Proceedings – Summary judgment – Extended civil restraint order (ECRO) – Claimant making unsuccessful applications to stop execution of possession warrant and challenging appointment of defendant receivers – Defendants obtaining summary judgment and asking court to make ECRO – Whether claimant fulfilling criteria for making of ECRO against it – Claim allowed
The claimant owned six buy-to-let properties which were mortgaged to the first defendant. The claimant sublet the properties to another company connected to it which, in turn, sublet the properties. The first defendant appointed the second defendants as receivers over all the properties under the Law of Property Act 1925. The receivers obtained possession orders over all but one of the properties.
The claimant had made unsuccessful applications in the county court to stop execution of the warrant for possession and seeking, amongst other things, a declaration that the appointment of the second defendants was unlawful and an injunction to stop all actions of the second defendants in exercising their alleged rights under the mortgage. It subsequently brought proceedings in the High Court seeking similar declaratory and injunctive relief.
The defendants were subsequently granted for summary judgment under CPR, rule 24(2). The judge held that, if he had been wrong to do so, he would have dismissed the claim as disclosing no reasonable cause of action and as an abuse of process. The judge concluded by declaring that the claimant’s claim was totally without merit: [2013] EWHC 3928 (Ch); [2013] PLSCS 305.
The court was then required by CPR, rule 3.4(6) to consider whether it was appropriate to make a civil restraint order against the claimant. The defendants each sought an extended civil restraint order (ECRO) pursuant to paragraph 3.1 of Practice Direction 3C to the Civil Procedure Rules which stated that an ECRO might be made “where a party has persistently issued claims or made applications which are totally without merit”.
Held: The claim was allowed.
(1) The word “persistently” was not defined but it was to be inferred from paragraph 2.1 of the Practice Direction that it required a minimum of three claims or applications, including the present one. That paragraph stated that a limited civil restraint order might be made where the party had made two or more applications which were totally without merit; an ECRO was more draconian that limited order so that “persistent” had to envisage a larger number than two. If the total number was no higher than the minimum number of three, that was a factor which affected the discretion though not the jurisdiction of the court. Persistency was not a simple matter of numbers but an approach on the part of the litigant that was deemed obsessive in the sense that he would not accept the decisions of the court: Courtman v Ludlam [2009] EWHC 2067 (Ch) and Pius v Fearnley [2013] EWHC 2217 (Ch) considered.
(2) An ECRO had a wide reach. It was a draconian order which was not to be made made unless the court was satisfied that there were sufficient reasons for interfering with the liberty of the litigant to sue whoever he wished, without having to satisfy a judge that it was a proper claim. There was a potential distinction between cases which were totally without merit on the facts and those which were totally without merit in law. There might be cases in which the litigant could not be blamed for running a case which his lawyers presumably thought was arguable. However, in the circumstances of the present case, it was appropriate to make an ECRO. The court accepted the defendants’ submissions that the claimant was intent on taking every possible step by intervening in proceedings in which it was not a party to frustrate the receivers’ proper discharge of their functions. The claimant’s conduct in the past suggested a high probability that it would continue with those tactics in the future, unless restrained.
(3) The defendants had been entirely successful and were entitled to their costs. The bringing of proceedings which were dismissed on a summary basis as being wholly without merit, and which resulted in an ECRO, was plainly appropriate for indemnity costs. Accordingly the court would make a summary assessment of costs on the indemnity basis.
Roger Bartlett (instructed by Direct Access) appeared for the claimant; Francis Moraes (instructed by Walker Morris LLP) appeared for the first defendant; Jonathan Lewis (instructed by RPC LLP) appeared for the second defendants.
Eileen O’Grady, barrister