Guy's & St Thomas' NHS Foundation Trust v ESMS Global Ltd
| Jurisdiction | England & Wales |
| Judge | Julia Dias |
| Judgment Date | 18 November 2022 |
| Neutral Citation | [2022] EWHC 2941 (Comm) |
| Docket Number | Case No: CL-2021-000460 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 2941 (Comm)
Miss Julia Dias KC
Case No: CL-2021-000460
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Lance Ashworth KC and Mr Gregor Hogan (instructed by Reynolds Porter Chamberlain LLP) for the Second to Seventh Defendants
Mr Patrick Talbot KC, Ms Zahler Bryan and Mr Max Marenbon (instructed by Bingham Mansfield Solicitors Ltd) for the Claimants
Hearing dates: 11,13 and 17 October 2022
Approved Judgment
Julia Dias KC sitting as a Deputy High Court Judge:
Introduction
This is an application by the Second to Seventh Defendants to strike out the claim against them and/or for reverse summary judgment. The application was made on 21 September 2021 although it was not ultimately listed for hearing until 11 October 2022.
On 5 October 2022, the day on which the applicants' skeleton argument was due to be served, and 11 months after evidence in relation to the application had been exchanged, the Claimants served proposed draft Amended Points of Claim. At just after 1600 the same day, the Second to Seventh Defendants were notified that an application to amend had been issued, albeit not served, and that I would be asked to determine both applications at the forthcoming hearing.
On behalf of the Second to Seventh Defendants, Mr Lance Ashworth KC (who appeared with Mr Gregor Hogan) complained vociferously (and with no little justification) about the lateness of the application generally and, specifically, about short service in breach of the CPR which gave his clients no opportunity to file evidence in response. He therefore objected to any suggestion that I should determine the amendment application.
This led to a lively debate as to whether I could hear the strike out application in isolation without reference to the proposed amendments at all and, if not, whether I should adjourn both applications (a course to which Mr Ashworth objected) or whether it was possible to find a way of proceeding which enabled the court to make some headway but preserved the Second to Seventh Defendants' right to object to the proposed amendments.
In the event, counsel indicated that they were content to proceed with the strike out application on the basis that both the original Points of Claim and ( de bene esse) the Amended Points of Claim were in play. If the Second to Seventh Defendants persuaded me that the Claimants' case raised no arguable issue of law, or had no real prospect of success on the basis of the evidence adduced, that would be the end of the matter since the claim would be struck out on either basis and the amendment application would simply fall away. If, on the other hand, I were to hold that (i) the strike out application failed – but only in relation to the Amended Points of Claim and (ii) the Claimants had adduced sufficient evidence to make out a more than fanciful case to support the amendments, then the amendment application would remain live and the Second to Seventh Defendants would need to be given an opportunity to consider whether or not to object to it. It was accepted by both parties that nothing I decided could bind either the First or Eighth Defendants. This, therefore, is the basis on which I have approached the matter.
I was referred by Mr Patrick Talbot KC (who appeared with Ms Zahler Bryan (albeit remotely in her case) and Mr Max Marenbon on behalf of the Claimants) to the Court of Appeal decision in Sofer v SwissIndependent Trustees SA, [2020] EWCA Civ. 699 in support of the proposition that there was in fact no need for the court to look at the factual basis of the claim since for the purposes of a strike out application, the pleaded facts must be assumed to be true. In that case, the application to strike out was brought solely under CPR Part 3.4(2) on the basis that the statement of case disclosed no reasonable grounds for bringing the claim. It was common ground that on that type of application, the pleaded facts must be assumed to be true. However, as Arnold LJ pointed out at paragraph 44:
“The application to strike out was based on CPR 3.4(2)(a) which excludes consideration of the evidence. Although it is true that the Claimant seeks permission to amend the Particulars of Claim, the only basis upon which the application is resisted is that the amended statement of case would also be strikeable. There is no application for summary judgment dismissing the whole claim as having no real prospect of success on the facts.”
In the present case, of course, the application is not limited solely to striking out pursuant to Part 3.4(2)(a) but includes an application for summary judgment on the grounds that the claim has no real prospect of success. In KKK Ltd v James Kemball Ltd, [2021] EWCA Civ. 33 at [18], the Court of Appeal clarified that the same test applies to both applications for summary judgment and applications to amend and that:
(1) “It is not enough that the claim is merely arguable; it must carry some degree of conviction: ED & F Man Liquid Products Ltd v Patel, [2003] EWCA Civ 472 at paragraph 8; Global Asset Capital Inc. v Aabar Block SARL [2017] 4 WLR 164 at paragraph 27(1).
(2) The pleading must be coherent and properly particularised; Elite Property Holdings Ltd v Barclays Bank Plc [2019] EWCA Civ 204 at paragraph 42.
(3) The pleading must be supported by evidence which establishes a factual basis which meets the merits test. It is not sufficient simply to plead allegations which if true would establish a claim; there must be evidential material which establishes a sufficiently arguable case that the allegations are correct: Elite Property at paragraph 41.”
I therefore accept the submission of Mr Lance Ashworth KC that I am not precluded from examining the factual basis of the claim; indeed, for the purposes of the summary judgment application I am not only entitled but also bound to consider the extent to which the pleaded case and, in particular, the draft amendments, are supported by the evidence adduced. If I conclude that the Claimants' evidence does not establish a sufficiently arguable case that the pleaded allegations are correct, then that is a basis upon which I can properly strike out the claim and/or give summary judgment even if it is otherwise legally coherent. 1 I do not accept that it is sufficient in this respect for the Claimants to point to the mere fact that their pleadings are attested by a statement of truth. If that were so, then the test in KKK would be satisfied in every case. Moreover, while a statement of truth may technically have the effect of making a pleading evidence of its contents, in this particular instance it was signed by the Claimants' legal representative. It is therefore not first-hand testimony and cannot in my judgment prevail where it is not supported by the statements of the relevant witnesses themselves.
In this respect, I also bear in mind that the strike out application was issued as long ago as 17 September 2021 and that exchange of evidence was completed by the end of November 2021. The Claimants have therefore had ample time not only to issue the amendment application but also to adduce any further supporting evidence had they so wished. In the event, they have chosen to rely only on the evidence served in October 2021. Given the lapse of time, they should in my judgment be held to that, and if I conclude that there is insufficient evidence before me to support the proposed amendments, it would be unfair to
the Defendants for me to reject their application on the speculative basis that further evidence might nonetheless be forthcoming in the future.The Parties
The First Claimant (“GSTT”) is the well-known Guy's & St Thomas' Hospital Trust. The Second Claimant, Mrs Fitzgerald, is a former employee of GSTT and currently the General Manager of the First Defendant (“ESMS”) and leader of its management team. The Second and Third Defendants, Mr Sood and Mr Webster, are directors of ESMS. The Fourth and Fifth Defendants are their respective wives and, since 2018, also directors of the company. The Sixth and Seventh Defendants are companies affiliated to Mr Sood and Mr Webster. The Second to Seventh Defendants collectively are the majority shareholders in ESMS.
The Eighth Defendant (“Trident”) is a Guernsey-based trust company which is the trustee of an Employee Benefit Trust (the “EBT”) which was established by ESMS in the circumstances described in more detail below.
The nature of the claim
Prior to 2010, GSTT operated a specialised business providing healthcare services to the pharmaceutical and veterinary industries. In about 2010, it concluded that it was not in a position to run this business at a profit consistently with its charitable objectives and accordingly started to look for a buyer.
In 2011, an offer was received from Ivy Partners Ltd (“IPL”), a company owned and controlled by Mr Sood and Mr Webster, for the business to be purchased by a special purpose vehicle yet to be incorporated. On 26 August 2011, ESMS was incorporated as the purchasing company, of which Mr Sood and Mr Webster were the initial shareholders and directors.
GSTT was concerned about the position of its existing employees who worked for the business since Mr Sood and Mr Webster had indicated that they were not prepared to accept a TUPE transfer. Accordingly, any employees who agreed to transfer to...
To continue reading
Request your trial