HT-2023-000306 - [2025] EWHC 660 (TCC)

By an application notice dated 24 February 2025, the Second Defendant, Kazu 1, applied for an Order pursuant to CPR 19.6.3(b) that Kazu 1 be substituted as the Claimant in these Proceedings on the grounds set out in section 10 of the application notice. The grounds are essentially that in the context of the Court having handed down judgment on 24 February 2025, the Second Defendant (acting through its Liquidator), has now confirmed that it is willing to carry on the Claimant’s claim in these Proceedings in its own name, not withstanding its earlier refusal. Hence, it seeks an Order that it be substituted as Claimant. Its consent is annexed to the application notice.

That application is supported by a statement of truth, signed by the Applicant’s (Kazu 1) legal representative, Mr Geoffrey Goldkorn of the Stokoe Partnership. Mr Benjamin Goldkorn, the Claimant, and the Liquidator of Kazu 1, Mr Ian Yerrill, have made witness statements in support. The application is opposed by a witness statement prepared by Mr Tagg, solicitor for MPA.

The application is made under CPR 19.6. That provides, so far as material:

“(1)

This rule applies to a change of parties after the end of a period of limitation under –

(a)

the Limitation Act 1980¹;

(b)

the Foreign Limitation Periods Act 1984; or

(c)

any other enactment which allows such a change, or under which such a change is allowed.

(2)

The court may add or substitute a party only if –

(a)

the relevant limitation period⁾ was current when the proceedings were started; and

(b)

the addition or substitution is necessary.

(3)

The addition or substitution of a party is necessary only if the court is satisfied that –

(a)

the new party is to be substituted for a party who was named in the claim form in mistake for the new party;

(b)

the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant; or

(c)

the original party has died or had a bankruptcy order made against them and their interest or liability has passed to the new party.”

It is common ground that when the application was issued, the period of limitation for the MPA Claim had expired such that CPR 19.6 is engaged in respect of any application to change parties in these Proceedings. Kazu 1 relies upon CPR 19.6(3)(b) as granting the Court jurisdiction to make an Order for substitution in those circumstances.

The Claimant and the Second Defendant rely upon Roberts v Gill [2011] 1 AC 240 and Irwin v Lynch [2010] EWCA Civ 1153. Having regard to my reasons for dismissing this application which I explain below, it is unnecessary for me in this Judgment to consider those two authorities.

CPR 19.6 allows the substitution of a party, relevantly, where the court is satisfied that (1) the relevant limitation period was current when the Proceedings were started and that (2) the substitution is necessary because the MPA Claim cannot properly be carried on by Mr Goldkorn, or against MPA, unless Kazu 1 is substituted.

There is a dispute between the Parties as to whether the relevant limitation period was current, so far as Kazu 1 is concerned, when the Proceedings were started. However, I do not believe it to be in dispute that it is impossible for the MPA Claim to be carried on by Mr Goldkorn or against MPA unless Kazu 1 is substituted. If that is disputed, I am satisfied that it is so.

It is common ground that the Court has a discretion whether to make an Order for substitution. The White Book says, at paragraph 19.6.1:

“The opening words of rule 19.6(2) (“the court may ...”) indicate that the court has a discretion to refuse an application for additional substitution under this rule, even if both of these conditions are satisfied. That discretion should be exercised in accordance with the overriding objective, including the cost and delay elements contained therein, and should take into account all relevant circumstances, including prejudice to the parties and to other court users.”

When exercising that discretion, the conduct of the applicant, and in particular any delay in making the application, is a relevant factor in the exercise of the court’s discretion. See American Leisure Group v Olswang LLP [2015] PNLR 21 at [56] – [61]. The Court must also apply the over-riding objective.

The context for the trial on the Preliminary Issue was that:

The premise of the substitution application is that the Liquidator has changed his mind, and intends to bring proceedings. That would mean that the Preliminary Issues were pointless and were a waste of the Parties’ and the Court’s time.

At paragraph 4 of his witness statement, dated 5 March 2025, the Liquidator, Mr Yerrill, says:

“In those circumstances, following the hearing, I was contacted by Mr Goldkorn and decided I was prepared to discuss with Mr Goldkorn the possibility of Kazu 1 continuing the MPA Claim in place of Mr Goldkorn. Mr Goldkorn and I were able to reach an agreement, the effect of which is that Kazu 1 will be entitled to a certain portion of the proceeds of any money judgment obtained against MPA, in addition to the sum of money paid to it in connection with the Deed of Assignment. I am now therefore prepared to bring the MPA Claim on behalf of Kazu 1 as the arrangement I have agreed with Mr Goldkorn stands potentially to benefit Kazu 1’s creditors, in whose interest I am under a duty to act”.

That decision and attitude was always available to both Mr Yerrill and Mr Benjamin Goldkorn. Had they been pursued, the cost and time of the Preliminary Issues would have been avoided.

In their skeleton argument for the Claimant and Second Defendant, it is said by Counsel that the Judgment “represents a material change of circumstances”: see paragraphs 4 and 7. As I suggested to Mr Brisby KC, that assertion is wrong. It is not a result of the First Judgment that only Kazu 1 may properly carry on the MPA Claim. That is a consequence of the PM Appointment.. It is the PM Appointment, as interpreted, which resulted in the answer to both Issues formulated through the Preliminary Issues being “No”.

Mr Brisby explained that the assertions by Mr Geoffrey Goldkorn in his witness statement, and by Junior Counsel, were true when made, and that the application could not have been brought earlier because there had been no determination that Mr Goldkorn did not have standing.

The answer to the first is that the Preliminary Issues were held on the basis of those assertions by Mr Goldkorn, and repeated by Junior Counsel (albeit in the latter case after the Ordering of the Preliminary Issues). The answer to the second is that on the wording of the PM Appointment, Mr Goldkorn was without standing. In any event, there was nothing to prevent the Liquidator being a Claimant from the outset.

For those reasons, the Court refuses the application in the exercise of its discretion.

In any event, the Court refuses the application on the ground of abuse of process under the doctrine of Henderson v Henderson as explained by Lord Bingham in Johnson v Gore-Wood [2002 AC1 at [31]:

“... the bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all”

In subsequent cases, the Court has repeatedly emphasised that the proper course where a party has claims which it may, at some point, wish to pursue is for such matters to be raised with the Court at the earliest opportunity: Aldi Stores Ltd v WSP Group [2008] 1 WLR 748.

Clearly, Kazu 1 could, and should, have brought any claim against MPA earlier.

It is necessary for the application of the doctrine of Henderson v Henderson to show some element of prejudice or unfairness. That element is manifest. MPA prepared for the Preliminary Issue on the basis that if they won, that, subject to any appeal, would be the conclusion of the litigation. Contrary to what is said by Mr Goldkorn and Kazu 1, there has been no change of circumstance (see paragraphs 23 and 25 above). Mr Goldkorn and Kazu 1 allowed MPA to go through the cost and delay engendered by the Preliminary Issues on a basis which would be entirely pointless if the substitution application is allowed.

The Court, therefore, also dismisses the application on the basis that it is abusive of process.

In those circumstances, there is no need for the Court to consider the limitation issue. In any event, if further proceedings are brought that issue may have to be argued at greater length than was possible on 6^th March.

At the conclusion of the hearing, I was asked to assess the basis on which costs should be assessed. Having regard to the matters set out in this Judgment, I formed the clear view that the conduct of Mr Goldkorn and Kazu 1 is sufficiently out of the norm to justify an award of costs on the indemnity basis against them on a joint and several basis.