Paratus AMC Ltd & Ors v Lewis

An extended civil restraint order may apply to claims or applications in different proceedings and against different parties where the subject matter has a wide relationship with the proceedings in which the order was made, including matters involving, relating to, touching upon or leading to those proceedings.

A bankrupt generally lacks standing to pursue a cause of action vested in the trustee in bankruptcy. This includes an action to set aside a final judgment for fraud. A settlement cannot ordinarily be reopened merely because the settled account is later alleged to be negligent or inaccurate; fraud would be required.

An extended civil restraint order had been made against the defendant in mortgage possession proceedings. The defendant subsequently applied to set aside a Tomlin order and the judgment entered following default under it, naming solicitors who had obtained a charging order over the mortgaged property. He also sought permission to make related applications against another secured creditor.

The court was required to clarify the scope of the restraint order, determine whether the defendant’s application fell within it, and decide whether permission should be granted. The court also considered the effect of the defendant’s bankruptcy and the legal basis advanced for reopening the settlement and judgment.

1. The extended civil restraint order was not confined to applications in the proceedings in which it was made, or to applications against the original claimant. It could apply to applications in new or existing High Court or county court proceedings and against any person, provided the application concerned a matter involving, relating to, touching upon or leading to the original proceedings.

2. The application seeking to undermine the Tomlin order and the judgment of 27 January 2009 was within that description. The judgment and the charging order affected the distribution of surplus mortgage-sale proceeds paid into court in the original proceedings. The application therefore remained struck out, and the district judge’s order was not set aside.

3. Permission was refused on the independent ground that the defendant lacked locus standi. The Tomlin order had effectively merged into the later final judgment. Any cause of action to set aside that judgment for fraud was vested in the trustee in bankruptcy under section 306 of the Insolvency Act 1986. The court applied the analysis in Heath v Tang [1993] 1 WLR 1421, including the distinction between causes of action personal to a bankrupt and other choses in action. Section 436 was noted in relation to things in action vesting in the trustee.

4. The court made no final ruling on the defendant’s alternative contention that the proceeds of sale had revested in him after three years. The correspondence was confusing, and the issue was unnecessary to the decision.

5. The defendant’s proposed challenge to the settled sum on the basis of negligent accounting or an inaccurate account could not succeed. By settling, he had contracted as to the amount due and given up the ability to challenge it. Fraud might provide a different basis, but the allegations made were insufficiently particularised and did not justify permission. The applications were dismissed or refused accordingly.

Not stated in the judgment.