Charter Plc & Anor v City Index Ltd & Ors [2006] EWHC 2508 (Ch) (12 October 2006)

Charter Plc & Anor v City Index Ltd & Ors [2006] EWHC 2508 (Ch) (12 October 2006)

A claim for knowing receipt is within the scope of the Civil Liability (Contribution) Act 1978 as a claim for compensation for damage, but where the knowing recipient (City Index) received and used the misapplied funds, it is inconceivable that directors or auditors who received nothing should be ordered to contribute; thus, City Index's Part 20 claim has no real prospect of success and should be struck out or summarily dismissed.

Citation
[2006] EWHC 2508 (Ch)
Parties
Claimant: Charter plc; Claimant: Charter Central Finance Limited; Defendant/part 20 Claimant: City Index Limited; Part 20 Defendants (directors): David Gawler and 12 others; Part 20 Defendant (auditor): Auditors (13th Part 20 Defendant)
Jurisdiction
England and Wales
Judgment Date
12 October 2006
Procedural Posture
Civil (contribution/indemnity Under Civil Liability (contribution) Act 1978) / Application to Strike Out or Summarily Dismiss Part 20 Claim
Outcome
Part 20 claim struck out/summarily dismissed
Legal Topics
Knowing Receipt, Constructive Trust, Contribution Between Wrongdoers, Breach of Fiduciary Duty, Restitutionary Remedies, Directors' Duties, Auditors' Liability
Equity and Trusts Restitution Company Law Civil Procedure Knowing Receipt Constructive Trust Contribution Between Wrongdoers Breach of Fiduciary Duty +3 more

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Parties

Charter plc

Claimant

Charter Central Finance Limited

Claimant

City Index Limited

Defendant/part 20 Claimant

David Gawler and 12 others

Part 20 Defendants (directors)

Auditors (13th Part 20 Defendant)

Part 20 Defendant (auditor)

Procedural Posture

Civil (contribution/indemnity Under Civil Liability (contribution) Act 1978) / Application to Strike Out or Summarily Dismiss Part 20 Claim

Legal Issues

  1. 1 Whether a claim for knowing receipt falls within the Civil Liability (Contribution) Act 1978 as a claim for compensation for damage
  2. 2 Whether City Index's Part 20 claim for contribution/indemnity against directors and auditors has a real prospect of success

Ratio Decidendi

A claim for knowing receipt is within the scope of the Civil Liability (Contribution) Act 1978 as a claim for compensation for damage, but where the knowing recipient (City Index) received and used the misapplied funds, it is inconceivable that directors or auditors who received nothing should be ordered to contribute; thus, City Index's Part 20 claim has no real prospect of success and should be struck out or summarily dismissed.

Court Disposition

Part 20 claim struck out/summarily dismissed

Orders

  • Part 20 claim by City Index against directors and auditors is struck out or summarily dismissed under CPR 3.4(2) and 24.2