Higgins v Swanlea Ltd

The claimant sought an order under section 782 of the Companies Act 2006 for a certificate for 190,000 redeemable preference shares and alternatively specific performance or damages. The defendants applied to strike out the claim under CPR 3.4(2). The Chief Registrar refused to strike out, but the Deputy Judge allowed the defendants' appeal.

The court held that rule 3.4(2) can be engaged where the pleaded case cannot realistically be proved on the available evidence and that there is overlap between CPR 3.4 and Part 24, as reflected in Practice Direction 3A and authorities such as Three Rivers and Moroney. The court concluded the Chief Registrar was wrong to treat CPR 3.4 as inapplicable and that, in this case, the claimant was precluded by sanctions (CPR 32.10) from adducing further oral evidence necessary to prove the pleaded agreement. Because the available written evidence described the key document as a letter of intent that did not identify Swanlea as contracting party, the claim had no realistic prospect of success on the facts and was struck out under CPR 3.4(2)(b).

This was an appeal from an order of Chief Registrar Baister refusing to strike out a Part 8 claim. The claimant, Mr Higgins, issued proceedings seeking a certificate for 190,000 redeemable preference shares issued by Swanlea Ltd pursuant to an alleged agreement said to have been made in August 2007; he alternatively sought specific performance or damages. The claim relied on a letter dated 7 August 2007 and supporting correspondence.

The proceedings were subject to case management directions and ultimately the claimant failed to comply with directions for exchange of witness statements. The claimant's application for relief from sanctions was dismissed by the Chief Registrar in December 2014. The defendants then applied to strike out the claim under CPR 3.4 on the basis there was no real prospect of success; that application was dismissed by the Chief Registrar but he gave permission to appeal.

Issues before the High Court were: (i) whether CPR 3.4(2) could properly be used to strike out a claim after consideration of evidence (and the overlap between rule 3.4 and Part 24); (ii) whether the claimant had a real prospect of proving the pleaded agreement on the evidence he was permitted to rely upon; and (iii) whether the claimant could rely on evidence inconsistent with his pleaded case absent amendment.

The Deputy Judge reviewed Practice Direction 3A para 1.7 and authorities on the overlap between CPR 3.4 and Part 24, concluding that earlier authorities (Three Rivers and Moroney) supported considering evidence when appropriate. The judgment distinguished a later Court of Appeal decision (Ministry of Defence v AB) but followed the approach that permitted overlap in order to achieve the overriding objective. On the facts the court found the claimant was precluded from adducing further oral evidence by CPR 32.10 sanctions and that his existing witness statement described the 7 August letter as a letter of intent and pointed to Europa, not Swanlea, as the contracting party. Those matters went to the root of the case and meant the particulars could not be proved on the evidence available. The court allowed the appeal and struck out the claim under CPR 3.4(2)(b).

Appeal allowed. The Chief Registrar was mistaken to treat CPR 3.4 as inapplicable; having regard to Practice Direction 3A and authorities allowing overlap between rule 3.4 and Part 24, the court may consider evidence where necessary. On the facts, because the claimant was prevented from adducing oral evidence by CPR 32.10 and his written evidence undermined the pleaded contract (the 7 August letter was described as a letter of intent and did not identify Swanlea as the contracting party), the claim had no realistic prospect of success and was struck out under CPR 3.4(2)(b).

Appeal from the Companies Court / decision of Chief Registrar Baister refusing to strike out the claim (order made 8 October 2015; judgment of Chief Registrar 30 July 2015). The present judgment is the High Court (Chancery Division) allowing the appeal [2016] EWHC 1147 (Ch).