CFC 26 Ltd & Anor v Brown Shipley & Co Ltd & Ors

An extended civil restraint order requires a litigant to have made at least three claims or applications that are totally without merit. The requirement of persistence cannot be met by only two such steps, even if they arise in separate proceedings.

For this purpose, Practice Direction 3C can apply to the real claimant or applicant, rather than only the named party. A person who substantially controls, supports and stands to benefit from litigation may therefore be treated as having issued it. The court must nevertheless decide whether an extended order is proportionate and appropriate on the evidence.

The proceedings concerned litigation arising from the sale of Sofia House. The first and second defendants sought a two-year extended civil restraint order against the sixth defendant, Mr Yeganeh.

Mr Yeganeh had made unsuccessful applications in his own name. Related companies, which he ultimately owned or controlled, had also brought claims and applications that were certified totally without merit. The court had previously dismissed the 2016 claims against the Banks and Concord and had found that Mr Yeganeh effectively controlled and supported that litigation for his own potential benefit: [2016] EWHC 3048 (Ch).

The central issues were the meaning of “persistently” in paragraph 3.1 of Practice Direction 3C, whether proceedings formally brought by others could count against Mr Yeganeh, and whether an extended order was appropriate.

1. Application granted. The court made a two-year extended civil restraint order against Mr Yeganeh.

2. Under rule 3.11 of the Civil Procedure Rules 1998 and Practice Direction 3C, an extended civil restraint order is available only where the person has persistently issued totally without merit claims or applications. Following Courtman v Ludlam [2009] EWHC 2067 (Ch), persistence requires at least three. The contrast with the two-application threshold for a limited order confirms that conclusion. The observation in Connah v Plymouth Hospitals NHS Trust [2006] EWCA Civ 1616, that an extended order addresses proceedings in more than one action, did not remove the separate numerical requirement.

3. The references in Practice Direction 3C to a party issuing claims or making applications extend, where appropriate, to the real claimant or applicant. A person who merely has a small interest in a company or trust is not thereby responsible for its litigation. However, a person who substantially controls and supports proceedings and expects a personal benefit from their success can be treated as the real party. That construction prevents the restraint regime being defeated by using associated persons or entities as nominal litigants.

4. The court could, in principle, reassess earlier steps not originally certified totally without merit. It declined to do so here. The injunction application had not been so certified, and the 2014 claim had been struck out for procedural failure while the judge assumed that Mr Yeganeh might have an arguable claim.

5. Mr Yeganeh was nevertheless responsible for at least three totally without merit steps: his application for relief from sanctions, the unsuccessful permission applications, and the claims brought through controlled companies in the 2016 proceedings. His continued attempts to litigate matters concerning Sofia House, and the evidence showing that he would not accept adverse decisions, made the extended order appropriate. The court applied the approach reflected in Bhamjee v Forsdick [2003] EWCA Civ 1113.

High Court (Chancery Division): This was a first-instance application for an extended civil restraint order. It followed the dismissal and striking out of related 2016 claims, recorded in [2016] EWHC 3048 (Ch).