Plaintiffs obtaining Mareva injunction preventing sale of property – Parties compromising action – Terms contained in Tomlin order and Mareva discharged – Plaintiffs claiming breaches of undertakings and issuing motion for committal of defendants’ solicitor – High Court striking out motion – Whether court entitled to strike out proceedings for contempt of court – Whether appropriate exercise of discretion – Appeal dismissed
In November 1978 the plaintiffs bought Ribby Hall, Kirkham, Lancashire, (the property), to develop as a leisure complex and transferred the property to RHL, the first defendant. In November 1987 when the property was substantially developed they entered a conditional agreement for the sale of their shares in RHL to NWHL, the second defendant, for £360,000. In December 1988 following disagreements arising out of the contract, the plaintiffs issued proceedings against RHL and NWHL claiming £160,000. They obtained an ex parte injunction on December 19 restraining the disposal of Ribby Hall and of the shares in RHL. Y acted as solicitor to RHL and NWHL with full knowledge of the order of December 19 1988 and of later orders in the action.
On June 27 1989 the action was compromised on terms, contained in a Tomlin order, that the Mareva injunction be discharged on terms, inter alia, that the plaintiffs would receive £850,000 from the sale of the property. The plaintiffs served a motion for committal on Y for causing or aiding and abetting or failing to prevent breaches of the order of December 19 1988, as varied, and sought an order that they be paid the £850,000. The plaintiffs contended that they had consented to the Tomlin order, relying on the undertaking and integrity of Y as a solicitor, and would not have agreed to it otherwise. The motion was struck out and dismissed as an abuse of process on the grounds that there had been inordinate and inexcusable delay, Y had been seriously prejudiced and the plaintiffs had no chance of recovery. The plaintiffs appealed.
Held The appeal was dismissed.
1. The court had an inherent discretionary power to strike out proceedings as an abuse of process even where they were for contempt of court or invoked the supervisory power of a court over its officers. The absence of a limitation period for initiating proceedings did not preclude the power to strike out for abuse of process. The court had to be able to protect its own processes.
2. The plaintiffs had been aware since 1990 of the breaches relied upon, but no action had been taken for over 4 years and no good reasons had been advanced for failure to act at a much earlier stage. To allow the motion to proceed to a full hearing would serve no purpose, as the motion had no real prospect of success and would inflict serious prejudice on Y. Therefore the High Court had been wrong to strike out the motion.
Andrew Rankin QC (instructed by Banks Wilson, of Preston) appeared for the appellants; Crawford Linsay QC and John Norman (instructed by Barlow Lyde & Gilbert) appeared for the respondents.
