BCS Corporate Acceptances v Terry

A claim cannot be struck out for abuse of process after judgment, because the cause of action has merged in the judgment. The exceptional power recognised in Summers v Fairclough Homes Limited [2012] UKSC 26 concerns strike-out at the end of a trial, not the reopening of concluded proceedings.

A freezing-order claimant must act expeditiously, but delay does not automatically discharge the order. The court must consider the reasons for delay, the parties’ conduct and the balance of prejudice. Security for costs may be ordered where breaches of orders or opaque financial arrangements create a real concern about payment, provided access to justice is not stifled.

The Claimants obtained judgment in default against the Defendant for sums exceeding £1.6 million and €400,000. The Defendant unsuccessfully sought to set aside the judgment and later applied to strike out the Claimants’ claims for abuse of process, relying on Summers v Fairclough Homes Limited [2012] UKSC 26.

The Defendant also sought discharge of a worldwide freezing order, strike-out of a committal application alleging breaches of that order, and directions concerning security for costs. The Claimants sought continuation of the freezing order and security for costs. The central issues were whether a concluded claim could be struck out, whether delay justified discharge of the freezing order, and whether the evidence justified security for costs.

1. Strike-out after judgment. The Defendant’s strike-out application was misconceived. Summers v Fairclough Homes Limited [2012] UKSC 26 concerned the exceptional strike-out of a claim at the end of a trial. It did not establish a power to strike out a claim after judgment. Once judgment has been given, the cause of action and the claim have merged in the judgment. Allowing such an application would undermine finality and permit a fresh trial without the ordinary procedural safeguards.
2. If genuinely fresh evidence existed which could not reasonably have been obtained for the application to set aside the default judgment, the Defendant’s proper route was an application for permission to appeal out of time under the criteria in Ladd v Marshall [1954] 1 WLR 1459.
3. Freezing order. The Claimants had delayed in seeking a further return date and in pursuing enforcement. However, the Defendant’s conduct plausibly explained the lack of progress. The evidence supported a reasonable inference that he had undisclosed assets. Applying Svendborg v Awada [1992] 2 Lloyd’s Rep 244, delay did not require discharge; the reasons for delay, the parties’ conduct and the balance of prejudice had to be considered. The application to discharge was dismissed.
4. The freezing order remained binding unless and until discharged. Any discharge would operate prospectively and could not retrospectively excuse earlier breaches. It was at least arguable that the Defendant had breached the order by using undisclosed funds for expenses and by failing to identify the source of payments. The committal application therefore should not be struck out.
5. Security for costs. Under Part 3 of the Civil Procedure Rules 1998, security may be ordered where the history of non-compliance, incomplete disclosure or unexplained financial protection creates a substantial concern about payment. The court must remain sensitive to access to justice. The money paid into court for existing costs liabilities was not security for future costs. Had the strike-out application proceeded, security of £275,000 would have been ordered.

All the Defendant’s applications were dismissed. The court invited the parties to agree an order giving effect to the judgment.

The judgment describes earlier procedural steps, including the refusal of permission to appeal from the refusal to set aside the default judgment. No appeal from the present decision is stated.