Formal Holdings Ltd & Anor v Frankland Assets Inc & Ors

On a without-notice application to extend a claim form, the applicant must present the application fairly and disclose material matters which may affect the exercise of discretion. The court must assess whether an extension furthers the overriding objective, including equal footing, full participation and fair, proportionate resolution. Material non-disclosure may justify discharge even where the extension would otherwise have been granted and even where discharge has limited practical effect. The court’s process should not facilitate a claim in which the same individual controls both sides or prevents a defendant from responding freely. For jurisdiction under an exclusive jurisdiction clause, the claimant must show a good arguable case at the commencement of proceedings. The court may consider the pleaded case in the claim form and accompanying particulars of claim. An unclear claim form is read with the particulars of claim to determine whether an alternative claim has been advanced.

The claimants brought a £25 million debt claim against defendants incorporated in the British Virgin Islands and Liberia. The claim form was issued on 17 May 2018. The court extended its validity without notice, but the defendants later applied to set aside that order and the December 2018 service out of the jurisdiction.

The application raised four issues: whether the extension application had been fairly presented; whether the extension order should nevertheless remain in force; whether the first claimant had a good arguable case that it could rely on an exclusive jurisdiction clause through an alleged assignment; and whether the second claimant had brought an alternative claim in its own right.

1. September order discharged. The claimants had not fairly presented the without-notice extension application. They failed to disclose material matters, including that the same individual controlled the claimants and the defendants, controlled the defendants’ response, had decided that they would not respond, and had acted to advance the claimants’ position. The existence and purpose of related BVI proceedings and a receivership application were also material.
2. The duty of full and frank disclosure is a duty owed to the court. Its touchstone is fairness in the presentation of the application as a whole. The court must make proper inquiries and fairly summarise evidence and competing considerations. The court has a discretion after material non-disclosure, but discharge is the general rule and any continuation or re-granting must be exercised sparingly.
3. An extension under CPR 7.6 is a discretionary power. The court must be satisfied that it furthers the overriding objective under CPR 1.1 and CPR 1.2. That requires attention to equal footing, full participation, fairness and proportionate cost. The court should not facilitate a claim in which there is no genuine dispute or in which the defendant is not free to respond.
4. Discharge was proportionate. The non-disclosure was serious, the matters were known to the claimants, and refusing discharge would leave no effective sanction. The fact that a later claim had been issued and that the present claim had made little progress did not make discharge inappropriate.
5. The court did not need to decide jurisdiction or the second claimant’s status because the September order was discharged. Nevertheless, the first claimant had a good arguable case at commencement that the settlement agreement assigned the benefit of the loan agreement, including the exclusive jurisdiction clause. The court could consider the particulars of claim accompanying the claim form. The settlement agreement, read in context, expressed an intention that the first claimant could recover directly from the defendants and that the second claimant would have no remaining recourse.
6. Had it been necessary to decide the pleading issue, the second claimant would have been treated as bringing an alternative claim. The claim form was unclear, but when read with the particulars of claim and prayer, it advanced alternative claims by the first and second claimants.
7. The claim form had not been served in time. The December 2018 service was therefore liable to be set aside, subject to consequential submissions. The court directed further submissions on the form of order and consequential matters.

First-instance decision. No appeal history is stated in the judgment.