DELAY BY THE CLAIMANT WAS NOT “WAREHOUSING” AND DID NOT LEAD TO A STRIKE OUT: A PARTY ALLEGING DELAY WAS ABUSE MUST ACT PROMPTLY

There are several significant aspects to the judgment of Mr Justice Eyre in Morgan Sindall Construction and Infrastructure Ltd v Capita Property and Infrastructure (Structures) Ltd & Anor [2023] EWHC 166 (TCC). Firstly the distinction between proceedings issued for the purpose of “warehousing” and those where there has been delay after issue; secondly the issue of whether delay is necessarily an abuse and thirdly the observations that a party alleging such abuse must themselves act promptly.

“A party who alleges abuse of this kind must act promptly. Such a party cannot allow the action to continue and then some time later seek to strike out for this form of abuse.”

THE CASE

The first claimant issued proceedings against the defendant in relation to allegations following stadia built at the Old Trafford Cricket Ground.   The claimant also issued separate proceedings against Aviva, the Second Defendant’s insurer, alleging the insurer is liable under the Third Party (Right Against Insurers) Act 1930.

The work was done in 2011 – 2012 and practical  completion took place in 2014.   Proceedings were issued in 2017.  Initially a stay was agreed. Proceedings were issued against Aviva and then a tripartite mediation took place which did not resolve the proceedings.  That mediation took place in September 2022. In June 2022 the claimant applied for a CMC.

On the 5th December 2022 the First Defendant applied to strike out the action on the basis that it been “warehoused” and this amounted to an abuse of process.

THE LEGAL PRINCIPLES

It was common ground that the “warehousing” of an action is potentially an abuse of process.  The judge decided that there was a distinction between proceedings issued with the deliberate aim of “warehousing” the case are in a different category to those issued where there has been subsequent delay.

1. 1. So it is right to say that a distinction is drawn between the two kinds of abuse: starting proceedings with no intention of continuing them; and starting with an intention of continuing but then putting the case on hold in the course of proceedings. The former is the graver abuse. That does not, of course, mean that putting proceedings on hold in the course of proceedings is not an abuse: the authorities are clear that it can be. The distinction between the two categories can be relevant to sanction and in particular to whether the proportionate response is striking out.

1. 1. In Asturion Arnold LJ said, at [64], that a two-stage process was to be adopted. The two stages being: first, determining whether the claimant’s conduct was an abuse of conduct; second, deciding whether the court should exercise its discretion so as to strike out the claim.

1. 1. In deciding whether there was abuse the court will need to consider whether the circumstances and in particular the relevant delay amounted to a deliberate putting of the proceedings on hold. Doing that requires an analysis of the intention underlying the delay and the failure to progress to the action and the court will then have to consider in light of its conclusion as to the intention whether there was abuse. The relevant intention is subjective. A party who is delaying proceedings or who is inactive through incompetence or the like will not be guilty of this form of abuse. Such a party may well be liable to have its claim struck out but that would be on a different basis.

1. 1. Mr. Hext is right to say that it is necessary to consider the claimant’s subjective intent. That was a point that was made by Judge Pearce in Alfozan at [18] where he said that the focus on this type of abuse is on the state of mind of the claimant.

1. 1. However, for her part Miss. Mirchandani KC, for the First Defendant, was right to say that the claimant’s intention is to be deduced from the evidence as a whole. It is not sufficient for a party or a party’s solicitor simply to say in resisting an application on this footing that in fact the claimant was not proceeding with the intention to put matters on hold. Inevitably, when such evidence is being put forward that will be in the context of facing an abuse allegation. Such evidence can of course be perfectly honest at the time of the statement. Let me emphasise that here there is no suggestion at all that Miss. McDermott, who put in evidence on behalf of the Claimant, was doing anything other than seeking to give her honest recollection and an honest account of the Claimant’s intention. Nonetheless, the capacity for recollection even of a solicitor will inevitably be influenced to some extent by the viewpoint from which the recollection is being undertaken and by the circumstances in which the person concerned is engaging in the recollection. Therefore, the court must look to the circumstances and it may be that the circumstances are such as to compel a conclusion that the intention at the relevant time was to put the proceedings on hold even if such an intention is now disavowed.

1. 1. The court must be on guard against making undue assumptions. It is necessary for the court to remember that what might appear, with hindsight, to be a deliberate course of conduct can be, and often will be, the result of a combination of unrelated decisions or omissions with a different intent or with no combined intent at all.

1. 1. The dividing line between putting proceedings on hold in such a way as to be warehousing them and failing to progress a claim with proper expedition will often be a narrow one but there is a distinction and the distinction lies in the intention with which the actions are done.

THE ACTION WAS NOT STRUCK OUT

The judge decided that there were grounds for criticism of the delay. This action had been put on hold because of the separate action against the insurer. However the delay was not such as to amount to an abuse of process.  Further the first defendant’s own delay in making the application would have militated against any discretion being exercised in its favour.

The First Issue: was the Action deliberately put on hold?

1. 1. I do not accept the Claimant’s argument that the claim against Aviva was so closely related to this claim that progressing the Aviva claim was tantamount to progressing the current action. They were related but they were distinct claims and progressing one was not equivalent to progressing the other.

1. 1. The only interpretation I can put on the history is that for periods of time the Claimant was deliberately putting this matter on hold in order for it to tread water while the Claimant pursued Aviva in an attempt to clarify the position vis-à-vis Aviva and/or to bring the matters into line. That goes beyond mere delay and there were undoubtedly periods when this action was not being pursued because the Claimant had decided to put it on hold waiting for developments in the Aviva action.

The Second Issue: whether, in the Circumstances of this Case, putting the Action on Hold was Abuse.

1. 1. There are a number of factors which support the First Defendant’s interpretation of the position and which favour the conclusion that the Claimant’s conduct was abusive.

1. 1. The first is the very significant periods of inaction and the repetition of the periods of inaction. In particular, there was inaction between August 2016, indeed perhaps from a little earlier than that, and November 2017, and also in the period from March 2020 to December 2021.

1. 1. The length of time for which an action is put on hold is highly relevant to whether doing so is an abuse. That was made clear by Arnold LJ in Asturion. That follows from the passage at [61] which I have already quoted. Also, at [63] Arnold LJ made the point that Popplewell J, in Société Generali v Goldas [2017] EWHC 667 (Comm), had clearly regarded the length of delay in the particular case to be germane to the question of abuse. The longer the period of stasis in an action the more risk there is of prejudice to the other party and the greater the potential for an adverse impact upon the administration of justice.

1. 1. There were other shorter periods when this action was put on hold. The relevance of those is that they show that the lengthy periods to which I have just referred did not stand alone. Those longer periods are not to be seen as exceptional but rather they are to be considered in the context of a lack of urgency at other times and as being part of a pattern. That is coupled with the reference that the First Defendant properly makes to the proceedings being issued arguably at the end of the limitation period; to the delay pre-action; and to the delay in service of the claim form.

1. 1. The First Defendant also points to the fact there was a deliberate putting on hold to bring in line with Aviva but that adds little to the finding I have already made that this was a deliberate putting on hold and the motivation of tying up with Aviva is a factor which is relied on conversely by the Claimant as justifying the conduct.

1. 1. A factor in favour of the First Defendant’s position and in favour of interpreting this conduct as abusive is that the conduct resulted from a unilateral decision on the part of the Claimant. The Claimant could have sought formal or express consent from the First Defendant or a court order but it chose not to do so.

1. 1. It is right to note that the Aviva action involves different issues from the current action. Even though Aviva is putting the Claimant to proof of Sabre’s liability the issues as between Sabre and the Claimant are different from those between the Claimant and the First Defendant. There is some overlapping but showing a failure by Sabre in respect of its obligations is very different from establishing a failure by the First Defendant in respect of its alleged obligation to warn about Sabre’s actions and failings.

1. 1. It is also relevant to note that the delay in this case and the putting on hold are in the context where, as matters now stand, the First Defendant has at the very least a limitation argument with potential for success if the matter is struck out. There is more than a potential argument in terms of the negligence claims, where absent special circumstances, those aspects of the claim appear to be statute-barred. Even if the claim is not statute-barred it will potentially be abusive conduct for the Claimant to start fresh proceedings if these proceedings have been struck out for abuse of process.

1. 1. The First Defendant is also right to say that the claim is ambitious in its nature. It is being said that the First Defendant is liable for a failure to warn in respect of failures of another party where the Claimant had chosen that other party and in particular had deliberately decided not to adopt the First Defendant’s design but had gone for a less costly option. The First Defendant proceeds from that interpretation to say that the implication is that the Claimant knows that this claim is an ambitious one and that it is adopted as a fallback position. There is some force in that contention.

1. 1. There was also delay in the Aviva claim. Not all of that was the responsibility of the Claimant and it appears that Aviva was not co-operative in those proceedings. Nonetheless, it is relevant because if the Claimant is saying that it was legitimate to put these proceedings on hold while pursuing the Aviva claim then it was all the more important to move promptly in those proceedings.

1. 1. As I indicated earlier there is an overlap in terms of the relevance of those factors both as to the question of whether there is abuse and also what the relevant sanction would be if there is abuse.

1. 1. What are the factors pointing the other way?

1. 1. It is right to note that this is not a case of simply putting the matter on hold until it was convenient for the Claimant or waiting until the Claimant had dealt with other unrelated claims. The matter was put on hold because of a desire to tie this action up with the action against Aviva. Tying the action up with the action against Aviva was commercially sensible and acknowledged by the First Defendant to be such. The First Defendant had, indeed, urged that course in November 2017 and again in 2018. This is very significant because it is apparent that the course which the Claimant took was the course which the First Defendant was saying was appropriate even though the Claimant took longer over it than the First Defendant believed it should have done. It would be putting matters too high to say that the First Defendant was complicit in the course that was taken but that course was that which the First Defendant (certainly as in November 2017) was saying it regarded as appropriate or at the very lowest the course which it represented to the Claimant as being the appropriate one.

1. 1. It is relevant in that context to note that ultimately there was a tripartite mediation. The proceedings against Aviva were not straightforward and it appears that Aviva was not facilitating a speedy progress although those are far from being the most complex of proceedings and, as I have already noted, they could have been dealt with more expeditiously.

1. 1. Although there was delay and although the matters were put on hold not all of the delay was of the scale now being alleged by the First Defendant. As I have already indicated, the explanations given on behalf of the Claimant, although not carrying the potency which the Claimant places on them are not to be dismissed as readily as the First Defendant seeks to do.

1. 1. The First Defendant could itself have applied to the court for a CMC. For the reasons given by Judge Pearce in Alfozan at [39] that factor has only limited weight. However, it does have some relevance because of the background of the First Defendant having contended that tying matters up with the Aviva action and establishing what the position was in that action was the appropriate course. The First Defendant could at some point in the history have said that it had come to the view that the adverse effects of the delay outweighed the benefits of that course. It could have said expressly to the Claimant or expressly to the court in seeking a CMC that the stage had come when it was no longer appropriate to tie the proceedings up with the Aviva action and that this matter should be proceeded with separately.

1. 1. It is also relevant to note the reaction of the First Defendant in December 2021 when the matter came to life. It is right that the First Defendant was highly critical of the “radio silence” (in my term not its) that there had been and of the actions of the Claimant. However, it did not at that stage say that the conduct had been abusive and at that stage it agreed to move to a mediation.

1. 1. It is also of note that progress is now being made: a CMC is imminent and is to be held in less than a month’s time. Although this is a factor of relevance it has limited weight because in almost every case of this kind where there is an allegation of abuse there will be a response by the claimant of seeking to move matters forward. That cannot be a sound answer if a strike out application is otherwise meritorious. It is, however, relevant to note that the movement forward here on the part of the Claimant did not come in response to a strike out application or even to the threat of such an application.

1. 1. What is the conclusion on the question of abuse? No single factor is conclusive but I am satisfied that it was not abuse here to put this action on hold for significant periods of time to await the clarification of the position vis-à-vis Aviva and/or to bring into line with the Aviva action. The key is that the reason for putting matters on hold was to line up with the Aviva claim and to get all the parties, including Aviva, to the stage of a mediation together or of being able to combine the proceedings. That was a sensible course and it was, moreover, one which the First Defendant had, at the time a stay was imposed, indicated in clear terms that it believed it to be appropriate. In addition the First Defendant’s continued acceptance of that appropriateness was indicated at least to some extent by its participation in the tripartite mediation when the action was revived.

1. 1. It follows that I am not persuaded that the action of the Claimant was abuse of process of the form characterised as improper warehousing.

The Third Issue: the appropriate Sanction.

1. 1. In the light of my conclusion on the question of abuse the third issue does not arise. However, even if I had concluded that the Claimant’s actions were such as to amount to abuse I would not have imposed a sanction on the Claimant in the circumstances here let alone the sanction of striking out the claim. That, in part, is because the factors which led me to the conclusion that the Claimant’s conduct was not abuse of process would operate, if the balance tipped the other way and the behaviour was found to be abusive, to reduce the gravity of that abuse.

1. 1. More significantly, it is because of the delay on the part of the First Defendant in making this application. The action came to life again in December 2021. From then, although there was a contention that there was some further delay, it was clear that the Claimant was no longer warehousing the claim and that the Claimant was moving the matter forward. The First Defendant chose not to make an application to strike out in January 2022 or thereabouts. Instead, it took part in a tripartite mediation and waited until December 2022 to seek strike out. A party who alleges abuse of this kind must act promptly. Such a party cannot allow the action to continue and then some time later seek to strike out for this form of abuse. Here, the First Defendant’s explanation of that interval between the revival of the action and the strike out application was that it hoped or believed that matters would move more quickly once the action came back to life. That is not a persuasive explanation. It should and must have been apparent that with the best will in the world fixing a tripartite mediation in a matter of this kind would take some considerable time. I am driven to the conclusion that the reality is that the First Defendant kept the possibility of applying to strike out in reserve and only brought it into play when the mediation failed to resolve matters. A party who chooses to do that will not be given relief. This is not a matter of some form of estoppel but a matter of the court’s exercise of its discretion. The actions of a party seeking strike out are highly relevant as to whether to grant that remedy in the light of the overriding objective. A party who holds in reserve the option of applying for this form of strike out will not get relief if the consequence of its holding the option in reserve is to allow the action to continue and for substantive steps between the parties to take place over a period of some months.

1. It follows that the application is dismissed