NOT PROCEEDING WITH LITIGATION FOR ONE YEAR IS NOT AN ABUSE OF PROCESS: THE ACTION WAS NOT BEING “WAREHOUSED”: BUT STILL A POINT TO WATCH

In Grenda Investments Ltd v Barton [2017] EWHC 2371 (Comm)Mr Justice Picken considered (and rejected) an argument that the claimant’s failure to proceed with litigation for a year amounted to an abuse of process.  Although the application failed this case does highlight the point that delay can amount to an abuse of process and that this argument is not confined to defamation claims.

THE CASE

The claimant brought an action for money due under loan facilities. Proceedings were issued in August 2014. A defence was filed, the last step in the action was when replies to a request for information were served in December 2015.  There were ongoing related proceedings which were settled. The claimant applied for summary judgment. The defendant  made a counter-application to strike the action out on the grounds that the claimant’s delay amounted to an abuse of process.

THE JUDGMENT ON THIS ISSUE

    1. Turning then to the strike-out application, and picking up on the point concerning co-operation, Mr Hext highlights how, in the period from December 2015, when the further information was provided by Mr Barton pursuant to Grenda’s request, until October 2016, when Richard Slade & Co came on the record in place of Stewarts Law, for Grenda, nothing was done by Grenda to pursue the present proceedings against Mr Barton. He submits that this was the result of a deliberate decision on the part of Mr Ruhan and Grenda not to pursue the claim at a time when Mr Barton’s assistance was required by Mr Ruhan in relation to the Orb Litigation as I have already mentioned. In this regard, Mr Hext highlights how Mr Ruhan applied for summary judgment against Mr Minardi in early 2016, in proceedings which ultimately came to be joined to the wider Orb Litigation, namely Ruhan v Minardi, and in doing so Mr Ruhan relied on a witness statement which was provided by Mr Barton. Although that application was not ultimately pursued, Mr Hext relies on this as an illustration of Mr Barton’s utility to Mr Ruhan in the other litigation. Those proceedings, as I have indicated, between Mr Ruhan and Minardi were ordered in March 2016 to be tried at the same time as the Orb Litigation.
    2. In relation to that litigation, I have already referred to the judgment which was handed down by Popplewell J in April 2016. That judgment was resoundingly in Mr Ruhan’s favour and resulted in the triggering of a settlement of the Orb Litigation very shortly afterwards. It was only after that litigation had settled, albeit that the Ruhan v Minardi proceedings continue, that Grenda sought to revive the present proceedings with, as I say, the instruction of Richard Slade & Co as its new solicitors. Mr Hext submits, as I have previously mentioned, that this is because Mr Barton’s co-operation was no longer required at that stage, the Orb Litigation having come to an end. This, he submits, represents an abuse of process and ought not to be permitted. He relies for these purposes on certain provisions of the CPR, namely, in the first place, CPR 3.4(2), which states that:
“The court may strike out a statement of case if it appears to the court –
(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; or
(c) that there has been a failure to comply with a rule, practice direction or court order.”
Mr Hext also draws my attention to CPR 1.1(2) and what is there stated concerning the Overriding Objective. Specifically, Mr Hext relies upon sub-paragraph (d) which states “ensuring that it [the case] is dealt with expeditiously and fairly”, sub-paragraph (e) which states “allotting it to an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases” and sub-paragraph (f) which states “enforcing compliance with rules, practice directions and orders.”
    1. In further support of his application (as I say, an application which is based not on the alleged agreement entered into in November 2015 not to pursue the Grenda proceedings against Mr Barton, but on the delay which ensued from November or December 2015 until the autumn of 2016), Mr Hext cites Grovit v Doctor [1997] 1 WLR, 640 and, specifically, a passage in the judgment of Lord Woolf at page 647G to 648A, as follows:
“The courts exist to enable parties to have their disputes resolved. To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceedings is brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action. The evidence which was relied upon to establish the abuse of process may be the plaintiff’s inactivity. The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution. However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v. James [1978] A.C. 297. In this case once the conclusion was reached that the reason for the delay was one which involved abusing the process of the court in maintaining proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings.”
Mr Hext also in oral argument took me to an authority which Mr Lord cited in his skeleton argument, namely The Auk [2013] EWHC 4076 (Adm), in which Hamblen J (as he then was), having referred to Grovit v Doctor, then referred to a previous decision of Lord Woolf in Arbuthnot Latham Bank v Trafalgar Holdings [1988] 1 WLR 1426 at page 1437, where Lord Woolf said as follows:
“Whereas hitherto it may have been arguable that for a party on its own initiative to in effect ‘warehouse’ proceedings until it is convenient to pursue them does not constitute an abuse of process, when hereafter this happens this will no longer be the practice. It leads to stale proceedings which bring the litigation process into disrespect. As case flow management is introduced, it will involve the courts becoming involved in order to find out why the action is not being progressed. If the Claimant has for the time being no intention to pursue the action this will be a wasted effort. Finding out the reasons for the lack of activity in proceedings will unnecessarily take up the time of the court. If, subject to any directions of the court, proceedings are not intended to be pursued in accordance with the rules they should not be brought. If they are brought and they are not to be advanced, consideration should be given to their discontinuance or authority of the court obtained for their being adjourned generally. The courts exist to assist parties to resolve disputes and they should not be used by litigants for other purposes.”
The Auk was a case, unlike Grovit v Doctor, which did not involve a defamation claim, and so Mr Hext observes, correctly, as I see it, the principles concerning abuse of process, which I have to consider are not confined to the defamation context, but are of more general application.
    1. It is Mr Hext’s submission that in the present case there was a significant period of delay and that that period of delay is explicable (as he would suggest, only explicable) from at the latest November 2015 onwards as a result of a deliberate decision on part of Grenda not to proceed with litigation in order not to discourage Mr Barton from providing the assistance that was required from him in relation to the Orb Litigation. During that period, Mr Hext submits, Grenda did not have an intention to bring the proceedings to a conclusion and, accordingly, an abuse has been committed by Grenda. Mr Hext observes that it does not assist Grenda that subsequently, once Mr Barton’s help was no longer needed, the Orb Litigation having settled, Grenda changed its position and sought to revive the proceedings.
    2. This, as I say, is Mr Hext’s essential submission. I am not persuaded, however, that it would be appropriate to strike out the proceedings on the basis suggested by Mr Hext. I have reached this conclusion for various reasons, which I propose to state as shortly as I can.
    3. First, this is not a strike-out application which is put on the basis of any express agreement of the sort said to have been concluded in November 2015 between Mr Ruhan and Mr Barton. As I have indicated, Mr Hext accepts that it is not realistically open to him to submit that the Court can be satisfied for strike-out purposes that the agreement alleged to have been made in November 2015 was, in fact, made. The Court is instead being invited to draw the inference that Mr Ruhan (and, accordingly Grenda) made a decision not to pursue the proceedings in order to retain Mr Barton’s co-operation. The difficulty with this is that Mr Ruhan’s (and Grenda’s) conduct in not progressing the proceedings between late 2015 and October 2016 is as consistent with a decision to suspend proceedings as it is with deciding not to pursue the proceedings forever and a day. It is clear to me that the parties to the Orb Litigation are not averse to adopting tactical positions which can change as circumstances alter.
    4. Secondly, I do not consider that this is a case where what has happened is the type of warehousing of proceedings described by Lord Woolf in the Arbuthnot Latham case. Mr Slade in his witness statement has described how Mr Ruhan was heavily involved in the Orb Litigation in the relevant period. That plainly was the position. It seems to me that, in the circumstances, it is not altogether surprising that the present proceedings were not his main priority. In those circumstances, I struggle to see that what has happened in relation to the present proceedings amounts to any type of warehousing. Indeed, Mr Lord took me to a passage in Mr Barton’s second witness statement, paragraph 37, in which Mr Barton himself describes without prejudice discussions, admittedly postdating the settlement of the Orb Litigation taking place in May 2016, in the following terms:
“Following the settlement, the Ruhan Proceedings have not been pursued further. In their letter of 16 May 2016, Memery Crystal said that Mr Ruhan and Minardi had agreed extensions of time for further steps in the proceedings. They said that because Mr Ruhan had under the assignment agreement a right to conduct the proceedings ‘in the manner he, at his sole unfettered discretion, shall see fit’, he was entitled to do that without references to Mr Pelz or I. They said that there were discussions with us to ‘explore satisfactory terms for agreement to settlement of the Minardi Proceedings’. There was a meeting, at which I, Mr Pelz, Mr Ruhan and Mr Stevens attended. The focus of the discussion was Mr Ruhan’s insistence that I settle my alleged debt owed to Grenda. That meeting ended unsatisfactorily. There have been no negotiations since that time.”
Mr Hext rightly points out that this discussion took place some months into the period of inactivity which started at the end of 2015. However, Mr Lord seems to me to be right in making the submission that what this discussion, as described by Mr Barton himself, demonstrates is that Mr Ruhan was, at least as at May 2016, looking to Mr Barton for payment of what was owed to Grenda under the three Facilities which are the subject of the present proceedings. In those circumstances, it is striking that Mr Barton’s reaction was not apparently to remind Mr Ruhan of his agreement the previous November not to pursue the Grenda proceedings, and nor was it to complain to Mr Ruhan that as far as he, Mr Barton, was concerned, he had taken it that Grenda had decided no longer to pursue the claims against him.
    1. As for Mr Hext’s point that this is a discussion which took place after several months of inactivity, I recognise that this point has a degree of force. It does not, however, explain why it took the best part of another year before Mr Barton decided to apply to strike out the proceedings on the basis of abuse of process.
    2. I am clear from this evidence is that this is not a case where there has been warehousing of the sort described. In short, I am not satisfied in the present case that there has been significant delay, which can only be explained by a clear intention, supported by evidence, not to pursue the proceedings against Mr Barton and, accordingly, that Grenda’s inactivity is capable of amounting to an abuse of process. I am not able, in the circumstances, to draw the inference that the inactivity was consistent, and only consistent, with a decision not to pursue the Grenda proceedings.
    3. I observe in this context that, whilst I appreciate that the jurisdiction is not confined to defamation-type cases, nonetheless the authorities in which the jurisdiction has been excised have typically, but not exclusively, been in that context. Nor is this a case where some limitation point arises. I did not understand Mr Lord to suggest that the jurisdiction is confined to cases where there is a limitation point, as arguably at least was the position in relation to previous applications for dismissal for want of prosecution, but nonetheless it seems to me that it represents something of a stretch for it realistically to be submitted by Mr Hext on Mr Barton’s behalf that here there has been an abuse of process.
    4. To repeat, I do not conclude, in short, that the only appropriate inference to draw from the inactivity is that Grenda and Mr Ruhan took the decision not to pursue the proceedings against Mr Barton. It follows that this is not a case which is in abuse of process territory.
    5. Mr Lord, during the course of his oral submissions, referred to a decision cited by Mr Hext, namely Sheldon Gary Adleson and another v Debbie Anderson and another [2011] EWHC 2797, a defamation case, in which Tugendhat J referred at paragraph 20 to a passage in the judgment of the Court of Appeal in Grovit v Doctor, in which Glidewell LJ stated at follows at page 15:
“The purpose of a libel action is to enable the Plaintiff to clear his name of the libel, to vindicate his character. In an action for defamation in which the Plaintiff wishes to achieve this end, he will also wish the action to be heard as soon as possible. If the Plaintiff delays in prosecuting such an action, and gives no valid explanation for his delay, the court is entitled to infer that his motive for the delay is not a proper one. Whether or not the Judge’s suggested explanation for the delay is correct, we are entitled to infer that [the Plaintiff’s] motive in delaying is not a proper use of a libel action and this constitutes an abuse of process “.
As I say, I do not approach this relevant jurisdiction as confined to the defamation context, but the observations which Glidewell LJ there made do, it seems to me, give something of a clue as to the circumstances in which it would be appropriate to strike out. Later on, in paragraph 32, Tugendhat J cited from a Privy Council decision, namely Icebird Limited v Winegardner [2009] UKPC 24, in which Lord Scott again referred to Grovit v Doctor and quoted from the decision of the judge apparently at first instance, who declared him or herself “quite satisfied … on the evidence that the appellant has had literally no interest in pursuing this litigation.”
  1. Again, drawing together the threads in the present context, I am unable to conclude that the present case is in that type of territory. On the contrary, Mr Slade’s evidence, which I have already described, is that the reason for the inactivity, which undoubtedly occurred in the present case, is Mr Ruhan’s preoccupation with the other wider Orb Litigation.
  2. Thirdly, since ultimately this is a matter of discretion, I can hardly lose sight of the fact that it has not been suggested that Mr Barton has suffered prejudice by the period when Grenda did nothing to progress the proceedings. Clearly, there is prejudice if the strike-out application were to fail, but that is prejudice which exists in any strike-out application and so I take no account of that. Other than this, there is (and there has been) no suggested prejudice.
  3. Fourthly, although Mr Lord puts the point as a waiver argument, it is accepted by both Mr Lord and Mr Hext that really the question is not a matter of waiver, but a point that goes to my general discretion in the present context. I can hardly lose sight either of the fact that Mr Barton did not raise any point concerning the delay until April this year, when JMW, his present solicitors, first raised the point. This was almost a year after the without prejudice discussions described in paragraph 37 of Mr Barton’s witness statement, to which I have referred, and some seven months or so after Grenda had sought to revive the proceedings. JMW, Mr Barton’s new solicitors, engaged in the proceedings, issuing an application for security for costs, for example, before only belatedly raising the point in a letter to Richard Slade & Co in April this year.
  4. I do not suggest, at all, that JMW are at fault in this regard. JMW explained in correspondence with Richard Slade & Co, dating from last autumn, and into the new year, that they were somewhat hamstrung by not having access to case documentation and that point is understood. Mr Hext, indeed, sought to meet Mr Lord’s argument by observing that it took JMW some considerable time to obtain documents from Stewarts Law. The difficulty with this submission, however, at least as I see it, is that it must have been obvious to Mr Barton and so to his new solicitors, JMW, that nothing had happened in the proceedings since late 2015. Indeed, in certain of the correspondence this very point was made and understandably so, by JMW. The point now raised concerning that delay is a point which could have been raised without sight of any underlying documentation at a much earlier stage. I leave out of account here the point about the alleged agreement not to pursue said to have been entered into in November 2015 and focus instead exclusively on the invitation which Mr Hext makes on behalf of Mr Barton to infer that a deliberate decision was made by Ruhan and Grenda not to pursue the present proceedings. Mr Barton himself must have been in a position to draw the inference which the Court is now invited to draw and to inform JMW accordingly. It would appear, however, that he did no such thing. It is, therefore, not a question, as I say, of fault being attributed to JMW; it is simply a feature of the fact that it took a long time for the present application to be made.
  5. In my view, there was no need to have sight of documents in Stewarts Law’s position to enable the present application to be made, or at least for the point to be raised in correspondence and a reservation of rights entered. Instead of this, nothing was said on Mr Barton’s behalf, after JMW came to be instructed and no reservation of rights was entered. The fact that no mention was made of the alleged agreement not to pursue in November 2015 lends further support, in my assessment, to the conclusion that Mr Barton did not consider until somewhat late in the day that Mr Ruhan and Grenda had decided not to pursue the proceedings as against him. If he had done so, then, as I have observed, he would have been bound to have pointed that out in the discussion he had with Mr Ruhan in May 2016. He would have been bound to have also raised the point with JMW and they would have been bound to have raised the point with Richard Slade & Co. Instead of that, nothing was said when Richard Slade & Co sought to kick-start the proceedings and, on the contrary, although the CMC seems to have been unilaterally fixed, applications (including for security for costs) were made by or on behalf of Mr Barton.
  6. For these reasons, I do not consider that it is appropriate to strike out the proceedings. I do so without formally needing to address Mr Lord’s formal waiver argument, if indeed it is a waiver argument at all. For the reasons I have just indicated, I have taken into account the facts which go to that waiver argument and Mr Hext’s response in the exercise of my discretion and I am clear that exercising that discretion it is inappropriate to strike out the proceedings. I need not, in the circumstances, take up time making an assessment as to the extent to which Mr Barton took part in the proceedings and, therefore, the submissions which Mr Hext makes to me based on the decision of the House of Lords in the dismissal for want of prosecution context in Roebuck v Mungovin [1994] 2 AC 224. In my assessment, the present case is simply not in that territory.