Summary

Where a claimant had altered its case on the trial of a preliminary issue as to the nature of a £1 million payment, and that case was an arguable one, it was not appropriate to strike it out, but the trial would have to be adjourned to allow that case to be properly pleaded. An individual who had a close personal interest in the outcome of the preliminary issue met the test in CPR r.19.2(2) and was joined as a party.

Facts

The first applicant company (N) applied to strike out the case of the respondent company (S) at the trial of a preliminary issue, and the second applicant (X) applied to adjourn the trial so as to allow him to be joined in his own name as a defendant.

N had engaged S as management contractor in respect of the refurbishment of a property. N was ultimately owned by a discretionary trust (R), of which X was a beneficiary. It was S's case that, in addition to and separate from the management contract, S's directors (Y) had personally come to a joint venture agreement with X, pursuant to which they would share the profits arising out of the refurbishment. Problems occurred in connection with the management contract and S issued proceedings against N. A dispute arose concerning a payment of £1 million made in November 2008, and trial of a preliminary issue was ordered to determine whether that payment was an advance payment made on account of the management contract as alleged by N in its defence and counterclaim, or an advance payment made on account of the separate agreement/joint venture as alleged by S.

N contended that S's case that the payment was made under the alleged joint venture agreement should be struck out because, on the basis of the pleadings and some of the evidence, the court was bound to answer the preliminary issue in its favour. S altered its case to submit that, on the evidence, it was at least arguable that the £1 million payment was made, not by N, but as a distribution by R on behalf of X personally. X contended that he should be joined as a defendant, and the matter adjourned to enable him to do all that was necessary to take part in the trial.

Held

(1) It was at least arguable that the £1 million payment was made, not by N, but as a distribution on R's instruction, with the money coming from one of the underlying companies administered by R. That was the basis on which S now put its case, although that would require an application to amend and an explanation in the evidence. In those circumstances, it was not appropriate to strike out S's case. The trial of the preliminary issue would, however, have to be adjourned to allow that case to be properly pleaded (see paras 19, 23-24 of judgment). (2) Determination of the preliminary issue would lead to a decision, binding on all the relevant parties, as to whether or not there was a joint venture agreement between X and Y. It followed that X had a close personal interest in the outcome of the preliminary issue and that the test in CPR r.19.2(2) was fully made out. There was simply too much for X and his representatives to do in order to be able properly to take part in an ongoing trial without an adjournment. The trial was, accordingly, adjourned for that reason also (paras 31, 33, 41).

Judgment accordingly