Saulawa & Anor v Abeyratne & Anor

Permission under Civil Procedure Rules 1998, rule 38.7, to bring a fresh claim after discontinuance depends on the circumstances viewed in the round. The applicant must provide a sufficient explanation for reintroducing the claim, overcoming the court’s natural disinclination to permit litigation previously abandoned. Relevant considerations include the parties’ conduct, prejudice, the interests of justice, possible harassment and the proper use of court resources. Conditions may be imposed, including payment of earlier costs. A claim timed to obtain a collateral advantage from an arbitration award, after a settlement intended to resolve the underlying dispute, may be an abuse of process and may be struck out.

The claimants sought retrospective permission, or alternatively permission to issue fresh proceedings, under rule 38.7 of the Civil Procedure Rules 1998. Their earlier claim concerning the beneficial ownership of shares in the second defendant had been discontinued by consent in 2015 after the parties entered an interim settlement agreement. A previous application to set aside that consent order had been dismissed.

The defendants opposed permission and applied to strike out the claim under rule 3.4(2)(a), (b) and (c). They argued that the proposed proceedings attempted to reopen a settled dispute and constituted a collateral attack on an arbitration award obtained by the company. The central issues were whether permission could be granted retrospectively, whether permission should be granted prospectively, and whether the claim was an abuse of process.

1. Permission to bring a fresh claim. The approach in Hague Plant Ltd v Hague & Ors [2014] EWCA Civ. was accepted. The applicant must show a sufficient explanation for reintroducing the claim, overcoming the court’s natural disinclination to permit a party to revive litigation it had chosen to abandon. The court should consider the circumstances of the discontinuance and the position in the round, including the parties’ conduct, prejudice, the interests of justice, any indication of harassment and the proper use of court resources.
2. The court may impose conditions on permission. Payment of the defendants’ costs in the earlier proceedings was a possible condition, while any application for security for costs remained open to be determined under the usual principles.
3. Permission was refused. The settlement had been reached immediately before trial, with legal advice, and was intended to provide a final resolution of the dispute. The parties’ subsequent conduct was inconsistent with any attempt to revive the ownership claim. Reopening the issue after the arbitration award would be highly prejudicial.
4. The proceedings were a collateral attack on the arbitration award and were an abuse of the court’s process. The claim was therefore struck out under Civil Procedure Rules 1998, rule 3.4.
5. As a lesser point, rule 38.7 was interpreted as prospective, so that an application for permission should be made before the fresh proceedings are issued. The claimants’ application was dismissed. Costs were summarily assessed on the indemnity basis at £17,400 including VAT. Permission to appeal and stays of the costs orders were refused.

The judgment was a first-instance decision on applications for permission under rule 38.7 and strike-out under rule 3.4. The judgment records that the earlier claim had been discontinued by consent in 2015 and that a subsequent application to set aside the consent order had been dismissed.