Liquidator's claim struck out for insufficient drafting and abuse of process

Key points

• The High Court struck out a claim by a liquidator who had already brought a claim arising from the same facts against the same defendants.
• The court relied on the fact that the economic benefit of pursuing the claim would accrue only to the liquidator.

The Facts

The liquidator of Brady Property Developments Limited (the "Company") brought a claim against Mr Loughlin and Mr Hutt in their capacity as directors of the Company, for misfeasance and breach of fiduciary duty (the "First Claim") after £160,000 was paid to a partnership operated by the respondents (the "Partnership"). The First Claim was discontinued when the liquidator accepted that the Company had suffered no loss. The liquidator then brought another claim for a declaration that the payment was void as a preference (the "Second Claim").

The respondents applied for the Second Claim to be struck out on the grounds that: (1) the liquidator had not asked for permission to bring the claim, which was required being one against the same defendants, arising out of the same facts as in the First Claim; (2) the liquidator should have included the preference claim in the First Claim and; (3) it was an abuse of process.

The Decision

The court held that: (1) as the Partnership is not a separate legal person the liquidator was suing the same defendants and, as the liquidator could have brought a preference claim in the first instance, it also arose from the same facts; (2) as the First Claim was discontinued and no judgment given, the principle that the liquidator should bring the whole claim did not apply and; (3) the Second Claim constituted an abuse of process as monies recovered would simply be paid back to the respondents as creditors but less the liquidators fees and costs. The Second Claim was accordingly struck out.

Ward v Loughlin & Hutt [2018] EWHC 77 (Ch)