Plaintiffs advancing money secured by mortgage – Mortgagor falling into arrears – Plaintiffs issuing proceedings alleging defendants agreed to act as guarantor – Defendants issuing summons to strike out – Whether statement of claim disclosed reasonable cause of action- Whether mortgage document referred to in pleadings could be looked at – Plaintiffs’ action dismissed
The plaintiffs, a husband and wife, issued writ number 96 P 7667 claiming that by an agreement dated December 12 1989 and a legal mortgage dated October 18 1989 a company, Demiserve Ltd, (Demiserve), mortgaged to the plaintiffs land at 104/106 Holland Park Avenue, London W11, and pursuant to the mortgage the plaintiffs’ advanced £85,000 to Demiserve. It was claimed that under the mortgage Demiserve was to pay the plaintiffs’ monthly instalments of £8,900, of which £4,100 was in respect of interest, and £4,800 was in respect of capital. Although payments were made from October 1989 to November 1990 inclusive, Demiserve had thereafter been in default of its obligations under the mortgage. The plaintiffs claimed that by clause 11 of the mortgage the defendants had irrevocably guaranteed all payments due from Demiserve to the plaintiffs, that 72 instalments, totalling £640,800, were outstanding and that despite a formal demand contained in a letter dated December 12 1996 no payment had been received.
The defendants issued a defence claiming, inter alia, that no reasonable cause of action had been disclosed and issued a summons to strike out the action on the grounds that the statement of claim sought substantially the same relief as already sought against the defendants in existing proceedings by another plaintiff. The defendants contended that no reasonable cause of action had been disclosed because, although the mortgage was stated to have been made between the borrower, the lender and the guarantor, the terms in relation to the guarantor had not been executed since no person had been identified. The plaintiffs sought leave to amend the statement of claim and contended that under RSC Ord 18 r 7 consent was require, before a document, such as the mortgage, referred to in a pleading, could be read.
Held The defendants’ application was granted.
1. A document expressly referred to in the pleadings could be referred to for its terms. The rule that consent was required had not been the practice and was not a proper process of law and, in any event, it was not clear whose consent was required. Therefore the court was entitled to look at the document and upon so doing it was clear that no reasonable cause of action had been disclosed.
2. The plaintiffs’ application to amend the statement of claim by a summons dated March 27 1997, with the insertion of a reference to an agreement signed by the defendants to guarantee the performance of Demiserve, was outside the limitation period. Therefore the statement of claim was to be treated as it stood and was to be struck out and the action dismissed. That exercise of discretion was supported by the fact that there were existing proceedings by another plaintiff alleging that by a letter dated September 19 1989 the defendants had guaranteed the performance of Demiserve.
Anthony Trace (instructed by Beachcroft Stanleys) appeared for the plaintiffs; Martin Young (instructed by Hugh Cartwright & Amin) appeared for the defendants.
