Higgins v Swanlea Ltd

There is an established overlap between CPR 3.4 and Part 24. Although CPR 3.4 ordinarily concerns the statement of case, it may be used where the pleaded claim has no real prospect of success on the facts and the evidential position is sufficiently clear. The court must apply the overriding objective and avoid both an unjustified trial and an unjustified strike-out. Where sanctions prevent a claimant from adducing further evidence, the court may assess the case on the evidence that can properly be used at trial. A possibility that further disclosure or oral explanation may improve the case is insufficient where disclosure is complete and relief from sanctions has been refused. If the admissible evidence cannot establish essential elements of the pleaded agreement, the claim may be struck out as an abuse of the court’s process under CPR 3.4(2)(b).

The claimant brought proceedings seeking an order under section 782 of the Companies Act 2006 for the delivery of redeemable preference shares, together with related relief concerning an alleged agreement with Swanlea Ltd. The proceedings were converted from Part 8 proceedings to ordinary pleadings after a substantial dispute of fact emerged.

The claimant failed to comply with directions concerning witness statements. His application for relief from sanctions was dismissed, and the defendants later applied to strike out the claim under CPR 3.4. The Chief Registrar dismissed that application, holding that the rule did not permit an assessment of whether the evidence supported the pleaded case. The defendants appealed. The central issue was whether CPR 3.4 could be used where the pleaded claim was arguable but the evidence available for trial could not establish it.

1. Appeal allowed. The Chief Registrar had been wrong to conclude that CPR 3.4 was unavailable merely because the defendants’ argument concerned the evidence supporting the pleaded case.
2. Practice Direction 3A paragraph 1.7 confirms that a party may apply under CPR 3.4, Part 24, or both, where the opponent’s case has no real prospect of success on the facts. The earlier authorities, including Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1 and Moroney v Anglo-European College of Chiropractic [2009] EWCA Civ 1560, establish an overlap between the two procedures. That approach was preferred to the narrower approach expressed in Ministry of Defence v AB and others [2010] EWCA Civ 1317.
3. The court had to consider the evidence which the claimant was permitted to adduce at trial. His failure to comply with the order for witness statements, and the refusal of relief from the resulting sanction under CPR 32.10, meant that he could not rely on additional oral evidence to repair material deficiencies in his written evidence.
4. The pleaded case required proof of an agreement with Swanlea. The claimant’s witness statement described the relevant document as a letter of intent, did not identify Swanlea as the contracting party, and did not establish that the document recorded the pleaded agreement. The subsequent correspondence, without further explanation or elaboration, was insufficient.
5. The possibility that further disclosure or oral evidence might emerge was not persuasive after standard and specific disclosure, particularly where the claimant had already unsuccessfully sought relief from sanctions. The claim therefore had no real prospect of success and was struck out under CPR 3.4(2)(b).

• High Court (Chancery Division): Allowed the defendants’ appeal from the Chief Registrar’s order and struck out the claim under CPR 3.4(2)(b).
• Companies Court: Chief Registrar Baister dismissed the defendants’ strike-out application and granted permission to appeal.