Harbour Castle Ltd v David Wilson Homes Ltd

A second action advancing the same claim may be an abuse of process where the claimant deliberately allowed the first action to be struck out for non-compliance with a peremptory order. A corporate claimant’s inability to fund security depends on whether it can probably obtain funds from its owner or another closely associated person, rather than on whether the owner can personally raise them.

Where the company’s directing mind chooses not to seek funding which would have been available, its non-compliance is deliberate. Subjecting the defendant to the repeated claim may then be manifestly unfair and bring the administration of justice into disrepute. Whether proceedings are abusive is an evaluative assessment with only one correct answer, although the court retains a discretion whether to strike them out.

Harbour Castle Ltd brought proceedings alleging that David Wilson Homes Ltd had breached an obligation to use all reasonable endeavours to obtain planning permission. The first action was struck out in 2012 under an unless order after Harbour Castle Ltd failed to provide security for costs. In 2016 it commenced a second action based on the same causes of action and seeking the same principal sums, with an additional claim for consequential losses.

A Deputy High Court Judge struck out the second action as an abuse of process. Harbour Castle Ltd appealed, relying on the subsequent decision in Goldtrail Travel Ltd v Onur Air Tasimacilik AS [2017] UKSC 57. It argued that the first action had been stifled because the company could not itself fund the security and its shareholder had ceased to be willing to do so. The central issue was whether the evidence established that funding had been unavailable or that the company had deliberately chosen not to obtain and provide it.

1. Appeal dismissed. The Deputy High Court Judge was entitled to find that the company deliberately chose not to comply with the peremptory order for security. Commencing a second action advancing the same claim was therefore a clear abuse of process.

2. The party alleging abuse bears the burden of clearly establishing it. Whether proceedings constitute an abuse is an evaluative assessment admitting only one correct answer. If abuse is established, the court retains a discretion whether to strike out, although strike-out will ordinarily follow.

3. An appellate court will not interfere with a fact-sensitive assessment of abuse unless the judge considered irrelevant matters, omitted relevant matters, applied a wrong principle, reached a decision outside the permissible range, or was plainly wrong.

4. Under Goldtrail Travel Ltd v Onur Air Tasimacilik AS [2017] UKSC 57, the relevant question was whether the company had proved on the balance of probabilities that its owner or another closely associated person would not make funds available to satisfy the security requirement. On this sub-issue, Harbour Castle Ltd bore the burden because the defendant could not realistically prove the negative proposition.

5. The company itself lacked sufficient funds, but its sole shareholder and directing mind possessed the resources, had funded the litigation, and continued to finance the company. The Judge was entitled to find that the shareholder decided, both personally and as the company’s directing mind, not to provide the security for commercial reasons. Had he decided that pursuing the first action was in the company’s interests, he would have provided the necessary funding. The company therefore had access to funding or, at least, had failed to prove otherwise.

6. The company had chosen not to use the first action to resolve its dispute and allowed that action to be struck out. Requiring the defendant to face the same claim again would be manifestly unfair and would bring the administration of justice into disrepute. The additional factors considered below added little to that decisive conclusion.

Leggatt and Longmore LJJ agreed with David Richards LJ.

1. Court of Appeal (Civil Division): The appeal was dismissed. The court upheld the order striking out the second action as an abuse of process.

2. High Court of Justice, Chancery Division: William Trower QC, sitting as a Deputy High Court Judge, struck out the second action as an abuse of the process of the court.