INTENSITY HOLDINGS S.A. v STRATTON MORTGAGE FUNDING 2019-1 PLC & Ors

A claim may be struck out where it has no reasonable grounds or is an abuse of process. Reverse summary judgment may be granted where the claimant has no real prospect of success and there is no other compelling reason for a trial. The applicant bears the overall burden, but credible evidence may impose an evidential burden on the respondent. The respondent’s case must carry some degree of conviction, although the court must avoid conducting a mini-trial.

Where strongly evidenced connections with repeated spurious litigation justify heightened scrutiny, the court may take those connections into account when assessing whether the merits threshold is met. Proceedings brought as a continuation of earlier abusive claims may themselves constitute an abuse of process.

The claimant, an annulled Marshall Islands company, sought declarations that it had acquired beneficial ownership of mortgage portfolios from Stratton Mortgage Funding 2019-1 plc and Clavis Securities plc under an alleged sale and purchase agreement dated 19 August 2022.

The defendants applied under Civil Procedure Rules rule 3.4(2)(a) and (b), and for reverse summary judgment under rule 24.2. The claimant did not participate in the application or serve evidence. The central issues were whether the alleged agreement and subsequent ratification had any real evidential foundation, and whether the proceedings were abusive.

1. Merits threshold. The court held that the tests under Civil Procedure Rules rule 3.4(2)(a) and rule 24.2 were essentially the same for present purposes. The question was whether the case carried a sufficient degree of conviction to go forward.
2. The defendants produced evidence from a director that neither relevant company had entered into, authorised or ratified the alleged sale. There was no contrary evidence. The alleged agreement was also inherently improbable because its date fell between urgent hearings in which the companies were defending the same securitisation transaction against disruptive claims.
3. The claimant alleged no consideration, refused a proper request to produce the agreement, and gave no satisfactory explanation. Taking those matters together, the claim carried no conviction. The court concluded that there had been no contract, no agreement by the directors and no ratification.
4. Abuse of process. The court found clear and compelling connections with earlier proceedings associated with Mr Hussain, including substantially identical pleadings, common securitisation structures and the use of proxy or annulled companies. Those connections justified heightened judicial scrutiny and scepticism when assessing whether the claim passed the merits threshold.
5. The claim was also a continuation of earlier spurious proceedings concerning the same securitisations and challenges to the transaction. It was therefore an abuse of the court’s process under rule 3.4(2)(b).
6. The claim was struck out and reverse summary judgment was granted.