Harbour Castle Ltd v David Wilson Homes Ltd

Civil procedure – Abuse of process – Striking out – Court striking out claim for failure to comply with unless order – Claimant issuing second action allegedly in identical terms – Defendant applying to strike out proceedings – Whether second action abuse of process – Application granted A dispute between the parties arose out of an option agreement pursuant to which the defendant was granted an option by the claimant (the call option) to acquire two adjoining parcels of land at Park Mill Farm, Princes Risborough, Buckinghamshire. The claimant contended that the defendant 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 defendant had used reasonable endeavours, it would have obtained planning permission and would have exercised the call option which would have entitled the claimant to a purchase price under the option agreement of £27,500,000. It claimed that amount by way of damages. The defendant 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 defendant contended that the unless order was intended to bring finality, and was not appealed. It would undermine and circumvent that order if the claimant were to be permitted to pursue fresh proceedings raising an identical cause of action after the elapse of four years during the course of which the defendant reasonably thought that the dispute was at an end. Held: The application was granted. (1) Although the decision on whether or not to strike out was discretionary, the anterior question of whether or not the proceedings were an abuse, such as to justify the exercise of the jurisdiction to strike out, was not. The finding of abuse was a judgment which was either right or wrong. Where, as in the present case, the defendant did not contend that the claims had no real prospect of success, and the claimant did not contend that the defendant had no real prospect of defending them, the underlying merits were not relevant to the question of whether or not a second action was an abuse of process: Aldi Stores Ltd v WSP Group Plc [2008] 1 WLR 748; [2007] PLSCS 244, Stuart v Goldberg Linde [2008] 1 WLR 823 and Aktas v Adepta [2011] QB 894 considered. (2) The mere fact that the first action was struck out for breach of a peremptory order was not sufficient to justify the striking out of the present proceedings as an abuse of process. However, it was capable of being a significant factor depending on the circumstances in which it was made and not complied with. In the present case, there was no doubt that the breach of the order was deliberate in the sense that the claimant knew of its terms and made an informed decision not to comply with it. The approach which the authorities required the court to take in deciding whether a strike out was justified depended on whether, taking all the circumstances of the case into account, the claimant’s commencement of the proceedings constituted a misuse of the court’s procedure which would be manifestly unfair to the defendant or would otherwise bring the administration of justice into disrepute. The answer to the questions which necessarily arose for answer was always fact-specific. In particular, it was not appropriate simply to ask whether there were special reasons which justified a second action because the first action was so abusively conducted as to fall within the category described by Mance LJ in Glauser International SA v Khan [2002] CLC 958, at para 30. The court had to address the application to strike out the second action with the overriding objective of the Civil Procedure Rules in mind and had to consider whether the claimant’s wish to have “a second bite at the cherry” outweighed the need to allot its own limited resources to other cases: Securum Finance Ltd v Ashton [2001] Ch 291; [2000] PLSCS 143 applied. (3) Applying that approach, and having regard to all the circumstances of the case, the present proceedings were an abuse of process and should be struck out. The claimant’s wish to proceed was outweighed by the circumstances in which the first action was conducted and came to an end, and the need to allot the court’s limited resources to other cases. The claimant ought to have made proper use of the opportunity provided by the first action to resolve its dispute with the defendant and, not having done so, the pursuit of the present proceedings could properly be characterised as unjust harassment of the defendant. Furthermore, the considerations which the court was required to take into account by CPR 1.1(2) and the decision of the Court of Appeal in Securum Finance Ltd v Ashton [2001] Ch 291; [2000] PLSCS 143 supported the conclusion that further pursuit of the proceedings by the claimant would, in the particular circumstances of this case, be inconsistent with the overriding objective. Michael Brindle QC and James McClelland (instructed by K&L Gates LLP) appeared for the claimant; Alan Gourgey QC and Tom Hickman (instructed by DLA Piper UK LLP) appeared for the defendant. Eileen O’Grady, barrister Click here to read a transcript of Harbour Castle Ltd v David Wilson Homes Ltd