SECOND ACTION NOT AN ABUSE OF PROCESS: COURT RESOURCES DOES NOT “TRUMP THE OVERRIDING NEED TO DO JUSTICE”

December 10, 2017 · by · in Abuse of Process, Appeals, Applications, Relief from sanctions, Second set of proceedings

In Davies v Carillion Energy Services Ltd & Anor [2017] EWHC 3206 (QB) Mr Justice Morris upheld a finding that a second claim brought by the claimant was not an abuse of process.

 “…even post-Jackson, ultimately, the importance of the efficient use of resources does not, in my judgment, trump the overriding need to do justice: “

THE CASE

In 2010 the claimant, as a litigant in person, issued proceedings against the defendant claiming damages for alleged breach of contract in the installation of a central heating system.  The defendant filed a defence. The court then, of its own motion, made an order that the claimant particularise his claim, and claim for damages. The claimant complied.  When the matter came for trial, the court of its own motion ordered that the claimant further particularise his case. The trial was adjourned. The claimant filed a 39 page manuscript in attempted compliance.  The court held he had not complied and the action was struck out. The claimant subsequently paid the defendant’s costs.

A second action was issued in December 2015. This time the claimant was represented by solicitors and counsel.  The claimant sued the original defendant and a further defendant. The defendant applied to strike the action out. The defendant’s application was refused.  The defendant appealed.

THE JUDGMENT ON APPEAL

The defendant’s appeal was dismissed.

The judged reviewed the case law on striking out a second action in detail. He concluded.

“(1) Analysis of the case authorities

    1. First, the line of cases of Arbuthnot, Securum and Collins are authority for the following:

(1) Where a first action has been struck out as itself being an abuse of process, a second action covering the same subject matter will be struck out as an abuse of process, unless there is special reason: Securum §34, citing Arbuthnot , and Aktas §§ 48, 52.

(2) In this context abuse of process in the first action comprises: intentional and contumelious conduct; or want of prosecution; or wholesale disregard of rules of court: Aktas §§72 and 90.

(3) Where the first action has been struck out in circumstances which cannot be characterised as an abuse of process, the second action may be struck out as an abuse of process, absent special reason. However in such a case it is necessary to consider the particular circumstances in which the first action was struck out. At the very least, for the second action to constitute an abuse, the conduct in the first action must have been “inexcusable”. Collins §§24-25 and Cranway §20.

    1. Secondly, Johnson v Gore Wood, Aldi and Stuart v Goldberg are all cases of the Henderson v Henderson type of abuse, where the first action has been resolved by way of adjudication or settlement and where it is said that issues which should have been brought in the first action are being sought to be re-litigated. In such cases:

(1) Whether a second action raising matters which could have been, but were not, raised in the first action is an abuse of process is not a matter of discretion, but is a judgment to be made by the first instance judge, assessing and balancing all the relevant factors in the case.

(2) On appeal from a first instance judge’s decision, the appeal court will interfere only where the judge has taken into account immaterial factors, omitted to take account of material factors, erred in principle or come to a conclusion that was impermissible or not open to him or was wrong: Stuart §82.

(3) Even if there is a finding of abuse of process, the court still has a remaining discretion not to strike out, but only in very unusual circumstances: Stuart §24 and Aktas §53.

    1. Thirdly, there is a tension between these two lines of authority, which Rix LJ sought to address in Aktas at §53. Even if, as there suggested, the first category of case is to be regarded as an example of the general principles established in Johnson and Aldi, it is difficult to see how, in a “procedural” case, the two approaches can be applied in tandem. If both approaches are to be applied, it is not clear at what point in the analysis the “special reason” identified in Securum/Collins comes into consideration: in the first stage of the assessment of all relevant factors or at the second stage of residual discretion, if abuse is found; nor is it clear what factors come into play in the second stage, if all relevant factors have been considered in the first stage.

    2. Against this background, I conclude as follows:

(1) Where a first action has been struck out for procedural failure, the Court should apply the Securum/Collins approach I set out in paragraph 52 above. Even if Aldi and Stuart state general principles which are now applicable to all categories of abuse of process, I am not satisfied that there is any case authority which has specifically disapproved of the detailed analysis in Securum, Collins and Aktas of cases of procedural failure. Indeed Securum and Collins were not considered in either Johnson or Aldi. In Aktas, Rix LJ did not indicate disapproval of Securum.

(2) However given the introduction, since those cases, of amendments to CPR 1.1 and given developments in Mitchell and Denton, the “special reason” exception identified in Securum and Collins falls to be more narrowly circumscribed. Where the conduct of the first action has been found to have been an abuse of process or otherwise inexcusable, then the second action will be struck out as an abuse of process, save in “very unusual circumstances”. (Other terminology might equally be used to indicate this strict approach). In addition, in a case where the first action was not itself an abuse of process, whether the conduct in that action was “inexcusable” might fall to be assessed more rigorously and in the defendant’s favour. However, even post-Jackson, ultimately, the importance of the efficient use of resources does not, in my judgment, trump the overriding need to do justice: see Aktas §92.

(3) A single failure to comply with an unless order is not, of itself, sufficient to conclude that the second action is an abuse of process.

(2) Application to the facts of the case

    1. On the basis of the foregoing analysis, I accept the Defendant’s first two submissions of principle set out in paragraph 50 above. It follows that, strictly, the judge erred in law in applying the Aldi approach. This was entirely understandable, since he did not have the benefit of the Court of Appeal’s decision in Collins. Nevertheless, on this basis, I consider the position afresh, applying the principles set out above. I turn first to examine the circumstances in which the first action came to be struck out.

“Whole series of procedural failings”

    1. The Defendant contends that, in the First Action, there were at least five failures on the part of the Claimant to comply either with a CPR rule or with a court order and that this constitutes a “a whole series of procedural failings”. I do not agree.

    2. As to the first alleged breach, which was a failure initially to serve particulars of claim compliant with the CPR, this was at most a highly technical breach. Initially, the particulars of claim were endorsed on the claim form. The claimant as a litigant in person sought to comply with the provisions and did set out some particulars of claim: see paragraph 4 above. There may have been a failure to comply precisely with the detailed rules found in paragraphs 7.3 to 7.5 of Practice Direction 16 as regards the details of the oral or written agreement relied upon.

    3. The second alleged breach was the failure to comply with the unless order of Deputy District Judge Pollard by failing to serve particulars of claim. Whether or not this was a breach is, to say the least, contentious. First, plainly the Claimant sought to comply with that order by serving the 4-page particulars of claim which he served on 18 October 2010. Secondly the Defendant itself at no point alleged that what he did serve did not comply. Of course, it appears that Deputy District Judge Jones took the view, some nine months later and of his own motion, that there was non-compliance with this order. However District Judge Swindley on taking stock of the case as a whole, had previously considered those particulars and did not consider that there had been non-compliance.

    4. The third breach is said to be failure to comply with the general directions imposed by District Judge Swindley’s case management order dated 10 January 2011, in failing to serve witness evidence or a disclosure list within the time set by those directions. However it is the case that the Defendant was also late with its disclosure list. Moreover, once again, no complaint of non-compliance was made by the Defendant at the time. If this was a breach of the order of 10 January 2011, in my view it was technical.

    5. The fourth breach alleged is that on 20 June 2011, the date of trial, the Claimant had failed to comply with “previous orders and rules”. This, the Defendant says, must have been the case because that was the basis upon which Deputy District Judge Jones made the final unless order. However in my judgment, these involved no further breaches than those already alleged.

    6. Finally, there was the failure to comply with the unless order of Deputy District Judge Jones. There was no failure to comply with paragraph 2 of that order relating to the service of a witness statement. However District Judge Shaw concluded that there was a failure to serve particulars of claim in compliance with paragraph 1. As to this, I proceed on the basis that the document served on 4 July 2011 did not constitute “a fully pleaded particulars of claim” in the manner required by the terms Deputy District Judge Jones’ order. At the time, the Claimant himself recognised that he might not be complying with the letter of the unless order; he considered that what he had previously done was adequate and he took the view that it was “unnecessary” to repeat it. The Claimant took a conscious decision not to seek to improve upon the particulars of claim which he had already served, at least as regards the facts alleged, despite the terms of the order. On the other hand, and despite saying this, the Claimant did seek to set out the legal basis of his claims; which, as indicated in paragraph 11 above, was the only part of Deputy District Judge Jones’ order which was “new”. I accept the finding of District Judge Stuart at §26 that the Claimant did not know how else to express his claim (see paragraph 23 above). What is more, it appears that at the time of submitting the 4 July document he did not have the precise terms of the order made by Deputy District Judge in front of him.

    7. Thus, in my judgment, there was, on the part of the Claimant, one failure to comply with part of a court order (paragraph 1 of Deputy District Judge Jones’ order), one possible, highly technical, breach of the rules as to pleading particulars of claim at the outset, and possibly one, highly contestable, breach of the first unless order.

(1) Was the Claimant’s conduct in the First Action an abuse of process?

    • First, in the light of my conclusions above, there was not, in the first action, a wholesale disregard of the rules. Secondly, the first action was not struck out for inordinate and inexcusable delay. As to the third basis of abuse of process, I do not consider that the Claimant’s overall conduct in the First Action was contumelious. First, up until the 4 July 2011 document, the Claimant sought at all times to comply with rules and orders. Secondly, in that document, he set out a lengthy and detailed factual case in his witness statement. Thirdly, in fact he did make an attempt to set out the legal basis of his claims. (I note that the CPR requirement is to plead facts and not law). Whilst what he submitted was not always clearly expressed or even easy to read, I consider that the Claimant was attempting to set out his case on the facts.

    • As regards the Claimant’s position as a litigant in person, I bear well in mind the observations of Tomlinson LJ in Elliott v. Stobart Group Ltd [2015] EWCA Civ 449 at §§39 and 40 (referring to the observations of Moore-Bick LJ in Hysaj v SSHD [2015] EWCA Civ 153 at §44) (set out in the Judgment: paragraph 23 above). However the facts of Elliott are not comparable to those in the present case. Unlike the findings made in Elliott (at §§ 25, 26 and 40), here it is not clear that the Claimant here understood what the order of Deputy District Jones required him to do and the Claimant did take steps to seek to comply with the order. Moreover, as a litigant in person, I do consider that some allowance is to be made for the likelihood that the Claimant would not be fully conversant with the details of pleading rules in the CPR practice directions or with the distinction between pleading facts and law, and what may or may not amount to a “cause of action” or a legal basis of the claim. As to the Defendant’s submission that at the critical time the Claimant was in fact legally represented, I address this in paragraph 71 below.

    • When set against all this background, I do not consider that the Claimant’s apparent irritation expressed in the 4 July document amounted to scornful and insulting behaviour on his part or was a deliberate flouting of the Court’s orders.

(2) Was the Claimant’s conduct in the First Action otherwise “inexcusable”?

    1. As I have said, it appears that the Claimant was conscious that he might not be complying with the letter or even the spirit of Deputy District Judge Jones’ order. On the other hand, as District Judge Stuart found, the Claimant did not know what more he could do. The Defendant had never complained about his previous particulars of claim. That unless order was made in very unusual circumstances. The Claimant provided a detailed witness statement, in compliance with the same order and he attempted to set out the legal bases of his claim.

    2. The Claimant’s conduct stands in stark contrast to the conduct of the claimant in Collins and in Maritime Transport (see paragraphs 36-37 and 48 above). Whilst the present case does not concern a failure at an early stage of an action (as in Cranway and Aktas), neither is it a case of repeated and persistent disobedience to court orders.

    3. In my judgment, taking account of all these circumstances, the Claimant’s failure to comply with part of the unless order of Deputy District Judge Jones was understandable and not inexcusable.

(3) Relief from sanctions.

    1. The Claimant did not apply for relief from sanctions in relation to District Judge Shaw’s order. As a matter of analysis, it is not clear whether this is a factor in considering whether the Claimant’s conduct in the first action was an abuse of process or otherwise inexcusable, or rather whether it falls for consideration at the stage of “very unusual circumstances”. It seems to me that it should be the latter, since “abuse of process” or “inexcusable” concern the circumstances leading to the strike out of the first action. In that event, in principle, such a failure would militate strongly against the court finding “very unusual circumstances”. However, as I have found that in fact the conduct in the First Action (other than the failure to apply for relief) was neither an abuse of process nor inexcusable, then in this case, I do not go on to consider whether there are “very unusual circumstances”. In this context, it is not clear to me that in a case where an action is struck out for, say, a single act of non-compliance with rule, practice direction or order, a failure to apply in that action for relief from sanctions necessarily bars the commencement of a second action: see Cranway §2 where there was no appeal against the decision striking out the first action.

    2. However, I go on to address the failure to apply for relief from sanctions on the assumption that it falls properly to be considered as part of the question whether conduct of the First Action was an abuse of process or otherwise inexcusable. In many, if not most cases, such a failure to apply for relief from the sanction of a strike out for non-compliance with an unless order would be a strong factor in concluding that the conduct in the first action was inexcusable. However in the present case, I consider that that failure would not lead to such a conclusion. True it is that as at 4 August 2011, the Claimant had legal representation who indicated that an application for relief from sanctions was in the offing. At the same time there was a request for disclosure, to which the Defendant did not respond. However, the Claimant’s evidence, which I accept, is that at the time when he could have made such an application he had no further funds to maintain that legal representation nor the emotional fortitude to advance the fight at that stage. He remained a litigant in person. In my judgment, on the particular facts of this case the failure to apply for relief from sanctions, in circumstances where the Claimant’s conduct was not otherwise an abuse of process or inexcusable, would not be sufficient to render that conduct an abuse or inexcusable.

(4) Aldi

    1. Finally, I consider the position if, as a matter of principle, it is correct to apply the Aldi approach to the question whether the Second Action is an abuse of process. This was the approach applied by District Judge Stuart. (Whilst there is some ambiguity in §34 of the Judgment, he considered both the first stage of assessing all factors and also the second stage of discretion.)

    2. In the Judgment, the Judge took account of a wide range of relevant factors in the case. He considered both the use of court resources and doing justice; the fact that the first action had not been litigated; his view that the Claimant, understandably, considered that he had obeyed the first unless order by serving a “fully pleaded” particulars of claim and that there had been no complaint from the Defendant or the court; that the Claimant had not known what to do to comply with the second unless order; that he could take limited account of the Claimant’s position as a litigant in person; that the Claimant had suffered the adverse consequence of having to pay the costs of the First Action; and that it was likely that Carillion would bring the Defendant into the action in any event. He took account of the more robust approach indicated by Mitchell and Denton. Delay was not a relevant consideration and that there was no adverse effect on the availability of witnesses. Taking account of all these factors he concluded that the Second Action was not an abuse. In my judgment, applying the test in Stuart §82, there would be no basis for this court to interfere with his balancing of the relevant considerations. I would add, specifically addressing the important concern of limited court resources, that in the present case the Second Action will proceed in any event, at least as regards Carillion.

Conclusions

    1. I conclude as follows:

(1) Whilst District Judge Stuart erred in his approach to the question whether the Second Action is an abuse of process, nevertheless, I am satisfied that the Claimant’s conduct in the First Action was neither an abuse of process nor inexcusable and thus that the Second Action should not be struck out as an abuse of process.

(2) If, contrary to the foregoing, the Judge was correct in applying the principles in Aldi, he took account of all relevant factors and there is no basis for finding that his decision was wrong.

It follows that the Defendant’s appeal is dismissed.”

RELATED POSTS

Second set of proceedings

 

Tags: , ,