CFC 26 Ltd v Brown Shipley & Co Ltd & Ors

A claim may be summarily dismissed where allegations of fraud are inadequately particularised and the available evidence gives them no real prospect of success. A local planning authority does not ordinarily owe a private law duty of care when exercising public planning and enforcement functions. The service of a planning enforcement notice is not, without more, the setting in motion of law before a person exercising judicial authority and cannot found a claim for malicious prosecution. Malice must be separately particularised and cannot be inferred merely from alleged carelessness or the absence of reasonable and probable cause.

The proceedings concerned the alleged undervalue sale of an underlease of Sofia House. SHG-SH20 Limited sought to pursue claims against Brown Shipley, KBL, Concord and Westminster City Council. The claims against the banks and Concord alleged a corrupt agreement, secret commissions, breach of duty and conspiracy. The claim against the Council alleged negligence, negligent misstatement and malicious prosecution arising from an enforcement notice and the Council’s treatment of planning permission.

Earlier proceedings concerning the receivers’ sale had been dismissed or struck out. In the present proceedings, the court considered whether SHG should be joined as claimant and whether the pleaded claims disclosed a reasonable cause of action or had a real prospect of success.

1. Claims against the banks and Concord. The alleged corrupt agreement amounted to an allegation of fraud and required full particulars. The pleadings did not identify the relevant individuals, conversations, dates or proposed secret commission. The proposed amendments did not materially improve the position. The contemporaneous procedural history and the evidence supplied no real support for the allegation. The fact that the banks and Concord had been in contact was readily explicable by their respective interests in the property, and the alleged agreement was inconsistent with the banks ultimately being left out of pocket. The claims against the banks and Concord therefore had no real prospect of success and were dismissed.
2. Negligence and negligent misstatement. The decision in Lam v Brennan and Borough of Torbay [1997] PIQR P488 was treated as determinative. A local authority does not owe a common law duty of care in respect of the exercise of public planning and enforcement functions merely because an individual may suffer economic loss. Later authority, including Barrett v Enfield LBC [2001] 2 AC 550, did not impliedly overrule that principle. The claim against the Council in negligence and negligent misstatement was struck out.
3. Malicious prosecution. Although Willers v Joyce [2016] UKSC 43 established that the tort may extend to civil proceedings, the law must still have been set in motion by an appeal to a person clothed with judicial authority. Service of an enforcement notice did not satisfy that requirement. The claim therefore failed.
4. In any event, malice had not been properly particularised. The alleged knowledge that planning permission had been implemented might indicate carelessness, but did not provide a real basis for inferring malice. The proceedings were dismissed as against the banks and Concord and struck out as against the Council.