Summary

The court had an inherent jurisdiction to make a civil restraint order against a third party who was controlled by an individual who had persistently made totally without merit applications where that party, still under the individual's control, was either making or issuing, or threatening to make or issue, such an application. That was so even though the third party had not been associated with all the past applications which justified the making of an order against the individual.

Facts

The defendants (P) applied to strike out a claim brought by the first claimant (F) and the second and third claimant companies (C and X), in which F or his daughter were interested.

P had been appointed as administrators of a company. They issued proceedings against C but later amended the proceedings so that over 96 per cent of their claim was abandoned. Judgment was entered against F. As a result, he became bankrupt and so any cause of action that he had became vested in his trustee. F brought proceedings against P alleging negligence on the basis that, by making the original claim and circulating their allegations widely, P had assumed a duty of care or entered into a special relationship with F, C and X giving rise to a duty of care; misfeasance pursuant to the Insolvency Act 1986 Sch.B1 para.75; malicious prosecution. At the date the action was commenced, C had been struck off but it was later restored. F's trustee was directed to assign to F his claims, although at the date of the instant hearing that had not yet occurred.

Held

(1) The claim alleging a duty of care was really a complaint of malicious falsehood. It was not open to someone who might timeously have brought a malicious falsehood claim to say that the falsehood complained of gave rise to a special relationship or assumption of responsibility giving rise to a duty of care, so producing a longer limitation period. The idea that one claimant, by asserting a claim, came under or assumed a duty of care to the other party was unsound, Kyrris v Oldham [2003] EWCA Civ 1506, [2004] B.C.C. 111 and Peskin v Anderson [2001] B.C.C. 874 considered. Insofar as the claims were based on any duty of care, there were no prospects of success and they should be struck out (see paras 7-10 of judgment). (2) As to the misfeasance claim, proceedings under Sch.B1 para.75 of the 1986 Act could only be brought by a shareholder or creditor. F was neither of those things and would not be even if the assignment took place. Any interest he might have had and indebtedness formerly due to him were vested in his trustee. The misfeasance claim also had no prospect of success (paras 13-15). (3) F had alleged that P's claims had been brought abusively, for an improper motive or an improper purpose. However, those proceedings were pursued to judgment, over an eight-day hearing, and the claim succeeded in substantial amounts. It was therefore difficult to see how the proceedings could be characterised as malicious or an abuse. The highest that the abuse of process claim could be put was that there was, in part, an illegitimate purpose, JSC BTA Bank v Ablyazov [2011] EWHC 1136 (Comm), [2011] 1 W.L.R. 2996 considered. However, the fact that there was ultimately a judgment wholly belied the assertion that the proceedings as a whole were improperly motivated or brought for an improper purpose (paras 23-24). (4) The proceedings were brought when F knew that the causes of action he wished to assert were vested in his trustee in bankruptcy and that he needed an assignment and so the court was bound to strike out F's claim on that ground also, Pickthall v Hill Dickinson LLP [2009] EWCA Civ 543, [2009] C.P. Rep. 40 followed. Further, when the proceedings were commenced, C had been struck off, had not then been restored and so did not exist. The proceedings were an abuse because F knew that it was an abuse of process for a claim form to be issued before restoration, Pickthall applied. The proceedings were totally without merit and should be struck out (paras 16-20, 28). (5) Previous applications issued by F were also totally without merit as was another claim he had issued against 20 defendants. The CPR requirements as against F for either an extended or a general civil restraint order were made out. The public interest required the making of a general civil restraint order against him. Where a third party was found to be controlled by an individual who had persistently made or issued totally without merit applications or claims, and that third party, still under the individual's control, was either making or issuing, or threatening to make or issue, such an application or claim, that was a special feature justifying the making of a civil restraint order in like terms against the third party, under the court's inherent jurisdiction. That was so even though the third party had not been associated with all the past applications or claims which justified the making of the order against the individual. It was therefore also appropriate to make a civil restraint order against C and X (paras 36, 41, 43, 46).

Application granted