Courtman v Ludlam and Another
| Jurisdiction | England & Wales |
| Judge | EDWARD BARTLEY JONES QC |
| Judgment Date | 06 August 2009 |
| Neutral Citation | [2009] EWHC 2067 (Ch) |
| Court | Chancery Division |
| Docket Number | No 4156 of 2006 |
| Date | 06 August 2009 |
[2009] EWHC 2067 (Ch)
Mr Edward Bartley Jones QC (sitting as a Deputy High Court Judge)
In The Matter of John Michael Ludlam (A Bankrupt)
And in The Matter of The Insolvency Act 1986
No 4156 of 2006
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
IN BANKRUPTCY
Mr Hugh Sims (instructed by Bevan Brittan LLP of Bristol) for the Applicant
John Michael Ludlam and Caroline Lesley Ludlam in person
HEARING DATE: Tuesday 14 July 2009
APPROVED JUDGMENT
I direct that no official shorthand note should be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION:
Before me are two applications by Tyrone Courtman (“the Trustee”) who is the present trustee–in–bankruptcy of John Michael Ludlam (“Mr Ludlam”). The first of these applications was issued on 27 January 2009 and seeks the making of an extended, alternatively limited, civil restraint order (“CRO”) against each of Mr Ludlam and his wife, Caroline Lesley Ludlam (“Mrs Ludlam”). The second application was issued on 24 April 2009 and seeks relief under sections 366 and 367 of the Insolvency Act 1986 against both of Mr Ludlam and Mrs Ludlam. The substantive issues which arose on the second application were resolved during the course of the hearing before me and all that now remains is the question of costs. I shall deal with that issue of costs on hand-down of this judgment.
On the application for the CRO the Trustee was represented by Mr Sims. Mr and Mrs Ludlam appeared in person and each addressed me. It is right to point out, at this early stage, that Mr and Mrs Ludlam behaved with impeccable courtesy in and to the court and made their points in an economic and articulate way. Nevertheless, what they had to say left me with little confidence that they had seen the error of their previous ways and with no confidence whatsoever that they would not, in the future, engage in litigation, and make applications, which were entirely unmeritorious.
When considering whether or not to make a CRO I must consider each of Mr Ludlam and Mrs Ludlam independently and separately. If I decide to make a CRO against both I must consider carefully whether the same level of CRO is required as against each of Mr Ludlam and Mrs Ludlam.
CRO's
As from 1 October 2004 (by virtue of the insertion of Rule 3.11 into Part 3 of the CPR) the court has had power to make a CRO against a party to proceedings. The principles applicable, and practice to be employed, are set out in Practice Direction C to CPR Part 3 (“the PD”). There are three levels of CRO:—
(1) a limited CRO restrains the party against whom the order is made from making any further applications in the proceedings in which the order is made without first obtaining the permission of the judge identified in the CRO (para 2.2(1) of the PD). It is a pre-condition for making a limited CRO that the party in question should have made two or more applications which are “totally without merit” (para 2.1 of the PD);
(2) an extended CRO goes further and restrains the party in question from issuing claims or making applications in the High Court or any County Court (if the order has been made by a judge of the High Court) where those claims or applications concern 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 the judge identified in the CRO (para 3.2(1) of the PD). The pre-condition for the making of an extended CRO is that the party in question has “persistently issued claims or made applications which are totally without merit” (para 3.1 of the PD);
(3) a general CRO restrains the party in question from issuing any claim or making any application in the High Court or any County Court (if the order has been made by a judge of the High Court) without first obtaining the permission of the judge identified in the CRO (para 4.2(1) of the PD). The pre-condition for the making of a general CRO is that the party restrained should have persisted in issuing claims, or making applications, which were “totally without merit” in circumstances where an extended CRO would not be sufficient or appropriate (para 4.1 of the PD).
The CRO regime puts on a statutory basis the powers of the court, under its inherent jurisdiction, to prevent abuse of its process. The court's armoury of powers under its inherent jurisdiction was identified, and explained, by the Court of Appeal in Bhamjee –v- Forsdick [2004] 1 WLR 88. Thus the limited CRO is the statutory reflection of a Grepe –v- Loam order ( Grepe –v- Loam (1887) 37 Ch D 168). The extended CRO is the statutory reflection of the extended Grepe –v- Loam order which the Court of Appeal identified as being part of the armoury in Ebert –v- Venvil [2000] Ch 484. The general CRO reflects what Brooke L.J. had to say in Attorney General –v- Ebert [2002] 2 All ER 789 at para 35.
In R (Kumar) –v- Secretary of State for Constitutional Affairs [2007] 1 WLR 536 the Court of Appeal indicated (para 51) that the CRO scheme had reproduced faithfully the effect of the judgement in Bhamjee. Whilst the Court's inherent jurisdiction to protect its process from abuse has always existed and has been preserved side by side with the statutory powers conferred on the court by the CRO regime, it would be a very rare case indeed in which a judge could rely on the inherent jurisdiction in an area which appeared to have been comprehensively covered by the statutory CRO regime (para 62).
Clearly neither a limited nor an extended CRO can be made unless the pre-conditions therefor as identified in paragraphs 4(1) and 4(2) above have been satisfied. If these pre-conditions are not satisfied then whatever the threat level of future unmeritorious applications or litigation a CRO cannot be made (save that in a wholly exceptional case the court might, perhaps, be able to make an order under its inherent jurisdiction. The present is not such a wholly exceptional case).
What, therefore, does “persistently” mean in para 3.1 of the PD? In Kumar the Court of Appeal cited (at para 68) the following passage from Bhamjee:
“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.
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 “persistence” (para 55). To my mind, three unmeritorious claims or applications must be the bare minimum for establishing “persistence”. The essential thrust of decisions such as Ebert, Bhamjee and Kumar is that the court should engage in a graduated, and proportionate, response to the identified abuse. This would make it logical for the statutory scheme to have a higher pre-condition threshold for the making of an extended CRO as opposed to a limited CRO (and an even higher threshold as a pre-condition for the making of a general CRO). The wordings of paras 2.1, 3.1 and 4.1 of the PD clearly confirm that this is the case. If the pre-condition threshold for a limited CRO is two or more applications which are totally without merit then “persistence” in para 3.1 of the PD must, on any logical analysis, require more than two unmeritorious claims or applications.
CPR Rules 3.3(7), 3.4(6) and 23.12 provide that where a statement of case or application is struck out or dismissed and is totally without merit, the court must specify that fact and the court must consider whether to make a CRO. CPR Rule 52.10(6) makes similar provision where an appeal court refuses an application for permission to appeal, strikes out an appellant's notice or dismisses an appeal.
As will appear, only in the case of one court order (an application made to the Bristol County Court by Mr Ludlum) is it specified on the face of the order that the application was totally without merit. Nevertheless, the decision of the Court of Appeal in Kumar makes it clear that I am entitled to examine individual components of the litigation history to ascertain whether claims or applications were made “totally without merit”. The absence of a specific mantra on the face of an order is in no way conclusive. But I must take care not to substitute my own views for those of the judge who heard the claim or application. My task, as I understand it from paragraph 79 of Kumar, is to understand and identify the view adopted (or which must in the context have been adopted) by the relevant judge. Having ascertained that view, it is not for me to depart from it. I do not sit as an appeal court entitled to substitute my views for those of the relevant judge (after I have ascertained them). Thus I note that in Kumar the Court of Appeal was particularly careful to ensure that it correctly identified the basis on which the earlier...
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