Disobedience to court order was fatal

Posted: 18th January 2018

LandEvery stage of litigation is subject to close judicial scrutiny and disobedience to case management orders can prove fatal. In one striking example, a nine-figure claim in respect of an abortive property deal was struck out without a hearing.

The owner of two parcels of land had granted a property developer an option to buy them for £27,500,000.

The developer was required by the agreement to use all reasonable endeavours to obtain an acceptable planning permission, as soon as reasonably practicable, to develop the plots for housing. However, no such permission was obtained and the option was never exercised.

The owner issued proceedings on the primary basis that the developer had not tried hard enough to obtain planning consent, with the result that the time-limited window for doing so closed. Damages were claimed in the amount of the option price. The claim was, however, struck out by a judge after the owner failed to comply with an order requiring it to provide security for costs.

Four years later, the owner issued further proceedings against the developer, this time also claiming for consequential losses and valuing its total claim at more than £200 million. In applying to strike out the second action, the developer argued that the owner was illegitimately seeking a further bite of the cherry. The second claim was in most respects identical to the first and, after the first claim was struck out, the developer had reasonably believed that the dispute was at an end.

The High Court noted the very substantial sums at stake and that the developer had conceded, for the purposes of the application, that the owner’s claim had a real prospect of success. However, in striking out the second action, the Court found that it could properly be characterised as unjust harassment of the developer. The commencement of the proceedings constituted a misuse of the court’s procedure which would be manifestly unfair to the developer or would otherwise bring the administration of justice into disrepute.