CFC 26 Ltd and Another v Brown Shipley & Company Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 28 June 2017 |
| Neutral Citation | [2017] EWHC 1594 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2016-000617 |
| Date | 28 June 2017 |
[2017] EWHC 1594 (Ch)
Mr Justice Newey
Case No: HC-2016-000617
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Christopher Boardman (instructed by DWF LLP) for the First and Second Defendants
Mr Marc Glover (instructed by Gordon Dadds LLP) for the Sixth Defendant
Hearing dates: 10 March & 4 May 2017
This judgment addresses the question of whether a civil restraint order ("CRO") should be made against Mr Din Hessam Yeganeh, whom I added as the sixth defendant to the present proceedings on 29 November 2016. The first and second defendants contend that I should make an extended civil restraint order ("ECRO"). The application is resisted by Mr Yeganeh.
Basic facts
I outlined some of the history of this and related litigation in a judgment I gave in these proceedings on 29 November of last year: see [2016] EWHC 3048 (Ch). This section of the current judgment seeks to draw out from that judgment, and in a few respects to expand on, matters relevant to the application now before me. It uses the same abbreviations as the 29 November judgment.
In brief:
i) The litigation with which I am concerned all arises out of an underlease of Sofia House;
ii) On 10 October 2014, Mr Yeganeh applied for an injunction to restrain the Receivers from selling Sofia House. Sales J dismissed the application on 15 October and ordered Mr Yeganeh to bear the Receivers' and Banks' costs;
iii) Mr Yeganeh had by then issued the 2014 Claim, to which the Receivers and Banks were defendants. On 19 January 2015, however, Birss J ordered the claim form to be struck out and judgment to be entered for KBL on the counterclaim. Birss J's order also provided for Mr Yeganeh to pay the defendants' costs of the proceedings. In his judgment, Birss J said that he would "assume in Mr Yeganeh's favour that he has some arguable Claim or arguable Defence to the Counterclaim", but that there was "no alternative that has any air of justice about it other than to give judgment in default on the counterclaim and to strike out these proceedings for failure to serve the Particulars of Claim";
iv) By an application notice dated 10 February 2015, Mr Yeganeh sought an order for the applications that had been before Birss J to be re-listed and relief from sanctions;
v) At much the same time, SHG, of which Mr Yeganeh is the ultimate beneficial owner, issued the 2015 Claim against the Receivers and Banks;
vi) On 15 July 2015, Mr David Halpern QC, sitting as a Deputy High Court Judge, dismissed Mr Yeganeh's application for the matters before Birss J to be re-listed and relief from sanctions. He further ordered Mr Yeganeh to pay the defendants' costs on the indemnity basis and recorded that he considered the application to be totally without merit. On the same occasion, Mr Halpern acceded to an application in the 2015 Claim for security for costs. Mr Halpern made an order requiring SHG to give security of £174,500 to the Receivers and £225,000 to the Banks;
vii) Mr Yeganeh and SHG sought to appeal Mr Halpern's orders, but without success. On 26 November 2015, Patten LJ refused to grant permission to appeal and characterised the applications for permission as totally without merit;
viii) SHG failed to provide the security for costs that Mr Halpern had directed, with the result that the 2015 Claim was struck out;
ix) The 2016 Claim was issued on 25 February 2016 on the footing that SHG and Mr Yeganeh had on 15 February assigned their claims against the defendants to CFC, another company ultimately owned by Mr Yeganeh. The defendants comprised the Banks, Concord and the Council;
x) The defendants all issued applications in the 2016 Claim for the claims against them to be struck out and/or for summary judgment in their favour. Those applications came before me in October of last year. At the hearing, the defendants maintained that the assignment to CFC by SHG and Mr Yeganeh of their claims was invalid. On the morning of the second day of the hearing, counsel for CFC told me that it was no longer contended that the assignment was effective but that SHG was applying to be joined to the proceedings as claimant;
xi) For the reasons given in my judgment of 29 November 2016, I dismissed the proceedings as against the Banks and Concord and struck them out as against the Council. I also certified the claims against the Banks and Concord to be totally without merit and decided that, notwithstanding the fact that he was not a named claimant, the defendants' costs (as regards the Banks and Concord, on the indemnity basis) should be borne by Mr Yeganeh as well as CFC and SHG. In that connection, I concluded in a supplemental oral judgment that Mr Yeganeh was behind the litigation and particular corporate entities and had been "effectively controlling the litigation and supporting it" and had been "doing so with a view to obtaining a personal benefit if it is successful". In a further oral judgment, I said:
"It is, in effect, the third occasion on which Mr Yeganeh has sought to bring proceedings in respect of the sale of Sofia House. The earlier claims for different reasons were struck out but, undeterred, Mr Yeganeh has been responsible for a third set of proceedings being issued";
xii) The order I made on 29 November 2016 provided, too, for Mr Yeganeh to be joined as the sixth defendant to the proceedings and for the application for a CRO to be considered at a later hearing.
The legal framework
CPR 3.11 empowers the Court to make a CRO in the circumstances and with the consequences specified in Practice Direction 3C.
Practice Direction 3C provides for three kinds of CRO. A "limited civil restraint order" may be made where a party "has made 2 or more applications which are totally without merit" (paragraph 2.1), an ECRO may be made where a party "has persistently issued claims or made applications which are totally without merit" (paragraph 3.1) and a "general civil restraint order" may be made where "the party against whom the order is made persists in issuing claims or making applications which are totally without merit, in circumstances where an extended civil restraint order would not be sufficient or appropriate" (paragraph 4.1).
What the Banks seek in the present case is an ECRO. Someone against whom such an order is made is, unless the Court otherwise orders, "restrained from issuing claims or making applications" in specified Courts "concerning any matter involving or relating to or touching upon or leading to the proceedings in which the order is made without first obtaining the permission of a judge identified in the order" (paragraph 3.2 of Practice Direction 3C).
As its name suggests, a "limited civil restraint order" is more limited in effect than an ECRO. Such an order restrains the person affected only from making further applications in the particular proceedings in which the order is made. As Mr Christopher Boardman, who appears for the Banks, observed, such an order would be pointless in the present case.
Issues
The parties differ on, among other things, the following:
i) Whether an ECRO requires there to have been at least three totally without merit claims or applications. Mr Marc Glover, who appeared for Mr Yeganeh, submitted that the word "persistently", as used in paragraph 3.1 of Practice Direction 3C, carries that implication, but Mr Boardman said otherwise;
ii) Whether a CRO can be based wholly or in part on claims or applications made in the name of someone other than the subject of the CRO. Mr Boardman argued that claims or applications in the names of third parties can potentially be relevant, but Mr Glover disputed this;
iii) Whether, on the facts of the present case, it is appropriate to make an ECRO.
I shall take these topics in turn.
The meaning of "persistently"
The meaning of the word "persistently", as used in paragraph 3.1 of Practice Direction 3C, was considered by Mr Edward Bartley Jones QC, sitting as a Deputy High Court Judge, in Courtman v Ludlam [2009] EWHC 2067 (Ch). He concluded that "persistence" requires at least three wholly unmeritorious applications. He explained:
"8 What, therefore, does 'persistently' mean in para 3.1 of the PD? In [ R (Kumar) v Secretary of State for Constitutional Affairs [2006] EWCA Civ 990, [2007] 1 WLR 536] the Court of Appeal cited (at para 68) the following passage from [ Bhamjee v Forsdick [2003] EWCA Civ 1113, [2004] 1 WLR 88]:
'By the time the order comes to be made the litigant for whom the further restraint has been adjudged necessary will have exhibited not only the hallmarks of vexatiousness…but also the hallmarks of persistent vexatiousness…We do not include the word "habitual" among the necessary criteria for an extended civil restraint order, but there has to be an element of persistence in the irrational refusal to take "no" for an answer before an order of this type can be made.'
At para 69 in Kumar the Court of Appeal stated that under the statutory CRO regime it was sufficient that the previous claims or applications were totally without merit, and that the litigant persisted in making them. The requirement for 'vexatiousness', or its modern equivalent, had gone.
9 What seems, therefore, to be required is a persistence in making wholly unmeritorious claims. I note that in Supperstone v Hurst [2009] EWHC 1271 Mr Bernard Livesey QC (sitting as a Deputy Judge of the Chancery Division) regarded three wholly unmeritorious claims or applications by Mrs Hurst as being sufficient to constitute...
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