High Court rules on derivative claim involving property development

Introduction

The High Court, presided over by Mr Justice Michael Green, delivered a judgment on a complex derivative claim involving property development and fiduciary duties. The case, Humphrey vs Bennett, centred around allegations of breach of fiduciary duties and unjust enrichment related to property transactions.

Background

The claimants, Neil and Fiona Humphrey, brought a derivative claim on behalf of Esprit Land Limited against Paul Bennett, the estate of Alison Murphy, and Esprit Homes Construction Limited (EHCL). The claim involved the transfer of land and alleged misappropriation of company profits by Bennett and Murphy.

Key Applications

Two primary applications were heard: one by the claimants to amend their particulars of claim to introduce new causes of action, and another by EHCL to strike out certain claims. The claimants sought to add claims of unjust enrichment, dishonest assistance, unlawful means conspiracy, and breaches under the Companies Act 2006.

Strike Out Application

EHCL's application to strike out claims was primarily based on the Supreme Court decision in Byers v Saudi National Bank, which addressed the requirement of a continuing equitable interest for claims in knowing receipt. However, the court found that the strike out application was premature, as the issues involved developing areas of law that should be decided at trial.

Amendment Application

The court granted the claimants permission to amend their particulars of claim, allowing the introduction of new causes of action. These included claims for unjust enrichment, dishonest assistance, and unlawful means conspiracy, all of which were deemed to have a real prospect of success.

Legal Analysis

The judgment delved into the intricacies of the Land Registration Act 2002 and the Companies Act 2006, highlighting the evolving nature of the law in these areas. The court emphasised the importance of a trial to resolve factual disputes and determine the applicability of legal principles.

Conclusion

The court's decision to allow the claims to proceed underscores the complexity of derivative actions and the need for thorough examination of the facts and legal arguments. The case will continue to trial, where the claims will be fully evaluated.

Learn More

For more information on construction disputes, see BeCivil's guide to Resolving Construction Disputes.