Parties - Joinder of parties - First claimant company owned by second claimant company and first defendant company

R.G.I. International Ltd and another company v Synergy Classic Ltd and others: QBD (Comm) (Mr Justice Teare): 2 December 2011

Civil Procedure Rule 3.4 provides, so far as material: ‘(2) The court may strike out a statement of case if it appears to the court - (a) that the statement of case discloses no reasonable grounds for bringing or defending the claim; (b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings.’

CPR 24.2 provides, so far as material: ‘The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if - (a) it considers that: (i) that claimant has no real prospect of succeeding on the claim or issue; or (ii) that defendant has no real prospect of successfully defending the claim or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.’

The first claimant company (RGI) was owned by the second claimant company (DES) and, through the defendant company (Synergy), by S, an individual. Synergy acquired its shareholding in 2010, by subscribing $90m under the terms of a subscription and put option agreement (the SOA). S was appointed to the board of RGI in August 2010.

Shortly afterwards the shareholders fell out. S submitted that, at a board meeting in September 2010, an employee of DES told him that some of the money received from RGI had been used to pay a bribe in Russia. RGI and DES brought proceedings against Synergy, in October 2010, seeking a declaration that a put option notice was invalid and an injunction restraining alleged breaches of confidence by Synergy.

In the course of the litigation, Synergy wrote to F, the fifth party and the applicant in the instant application, who was an independent non-executive director of RGI and was the chairman of its remunerations committee. Synergy demanded to know, inter alia, whether F had been aware of the alleged bribe. F responded that the allegations were unfounded. Synergy replied, in February 2011, that the obvious inference from F’s refusal to answer its questions was that he had known of criminal activity and was party to a conspiracy. Synergy promised to withdraw the allegations if F swore on oath that he did not know of the alleged matters. Synergy successfully applied to the court for F to be made a party to the proceedings, and brought a counterclaim against him.

F made an application to the court to set aside an order joining him as a party to the proceedings, and/or to strike out and/or summarily dismiss the counterclaim made against him by Synergy. He contended that: (i) there were no reasonable grounds for bringing the claim against him (CPR 3.4(2)(a)); (ii) the counterclaim was an abuse of the court’s process, as it was incoherent, lacking in particulars and embarrassing (CPR 3.4(2)(b)); and (iii) the claim was an abuse of the court’s process (CPR 3.4(2)(b)) and had no real prospect of success as it had no supporting evidence (CPR 24.2). The application would be allowed.

First, on the evidence, the allegation of bad faith was unsupported by particulars. It was a bare allegation, and it could not be inferred from the mere fact that F had been chairman of the remunerations committee that he had known, or ought to have known, that payments had been made in breach of the SOA. On the evidence, F had not been involved in the authorisation or processing of payments to directors. Consequently, the allegation of bad faith was either unsupported by effective particulars or had no real prospect of success.

Second, for the same reason, the allegation that F had knowingly and intentionally induced or procured a breach of the SOA was either unsupported by effective particulars or had no real prospect of success. Third, the allegation of a conspiracy was wholly unparticularised. No facts and matters from which the alleged conspiracy was to be inferred were pleaded. If the matter were to go to trial, F would have no understanding of the case which was to be advanced against him under the head of conspiracy. The absence of particulars indicated that the conspiracy claim had no real prospect of success.

Fourth, to advance serious charges involving bad faith and conspiracy without adequate particulars or any real prospect of success would be an abuse of the process of the court and would amount to no more than harassment (see [23]-[26] of the judgment). The counterclaim against F would be struck out (see [27] of the judgment).

Robert Howe QC (instructed by Mishcon de Reya) for the fifth party; Nigel Dougherty (instructed by Wragge & Co) for the defendant.