Mark Damien Clarkson v Future Resources FZE & Ors.

A party may abuse the court’s process by advancing a later claim which could and should have been raised when the same underlying issue was determined in earlier proceedings. The court makes a broad, merits-based assessment of all the circumstances. A collateral attack or dishonesty is relevant but unnecessary.

An admission may be withdrawn only with the court’s permission. The applicant must provide a full and frank explanation of how and why the admission was made and why withdrawal is sought. A bare assertion of counsel’s error is insufficient, particularly where the pleading was repeatedly verified by statements of truth.

In construing inconsistent contractual terms, a specific provision governing default prevails over a general provision.

These connected appeals arose from litigation concerning loans, alleged fraud and conspiracy, and the ownership and sale of a Manchester property. A settlement embodied in a Tomlin order resolved earlier proceedings brought by Mark Clarkson against the lenders. The settlement was later enforced without appeal.

Clarkson subsequently brought a Part 20 claim alleging that the lenders and others had conspired to obtain the property. His Honour Judge Hodge QC held in [2021] EWHC 1053 (Ch) that the claim was not an abuse of process. He also refused several defendants permission to withdraw admissions and entered summary judgment for admitted principal and interest.

The appeals concerned whether the admissions should have been withdrawn, whether contractual interest had been calculated cumulatively in error, and whether the Part 20 claim was an abusive collateral attack on the earlier enforcement order.

1. The admissions appeal was dismissed. Permission under rule 14.1(5) of the Civil Procedure Rules 1998 engages a wide discretion exercised by reference to all the circumstances and the factors in paragraph 7.2 of Practice Direction 14. The applicant must give a full and frank explanation of how the admission came to be made and the grounds for withdrawing it. The bare assertion that previous counsel had erred did not explain why later counsel and the solicitors had not detected the error, why the affected defendants had twice verified the pleading, or why they had not responded promptly to the summary judgment application. A statement of truth is not an empty formality and gives a verified statement of case evidential weight at the interlocutory stage. The judge was therefore correct to refuse withdrawal: paras 41–49.

2. The interest appeal was allowed. Although the calculation had not been challenged below, there had been no admission or concession about the applicable rate. Its determination was a pure question of contractual construction requiring neither evidence nor factual investigation, so the Court of Appeal entertained it. The specific default provision prevailed over the general provision continuing the administration fee. Upon default, the default fee replaced rather than supplemented the administration fee. The interest had therefore been calculated incorrectly and was to be recalculated: paras 50–63.

3. The abuse-of-process appeal was allowed. The applicable inquiry was the broad, merits-based assessment described in Johnson v Gore-Wood [2002] UKHL 65. It asks whether, in all the circumstances, a party is misusing the court’s process by raising an issue which could and should have been raised earlier. No additional element of dishonesty or collateral attack is required, although either may make the abuse clearer: para 64.

   Clarkson knew the material facts and could have challenged the settlement’s validity when its enforcement was before the court. His deliberate choice to advance only a penalties argument, followed by his failure to appeal the enforcement order, did not justify later litigation. The different remedy sought did not alter the position because the later claim depended upon attacking the same settlement and enforcement order. The conspiracy allegations should also have been brought at the same time against the alleged co-conspirators who were not parties to the original proceedings. The entire Part 20 claim was struck out as an abuse, making the pleading challenge academic: paras 70–76.

1. Court of Appeal (Civil Division): In [2022] EWCA Civ 230, unanimously allowed the appeals concerning interest and abuse of process, dismissed the appeal concerning withdrawal of admissions, and struck out the Part 20 claim in its entirety.
2. High Court: His Honour Judge Hodge QC, sitting as a deputy High Court judge, held in [2021] EWHC 1053 (Ch) that the Part 20 claim was not an abuse of process, refused withdrawal of the admissions and entered summary judgment including contractual interest.