Haydon-Baillie & Ors v Bank Julius Baer & Co Ltd & Ors

The court may strike out defective pleadings while permitting a properly pleaded underlying claim to continue. Indemnity costs are compensatory, not punitive, and may be ordered where litigation is unreasonable, unfounded, weak, or involves unjustified allegations of dishonesty. A court may stay continuation of proceedings against a defendant until that defendant’s earlier costs are paid, where continuation would abuse the court’s process. The stay should be confined to the defendant whose costs remain unpaid. An extended civil restraint order requires persistent issuing of claims or applications that are totally without merit; serious defects in existing proceedings do not necessarily satisfy that threshold.

The judgment concerned further directions in three related actions after an earlier judgment had struck out most of the claimants’ pleaded claims. The court considered which parties and causes of action could continue, the form of any replacement pleading, liability for costs, indemnity costs, interim payments, stays for unpaid costs, unilateral land-registration notices, and an extended civil restraint order.

The central issues were whether the surviving contents claim should proceed, whether the claimants’ conduct justified indemnity costs and procedural restrictions, and whether the court could condition continuation against particular defendants on payment of their costs.

1. Claims and pleadings. The trustees had no viable claims and judgment was given for the defendants against them. Professor Haydon-Baillie’s claims were struck out except for a potentially arguable proprietary and conversion claim concerning specified contents. The three actions were consolidated. Any replacement particulars of claim had to be concise, identify the items and causes of action, state the facts relied upon, identify loss and remedy, and comply with rule 16.4(1)(a).
2. Costs. The defendants were awarded their costs against the trustees and against the first claimant in relation to claims no longer continuing. The costs were ordered on the indemnity basis. Applying the principles discussed in Three Rivers District Council v Bank of England and National Westminster Bank v Rabobank Nederland, the proceedings were outside the norm and unreasonable because of their breadth, lack of foundation, defective pleading, and unjustified allegations of dishonesty. Indemnity costs were compensatory rather than punitive.
3. Set-off and interim payment. The discretion concerning costs was not confined to equitable set-off. The court had to determine what was fair in the circumstances, applying Lockley v National Blood Transfusion Service and R (Burkett) v Hammersmith and Fulham London Borough Council. The evidence did not justify setting off the uncertain prospective value of a notional rental claim against the costs. Interim payments of 60 per cent of the submitted schedules were ordered.
4. Stay for unpaid costs. Rules 3.4(4), 3.1(2)(f) and 3.1(3), together with the inherent jurisdiction, supported a stay of continuation against a defendant whose earlier costs had not been paid. The jurisdiction exists to prevent abuse of process and to do substantial justice. It was not proper to require payment of every defendant’s costs as a condition of proceeding against one particular defendant. The stay would be lifted upon payment of the relevant interim and finally assessed costs; otherwise the claim against that defendant would be dismissed.
5. Civil restraint order. The court recorded that the claims other than the contents claim were totally without merit, but declined to make an extended civil restraint order. The requirement that a party have persistently issued claims or applications that were totally without merit was not yet satisfied, or the discretion was in any event premature, applying the guidance in Bhamjee v Forsdick and R (Kumar) v The Secretary of State for Constitutional Affairs, Practice Note.
6. The unilateral notices registered against the land were ordered to be removed because the surviving claim concerned goods only and did not assert an interest in the land. Permission to appeal was refused.

The judgment followed an earlier judgment of the same court in July 2007, which had struck out most of the claims and left matters requiring further directions. The present court consolidated the actions, made consequential costs and case-management orders, and refused permission to appeal.