Court striking out claim for payment – Claimant issuing second action seeking to enforce payment by way of security under legal charge – Whether second action abuse of process – Civil Procedure Rules 1998 – Court dismissing application to strike out – Appeal dismissed
In January 1989 the appellants agreed to guarantee the obligations of a company to Arbuthnot Latham Bank Ltd (the bank). In March 1989 they granted a legal charge to the bank over a home owned by them to secure their obligations under the guarantee. In August 1989 the bank commenced proceedings against the appellants to enforce the guarantee (the first proceedings). Those proceedings were struck out as an abuse of process in December 1997 on an application by the appellants.
In September 1998 the respondent, the successor in title to the rights of the bank under the guarantee and legal charge, commenced further proceedings (the second proceedings), in which it sought payment under the covenant in the legal charge and enforcement of the security by orders for possession and sale of the mortgaged property. It was common ground that the only relevant liabilities, if any, of the appellants were their liabilities under the guarantee.
The appellants applied for an order striking out the second proceedings on the grounds that they were an abuse of process, as they pursued what was, in essence, the same claim as the one already struck out in the earlier proceedings. They further contended that the issues based on the covenant for repayment and the property rights of the mortgagee could, and should, have been raised in the first action.
Held: The appeal was dismissed.
1. As a result of civil procedural changes, in particular the CPR 1998, it was no longer open to a litigant, whose action had been struck out on the grounds of inordinate and inexcusable delay, to rely on the principle that a second action commenced within the limitation period would not be struck out save in exceptional circumstances.
2. The respondent’s claim for payment in the second proceedings was indistinguishable from that made in the first proceedings. Had it stood alone, it could have been characterised as an abuse of process and a misuse of the court’s limited resources. However, the claim for payment was conjoined with claims to enforce the security under the legal charge. Those claims could not be struck out on the ground of abuse of process, as they had not been argued in the first action, and there was no reason why they should have been. Accordingly, whether or not the claim for payment was struck out made little or no difference to the resources needed by the court in relation to the litigation between the parties.
James Guthrie QC and Peter Knox (instructed by Coldham Shield & Mace) appeared for the appellants; Anthony Mann QC and Anthony de Garr Robinson (instructed by Sheridans) appeared for the respondent.
Thomas Elliott, barrister
