Summary

A bankrupt's claim for breach of contract and negligence against his trustee in bankruptcy was struck out under CPR r.3.4(2), on the grounds that the claim form disclosed no reasonable grounds for bringing the claim and that it was an abuse of the court's process.

Facts

The defendant applied to strike out the claimant's claim.

The claimant had been adjudicated bankrupt. He sought damages for breach of contract and negligence in relation to the defendant's conduct as his trustee in bankruptcy. The claim form was issued at the county court money claims centre. The defendant applied to strike out the claim under CPR r.3.4(2)(c) on the grounds that it had been issued in breach of a previous order that any further application the claimant wished to make arising out of or in connection with his bankruptcy had to be made to a particular county court and marked for the attention of either of two particular judges. Alternatively, the defendant applied under r.3.4(2)(a) on the grounds that the claim form disclosed no reasonable grounds for bringing the claim or under r.3.4(2)(b) on the grounds that it was an abuse of the court's process.

The defendant submitted in relation to abuse of process that in an earlier application under the Insolvency Act 1986 s.303 and on appeal, a number of legal and factual issues had been decided against the claimant which could not be reopened in the instant claim. The claimant argued that the new claim was based on a number of matters which had taken place subsequently and therefore, there was no issue estoppel or abuse of process.

Held

Breach of court order - When issuing the order the judge was only concerned that any further litigation arising out of or in connection with the claimant's bankruptcy should be dealt with by particular judges who were aware of the background of the case. The order was intended to apply not only to any further application in the same proceedings, but also to any further proceedings which dealt with the particular subject matter. The instant claim was covered by the order as it arose out of and was connected with the claimant's bankruptcy. The claimant was in breach of the direction by issuing a new claim. However, he had provided an explanation of why he had done so. He had been consistently told by court officials that if he wished to issue a money claim in the county court he had to go first to the county court money claims centre. On that basis the court could not find that the claimant had deliberately flouted the judge's direction. He thought he was doing the right thing. There was no question of striking out the claim merely because on a strict reading of the direction it had been issued in breach of the judge's order (see paras 20, 24-26).

Breach of contract and Negligence - It was inherently unlikely that a bankrupt and his trustee in bankruptcy would enter into a contract between themselves governing the trustee's conduct and the exercise of his functions as a trustee. There was no benefit for the trustee in doing so. The existence of a contract would potentially conflict with the trustee's duties under the statutory scheme, which was primarily concerned with advancing the interests of the creditors. There were no particulars of any such contract given in the statement of case to enable the claim for damages for breach of contract to be maintained, and there was no support for it in the evidence. The contract claim was not sustainable and should be struck out under r.3.4(2)(a).The claimant had no standing to pursue the negligence claim at common law. That claim was also struck out under r.3.4(2)(a) (paras 35, 41).

Abuse of process - The new matters raised by the claimant made no difference. If he had a cause of action before, they did not add to it, and if not, they did not give him one. If the claimant was permitted to continue with the claims he would in substance be re-litigating issues which arose and were decided in the application under s.303 of the Act. If they had not been exactly the same issues, they would still have been the same in substance, and would constitute an issue estoppel. Even if they were not so sufficiently close as to be covered by issue estoppel they arose out of the same circumstances and should have been litigated at the same time, in accordance with the rule in Henderson v Henderson [1843-60] All E.R. Rep. 378, Henderson followed. The litigation between the parties had to be determined once and for all. It has already been so determined (subject to any possible appeal), and the claim should be struck out in its entirety (paras 61-62).

Claim struck out