Civil procedure – Abuse of process – Striking out – Court striking out claim for failure to comply with unless order – Appellant issuing second action allegedly in identical terms – Respondent applying to strike out proceedings – Judge granting application – Appellant appealing – Whether second action abuse of process – Appeal dismissed
A dispute between the parties arose out of an option agreement pursuant to which the respondent was granted an option by the appellant (the call option) to acquire two adjoining parcels of land at Park Mill Farm, Princes Risborough, Buckinghamshire. The appellant contended that the respondent was in breach of an obligation to use reasonable endeavours to obtain planning permission, with the result that the time-limited window for obtaining that permission closed. It argued that, if the respondent had used reasonable endeavours, it would have obtained planning permission and exercised the call option which would have entitled the appellant to a purchase price under the option agreement of £27,500,000. It claimed that amount in damages.
The respondent applied to strike out the proceedings as an abuse of process. It relied on CPR 3.4(2)(b) and/or the inherent jurisdiction of the court. The basis of the application was that the same claim had already been made in earlier proceedings between the same parties which had been struck out on 20 December 2012 for failure to comply with an unless order requiring the provision of security for costs. The basis for the application to strike out was that a claim in materially identical terms had already been struck out in circumstances in which it would be unjust to allow the claimant a further “bite of the cherry”.
The respondent contended that the unless order was intended to bring finality, and was not appealed. It would undermine and circumvent that order if the appellant were to be permitted to pursue fresh proceedings raising an identical cause of action after four years during which the respondent reasonably thought that the dispute was at an end. The application was granted: [2018] EWHC 25 (Ch); [2018] EGLR 10.
The appellant appealed contending, in reliance on Goldtrail Travel Ltd (in liquidation) v Aydin [2017] UKSC 57, that the requisite funds to satisfy the unless order in December 2012 had not been forthcoming and the unless order should have been discharged as stifling its claim.
Held: The appeal was dismissed.
(1) The burden of showing that the second action was an abuse lay on the party asserting it, in this case the respondent, and it had to be clearly shown to be an abuse. Whether an action was an abuse was not a question of discretion, but an evaluative assessment to which there could be only one answer. If it was an abuse, the court had a discretion whether to strike it out but, once satisfied the second action was an abuse of process, it was likely that the court would strike it out but it did not necessarily follow. It was clear from his judgment that the judge had those principles well in mind. Because the assessment was fact-sensitive and involved taking account of and giving appropriate weight to all relevant factors, an appeal court would not interfere with the judge’s assessment unless the judge had taken account of irrelevant factors, ignored relevant factors, applied a wrong principle, came to a decision that was not properly open to the judge or was, in the view of the appeal court, plainly wrong. Any court of justice had to possess the inherent power to strike out proceedings as an abuse of process to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute. The circumstances in which abuse of process could arise were very varied. Decisions of the Court of Appeal before Goldtrail established that where a corporate claimant could not itself provide security, but its owners or controllers who stood to benefit from success in the action could reasonably be expected to do so, a claim was not to be taken as stifled by an order for security. Goldtrail replaced that approach by attributing greater significance to the separate legal personalities of the company and its owner/controller, indicating that the relevant question was never whether a company’s owner or other closely associated person could raise the money to satisfy the requested condition, but whether the company itself could do so: Stuart v Goldberg Linde [2008] EWCA Civ 2; [2008] 1 WLR 823 and Atkas v Adepta [2010] EWCA Civ 1170; [2011] QB 894 and Goldtrail followed.
(2) In the present case, it was abundantly clear that the judge found, on the evidence before him, that the decision not to provide the security was taken by its sole shareholder in his capacity as the directing mind of the appellant; and that if, in that capacity, he had concluded that it was in the interests of the appellant to proceed with the litigation, he would personally have provided the necessary funding. Therefore, the appellant did have access to funding if it chose to seek it. At the very least, the judge held that the appellant had not discharged the burden of showing that the appellant did not have access to the required funding. Those conclusions were open to the judge on the evidence. Accordingly, the judge was entitled to say that the appellant did not ensure that it used the opportunity provided by the first action to resolve its dispute with the respondent. Through its sole director, it chose not to provide the security and so allowed the action to be struck out. It was a deliberate decision by the appellant not to comply with the peremptory order for security. It was in those circumstances a clear abuse to commence new proceedings making the same claim. It would be manifestly unfair to the respondent to subject it to a second action, when the appellant had chosen to abandon the first, and would bring the administration of justice into disrepute among right-thinking people. It was a conclusion that was properly open to the judge.
Bankim Thanki QC and James McClelland (instructed by K&L Gates LLP) appeared for the appellant; Alan Gourgey QC and Tom Hickman (instructed by DLA Piper UK LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Harbour Castle Ltd v David Wilson Homes Ltd
