Michael Wilson & Partners Limited v John Forster Emmott & Ors

An application notice issued under Civil Procedure Rules 1998 Part 23 is not a statement of case and cannot generally be struck out under CPR r. 3.4. In exceptional circumstances, the court may instead stay or summarily dismiss an application using its case-management and inherent powers where a point makes it not realistically arguable in law or fact. Those powers should not be used to determine substantial factual or legal disputes unsuitable for summary disposal. A debarring application based on unpaid costs is premature where the underlying set-off issue remains unresolved.

Michael Wilson & Partners Limited applied to strike out an application by John Forster Emmott seeking a declaration that costs orders could be set off against a judgment debt arising from an arbitral award. The claimant also sought to debar Mr Emmott from participating further in related proceedings until specified costs were paid.

The court considered whether the set-off application was procedurally capable of being struck out, whether the alleged assignments and funding arrangements made set-off impossible, and whether the debarring application should proceed before those issues and related statutory-demand proceedings were resolved.

1. Strike-out application. CPR r. 3.4 concerns statements of case. Under CPR 2.3(1), a statement of case is a pleading, and does not include an application notice issued under CPR 23. The strike-out application therefore could be dismissed on that basis.
2. In the exceptional circumstances of this litigation, the court could nevertheless stay the set-off application under CPR 3.1(2)(f), or summarily dismiss it under CPR 3.1(2)(m) and the court’s inherent procedural powers, if the claimant identified a point making it not realistically arguable in law or fact.
3. The alleged assignment of the judgment debt, the effect of the funding arrangements, the sums owed to Mr Sinclair, and the extent of other costs liabilities involved disputed facts and substantial legal issues. They could not safely be resolved on the strike-out application. The set-off application therefore required determination on its merits, with the claimant required to establish relevant matters to the summary-judgment standard where applicable.
4. The court accepted that the general availability of set-off involved both sufficient closeness between the claims and a functional assessment of whether enforcement without taking account of the cross-claim would be unjust. It declined to determine that issue summarily.
5. The debarring application was premature. It should not be considered until the set-off issue, and where necessary the related applications concerning statutory demands and the Part 7 proceedings, had been resolved.
6. No order was made on the strike-out application. The set-off application was directed to be listed for an attended hearing in London, provisionally lasting one to two days. Costs were reserved.