THE PROBLEM IN OBTAINING AN ORDER YOU HAVEN’T ASKED FOR:AN APPLICATION UNDER CPR 3.4 WILL NOT BE TREATED AS AN APPLICATION UNDER PART 24

The judgment of Chief Master Marsh in Saeed & Anor v Ibrahim & Ors [2018] EWHC 3 (Ch) contains several important observations in relation to making applications.  The Master refused to treat an application, ostensibly made under CPR 3.4, as an application for summary judgment under Part 24. He also observed that applications to strike out should be made promptly and not when the trial date was imminent.

THE CASE

The first claimant in the action was suing the defendants in relation to assets that had been passed to them in an attempt to hide assets from his wife when they were divorcing. The former wife had been added to the claim as the second claimant.

The matter is listed for trial in a window staring 17th February 2018.  On the 29th November 2017 the defendants made an application to strike out the claim.

THE DRAFTING OF THE APPLICATION

The Chief Master considered the wording of the application.

1. 1. “Mr Adair, who appeared for the applicants, candidly acknowledged that that the application had been poorly drafted. In section 3 of the form, the applicants stated that they were applying to:

“… seek an order striking out paras 2,3,4,6,7,8,9,10,13,14,15,16,17,31,37,42,48,49,50,51,53,56,57,58 and the claims in the prayer for relief para 1(a)- 6 because the claims are based on claims of a constructive trust/etc and/or are relying on actions which were illegal all of which were statute barred 6 years” [sic]

The draft order provided with the application notice, unhelpfully, refers to slightly different paragraph numbers and asks for them to be struck out “… as the claims are statute barred and/or are unenforceable by virtue of the illegality relied upon by the First Claimant.”

1. Mr Adair confirmed at the hearing that the applicants were not proceeding with the application on the basis that the first claimant’s claims are statute barred, leaving limitation a live issue only in relation to the second claimant and illegality as an issue in relation both claimants.

2. It is possible to discern from the application notice that an order is sought pursuant to the court’s powers under CPR 3.4(2) but no indication is given about which of the three sub-paragraphs of that rule are relied upon. Mr Adair confirmed that the applicants rely on ground (a), namely that there are no reasonable grounds for bringing the claim. They are not relying on grounds (b) or (c). However, Mr Adair said in his skeleton argument the applicants are also relying on CPR 24.2 and seek summary judgement in their favour so as to dismiss the claim. Neither the application notice nor the witness statement in support of the application mentions Part 24 and there has not been compliance with the requirements of the rule and paragraph 2 of PD24 concerning the notifications that must be given to a respondent to a Part 24 application.

3. Mr Adair referred to the note in Civil Procedure 2017 (the White Book) at paragraph 3.4.6 where the editors discuss the overlap between the court’s powers under rule 3.4 and Part 24. The notes suggest that the court may treat an application under rule 3.4(2)(a) as if it were an application under Part 24. They refer to decisions of the Court of Appeal in Moroney v Anglo-European College of Chiropractice [2009] EWCA Civ 1560 and Ministry of Defence v AB [2010] EWCA Civ 1317. In both decisions the overlap between the two rules is accepted and the Court of Appeal acknowledged there are circumstances in which a court is entitled to treat an application as if it were made under Part 24 even though the requirements of the rule have not been complied with. However, that is some considerable distance from there being a principle that an applicant is entitled to request the court to deal with an application as if it were made under Part 24 without an application in proper form having been made. In Ministry of Defence v AB the Court of Appeal refused to grant summary judgement on purely procedural grounds even though the claimants had been informally put on notice that a particular issue would be raised in an application for summary judgement. However, that was a case of very much greater complexity and substance than this case.

4. It seems to me the court should be slow to waive the express requirements of Part 24 and practice direction 24 and should proceed with the overriding objective firmly in mind. Issues that are purely matters of form should not be permitted to stand in the way where the procedural safeguards achieve little or nothing. On the other hand, the respondent to an application is entitled to notice of the case that is to be put forward and to have a proper opportunity to prepare for the hearing with knowledge of the basis upon which it is said the court should summarily dispose of the claim (or part of it).

SHOULD THE APPLICATION BE TREATED AS IF IF WERE MADE UNDER PART 24?

The Chief Master went on to consider whether the application should be treated as if it were under Part 24 (an application for summary judgment). The applicants asserted that they had stated, at an earlier hearing, that the application was to be made under Part 24. The Chief Master checked with the Master who heard that initial application, her recollection was that nothing was said about the defendants intending to treat the application as if it were under Part 24.

“Should the application be treated as if made under Part 24?

1. In my judgement, although there is an overlap between the power to strike out and the power to enter summary judgment, the court should be careful to avoid a respondent to such an application being taken by surprise. There are safeguards built into Part 24 and the practice direction and although the court has power to waive those requirements, it is essential to ensure that the hearing can take place on a fair basis. It is incumbent upon the applicant to frame the application with sufficient accuracy so as to make the jurisdiction that is relied upon sufficiently clear to the respondent. There was no indication whatever in this application that summary judgement would be sought and I accept that there was no indication given at the hearing before Master Clark. The application has the hallmarks of an application to strike out the claim relying on rule 3.4(a). It seems to me that at this very late stage where the trial is close, it was particularly important for there to be clarity. Regrettably there was only confusion created by the way the defendants have proceeded. They seek to rely, in part, upon the claimants’ witness statements prepared for the trial. It will be rare that an applicant under rule 3.4(2)(a) will be entitled to rely upon such evidence to make out that the statement of case does not show reasonable grounds for bringing the claim. An application will usually succeed or fail by reference only to the content of the statement of case. If conclusions have to be drawn for evidence, Part 24 is the appropriate rule to use.

2. This is not a case where the application can safely be treated as if it had been made under Part 24 and, in my judgement, there is a real risk of unfairness to the claimants if the court were to do so.

3. I would add that it would not necessarily be to the applicants’ advantage if Part 24 were to be engaged. Although the second limb of Part 24.2 is not often in play, an application for summary judgement made close to the trial may well provide circumstances in which the court could conclude that, even if the first limb of Part 24.2 is met, there are compelling reasons why the case should go to trial. Amongst such reasons in this case would be the probability that (a) the second claimant would need to remain a party to the claim for the purposes of the relief that is sought and/or (b) it is unlikely there would be any significant saving of costs if the claim made by the first claimant proceeds alone.

4. I propose to treat the application only as if it is made under the first limb of CPR 3.4(2).”

THE DECISION AND A WARNING

The Chief Master refused to strike out the claims. Further he observed:

1. “I would add that an application under rule 3.4(2)(a) should usually be brought at a much earlier stage of the claim. The particulars of claim were amended in April 2016 when the second claimant was added. The reply was amended to plead the claimants’ limitation case in March 2017. The court should have been asked to consider the claim at the latest at or after amendment of the reply rather than weeks before the trial.”