James Howells v Newport City Council

Hearing date: 3 December 2024

Approved Judgment

This judgment was handed down remotely at 10 a.m. on 9 January 2025 by circulation to the parties or their representatives by email and by release to the National Archives.

HIS HONOUR JUDGE Keyser KC

Judge Keyser KC:

Introduction

The claimant, Mr Howells, says that in August 2013 a hard drive containing the private key to his Bitcoin was deposited in error at Docksway Landfill Site, Newport, which is owned and operated by the defendant, Newport City Council. He says that his Bitcoin are now worth in excess of £600 million and that, without the hard drive containing the private key, he is unable to access them. By his claim issued on 17 May 2024 he contends that he is the owner of the hard drive and of everything on it, and he seeks declarations to that effect, an order that the defendant either deliver the hard drive or allow his team of experts to excavate the landfill in order to find it, and (in the alternative) compensation equivalent to the value of the Bitcoin that he can no longer access.

By an application notice dated 20 June 2024 the defendant has applied for an order striking out the claim on the grounds that the particulars of claim disclose no reasonable grounds for bringing the claim or are an abuse of process or likely to obstruct the just disposal of the proceedings; or, alternatively, summary judgment on the grounds that the claimant has no realistic prospect of success and there is no other compelling reason for the matter to be disposed of at trial.

This is my judgment on the application. It is structured as follows.

1) Paragraphs 5 to 10 summarise the procedural law dealing with how the court approaches an application of this nature.

2) Paragraph 11 provides some background understanding of the issues in the case by quoting a short summary of how Bitcoin works.

3) Paragraphs 12 to 18 summarise the claimant's claim and the facts on which he relies or which are not in dispute.

4) Paragraphs 19 to 54 contain the discussion of the issues. The conclusion is in paragraph 55.

I am grateful to all counsel who contributed to the oral and written submissions on the application: for the defendant, Mr James Goudie KC and Miss Olivia Chaffin-Laird; for the claimant, Mr Dean Armstrong KC, Miss Maria Mulla and Mr Bruce Drummond. It should be recorded that the claimant's counsel and solicitors represented him at the hearing on a pro bono basis.

Strike-out and Summary Judgment: The Law

Strike-out: Part 3

CPR rule 3.4 provides in part:

“(2) The court may strike out a statement of case if it appears to the court –

(a) that the statement of case discloses no reasonable grounds for bringing … the claim;

(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; …”

CPR Part 3 is supplemented by Practice Direction 3A, which provides in part:

“1.2 The following are examples of cases where the court may conclude that particulars of claim (whether contained in a claim form or filed separately) fall within rule 3.4(2)(a):

(1) those which set out no facts indicating what the claim is about, for example ‘Money owed £5000’,

(2) those which are incoherent and make no sense,

(3) those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable claim against the defendant.

1.3 A claim may fall within rule 3.4(2)(b) where it is vexatious, scurrilous or obviously ill-founded.

…

1.5 A party may believe they can show without a trial that an opponent's case has no real prospect of success on the facts, or that the case is bound to succeed or fail, as the case may be, because of a point of law (including the interpretation of a document). In such a case the party concerned may make an application under rule 3.4 or apply for summary judgment under Part 24 (or both) as they think appropriate.”

Although the defendant has relied in the alternative both on r. 3.4(2)(a) and on r. 3.4(2)(b), the application has been advanced simply on the basis that the claim cannot succeed. It is common ground that, when considering an application advanced on that basis, the court ought to assume that the facts relied on by the claimant are true: that is, the defendant's contention is that, even if (which it does not necessarily accept) the facts alleged by the claimant are true, his claim must fail.

Summary judgment: Part 24

CPR rule 24.3 provides, so far as relevant to this application:

“The court may give summary judgment against a claimant … on the whole of a claim or on an issue if –

(a) it considers that the party has no real prospect of succeeding on the claim … or issue; and

(b) there is no other compelling reason why the case or issue should be disposed of at a trial.”

Many cases have explained the correct approach to applications for summary judgment. The classic summary of the principles is that of Lewison J in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15], approved by the Court of Appeal in Global Asset Capital Inc v Aabar Block SARL [2017] EWCA Civ 37, [2017] 4 WLR 163. Other significant summaries or discussions of the relevant principles include: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at [8]–[10] (Potter LJ);; Elite Property Holdings Ltd v Barclays Bank Plc [2019] EWCA Civ 204 at [41]–[42] (Asplin LJ, dealing with the similar test for permitting amendment of a statement of case); Skatteforvaltningen v Solo Capital Partners LLP [2020] EWHC 1624 (Comm) at [3]–[4] (Andrew Baker J); Foglia v The Family Officer Ltd [2021] EWHC 650 (Comm) at [11]–[18] (Cockerill J); Lex Foundation v Citibank NA [2022] EWHC 1649 (Comm) at [33]–[39]. I have regard to what was said in these cases but do not need to set out the relevant dicta here.

For present purposes, I can summarise the position as follows. Summary judgment will be given against a claimant on a claim or issue only if the court is satisfied that the claim or issue has no real, as opposed to fanciful, prospect of success; a claim or issue that is merely arguable but carries no degree of conviction will not have a real prospect of success. The court will not conduct a mini-trial and, where necessary, will bear in mind that full disclosure has not yet taken place and that there might be more evidence to come. Accordingly, where there are disputed questions of fact, it will not generally attempt to determine where the probabilities lie. However, the court ought to carry out a critical examination of the available material and is not bound to accept the mere say-so of anybody; where it is clear that a factual case is self-contradictory or inherently incredible or where it is contradicted by the contemporaneous documents, the court, after careful consideration of the evidence that is currently before it and having regard to the nature of such further evidence as might reasonably be expected to be available at trial, is entitled to reject that case even on a summary basis. The court will not be dissuaded from giving judgment by mere Micawberism—the unsubstantiated hope that “something might turn up”. (I should record that the defendant in the present case does not invite the court, on this application, to question the factual basis of the claimant's claim.) Where the claim turns on a point of law that can properly be determined on the available evidence, the court is entitled to go ahead and determine it. The complexity of litigation is not itself a reason for refusing summary judgment: the circumstances may be such that determination of the case is impossible without a trial; on the other hand, it might be possible to analyse the case sufficiently at an early stage and thereby avoid the unnecessary time and expense of the continuation of litigation until trial. In all cases, r. 24.2(b) falls to be considered in principle.

How Bitcoin Works

In order to understand what this case is, and is not, about, some idea of how Bitcoin works is helpful. For that purpose, I can cite the remarks of Birss LJ in Tulip Trading Limited v Van Der Laan [2023] EWCA Civ 83, [2023] 4 WLR 16, at [21]–[24].

“21. In the bitcoin scheme transactions are recorded in a ledger or database known as a blockchain, with each network having its own ledger. The blockchain constitutes a public registry recording every transaction. A given amount of bitcoin is simply a number held at a certain digital address. A transaction simply involves reducing the value at one address and correspondingly increasing it at another. … The amounts held at every address are public, but the identity of the parties is not. The blockchain does not reveal the relationship between the digital addresses and any persons.

22. Each digital address is associated with a pair of public and private cryptographic keys. The public key identifies the address on the network. The relevant private key is the means by which bitcoin can be dealt with. The holder of the private key uses it to cryptographically sign a record of the transaction moving bitcoin from one address to another. The record is called a cryptographic hash. The public/private key pair means that the person signing with the private key is proving that they are associated with the public key (and so the address), without revealing the private key itself. The...