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No more second chances: Court of Appeal guidance on strike out

In Outlook Asset Management LP & Ors v Capstone Corporate Limited the Court of Appeal clarified procedural considerations following the strike out of an action pursuant to CPR 26.3.

The respondent successfully applied to the BVI Commercial Court for a strike out pursuant to CPR 26.3(1)(b) on the basis that the pleadings disclosed no reasonable prospect of success.

A number of “proceduaral gaffes” on the part of the appellants ensued.  Four days after circulation of the draft judgment, the appellants purported to file an amended statement of claim pursuant to CPR 20.1(1). Two days later, Justice Adderley released his judgment striking out the action.

All three of the appellants’ procedural grounds of appeal were rejected by the Court of Appeal, holding that:

  • The judge need not consider the amended statement of claim in light of CPR 20.1’s automatic permission to amend provisions before he struck it out. A statement of claim that has been struck out can only be substituted if the Court (a) decides to treat the action as subsisting and (b) gives the claimant permission to file a fresh statement of claim. To file an amended statement of claim the appellants first needed leave from the judge and to have provided it in in draft. The alternative would allow a claimant to circumvent a strike out decision by filing an amended statement of claim pursuant to CPR 20.1(1), rendering the strike out ruling otiose and frustrating the overriding objective of the Court.
  • A judge is required to give a party who has a defective pleading an opportunity to put right any defect, and such an opportunity had been given. The appellants erred by attempting to amend their pleadings without an application to put a draft amended statement of claim before the judge for his approval.
  • The Court of Appeal found that in the interests of the overriding objective of the CPR, the judge might have considered the appellants’ evidence (in the form of the purported amended statement of claim), even at the late stage after circulation of the draft judgment. Under its powers in CPR 62.20, the Court of Appeal found that the document submitted to the judge did not remedy the defect in the pleadings or save the action.

The Court of Appeal also rejected the appellants’ three other substantive grounds of appeal relating to the subject-matter of the claim.

Peter Ferrer and Sarah Thompson acted for the successful respondent at first instance and the Court of Appeal.

No more second chances: Court of Appeal guidance on strike out

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