Phil Ryan v LVR Capital Limited

A claim may be struck out where it is incoherent, discloses no legally recognisable cause of action, breaches a statutory or procedural restriction, or amounts to an abuse of process. A claim is totally without merit where it is bound to fail and has no rational basis on which it could succeed.

An extended civil restraint order requires at least three totally without-merit claims or applications and persistence assessed in the context of the party’s overall conduct. The court retains a discretion, focused particularly on the threat of continued abusive litigation. A general civil restraint order is unnecessary where an extended order adequately addresses the identified risk.

The Company, which was in administration, applied to strike out three Part 7 claims brought by Phil Ryan. The claims concerned alleged liens, trust ownership, priority over secured lending, and challenges to the Administrators’ possession of property. They relied in part on pseudo-legal concepts and were issued without the consent of the Administrators or the court’s permission.

The Company also applied for an extended civil restraint order. The applications arose against a background of earlier unsuccessful challenges to the administration and possession orders, statutory demands, threatened proceedings and a contempt application. The court had to determine whether the three claims should be struck out, whether they were totally without merit, whether an extended or general civil restraint order should be made, and the appropriate costs order.

1. The three Part 7 claims were struck out and certified as totally without merit. Claims A and B were brought against a company in administration without the consent of the Administrators or the court’s permission, contrary to paragraph 43(6) of Schedule B1 of the Insolvency Act 1986. The claims were therefore procedurally defective and abusive.
2. The claims also disclosed no reasonable grounds. Their brief details were incoherent, failed to identify the creation, subject matter or legal effect of the alleged liens, and did not explain the relief claimed. The alleged Omniversal Security Agreement could not give priority over earlier debentures and charges, even if it created enforceable rights. The claims concerning possession were additionally barred by the conclusively determined possession proceedings and constituted collateral challenges to the existing order.
3. Claim C was equally incoherent and contradictory as to the alleged settlement or transfer of the properties into the Phil Ryan Trust. The alleged priority over the secured lenders was neither properly pleaded nor supported by any good legal ground. Bringing Claim B and Claim C separately, rather than seeking all relief in Claim A, was also an abuse of process.
4. Under CPR 3.4(6), the claims were totally without merit because they were bound to fail and had no rational basis on which they could succeed. That conclusion did not require proof of bad faith, although the abusive conduct reinforced the need for restraint.
5. The threshold for an extended civil restraint order under Practice Direction 3C was met. The contempt application and the three Part 7 claims amounted to at least four totally without-merit applications. Applying Sartipy, persistence was established by the repeated use of court processes, over a short period, to advance substantially the same arguments. The wider conduct showed a high threat level of continued abusive litigation.
6. An extended civil restraint order was made for three years. A general civil restraint order was unnecessary because the conduct was presently confined to matters connected with the Company’s administration and secured creditors. The Company’s costs were summarily assessed at £55,254 on the indemnity basis.