The High Court has directed Porterridge Trading Limited to narrow its claim against First Active plc to an argument about the manner in which the bank obtained possession of property leased to Porterridge.
Mr Justice Clarke, in a judgment delivered on 4 October 2006, refused to stay the proceedings in their entirety. He said it remained possible that Porterridge could establish a claim based on its contention that First Active’s possession was wrongful, without contradicting findings made in earlier proceedings.
The dispute concerns three leases or agreements apparently made by Salthill Properties Limited in favour of Porterridge on 22 December 1999. First Active took possession of the premises on 20 August 2004 and later sought to sell the property. The bank argued that an earlier mortgage debenture gave it priority and restricted Salthill from leasing the property without the bank’s written consent.
In a separate directions application, the courts had considered the leases’ effect in relation to the debenture and the receiver’s entitlements. The High Court found that the leases were granted without the bank’s written consent and that Porterridge had not established that it lacked actual notice of the relevant restriction. The Supreme Court upheld the decision on actual notice. Mr Justice Clarke said Porterridge, as a party to that application, could not reopen those determinations.
Porterridge had also pleaded that First Active knew of the leases, or that the receiver accepted their validity, and was therefore prevented from relying on the debenture. Mr Justice Clarke ruled those estoppel arguments should have been raised in the directions application. He held that they were barred under the principle in Henderson v Henderson, which generally prevents parties from raising in later proceedings matters that could have been advanced earlier. He saw no basis to allow them to proceed.
However, the judge said the earlier courts had not expressly decided whether First Active’s possession was lawful in light of the receiver’s roles. Porterridge contended there was an inconsistency between the receiver holding the units as Salthill’s agent and acting for First Active as mortgagee in possession. The judge expressed no view on the merits of that argument.
He ordered Porterridge to file an amended statement of claim confined to the possession issue. Further directions were to be considered after counsel had reviewed the judgment. The ruling did not determine whether First Active’s possession was wrongful or decide the ultimate claim.