BDBP as a defendant to the claim, before serving the claim form and particulars of claim on the defendants.
Pitmans applied to strike out the claim. They argued that two of the extensions of time had been wrongly granted and should be set aside under CPR r. 3.3(5); or, alternatively, that their addition as a party (after the limitation period had expired) was so late that it was unduly prejudicial to them and should be disallowed pursuant to CPR r. 17.2.
Bacon J dismissed the application. Pitmans lacked standing to set aside the extensions of time because they were not a party to the proceedings when the orders were made. Moreover, it was not prejudicial to add Pitmans as a defendant despite the limitation period having expired: they had been omitted from the claim by mistake, the defendants were primarily responsible for the delays in serving the claim, and all the defendants had the same solicitors and insurers. The commercial reality was therefore that the substitution of Pitmans would make no difference to the defence of the claim.
The full judgment [2024] EWHC 370 (Ch) may be found at https://caselaw.nationalarchives.gov.uk/ewhc/ch/2024/370
Tyshchenko v Hyde (Bacon J)
Stay of bankruptcy proceedings – Adjournment on medical grounds – Amending judgments – Trustees in bankruptcy
The appellant is a defendant in a fraud trial. Following costs orders made earlier in the proceedings, which she was unable to pay, she petitioned for her own bankruptcy. Her main creditors are the claimants and another defendant in the fraud trial, and her only significant asset was a large family home in Surrey.
The appellant applied to stay the bankruptcy proceedings until after the conclusion of the fraud trial. She argued that if she won the trial she would be able to pay her remaining costs without selling the house. Shortly before the hearing of that application, the appellant applied to adjourn it on medical grounds. At the hearing, ICC Judge Prentis dismissed the adjournment application and then heard and dismissed the stay application in the absence of the appellant. The appellant appealed both the adjournment issue and the stay application.
Bacon J refused permission to appeal the dismissal of the adjournment application, as the decision fell within the judge’s case management discretion. The judge was entitled to reach the decision he made given the sparse medical evidence provided by the appellant.
As for the appeal in respect of the stay application, Bacon J refused permission to appeal on two grounds, but held that the ICC judge erred in concluding that the impact of the fraud proceedings on the bankruptcy (and in particular the timeframe for those proceedings) was best considered in later County Court proceedings addressing the trustees’ application for possession of the house. Bacon J held that whether the bankruptcy proceedings should be stayed pending the determination of the fraud proceedings was a logically prior question to the question of whether the trustees should obtain possession of the house, and should have been determined by the ICC judge.
Remaking the decision afresh, Bacon J was initially minded to stay the bankruptcy proceedings insofar as they related to the possession and sale of the house, as it would cause irreparable harm to sell the house only for that to prove unnecessary if the appellant succeeded in the fraud trial. However, after the draft judgment was circulated but before it was handed down, the trustees asked Bacon J to reconsider the decision based on new evidence showing (among other things) a deterioration in the condition of the property and a significant, ongoing decline in its market value. Following a further hearing and new evidence from both sides, the judge decided that it was appropriate to revisit her conclusions on the stay application, and ultimately refused to stay the bankruptcy proceedings. In light of the evidence as to the trustees’ ongoing costs, the deterioration of the property and the decline in its market value, there was a compelling reason for the property to be sold now, and it was probable that it would have to be sold in any event even if the appellant succeeded in the fraud trial.
The full judgment [2024] EWHC 838 (Ch) may be found at https://caselaw.nationalarchives.gov.uk/ewhc/ch/2024/838
Brigita Morina & Ors v Elena Nikolayevna Scherbakova & Ors. (Bacon J)
[ Probate, Domicile, Residence, Interim Administrators, Extortion]
This was a claim by the fiancée (Ms Morina) of the deceased Vladimir Scherbakov (V), and two of her minor children, for a grant of probate in relation to a will made by V in 2015. The claim was opposed by V’s ex-wife and V’s adult children from that marriage. V was a wealthy Russian businessman who in the later years of his life had moved to England with his fiancée and their children. In the last 18 months before his death, however, V lived in Belgium as a result of an Interpol Red Notice seeking his arrest and extradition to Russia. He died in Belgium in June 2017.
There were two issues central to the claim. The first was whether V had acquired and subsequently abandoned an English or Belgian domicile of choice, or whether his Russian domicile of origin was maintained at the time of his death. Finding that V had acquired an English domicile of choice, which he retained until his death, the court gave weight to V’s residence with his new family in England, his business and personal investments, his social activities and his declared intentions. The second issue was whether the 2015 will was valid and whether it had been revoked. The court found that the 2015 will was valid, had not been revoked, and that V’s ex-wife and adult children were involved in the suppression of that will. The court accordingly ordered that a grant of probate of a copy of the 2015 will should be made to Ms Morina, and ordered costs in favour of the claimants on the indemnity basis.
STDC v PD Teesport (Rajah J)
[Real property – Express easements – Implied easements – Easements by prescription – Trespass – Proprietary estoppel]
This was a dispute concerning the former British Steel steelworks at Teesside, near Middlesbrough. South Tees Development Corporation (a mayoral development corporation) and its joint venture vehicle (Teesworks) are developing the site. A dispute had arisen with PD Teesport, the port authority and operator of Teesport as to whether PD Teesport had rights of way over the site. The dispute related to three areas – South Gare, Redcar Quay and South Bank.
The judge found that PD Teesport had a right of way across South Bank at common law from long use to access and egress Teesport and a right of way on the same basis to South Gare for all purposes. In addition, PD Teesport had an implied right of way to access Redcar Quay and various minor express rights of way arising under historic conveyances. The judge rejected a number of other claims, including a claim in proprietary estoppel.
The full Judgment [2024] EWHC 214 (Ch) may be found at the National Archives.
Lidl Great Britain Limited and anr v Tesco Stores Limited and anr (Joanna Smith J)
Trade marks; Copyright; Passing off; Supermarkets
The logo of the supermarket Lidl comprises its name in a yellow circle on a blue square. It registered this logo, both with and without the ‘Lidl’ name, as trade marks. The court held that Tesco’s ‘Clubcard Prices’ (CCP) promotion, whose branding also used a yellow circle on a blue background, infringed these trade marks and Lidl’s copyright in them. The promotion also amounted to Tesco passing itself off as Lidl.
An average consumer would regard the CCP signage and Lidl’s logo as similar. Tesco gained an unfair advantage by associating itself with Lidl’s reputation for low-price shopping by using similar branding. Lidl suffered detriment, running adverts to counteract any impression that Tesco price-matched its goods to Lidl’s. Even if Tesco did not want to be associated with Lidl, it did not have a due cause to use the CCP signage. Furthermore, the evidence suggested that the design agency hired by Tesco had copied Lidl’s logo when it designed the CCP signage.
Tesco argued successfully that several earlier registrations of the ‘wordless’ version of Lidl’s logo as a trade mark were invalid as Lidl had no genuine intention to use the mark. However, the CCP signage also infringed Lidl’s ‘standard’ logo and, in any event, the most recent registration of the ‘wordless’ trade mark was valid.
The full judgment [2023] EWHC 873 (Ch) may be found on the National Archives website (external link).
Margulies v Margulies (Sir Julian Flaux C)
Wills; Strike Out; Cause of Action Estoppel; Issue Estoppel; Res Judicata; Abuse of Process; Secret Trust
The claimant and defendant were brothers, involved in a 31-year dispute over their late father’s estate. In 2000, the Court of Appeal upheld the striking out of a previous claim where the claimant said that he benefited from the estate via a secret trust. He issued fresh proceedings in 2022, alleging that his father had left money in a Swiss bank account on trust for him.
The Chancellor granted an application to strike out the claim on res judicata grounds. The claim was barred by cause of action estoppel, as it was a subset of the previous, wider claim. Alternatively, it was barred by issue estoppel, as it asked the court to decide the same question twice: had the father declared a trust over some of his assets before his death? There were no special circumstances that made it unjust to bar the claim for issue estoppel. The claim was also an abuse of process.
The full judgment [2022] EWHC 2843 (Ch) may be found on the National Archives website (external link).
Hugh Grant v News Group Newspapers Limited (Fancourt J)
Misuse of private information; Phone hacking; Summary judgment; Limitation; Concealment; date of knowledge
The claimant alleges that The Sun newspaper misused private information by, for example, hacking his voicemail. The defendant applied for summary judgment, arguing that the claim was time-barred.
Under the Limitation Act 1980, the six-year time limit on a tort claim does not start where the defendant conceals facts from the claimant that are relevant to the claim. Instead, it starts when the claimant discovers, or reasonably could have discovered, the concealment.
The judge held that this was an “all-embracing claim” about unlawful information gathering (“UIG”). Therefore, assuming that there was concealment, the clock started when the claimant knew, or could reasonably have known, that UIG was being used against him, even if he did not know about each specific incident. However, each type of UIG (e.g., phone hacking, bugging his house) had its own time limit.
On the evidence currently before the court, the claimant knew or ought to have known by January 2016 that he had a claim in relation to The Sun hacking his voicemail. Those allegations were time-barred. However, when the claimant first knew or could reasonably have known that The Sun may have been using other UIG methods against him needed to be determined at trial.
The full judgment [2023] EWHC 1273 (Ch) may be found on the National Archives website (external link).
Virgin Media Limited v NTL Pension Trustees II Limited and ors (Bacon J)
Occupational pensions; Contracted out schemes; Statutory interpretation; Revaluation; Trust deeds
The claimant runs a “contracted-out” pension scheme for employees who worked for it between 1991 and 2010. To qualify as contracted-out, the pension scheme had to pass a quality check. This is called the “reference scheme test” and is set out in the Pensions Schemes Act 1993.
In 1999, the pension scheme was made less generous. The 1993 Act, and Regulations passed under it in 1996 (both subsequently amended) say that a contracted-out scheme “cannot be altered” unless an actuary confirms in writing that the scheme continues to pass the reference scheme test.
The claimant does not know if it got this confirmation. The judge held that, if no confirmation was obtained, the changes made in 1999 were void. The words “cannot be altered” are clear and unambiguous. The changes have no effect on pension benefits accrued both before and after 1999.
The full judgment [2023] EWHC 1441 (Ch) may be found on the National Archives website (external link).
Re Bulb Energy Limited (Michael Green J)
Administrators; Court-appointed assessors; Energy supply company administration; Expenses; Remuneration
Energy supply company ‘Bulb’ became insolvent in 2021. Administrators were appointed. After Bulb was sold, the administrators asked the court to approve their remuneration.
Under the Energy Act 2011, the administrators’ objectives are to ensure that energy supplies continue at the lowest reasonable cost and that the company is rescued or sold. The Insolvency Practice Direction says their payments must be “fair, reasonable and commensurate” with the work they do.
The judge felt unable to decide if the objectives had been met or if the remuneration was reasonable without a report from a court-appointed insolvency expert. The report found that the payment was reasonable; the administrators met their objectives, the insolvency was complex and there was no obvious alternative strategy they could follow. The judge agreed, approving the payments.
The full judgment [2023] EWHC 1647 (Ch) may be found on the National Archives website (external link).
Charles Anthony Joseph Steel v Spencer Road LLP (trading as The Omerta Group) (Bacon J)
Employment contract – Discretionary bonus – Clawback provision – Restraint of trade
Mr Steel was employed by Omerta. Under the terms of his employment contract, Mr Steel received an annual discretionary bonus, which he was liable to return if he either left or gave notice of leaving Omerta within three months of receiving it. Mr Steel gave notice within the three-month period following his 2022 bonus, and Omerta sought to recover the bonus by serving a statutory demand. Mr Steel sought to set aside the statutory demand, contending that the clawback provisions of the contract amounted to unenforceable restraint of trade or penalty clauses. His application was dismissed by ICC Judge Mullen, and Mr Steel then appealed the finding as to restraint of trade.
In dismissing the appeal, the court held that a bonus clawback provision which is conditional on the employee remaining in employment for a specified period of time operates as a disincentive to the employee resigning, but that does not turn the provision into a restraint of trade where the provision does not impose any restrictions on the employee’s right to take up new employment thereafter. This followed from established precedent, including Tullett Prebon v BGC [2010] EWHC 484 (QB), which the court considered was correctly decided.
The full judgment [2023] EWHC 2492 (Ch) can be found on the National Archives website (external link).
Mortgage Five Zero Limited v Secretary of State for Business and Trade (Adam Johnson J)
Deeds; Mortgages; Winding-up order; Extended civil restraint orders; Corporate personality
The company Mortgage Five Zero (“MFZ”) provided legal services encouraging homeowners to challenge the validity of their mortgages. It claimed that a mortgage deed was invalid if the mortgagee (e.g. the bank) did not sign it, despite Lord Neuberger rejecting this argument in Helden v Strathmore Ltd [2011] EWCA Civ 542. The court wound up MFZ on public interest grounds in April 2023.
Mr Campbell, the director of MFZ, made umpteen applications challenging the winding-up order. Adam Johnson J dismissed almost all these as being totally without merit. Moreover, Mr Campbell had no authority to make some of the applications on MFZ’s behalf once it was wound up.
The judge then considered making an Extended Civil Restraint Order (“ECRO”) against Mr Campbell. He held that, even where failed applications had been brought validly in MFZ’s name, Mr Campbell was the “real” party as the applications had been made for his personal benefit. The judge said that Mr Campbell was “incapable of taking no for an answer” and granted a three-year ECRO.
The full judgment [2023] EWHC 2654 may be found on the National Archives website (external link).
Adams and ors v FS Capital Limited and ors (Edwin Johnson J)
Trusts; Jersey; Fiduciary duty; Improper purpose; Void transactions
The case concerned three Jersey-based tax avoidance schemes used by over 2,000 people. Under the schemes, the claimants were paid in the form of loans. They would then pay these loans back into trust funds of which they were the beneficiaries. When HMRC cracked down on this arrangement, the loan books were sold by the trustees of the three funds to the First Defendant for around £100,000 upfront with the potential for further payments of up to £1.2 million. The claimants challenged that sale, alleging that it was for an improper purpose.
The judge found that the sale had been for an improper purpose and was therefore void in equity. Each trust had negative cashflow, owing more in administration fees than they received in income. Rather than conducting a proper valuation of the loan book, the trustees sold it to the First Defendant at a value that would pay off the creditors but leave nothing for the beneficiaries, generating profits for the trustees and the buyer in the process. The trustees did have a duty to pay off the creditors but they had failed to take into account the interests of the beneficiaries.
The full judgment [2023] EWHC 1649 (Ch) may be found on the National Archives website (external link).