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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Raffermati v Capello Hair Designs Ltd & Anor [2017] EWHC 3134 (Ch) (04 December 2017) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2017/3134.html Cite as: [2017] EWHC 3134 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION APPEAL CENTRE
ON APPEAL FROM THE COUNTY COURT AT OXFORD
ORDER OF HHJ MELISSA CLARKE
CLAIM NUMBER AD7YX 861

		Royal Courts of Justice 7 Rolls Building, Fetter Lane, London, EC4A 1NL
		04/12/2017

Mr Justice Zacaroli :

Introduction

1. Capello Hair Designs Ltd (the claimant Company) was incorporated in 2008 to run a hairdressing business. Its sole director and shareholder is Mr Paul Roberts, the third party. At the time of the Company's incorporation, Mr Roberts and Ms Rosa Raffermati were in a relationship and living together. Ms Raffermati was an experienced hairdresser, and for the next six years worked hard in the business. Their relationship broke down in 2014, following which Ms Raffermati asked Mr Roberts to transfer the business to her. Mr Roberts refused but suggested she buy his shares. No agreement having been reached, Ms Raffermati began trading the business from the same premises for her own account, subsequently setting up a new company to which the business was transferred. She also diverted to herself payment of sums from the Company's PDQ machine.
2. The Company commenced proceedings against Ms Raffermati, claiming that she had misappropriated the business, in breach of fiduciary duties owed by her to the Company. It sought an account of profits, damages and other relief.
3. In her defence and counterclaim, Ms Raffermati averred that the shares in the Company were held by Mr Roberts on trust either for her absolutely, or for Mr Roberts and her together. Alternatively, she averred that the business was held by the Company for her benefit. The basis of those claims was said to be representations made to her by Mr Roberts that he would incorporate the Company on the basis that they would both be shareholders, which representations were false and known to be false, such that Mr Roberts was acting dishonestly. She counterclaimed for a declaration that she was beneficially entitled to the business. There was no counterclaim for a declaration of trust in relation to the shares in the Company, but it was indicated that such a claim would be brought in third party proceedings against Mr Roberts.
4. Ms Raffermati did indeed commence third party proceedings against Mr Roberts. In the particulars of additional claim she sought, among other things, a declaration that Mr Roberts held his shares in the Company on trust for each of them in equal proportions or such other proportions as the Court might find, alternatively a declaration that she was the sole beneficial owner of the business. While the particulars of additional claim included similar assertions of misrepresentation by Mr Roberts to those made in the defence, it also included allegations that there had been an express agreement between Mr Roberts and Ms Raffermati that the shares would be held equally by them, that Mr Roberts had made representations to her to that effect, and that she relied on the agreement and representations in various ways.
5. The trial of the claim, counterclaim and third party claim was listed for a three day hearing commencing on Monday 13 March 2017, before Her Honour Judge Melissa Clarke sitting in the County Court in Oxford.
6. In the skeleton argument served by counsel for Ms Raffermati on the Thursday prior to the start of the trial, the only basis asserted for the defence, counterclaim and third party claim was that the shares or the business were held on trust as a consequence of either an express agreement, or a common intention, to that effect. No claim in fraudulent misrepresentation was advanced. Having sought clarification (in solicitors' correspondence and via counsel) that the claim in fraudulent misrepresentation had been abandoned, counsel for the Company and Mr Roberts asked the judge to determine, as a preliminary matter, that the claims which counsel for Ms Raffermati did intend to pursue were neither properly pleaded, nor supported by evidence, and should be struck out, alternatively that summary judgment should be given to the Company/Mr Roberts in respect of them.
7. Having heard argument, the Judge – essentially in agreement with the Company's and Mr Roberts' counsel – ordered that the defence and counterclaim, and the third party claim, be struck out. In an Order dated 13 March 2017 she ordered that Ms Raffermati provide a full account of all takings and profits from the business, and gave consequential directions. By paragraph 7 of the Order, Ms Raffermati was required to pay the Company £44,041, being the amount alleged by the Company to have been paid for equipment and fitting out of the premises upon commencement of the business in 2008, which equipment and fittings had been appropriated by Ms Raffermati in 2014.
8. Ms Raffermati appeals against that decision with the permission of Newey J (as he then was), granted on 8 June 2017. By a further order dated 12 April 2017 Newey J stayed the effect of paragraph 7 of the Order.
9. In considering this appeal, the starting point is to identify precisely what was pleaded, and what evidence was provided in support of the pleaded case.

The Statements of Case

10. Ms Raffermati's pleaded case is to be found in the defence and counterclaim, and the particulars of additional claim.

Defence

11. Ms Raffermati's positive case (as opposed to a paragraph by paragraph response to the particulars of claim) is contained in the opening eight paragraphs of the defence. By paragraph 1, it is averred that Mr Roberts holds the shares in the company on trust either for Ms Raffermati alone or on trust for each of them.
12. By paragraph 2 it is averred that the hairdressing business was established by Mr Roberts for the benefit of both of them, that Ms Raffermati financed the establishment of the business from her own monies together with funds loaned by Mr Roberts and that she established the business by her own work. It is further averred that Mr Roberts offered to incorporate the Company for her as a vehicle for the business, and represented to her that they would both be shareholders and that she should leave the incorporation of the business entirely to him.
13. By paragraph 3 it is averred that, unbeknownst to Ms Raffermati, Mr Roberts placed the Company into his sole name as shareholder and director and that she did not discover the truth of this until about May 2014.
14. By paragraph 4 it is alleged that, in the premises, the representations made by Mr Roberts that the business would be placed in their joint names were false and made dishonestly.
15. By paragraph 5 it is alleged that Mr Roberts acted in breach of contract, in incorporating the company with him as the sole shareholder. A claim for specific performance of that agreement is asserted in paragraph 8.
16. By paragraph 6, it is further averred that between 2008 and 2014 Ms Raffermati built up the business by her own work without assistance from Mr Roberts and in reliance upon the representations made to her that she owned the company. In the premises it is averred that Mr Roberts holds his shares on trust for her or for both of them.
17. An alternative claim is made in paragraph 7 that the hairdressing business established by the company was beneficially owned by her and not by the company. The basis of this plea appears to be that where the company deliberately misrepresented to her, by its sole legal shareholder, that it was a company she owned, then the transfer of any business that she established to the claimant company was void.
18. According to a note prepared by the Company's solicitors of the hearing before the Judge, Ms Raffermati's counsel had indicated to the Judge that Ms Raffermati did not rely on each of paragraphs 3 to 8 inclusive. Mr Routley, appearing for Ms Raffermati before me, accepted that he had gone through the exercise, before the Judge, of identifying paragraphs in the defence and counterclaim which were no longer relied upon, and that these included the paragraphs asserting claims for breach of contract, and for fraudulent misrepresentation. He was unsure whether he had expressly abandoned paragraph 6 of the defence (which asserted a claim that the shares of the Company were held on trust for Ms Raffermati or for Ms Raffermati and Mr Roberts together).
19. As I have already noted, the only relief asserted in the prayer in the counterclaim is for a declaration that Ms Raffermati is beneficially entitled to the hairdressing business, and accounts and enquiries flowing from that declaration. The only pleaded basis for this relief is that in paragraph 7, which Mr Routley accepted before me had been abandoned before the Judge. Importantly, the counterclaim includes no claim for a declaration that the shares in the Company were held on any trust.

The Particulars of Additional Claim

20. By paragraph 3 of the Particulars of Additional Claim, Ms Raffermati states her case as being that Mr Roberts holds the shares in the company on trust for her.
21. By paragraph 8 it is asserted that there was an agreement reached between Ms Raffermati and Mr Roberts that they would be equal shareholders in the company. It is further pleaded that Mr Roberts represented to her that in incorporating the company he would arrange for both of them to be shareholders.
22. By paragraph 10 it is asserted that when Mr Roberts incorporated the company he made himself sole shareholder in breach of that agreement.
23. By paragraph 11 it is asserted that Mr Roberts's representation that he would arrange for both parties to be shareholders was false and made knowing it to be false.
24. By paragraph 12 particulars of further representations said to have been made by Mr Roberts are set out all of which are to the effect that he had placed the company into the names of both parties as shareholders. By paragraph 13 these representations are alleged to be false, and made knowing them to be false.
25. In paragraph 14 it is alleged that by reason of the aforesaid agreement and by reason of the representations set out above it was Ms Raffermati's belief that she was a beneficial owner of the company and therefore of the business. By paragraph 15 it is asserted that in reliance upon that agreement and upon the representations, Ms Raffermati invested her time and money in the business. In paragraph 15 it is asserted that, in reliance on the representations, Ms Raffermati drew no monies from the business until 28 November 2012.
26. In paragraph 23 it is claimed that "in the premises" Mr Roberts holds the shares in the company on trust for Ms Raffermati whether absolutely or jointly with Mr Roberts.
27. Paragraph 24 contains a similar alternative plea to that contained in the defence, namely that by reason of the misrepresentations by Mr Roberts the title of the company to the business is void and Ms Raffermati remains the sole beneficial owner of the business. Paragraph 25 contains a further alternative plea that by placing the company in his sole name, the shareholder, Mr Roberts, was in breach of the agreement reached between them that they would both own the company. Although not explicitly stated by Mr Routley, his abandonment on behalf of Ms Raffermati of the allegations of fraudulent misrepresentation giving rise to a claim that the business was held on trust for Ms Raffermati, and of breach of contract – made in relation to the defence – must extend to the similar claims made in the third party claim. In any event, a claim that the business (which was on any view owned by the Company) was held on trust could not logically be asserted against Mr Roberts.
28. Various heads of relief are sought in the prayer to the particulars of additional claim, including (adopting the numbering in the prayer) (1) a declaration that Mr Roberts holds the shares in the company on trust for Ms Raffermati and himself in equal proportions alternatively in such proportions as the court may find; (2) a declaration that Ms Raffermati is the sole beneficial owner of the business; (3) an order for specific performance of the agreement that the shares in the Company would be held in the name of both parties; and (6) damages for breach of contract/misrepresentation. It follows – from the abandonment of the claims in contract and misrepresentation – that the relief claimed in paragraphs (2), (3) and (6) of the prayer had themselves been abandoned.
29. The particulars of additional claim also asserted a claim to beneficial ownership of other property, including a house in Gorleston, Norfolk, and certain other items. It was common ground before me that the fate of such claims followed necessarily the fate of the claim to a trust over the shares and/or the business. No separate appeal lies in respect of them, and I do not consider them any further in this judgment.

Ms Raffermati's witness statement

30. Witness statements were exchanged simultaneously, in January 2017, although Ms Raffermati's statement is dated 1 December 2016. It contains very little that could remotely be said to be relevant to the allegations in the statements of case that there was any agreement, or representations, made as to joint ownership of the shares in the Company. The only paragraphs relied on by Mr Routley as evidencing either point are paragraphs 5 and 8. At paragraph 5 she states that throughout their relationship they had pooled and shared their resources. At paragraph 8 she states that whenever she and Mr Roberts spoke about the business he always referred to it as "ours". I should also point out that in paragraph 4 she says "Mr Roberts suggested that we should establish a limited company as a vehicle for the business and I agreed. I also agreed that he should carry out the necessary formalities."

The Judge's Judgment

31. In her judgment the Judge focused almost exclusively on the defence and counterclaim. She noted that the basis of the case advanced in it was that Mr Roberts had deliberately misrepresented that Ms Raffermati would have a joint interest in the company. She then noted that the skeleton filed on behalf of Ms Raffermati advanced a "quite different" case, based on an express or agreement or a mutual understanding that the shares would be held beneficially by the couple equally.
32. The judge noted at paragraph 6 of the judgement that she had already made a preliminary ruling that there was no reference in either the pleadings or witness statement of Ms Raffermati that there was any express agreement of trust. She had in fact asked Mr Routley whether he wished to amend the pleading, but he had declined, contending that the case was already sufficiently pleaded. The Judge went on to note that it was now in any event far too late to amend the pleadings, accordingly she had not allowed the argument based on express agreement to be made.
33. The judge then dealt with the second argument that there was a mutual understanding or common intention that the shares be held beneficially by the couple equally. Having reviewed the defence and counterclaim and witness statement of Ms Raffermati the judge concluded that it was clear that the facts required to establish a common intention which the defendant would need to show existed between the parties was neither specifically pleaded nor evidenced. She concluded, at paragraph 13 of the judgement, as follows:

"Where there is no properly pleaded case and there is no evidence that is put forward to establish a common interest trust, it seems to me that the court effectively has its hands tied. In the interests of doing justice between the parties, it is necessary for the claimant and the third party to be able to understand the defence they have to meet. She has not done so despite being legally represented throughout. So far that reason she has no real prospect of defending the claim as she has abandoned her pleaded case. Accordingly the defence must be struck out – or summary judgment given to the claimant, it amounts to the same thing – if there is nothing that the defendant wishes to argue about which can be argued from the defence."

34. The Judge then asked counsel for the Company and Mr Roberts what effect that judgement had on the third party claim. Counsel replied that the third party claim was put on the same basis as the defence and counterclaim, and that he did not think there was any suggestion that there was a different pleaded basis or evidential basis, so that it fell into the same category. According to the note of the hearing produced by the Company's solicitors, Ms Raffermati's Counsel was given the opportunity to argue but he did not do so.
35. After judgment had been given, counsel for Ms Raffermati then asked for permission to amend. The Judge refused this on the basis that the claim had now been struck out, and in any event permission would have been refused as it was too late.

The appeal

36. Ms Raffermati appeals against those findings, relying on four grounds. First, the fact that the defendant's case was based on the existence of the common intention trust should have been sufficiently apparent from the defence and counterclaim, the particulars of additional claim, and Ms Raffermati's witness statement. Second, if the defendant's case was not sufficiently apparent the judge should have afforded her the opportunity to amend the statements of case and or to file and serve a further witness statement. Third, to strike out a statement a case where there is an apparently good and bona fides defence deprived the court of the opportunity to deal with the case justly. Fourth, the judge did not appear to consider the provisions of CPR 3.4(2).
37. Ms Raffermati also appeals separately against paragraph 7 of the judge's order.
38. In my judgment it is important to distinguish between the strike out of the defence and counterclaim, on the one hand, and the third party claim on the other.

The strike out of the defence and counterclaim

39. So far as the defence is concerned, once the claim that the business itself was held on trust was abandoned, along with any claim for breach of contract or deceit, then, while the allegation that the shares in the Company were held on trust remained, it is hard to see any properly pleaded basis for that legal conclusion. There is certainly no pleading of any express agreement. It might be said that it is possible to discern a pleaded case that Mr Roberts promised Ms Raffermati that he would place the shares in both their names, and that she relied on that to her detriment, such that a conclusion that the shares were held on trust could follow. This is because although the defence pleads "representations" being made, those were not representations of existing fact (as might support a deceit claim) but were representations by Mr Roberts as to his future conduct. I address this possibility in more detail below in relation to the third party claim.
40. I need not consider it further in relation to the defence, however, because even if there was a sufficiently pleaded case that the shares in the Company were held on trust for Ms Raffermati, that could not conceivably amount to a defence to the Company's claim. When I asked Mr Routley how (if it were established) the fact that the shares in the company are owned equally by Mr Roberts and Ms Raffermati, provided a defence to a claim by the Company that Ms Raffermati had misappropriated the Company's assets, he said that this was because if the shares were jointly owned, then Ms Raffermati was entitled to half of the assets of the Company. That answer misunderstands, however, the basic concept of company law that the company is a separate legal entity, and that it, not its shareholders, is the legal and beneficial owner of its assets. Moreover, even on the view of the law expressed by Mr Routley, that would not entitle Ms Raffermati, as a joint owner of the shares, to all of the assets of the Company.
41. Given that the only relief sought in the counterclaim was a declaration that the business was held on trust, and that the only basis for that claim was paragraph 7 of the defence, which Mr Routley abandoned, it follows that the counterclaim contained no sustainable cause of action.
42. Accordingly, even if the defence and counterclaim pleaded facts which – on a benevolent interpretation – might support a case based on constructive trust, the defence in any event disclosed no sustainable cause of action to the claim brought by the Company. Subject only to a point relating to paragraph 7 of the Order (which I deal with separately below), the Judge's conclusion that the defence and counterclaim should be struck out was therefore correct, and the appeal against that part of her decision fails.
43. None of the further grounds of appeal in relation to the strike out of the defence and counterclaim provide any reason to overturn the Judge's decision in this respect.
44. So far as the second ground is concerned, even if the Judge's decision to refuse permission to amend after she had given judgment striking out the defence and counterclaim could be said to be outside the ambit of her discretion (which, in circumstances where Ms Raffermati's counsel had been offered, but had refused, the opportunity to apply to amend prior to the Judge giving judgment, I do not consider it to be), the amendment sought was to plead a claim that the shares in the Company were held on trust by reason of an express agreement, or common intention. For the reasons already given above, that could not have afforded any defence to the Company's claim. In these circumstances I do not need to consider Mr Routley's reliance on the case of Re Barrell Enterprises [1973] 1 WLR 19, for the proposition that the court could have altered its decision before the order was perfected. I comment only that the jurisdiction referred to in Barrell can be of no assistance in relation to a refusal of permission to amend, where the application for permission was made only after judgment was given, and thus formed no part of the Judge's judgment.
45. The third ground of appeal adds nothing to the first. So far as the fourth ground of appeal is concerned, namely that the Judge failed to address the requirements of CPR 3.4(2) in striking out the defence and counterclaim, the most that can be said is that the Judge applied the summary judgment test, and not the test for strike out under CPR 3.4(2). In fact, as the Judge made clear in two places in her judgment, her intention was to strike out, or give summary judgment, which she regarded as amounting to the same thing. In any event, Mr Routley, before me, accepted that on the facts of this case the application of one or other test would have led to no different result in substance.

Strike-out in relation to the third party claim

46. As I have noted above, the Judge dealt with the third party claim very briefly. Having been told that the third party claim was put "on the same basis" as the defence and counterclaim, she simply struck it out without considering further the detail of the particulars of additional claim.
47. In my judgment, this conclusion mischaracterised the basis upon which the third party claim was formulated. I have set out above the relevant paragraphs from the particulars of additional claim. Importantly, those particulars include the following matters: (1) a pleading of an express agreement that the shares would be held by both parties equally; (2) a pleading of representations by Mr Roberts that he "would" arrange for both of them to be shareholders; and (3) a pleading that Ms Raffermati, in reliance on the agreement and representations, invested her time and money in the business and refrained from making any drawings from it. The particulars contain a clear and express claim (see paragraph 23 and the prayer) that the consequence of (among other things) those matters is that the shares are held on trust for Mr Raffermati, whether alone or with Mr Roberts.
48. Those matters provide, in my judgment, sufficient particulars of a claim to a constructive trust on the basis of either an express agreement or representations that were relied on by Ms Raffermati.
49. Mr Wright, for the Company and Mr Roberts, submits that, while those matters might if taken in isolation be a sufficient pleading of a claim to a beneficial interest in shares, the particulars of additional claim are so poorly drafted that it is impossible to identify a sufficiently pleaded claim to such effect in this case. In the absence of a sufficiently pleaded case, he submits that Mr Roberts could not know what case he had to meet at trial. He relies, in addition to the fact that the pleading asserted claims in fraudulent misrepresentation and breach of contract, which were now abandoned, on the lack of clarity as to the nature of the claimed trust, i.e. whether it was one for her sole benefit or for their joint benefit.
50. He complains that the reasonable reader of the particulars would assume that the only claim being made on the basis of the representations was a claim in fraudulent misrepresentation, i.e. a claim in deceit. I disagree. In the first place, the allegation – which is clearly and expressly made in, for example, paragraph 3 – that in the premises the shares are held on trust is no part of a cause of action in fraudulent misrepresentation. Secondly, although called "representations", the representations relied on are not of a sort which would found a claim in fraudulent misrepresentation at all. The representation pleaded in paragraph 8 is that Mr Roberts "would arrange" for both of them to be shareholders. That is not a statement of an existing fact, but is in substance an allegation of a promise made to her by Mr Roberts as to his future actions. In my judgment, a reasonable reader of the particulars would have understood that multiple alternative claims were being advanced, including a claim based in contract, a claim (albeit a flawed one) based in fraudulent misrepresentation, and a claim to a beneficial interest in the shares by reason of reliance by Ms Raffermati on either an express agreement that they would both be shareholders, or representations to that effect made to her by Mr Roberts.
51. Mr Wright also submits that a claim to a beneficial interest pursuant to a "common intention" trust is liable to be struck out if it does not contain the words "common intention" before the word trust. In the absence of any authority for that submission I cannot accept it. The fact that the claim is one based – at least as one alternative – on a common intention is clear from the pleading of the agreement that the shares would be jointly held.
52. In the alternative, Mr Wright submits that those words were necessary where the pleading contained multiple causes of action, and it was unclear which matters were said to lead to which head of relief. Again, no authority was cited for this proposition and I do not accept it. There is a crucial difference between a pleading which contains the necessary matters to support a cause of action, but is confusing because it contains multiple possible alternative claims, and a pleading which simply fails to contain necessary matters to support the claim.
53. Mr Wright relied on The Prudential Assurance Company Limited v Commissioners for Her Majesty's Revenue and Customs [2016] EWCA Civ 376, at [20], per Lewison LJ, and Minerva (Wandsworth) Limited v Greenland Ram (London) Limited [2017] EWHC 1457 (Ch), at [206], per Rose J, in support of the proposition that a case should be clearly and comprehensively pleaded. Those passages were concerned, however, with a failure to plead a particular point at all, such that the opposing party was unable to prepare its case for trial in respect of such point. Where, as here, the relevant matters are pleaded, but the claim to a trust is based on the "premises" without adequately spelling out those premises then, if the opposing party is genuinely uncertain as to the case it must meet, it may request or apply for clarification by way of further information. No such request or application was made in this case.
54. In any event, it is apparent from the skeleton argument filed for the trial, that Counsel for the Company and Mr Roberts did understand that the claim to be met was based upon a contention that there had been an express agreement or representations made by Mr Roberts that the shares would be jointly owned: see paragraphs 106 to 110 of that skeleton, under the heading "Beneficial Ownership of Capello and Investments". In particular, at paragraph 109, it is noted that the claim to sole beneficial ownership is inconsistent with what was claimed by Ms Raffermati, namely that "they agreed to be joint owners, PR represented he would incorporate the company in that fashion but then incorporated it in his sole name…" In paragraph 110, which addresses the claim to joint beneficial ownership, it is simply said that this is a straight dispute of fact "as to what was agreed at its inception."
55. Accordingly, the exercise by the Judge of her discretion to strike out the third party claim was undertaken on a flawed basis, being based on the wrong assumption that the third party claim was put on precisely the same basis as the defence and counterclaim and thus contained no sufficient pleading of a claim to a beneficial interest in the shares based on either an express agreement or representations and reliance. I should point out that she was led into this error, first, because she was told by Counsel for the Company and Mr Roberts that the two claims were made on the same basis, and, secondly, by the failure of Counsel for Ms Raffermati to contradict that statement. She therefore gave no consideration to the details of the particulars of additional claim at all.
56. Had she done so then, for the reasons set out above, I consider that she ought to have concluded that there was a sufficiently pleaded claim by Ms Raffermati to a beneficial interest in the shares of the Company based on an express agreement or representations and reliance.

Evidence to support the claim?

57. The Judge's reason for striking out the third party claim was that there was no properly pleaded case and no evidence put forward to establish a trust by way of express agreement or common intention. Mr Wright submits that, even if there was a properly pleaded case, there was no evidence of the essential facts required in order to substantiate that case, and the Judge was accordingly right to strike out the third party claim on this alternative basis.
58. It is true that Ms Raffermati's witness statement, being the only witness statement relied on in support of the defence, counterclaim and third party claim, contains no adequate evidence of any agreement that the shares would be held in joint names, or of any representations by Mr Roberts. As the Judge noted, it contains evidence only of Ms Raffermati's own understanding, and of what was not said to her by Mr Roberts.
59. It is not, however, correct to say that there was no evidence of Ms Raffermati before the Court of either the alleged agreement or representations, or reliance on them. Such matters were (as I have referred to above) set out in the particulars of additional claim, which were verified by a statement of truth from Ms Raffermati herself.
60. Mr Wright submitted that the particulars of additional claim were irrelevant, because evidence at a trial must be given by witness statement, citing for that purpose CPR Rule 32.6. That rule is headed "Evidence in proceedings other than at trial" and states as follows:

"(1) Subject to paragraph (2), the general rule is that evidence at hearings other than the trial is to be by witness statement unless the court, a practice direction or any other enactment requires otherwise. (2) At hearings other than the trial, a party may rely on the matters set out in: (a) his statement of case; or (b) his application notice, if the statement of case or application notice is verified by a statement of truth."

61. Mr Wright submits that the natural inference from this rule is that at a trial, a party cannot rely on matters set out in his or her statement of case, but can only rely on matters set out in a witness statement. In my judgment, that is the wrong reading of rule 36.2. The rule is dealing with those circumstances in which evidence in writing can be relied upon other than at a trial. It is to be contrasted with rule 32.2, which states:

"(1) The general rule is that any fact which needs to be proved by the evidence of witnesses is to be proved: (a) at trial, by their oral evidence given in public; and (b) at any other hearing, by their evidence in writing."

62. In other words, the general requirement in relation to evidence at a trial, is that it is to be given orally. Although it is the normal (but not invariable) practice for the evidence in chief of a witness to be limited to confirming the accuracy of the matters contained in a previously served witness statement, nothing in rule 32.2 or rule 32.6 prevents a witness giving oral evidence at trial by way of confirming the accuracy of a previously served statement of case, particularly one verified by a statement of truth from the very witness called to give evidence.
63. The possibility of relying upon the particulars of additional claim for the purpose of showing there was evidence which could support the claim to a trust based on express agreement or common intention was not considered by, or canvassed before, the Judge, no doubt because it was irrelevant in circumstances where she had already concluded that there was no properly pleaded case in respect of such claim.
64. I should refer also to CPR rule 32.5(3) and (4) which provide that a witness may at trial supplement his or her written evidence with the Court's permission, but that the Court will give permission only if there is a good reason not to confine the evidence to that contained in the witness statement. In my judgment, that is primarily aimed at circumstances where the supplemental evidence sought to be led at trial is entirely new, as opposed to matters that are already set out in an existing document, such as a statement of case served in the same proceedings. In some circumstances, it might be said that to allow a witness to supplement a witness statement by reference to matters contained in a statement of case might prejudice the opposing party at trial, although given that, by definition, the opposing party was on notice (from the date of the service of the statement of case) of the matters referred to in it, the circumstances when there would be sufficient prejudice to prevent a party from doing so are likely to be rare.
65. Mr Wright submits that the Company and Mr Roberts would indeed have been prejudiced if the Judge (had she concluded there was a properly pleaded case) had then permitted Ms Raffermati to confirm in her evidence in chief the contents of the particulars of additional claim. This submission is partly based on the same objection that was made to the particulars as a pleading, namely that they were too confusing to permit the legal team acting for the Company and Mr Roberts to understand the case they were supposed to meet. I have addressed, and dismissed, that objection above. Alternatively, I understood Mr Wright to contend that the prejudice consisted in the fact that the preparation for trial had proceeded on the assumption that the only evidence Ms Raffermati was to lead, and thus the only evidence in respect of which cross-examination of her had to be prepared, was that set out in her witness statement. The short answer to this point is that in paragraphs 106 to 110 of Mr Wright's skeleton served for the trial it is acknowledged (as I have pointed out above) that one of the issues raised for determination was the beneficial ownership of the company and that, in that context, the issues to be explored in evidence at the trial included the contention that there was an express agreement as to joint ownership or representations made to like effect. Accordingly, I do not accept that there would have been sufficient prejudice – had it been relevant for the judge to consider this point at trial, and had it been raised before her – to deny Ms Raffermati the opportunity to confirm the accuracy of the matters set out in the Particulars of Additional Claim in her oral evidence at trial.
66. Finally, Mr Wright submits that it was not possible for Ms Raffermati to confirm the accuracy of the facts set out in the particulars of additional claim, because parts of the case had been abandoned, so that she would need to go through each paragraph to confirm whether it was something she still relied upon. That is not, in my judgment, a good objection. In the first place, a witness would only ever be asked to confirm the accuracy of the facts stated in a pleading, as opposed to legal conclusions derived from those facts. Secondly, there would be no difficulty in a witness being asked to confirm only those facts relevant to the remaining causes of action.
67. It may be more difficult (but not insurmountably so) if the pleading contained facts that were inconsistent with the case now being advanced. That is, however, not the case here. It is true that Mr Routley's skeleton argument for the trial contained an assertion that the reason the shares were placed into Mr Roberts' sole name was so as to protect Ms Raffermati from the attentions of the Child Support Agency. That contention was wholly inconsistent with the repeated statements in the particulars of additional claim, and indeed Ms Raffermati's witness statement, that she did not know that the shares were put into Mr Roberts' sole name until 2014. Mr Routley assured me that the assertion in his skeleton (and, it follows, his submissions to like effect at the trial) were simply wrong, and that Ms Raffermati had not resiled from the evidence contained in the particulars of additional claim or her witness statement. Although Mr Wright confirmed that Mr Routley had made submissions at trial which were inconsistent with his client's evidence, he did not go so far as to say that it was made clear that Ms Raffermati was herself resiling from that evidence. The extent to which Ms Raffermati had given instructions which caused her Counsel to make submissions inconsistent with her prior written evidence would no doubt be something on which she would be cross-examined at the trial, but in the absence of a clear abandonment of her prior evidence, it would not lead to the conclusion that there was no real (as opposed to a fanciful) prospect of her succeeding at trial on the point.
68. Accordingly, I reject the submission that the third party claim should in any event have been struck out for the separate reason that there was no evidence before the Court supporting the matters pleaded in it.
69. For these reasons, I allow the appeal against the striking out of the third party claim against Mr Roberts. I should make it clear that I say nothing about the merits of Ms Raffermati's claim against Mr Roberts, beyond the conclusion that it is sufficiently pleaded and has a real, as opposed to fanciful, prospect of success so as to survive the test applied on an application for summary judgment or strike out. I note that her version of events is strongly resisted by Mr Roberts.

Paragraph 7 of the Order

70. That leaves the appeal in relation to the order requiring Ms Raffermati to pay £44,041.
71. The judge gave no separate consideration to this point in her judgement. Mr Wright submits that, the Judge having struck out the defence and counterclaim, it necessarily followed that the Company was entitled to judgment in respect of the sum claimed by way of damages.
72. In my judgment, there is a logically prior question which should have been, but was not, addressed, namely whether it necessarily followed, from the conclusion that there was no basis in the pleading or evidence for Ms Raffermati to assert a claim that either the shares in the Company or the business were held on trust for her, that there was no defence to the quantum of the damages claim.
73. While it can fairly be said that the strikeout of the defence and counterclaim in relation to the claim to beneficial ownership of the shares or the business meant that there was no sustainable defence to the claim that Ms Raffermati had misappropriated the business, and was therefore liable to account to the Company for the profits she had received since 2014, in my judgment it did not necessarily follow that there was no arguable defence to the claim for payment of the specific sum of £44,041.
74. The pleading in relation to this point is as follows. At paragraph 4 of the particulars of claim, it is alleged that the company purchased equipment and paid for works to fit out the premises for the business at a cost of "approximately" £40,000. There is then a list of items said to have been paid for, including chairs, mirrors, a till, et cetera. At paragraph 32 of the particulars of claim it is alleged that as a consequence of the misappropriation of the company's business, the company has been wrongfully deprived of the benefit of funds expended on refitting the premises and purchasing equipment particularised at paragraph 4. In the premises it is said the claimant is entitled to damages in the amount of £40,000.
75. Ms Raffermati pleads to these paragraphs at paragraphs 9 and 38 of the defence. At paragraph 9 it is asserted that Ms Raffermati funded the purchase of equipment and paid for works herself from her own money together with a loan of £10,000 from Mr Roberts that was repaid. It is claimed that either title to the equipment was held by the company and Ms Raffermati is in turn an owner of the company, or the equipment itself is held for the benefit of Ms Raffermati. At paragraph 38 it is denied that the company is entitled to damages or that the company spent any funds on refitting the premises on the acquisition of the business.
76. It appears from a note of the hearing provided by Mr Roberts' solicitors that counsel for Ms Raffermati "attempted to make some representations [on this point] but he has been struck out, so really he has no argument." As I have noted above, that fails to address the logically prior point, as to the extent to which a defence to the sum claimed of £44,041 could be maintained notwithstanding the conclusion that there was no sustainable defence to the claim for an account.
77. Before me, Mr Routley pointed out that not only was the amount spent by the Company on equipment and fitting-out in 2008 pleaded as an "approximate" sum, but that damages for misappropriation of those items in 2014 (some six years later) could not be assessed by reference to their value at the time of purchase. Accordingly, there was an arguable defence to the quantum of the claim, at the very least. I accept those submissions. Mr Wright submitted that this point was not pleaded, other than as a bare denial of the Company's claim to damages. While I accept that in some cases a defence may be struck out where it consists of a bare denial (see CPR 3APD, paragraph 1.6), the potential flaws in the claim for damages, for misappropriation of equipment in 2014, calculated as the amount paid for that equipment in 2008, are self-evident. Accordingly, I allow the appeal in respect of paragraph 7 of the Order.

Conclusion

78. I therefore dismiss the appeal against the Judge's decision to strike out the defence and counterclaim, save that I allow the appeal as regards paragraph (2) of the prayer for relief in the particulars or claim (i.e. the claim for damages, reflected in paragraph 7 of the Order). I allow the appeal against the Judge's decision to strike out the third party claim.