Gregory John Rollingson v James Hollingsworth

Hearing dates: 27 and 28 October 2020

Introduction

This is my Judgment in relation to the Application of the First, Second and Fifth Defendants (“the Applying Defendants”) made by the Notice of Application dated 10 ^th August 2020 (“the Application”) seeking to strike-out (under Civil Procedure Rule (“CPR”) 3.4(2)), or for reverse summary judgment (under CPR 24.2) in respect of, certain paragraphs (“the Disputed Paragraphs”) of the Particulars of Claim.

This matter concerns Rollingsons Solicitors Limited (“the Company”); which company, carried on a solicitors' practice, but which, following its making substantial losses, entered into administration on 14 June 2018. The Claimant, a solicitor, was the managing director and controlling shareholder of the Company. The First Defendant is a solicitor who was employed by the Company under a written contract of employment dated 23 July 2010 as head of its Property Department until 9 September 2016, and who was a director of the Company from 11 January 2011 until he resigned on 13 September 2011. The Second Defendant is a solicitor, who was employed as a joint head and then head of the Family Department from June 2015 to 16 January 2017. The Third Defendant is a solicitor who employed within the Company's Family Department from 1 June 2015 to 24 January 2017 under a written contact of employment dated 24 April 2015. The Fourth Defendant is a fellow of the institute of legal executives who was employed in the Company's Property Department between September 2009 and 28 February 2017 under a written contract of employment of August 2009.

The Claimant contends that the First to Fourth Defendants (and in conspiracy etc. with them the Fifth Defendant) committed various wrongs including breaches of contract, (in the case of the First and Second Defendants) breaches of fiduciary duty, misuse of confidential information, and economic torts including by: themselves leaving and procuring each other and others to leave the Company and to join the Fifth Defendant; competing with the Company through the Fifth Defendant; and otherwise acting so as to damage the Company. It is alleged that they, or one or more of them, effectively took the Company's Property and Family Departments to the Fifth Defendant; being another company which was to operate and then has operated a solicitors' practice and of which the First and Second Defendants (at least) became directors and substantial shareholders. The Claimant alleges that all this resulted in the Company generating substantial losses instead of substantial profits; and a claim is made for £1,157,000 foregone profits (although not for incurred losses) of the Company and, further and alternatively, an account of profits made by the First and Second Defendants.

The Claimant does not claim directly in his own right but as alleged assignee of the Company's (alleged) claims (“the Claims”) against the Defendants, he alleging that he was assigned the Claims by Philip Lewis Armstrong and Philip John Watkins, the appointed administrators (“the Administrators”) of the Company, by an agreement of 7 March 2019 and a deed of variation of 3 June 2019. The Defendants contest the validity of this assignment (“the Assignment”) although I am not clear on what basis. The Assignment followed a bidding process (“the Bidding Process”) for the Claims conducted by the Administrators between the Claimant and the First Defendant, and which itself gives rise to one of the sets of issues before me.

The matters has proceeded through the stages of service of Particulars of Claim, Defences and Replies, the Third Defendant and the Fourth Defendant acting by separate representation and filing separate Defences from the Applying Defendants, and also provision of Replies to Requests for CPR Part 18 Further Information by the Claimant and by the Applying Defendants. Directions have been given to a Trial commencing on 12 July 2021. Disclosure had not yet occurred when this matter was heard, but has since taken place.

By the Application the Defendants seek to strike-out, or to obtain reverse summary judgments on, 5 paragraphs (6, 8, 80, 92 and 99) and one sub-paragraph (116(f)) of the Particulars of Claim on the bases, in effect, that they offend the rules of pleading (and I use the old-fashioned word “pleading” to describe the rules relating to the contents of statements of case under the CPR and at common-law) and/or have no real prospect of success. Owing to the linkage of their subject-matter, they can be seen to divide into issues (“the Issues”) regarding the pleading of: (A) the Bidding Process (paragraph 8); (B) elements of a “Common Design” between some or all of the Defendants (paragraph 80); (C) inference of participation, assistance and/or encouragement by other Defendants of misuse of Confidential Information by the Second Defendant or Third Defendant (paragraph 92); (D) knowledge that the Company would have taken action regarding misuse of Confidential Information (paragraph 99); and (E) the various wrongs having caused the insolvency and foregoing of profits of the Company (paragraphs 6 and 116(f)). Linked to Issue A is a question of whether the First Defendant's engagement in the Bidding Process has attracted and retained “without prejudice” privilege (“WPP”) such that it cannot be used by the Claimant in these proceedings (“the WP Issue”) and which the parties before me have requested that I should decide at this point as between them in any event.

In view of the nature of these applications, and where I had Skeleton Arguments from and then heard over a day's oral submissions from leading counsel, I have probably not referred to every point made to me in submissions in this judgment, but I have borne them all in mind even if I do not refer to them all specifically. The Claimant has submitted that the Application is defective in procedural form (as well as that it should fail in substance) and I will determine that submission as part of this judgment.

The Application by the Claimant for a Further Hearing pending this Judgment

While I was in the course of preparing this Judgment, on Saturday 5 December 2020 I was sent a letter from the Claimant's solicitors seeking a further hearing on the basis that they contended that, having now been given disclosure and inspection, they had obtained material which supported their pleaded contentions and demonstrated that the Applying Defendants were simply seeking to stifle on pleading grounds contentions which were fully justified by their now disclosed documents. I sought written submissions from each side as to what they sought and why (and copied this to the other Defendants whom had been copied into the email to me).

The Claimant repeated his position by letter of 11 December 2020. However, the Applying Defendants objected to the course sought on the basis that their Application stood (or fell) on the basis of the existing pleadings which were either good or bad, and that if they were bad then the Application had been properly made and it was for the Claimant to seek to deal with any existing problems by way of amendment.

I am concerned as to whether there are tactical aspects to all this where the Court's main objective is to determine the case justly (and at proportionate cost) in accordance with the overriding objective. However, I have decided to finish and produce this Judgment in any event, as:

a. I wish to accord with the usual rule (which exists for good reason) that Judgments be delivered within 2 months of conclusion of a hearing

b. There is a trial listed to commence on 12 July 2021. To delay this Judgment could be prejudicial to it and the orderly progress of this Claim in accordance with existing case management orders

c. There is force in the Defendant's contention that this Hearing was deliberately listed to take place before disclosure and so as not to be affected by it

d. There is force in the Defendant's contention that the statements of case should be in accord with the Rules

e. This Judgment was already well advanced, and to postpone it would have involved a waste of judicial resource

f. In view of what I have decided below in this Judgment, I do not see any particular prejudice as being likely to result to either party. Insofar as the Claimant is going to either have to or to wish to amend, those aspects can be sensibly combined. Insofar as I have identified deficiencies on the Claimant's part, I do not see that the disclosure is likely to make much (if any) difference.

The Statements of Case

The Particulars of Claim are 123 paragraphs and just over 50 pages (including a short Prayer for Relief) long.

Paragraphs 1–4 deal with the Company and its practice and departments.

Paragraph 5 states that it had key “Business Interests” including Goodwill, staff teams, loyalty and relationships, and the preservation and protection of “Confidential Information” defined as:

“(d)… including but not limited to information relating to Rollingsons': i. Corporate plans, strategy and financial performance, including (but not limited to) information concerning business development, business methods, financial reports and the performance of the firm and its individual departments;

ii. Clients and potential clients, including client names, client contacts (including contact details), information on past, ongoing...