Karim v Charkham & Ors

The claimant issued a fresh claim asserting fraud and misappropriation arising from the sale of a mortgaged property. The court held that the statement of case disclosed no reasonable grounds and was an abuse of process under CPR 3.4(2) because the matters raised could and should be determined in existing proceedings (HC12A03391 and related litigation). The claimant failed to particularise allegations of fraud and dishonesty, and the addition of a practising solicitor as a defendant amounted to harassment. The claim was struck out and an extended civil restraint order was made under Practice Direction 3C. The court also ordered indemnity costs against the claimant, summarily assessed at £20,000 for defendants 1–5 and £5,500 for defendant 6.

Background: The claimant, a former practising solicitor, and her husband borrowed from Waterside Finance and subsequently defaulted. Receivers were appointed, the property was sold at auction and title issues and registration disputes were litigated in the Chancery Division and county court. The claimant had previously issued related proceedings which were transferred, struck out or unsuccessfully pursued on appeal.

The third claim: The claimant issued a fresh claim against six defendants seeking declarations that transactions were procured by fraud and dishonesty, rescission of sale documents, an account of monies, restitution and damages. Defendants applied to strike out the new claim as an abuse of process and/or disclosing no reasonable grounds under CPR 3.4(2); alternatively they sought a stay until outstanding costs were paid.

Issues for the court:

• Whether the third claim disclosed reasonable grounds or was an abuse of process because it duplicated issues already before the courts;
• Whether the claimant had sufficiently pleaded fraud and dishonesty as required by Practice Direction 16.8.2;
• Whether an extended civil restraint order was justified by persistent, meritless litigation and repeated applications; and
• What costs order should be made.

Court reasoning and conclusions: The court applied the principles in Johnson v Gore Wood and related authorities and concluded the new proceedings were a re-working of earlier claims and should have been pursued in the existing proceedings. The claimant produced no adequate particulars of alleged fraud and had previously made similar complaints to regulatory bodies. The claim therefore constituted an abuse of process and evidenced harassment. Given the claimant's pattern of repeated unsuccessful and, in part, previously struck-out applications, an extended civil restraint order was appropriate. The court summarised the terms of the restraint order (two years, permission regime) and awarded indemnity costs to the defendants, summarily assessed at the stated figures.

The claim is struck out as an abuse of the court's process under CPR 3.4(2). The court found the fresh proceedings repeated issues already before the courts, involved inadequate pleading of serious fraud allegations and amounted to harassment. An extended civil restraint order under Practice Direction 3C was made for two years with a paper permission regime. Indemnity costs were awarded against the claimant, summarily assessed at £20,000 (defendants 1–5) and £5,500 (defendant 6).