A SECOND – IDENTICAL – APPLICATION WAS AN ABUSE OF PROCESS AND DISMISSED ON THAT GROUND ALONE

In  Lambert v Forest of Dean District Council & Ors [2019] EWHC 1763 (Ch) ICC Judge Mullen rejected an application on the grounds that it was an abuse of process. An identical application had been made earlier and struck out for non-payment of costs. The attempt to bring a second application was an abuse of process and the application was refused on that ground alone.  The judgment contains a useful summary of the relevant case law and principles in relation to abuse of process in these circumstances.

“Mr Lambert bypassed that exercise by issuing a fresh application that was in all material respects identical to the first, without having complied with the obligation that the court had specified as a condition of proceeding with the annulment. That in itself appears me to be an abuse of the processes of the court.”

THE CASE

The applicant had been made bankrupt in 2016 on the grounds that rates were not paid.  In November 2018 the bankrupt made an application to annul the bankruptcy.   An earlier application to annul the bankruptcy had been made in 2017. This was made on the grounds that the petition debt was not due and the statutory demand and petition had not been properly served.  That application was eventually dismissed on the grounds that the bankrupt had not paid various costs orders.  An application for permission to appeal that earlier order was struck out on the grounds that the bankrupt had failed to file an appeal bundle.

THE ARGUMENTS IN RELATION TO ABUSE OF PROCESS

The judge heard evidence from the parties. The judgment then considers the argument that this second application was an abuse of process.

 

    1. Having summarised the positions of the parties and the evidence, I shall deal with the submission that the current application should not be considered on its merits at all. The Council says that the application is abusive and should be dismissed on that ground alone. Ms Brooke referred me to the decision of the Court of Appeal in Securum Finance Ltd v Ashton [2001] Ch 291. In that case, proceedings had been struck out on the grounds of inordinate and inexcusable delay. The claimant then issued a second claim, which included a claim that had been included in the first set of proceedings, but also a claim that had not and could not, have been brought in those earlier proceedings. Chadwick LJ said at paragraph 34:

‘For my part, I think that the time has come for this court to hold that the ‘change of culture’ which has taken place in the last three years—and, in particular, the advent of the Civil Procedure Rules—has led to a position in which it is no longer open to a litigant whose action has been struck out on the grounds of inordinate and inexcusable delay to rely on the principle that a second action commenced within the limitation period will not be struck out save in exceptional cases. The position, now, is that the court must address the application to strike out the second action with the overriding objective of the Civil Procedure Rules in mind—and must consider whether the claimant’s wish to have ‘a second bite at the cherry’ outweighs the need to allot its own limited resources to other cases. The courts should now follow the guidance given by this court in the Arbuthnot Latham case [1998] 1 WLR 1426, 1436-1437:

“The question whether a fresh action can be commenced will then be a matter for the discretion of the court when considering any application to strike out that action, and any excuse given for the misconduct of the previous action: see Janov v Morris [1981] 1 WLR 1389. The position is the same as it is under the first limb of Birkett v James. In exercising its discretion as to whether to strike out the second action, that court should start with the assumption that if a party has had one action struck out for abuse of process some special reason has to be identified to justify a second action being allowed to proceed.”‘

    1. I was also referred to Aktas v Adepta [2010] EWCA Civ 1170 in which the Court of Appeal considered a second action pursued following the striking-out of a first action due to the failure to serve a claim form in time. Rix LJ, with whom Longmore and Atkins LJJ agreed, said at paragraph 90:

‘A mere negligent failure to serve a claim form in time for the purposes of CPR 7.5/6 is not an abuse of process. It has never been held to be in any of the many cases cited to this court, nor in my judgment should it be described as such, nor as being tantamount to such. I say a “mere” negligent failure to serve in time in order to distinguish the typical case of such failure to be found in these appeals and many other cases in the reports from any more serious disregard of the rules; but not in order to be in any way dismissive of the proper strictness with which a failure to serve in time, without good reason for doing so, is and has been rigorously dealt with by the courts, whether under the CPR or under the previous regime of the RSC. However, all the cases make clear that for a matter to be an abuse of process, something more than a single negligent oversight in timely service is required: the various expressions which have been used are inordinate and inexcusable delay, intentional and contumelious default, or at least wholesale disregard of the rules.’

    1. Mr French points out that this is not a case where Mr Lambert is seeking to relitigate a case decided on its merits. He referred me to the speech of Lord Millett in Johnson v Gore Wood [2002] 2 AC 1, 59 where he said as follows:

‘It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen’s right of access to the court conferred by the common law and guaranteed by article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression.’

He took me to a number of cases – Thames Investment and Securities Ltd v Benjamin [1984] 1 WLR 1381, Society of Lloyd’s v Jaffray [1999] CLC 713 and Sinclair v British Telecommunications plc [2001] 1 WLR 38 – in which the court stayed further proceedings until obligations under earlier actions had been complied with, rather than striking them out. In Society of Lloyd’s v Jaffray, Colman J said, at 720:

‘The underlying purpose of such stay orders is to reflect the fact that there has been a needless duplication of proceedings directed to the determination of the same or substantially the same issues. There has thus been a misuse of the court’s procedure. In many cases this may fall short of an abuse of process or vexatiousness, such as would justify striking out the second set of proceedings. Moreover, the circumstances may not be such as to give rise to an issue estoppel which could be the basis for an application to strike out the second set of proceedings. Nevertheless, the conceptual justification for these orders is clearly to discourage unnecessary procedural duplication. They reflect a much wider and well-established approach manifested in germane principles, such as the nemo debit bis vexare rule, issue estoppel and Henderson v Henderson (1843) 3 Hare 100; 67 ER 313

    1. This is not a case in which the First Annulment Application was, in itself, abusive. Nor is it a case in which Mr Lambert is seeking to relitigate issues which have been decided, or which should have been included in an earlier application. Nonetheless, in my judgment this application is an abuse of process, which should be dismissed on that basis alone.
    2. The change of litigation culture introduced by the Civil Procedure Rules, referred to by Lord Woolf in Securum, and changes to those Rules, with the emphasis on compliance with the court’s directions, introduced following Jackson LJ’s recommendations for reform are relevant here. Paragraph 1.1(2) of the Rules, as amended, now provides that the court’s overriding objective of dealing with matters justly and at proportionate cost includes:

‘(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; and

(f) enforcing compliance with rules, practice directions and orders.’

Parties to litigation are under a duty to help the court to further the overriding objective.
    1. Where a party has been subject to a sanction, such as the striking out of their case, relief from that sanction is obtained by an application under Rule 3.9, which provides as follows:

‘(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –

(a) for litigation to be conducted efficiently and at proportionate cost; and

(b) to enforce compliance with rules, practice directions and orders.

(2) An application for relief must be supported by evidence.’

As set out in Denton v. TH White Ltd [2014] EWCA Civ 906, the court has to approach this exercise in three stages: (i) it must identify and assess the seriousness and significance of the failure to comply with any rule, practice direction or court order which engages rule 3.9(1); (ii) it must then consider why the default occurred; (iii) it must evaluate all the circumstances of the case, so as to enable the court to deal justly with the application including the factors in sub-paragraphs (a) and (b).
    1. Mr Lambert bypassed that exercise by issuing a fresh application that was in all material respects identical to the first, without having complied with the obligation that the court had specified as a condition of proceeding with the annulment. That in itself appears me to be an abuse of the processes of the court. Were I to approach this application as if it had included an application for relief from sanction I would refuse it. The failure to comply with the unless order was serious. There is no good reason for Mr Lambert not to have complied with it. Although he paid the outstanding costs after the hearing before me, no reason has been given as to why he could not have paid them sooner. The fact that he sought permission to appeal the order of Warren J giving rise to the costs liability is not a good reason. The order was not stayed and the costs were not paid even after the dismissal of the permission application. Considering all the circumstances of the case would militate against relief from sanction so as to allow Mr Lambert to pursue an annulment application. The following matters are significant –
40.1. The First Annulment Application was itself made late. Mr Lambert was aware of the bankruptcy by April 2017 at the latest but did not make an application until 24th October 2017.
40.2. During the course of the First Annulment Application, Mr Lambert made an unsuccessful application for a stay and simply disregarded court orders requiring him to pay the costs occasioned by it. He did not pay the costs ordered by Warren J within 14 days. He did not pay them following the adjournment of the hearing before Mr Deputy Registrar Barnett on 19th December 2017, which hearing was adjourned in part to provide time for the Original Trustee’s costs to be paid. He did not pay them following the making of an unless order by Chief Registrar Briggs on 17th January 2018. He did not pay them after his application for permission to appeal the order of Warren J had been dismissed.
40.3. He did not respond to the commencement of detailed assessment proceedings by the Council leading to it obtaining a default costs certificate against him on 31st May 2018. This led to further court time being wasted by an application to set that certificate aside and further costs orders, which Mr Lambert did not pay.
40.4. This application was made some two years after the bankruptcy, one year after the First Annulment Application and nearly eight months after that application was struck out. No new material facts have come to light which might justify that delay. In his evidence in the First Annulment Application Mr Lambert made it clear that he had established that the Council had obtained the Service Address from Companies House despite having his home address and had seen the seen the Process Server’s statements. Costs have been incurred in the administration of his bankruptcy estate as a result.
40.5. Even in this application, Mr Lambert failed to comply with the directions of the court. He sought to adduce a witness statement more than two months after the deadline for doing so imposed by Deputy ICC Judge Schaffer had passed.
40.6. There is a plain background of a failure to cooperate with his trustees so as to enable them to identify the extent of his bankruptcy estate. The fact that Mr Lambert has not identified the source of the funds used to pay the respondents’ costs, despite requests, gives me no confidence that the costs orders have been paid from monies to which Mr Lambert is beneficially entitled, rather than monies that fall within his bankruptcy estate in any event.
It seems to me that those factors, taken with Mr Lambert’s attempt to circumvent the relief from sanction regime, also demonstrate a wholesale disregard for the orders of the Court and the procedures it has in place for dealing with cases justly and at proportionate cost. His disregard of the court’s orders led to the striking out of the First Annulment Application. His disregard for the court’s procedures is evidenced by the fact that he has made this application without paying the costs which led to the striking out of the prior application, putting the parties to expense and using court time in hearing what is now a contested application. That is not a proper use of the court’s procedures. The proper course would have been to apply for relief from sanction promptly after the first application was struck out, which might have had the effect of restoring a largely uncontested application. It is not appropriate for me to take the alternative course of staying the application pending payment of outstanding costs liabilities in circumstances where the source of funds remains unknown and there is a real question as to whether they are monies within the bankruptcy estate.
  1. I would dismiss the application on that ground alone.