A SECOND ACTION ON A DIFFERENT ISSUE TO THE FIRST SHOULD NOT HAVE BEEN STRUCK OUT: COURT OF APPEAL NOT TOO KEEN ON “SHADOW BOXING” IN CIVIL LITIGATION

In Orji & Anor v Nagra & Anor [2023] EWCA Civ 1289 the Court of Appeal overturned a decision that an action should be struck out as an abuse of process.  The Court rejected the defendant’s contention that the action was an abuse  because it should have been mentioned and dealt with in the course of the hearing in a separate action.  The matter did not fall within the rule in Henderson -v- Henderson; the claimants’ conduct was not an abuse of court process; even if there was abuse this was not such as to justify striking out the action.  The Court had something to say about a strategy of “shadow boxing” strategy by the defendants which was, to some extent, responsible for delays and additional expense.

“…the answer for a disgruntled defendant is to ensure that the litigation is closely case-managed by the court, so as to bring about a trial sooner rather than later. The solution is not to make the numerous interlocutory applications that the respondents chose to make, each of which have failed either in whole or in part, and each of which have caused delay, extra costs and additional stress.”

THE CASE

The claimants issued proceedings for trespass against the defendants.  During the course of those proceedings the claimants also indicated that they would be bringing a claim for malicious prosecution.

THE TELEPHONE HEARING

At a telephone hearing before a District Judge (of which no transcript was available) it was said that the claimants sought to amend the Particulars of Claim.  It was said that, during the course of that hearing, the claimants had stated that this was the final version of the claim.

1. 1. It appears that, not unreasonably, DJ Stewart was concerned to ensure that, given the delays in the trespass action, the appellants’ claim was not repeatedly reamended. He sought and obtained an oral assurance from the first appellant that this was the final draft or final version of the claim. Paragraph 6 of the note, which is not disputed, reads as follows:

“6 DJ Stewart says to [the first appellant] “you’re telling me that this is your final draft or your final version of your claim and as time goes on you don’t see yourself changing this claim or altering”. [The first appellant] confirms to DJ Stewart “correct your honour”.”

SHADOW BOXING

The Court of Appeal considered the Note of the hearing in detail.   Neither side mentioned the possibility of an action for malicious prosecution, even though the possibility hung over the hearing link Banquo’s ghost.  There may have been a degree of “shadow boxing” going on.

1. 1. Also of significance are the references in the note to a claim for £300,000, a figure taken from HHJ Parkes’ QC’s judgment as being the approximate value of the malicious prosecution claim. At paragraph 30, DJ Stewart is reported as saying that the appellants would have to pay a court fee “to amend or re-amend to include the sum of £300,000”, which again appears to be a reference to the possible making of a claim for malicious prosecution in the future. He appeared to refer to that possibility again at paragraph 34.9 of the note, with its express reference to “consolidation”.

1. 1. In my judgment, these references show that the possibility of a future claim for malicious prosecution hung, like Banquo’s ghost, over the hearing, with everyone aware of it to some degree or other but no-one, for whatever reason, prepared to articulate the point expressly. Perhaps both sides saw an advantage in this sort of shadowboxing, although that is not the way to conduct litigation in the twenty-first century. Be that as it may, by a “fine margin”, DJ Stewart allowed the application to reamend the trespass claim to introduce Version 5.

1. On 8 October 2020, the appellants issued a separate claim form setting out the malicious prosecution claim. This had apparently been drafted on 14 August, just two days after the hearing before DJ Stewart. The respondents put in a defence to that claim a month later which dealt with the merits, but subject to the caveat that they would seek to strike out the malicious prosecution claim as an abuse of process in accordance with the rule in Henderson v Henderson. Subsequently, various orders were made in respect of both the trespass claim and the malicious prosecution claim, concerned with allocation and the like. It was not until 31 March 2021 that the respondents made their second application to strike out, this time in respect of the malicious prosecution claim.

STRIKING OUT THE SECOND ACTION

At first instance, and on initial appeal, the claimants second action for malicious prosecution was struck out on the grounds that the first action should have been amended to include the claim.  The second action was issued two days after the hearing before the District Judge.  The claimants appealed. That appeal was heard a year later, the claimants’ appeal was dismissed.

THE CLAIMANTS’ SUCCESSFUL APPEAL TO THE COURT OF APPEAL

The Court of Appeal allowed the Claimants’ appeal.  There had been no previous determination of this issue.  The principle in Henderson -v- Henderson did not apply.  The claimants conduct did not amount to an abuse of process.

1. 1. I am in no doubt that the rule in Henderson v Henderson has no application to the facts of the present case. That is because there was no relevant determination by DJ Stewart which could legitimately prevent the appellants’ subsequent pursuit of the malicious prosecution claim.

1. 1. At the time of the hearing before DDJ Payne, there was a trespass claim which had not got beyond the pleading stage, and a later malicious prosecution claim, arising out of the same incident (but with many different features), which had also not got beyond the pleading stage. There had been no determination by the court of any substantive issue. The appellants could not be accused of trying to go behind some earlier determination of the court, because there had not been one. The only determination that DJ Stewart made was allowing the appellants permission to reamend the trespass claim. On the face of it, that had nothing to do with the existence or otherwise of the separate malicious prosecution claim, which had not even been commenced.

1. 1. On that basis, therefore, it is impossible to see how the rule in Henderson v Henderson could have any general applicability to this case. It might be different if the trespass claim had been fought through to a trial and been determined by the court by August 2020. In those circumstances, the commencement of the malicious prosecution claim in October 2020 may well have fallen foul of the rule, because it could and should have been raised before the trespass trial. But that was all a long way off in August 2020, when the trespass claim had not got beyond the pleading stage, and the only determination was the permission to make some reamendments.

1. 1. In addition, I consider that the respondents’ reliance on the rule faces an insurmountable causation hurdle. As I have explained, the rule in Henderson v Henderson is designed to ensure that an innocent party – in this case, the respondents – is not vexed twice with the same matter. But, on the findings of DDJ Payne, the respondents have not been (and could not have been) vexed twice. He found at [8] of his judgment that, if DJ Stewart had known that the malicious prosecution claim was going to be added to the trespass proceedings, “he would have allowed [the appellants] one last opportunity to amend their particulars of claim to include, not only all the claims for damages and clarifying that, but also the issue of malicious prosecution”. And DDJ Payne went on to confirm that in paragraph 11, when he found expressly that, if the appellants had referred to the malicious prosecution claim when they were in front of DJ Stewart, he would have allowed them to amend to add that claim – “the Court would have said yes” – “because it is right that you should include all the claims you could being in one proceeding to avoid multiplicity of claims.”

1. 1. I respectfully agree that that, or something like it, is what should and probably would have happened. If DJ Stewart had been made expressly aware that the reamendments with which he was concerned dealt only with the trespass claim, and that the malicious prosecution claim was also going to be advanced, then he would have adjourned the reamendment hearing, given the appellants the opportunity either to plead a case involving both causes of action or to issue the separate claim and have the two cases managed together^[3], and come back before the court for directions leading to trial. DDJ Payne was clear that that would have been permitted. In one way or another, everything would have been dealt with together. On that basis, the failure expressly to refer to the malicious prosecution claim at the hearing of 12 August 2020 did not mean that the respondents were vexed twice with the same claim: it meant only that (two months later) the malicious prosecution claim had to be consolidated or managed with the trespass claim.

1. 1. Taken at its highest, it seems to me that both judges below were saying that, because the appellants could and should have raised the existence of the malicious prosecution claim at the hearing before DJ Stewart, they were barred by operation of law from ever raising it subsequently. I disagree with that for two reasons. The first is the causation argument: for the reasons I have explained, in the overall context of this case, it made no, or very little, difference whether the malicious prosecution claim was promulgated in August or October. The second is that it would be an unusual extension of the rule in Henderson v Henderson if, in a single set of proceedings in which there had been no determination of any point of substance, it was concluded that, as a matter of law, solely because X could and should have done something earlier in the proceedings, he or she could not do it later. Of course, there may be costs implications in allowing something to be done late; there may indeed be good reasons (such as irredeemable prejudice or proximity to a trial) which militate against allowing X to do it at all. But it would be an unusual case where, merely because X could or should have taken a step earlier, X would be automatically shut out from doing so at a later date because of the rule in Henderson v Henderson. Of course, delays may lead to the striking out of a claim for different reasons and by reference to other rules: I address those in paragraphs 59 and 74 below.

1. 1. Accordingly, I am satisfied that this is not a situation in which the rule in Henderson v Henderson applies. There was no relevant determination which justified striking out the malicious prosecution claim. If the appellants had been legally represented on 12 August 2020, they would have suggested doing precisely what DDJ Payne envisaged, and the appellants would have had a final opportunity to advance both claims together. That is what should have happened once the malicious prosecution claim was issued in October. I would therefore allow ground 1 of the appeal. However, the matter does not end there. If this Court concluded that there had been an abuse of process on 12 August 2020, regardless of the rule in Henderson v Henderson, striking out may still have been justified.

7 WAS WHAT HAPPENED BEFORE DJ STEWART AN ABUSE OF PROCESS JUSTIFYING THE STRIKE OUT OF THE CLAIM?

7.1 The Law

1. 1. The power to strike out a statement of case is set out in r.3.4(2) in the following terms:

“3.4—(1) In this rule and rule 3.5, reference to a statement of case includes reference to part of a statement of case.

(2) The court may strike out a statement of case if it appears to the court—

(a)that the statement of case discloses no reasonable grounds for bringing or defending the claim;

(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.”

It is common ground that this appeal is concerned with the power at r.3.4(2)(b). Even if what happened before DJ Stewart did not involve an application of the rule in Henderson v Henderson, it was open to the respondents to argue that it nonetheless made the subsequent issue of the malicious prosecution claim an abuse of process. It is important to emphasise that the categories of abuse are not closed and that a flexible approach to r.3.4(2)(b) must always be adopted.

1. 1. A party seeking to obtain a finding that there has been an abuse of process faces a high hurdle. Abuse of process has been defined as the use of the court process “for a purpose or in a way significantly different from its ordinary and proper use”: Attorney General v Barker [2000] 1 FLR 759, DC, Lord Bingham of Cornhill. It needs to be shown that the conduct of the party in question is so objectionable that they should forfeit their right to take part in a trial, such as where that party is determined to pursue proceedings with the object of preventing a fair trial (through the use of forgeries and perjured evidence): Arrow Nominees Inc v Blackledge [2000] B.C.L.C. 167, CA.

1. 1. In the context of more than one set of proceedings, Dexter Ltd v Vlieland-Boddy [2003] EWCA Civ 14 at [49] is authority for the proposition that a later action will usually only amount to abuse of process if it involves unjust harassment or oppression. Aldi Stores Ltd v WSP Group PLC & Ors [2000] EWCA Civ 1260 at [21] and [39] gives guidance to the effect that a party who learns of a second intended action and considers that it may be oppressive (and therefore an abuse) should say so promptly rather than waiting and then applying to strike out under this ground.

1. 1. Striking out a claim is a draconian remedy. Even in a case where abuse may be made out, it does not necessarily follow that the claim should be struck out: Biguzzi v Rank Leisure PLC [1999] 1 WLR 1926 and Walsham Chalet Park Ltd v Tallington Lakes Ltd [2014] EWCA Civ 1607. The remedy of striking out must be proportionate in all the circumstances. There are obviously numerous alternative remedies, so the striking out of a valid claim should always be the last option.

1. 1. As noted above, the judges below (and in particular, HHJ Berkley) referred extensively to delay. Rule 3.4(2)(b) can be applicable to cases of delay, although it is usually necessary for there to be some additional factor to justify striking out, such as the delays arising from a claimant acting in wholesale disregard of the norms of conducting serious litigation, and doing so with a full awareness of the consequences, as in Habib Bank Ltd v Jaffer [2000] C.P.L.R. 438, CA. A long delay by itself will not usually be categorised as an abuse without that kind of additional factor: Icebird Ltd v Winegardener [2009] UKPC 24 and Adelson v Anderson [2011] EWHC 2497 (QB).

7.2 The Possible Elements of Abuse

1. 1. In the present case, there are three possible elements of abuse on which the respondents have sought to rely. The first is the suggestion that the first appellant lied to DJ Stewart on 12 August 2020 in order to hide the existence of the malicious prosecution claim. The second is the argument that the issue of the separate malicious prosecution claim in October 2020 amounted to oppressive conduct. The third is the argument that the appellants have been responsible for the unacceptable delays in this litigation and that, when factored into everything else, justified the striking out. I deal with each in turn.

7.3 Dishonesty/Deception

1. 1. HHJ Berkley said in terms that, if DJ Stewart had understood the real position in August, he would not have allowed the reamendments, and that the reamendments were obtained by the deliberate misleading of the court. The inference is that the appellants were knowingly untruthful when they said to DJ Stewart that the reamendments represented their final case.

1. 1. On behalf of the respondents, Mr Croskell properly acknowledges the seriousness of that finding. But, as he accepted, dishonesty forms the basis of his underlying submission: if the appellants had been dishonest with the court by effectively keeping quiet about the malicious prosecution claim, then that was an abuse of process and should result in that claim being struck out. He fairly conceded that he needed to put his case that high in order to meet the high hurdle on an application strike out: as he put it, “the mischief comes from the dishonesty”.

1. 1. I do not consider that there is any proper evidence of dishonesty on the part of the appellants. I note that DDJ Payne did not make such a finding. It is quite plain that, at the hearing before DJ Stewart, the appellants had in mind their trespass claim, for the reasons that the first appellant explained in his witness statement. The affirmative answer to the question, “Is this the last word?”, was accurate because, in relation to the trespass claim, that is what it was. The first appellant was never asked directly about the malicious prosecution claim, which – as demonstrated by his letter before action – he was treating separately, at least in his own mind. Thus his answer was not, and not intended to be, misleading.

1. 1. I also think that, at times, Mr Croskell read far more into the note of the hearing of 12 August 2020 than the words will bear. By way of example, he submitted to this Court that the first appellant “expressly excluded further causes of action”, and that the first appellant “made an election not to pursue additional claims”. In my view, no part of the note can be read as indicating any such exclusion or any such election.

1. 1. To my mind, the important thing, which both judges below appear to have missed, is that the appellants never hid or even equivocated about the existence of the malicious prosecution claim: on the contrary, their intention to pursue it was always plain. Thus, in January 2020, they had provided Version 4 which ran the two claims together, and they had sent the letter of 17 May 2020 which made it quite clear that they were pursuing the malicious prosecution claim, albeit as a separate claim. This was not a case in which the malicious prosecution claim, when made, came out of the blue: on the contrary, it had been identified, and the intention to pursue it had been advertised in the clearest terms. Indeed, taking that point to its logical conclusion, it could be argued that it was the respondents who were at fault for not following the guidance in Aldi, and failing to notify DJ Stewart about the potential for oppression if the second claim for malicious prosecution was commenced.

1. 1. It is also instructive to look at this question of deception and dishonesty by endeavouring to identify the advantage which the appellants may have been seeking by hiding the existence of the malicious prosecution claim. What benefit could they hope to obtain from such conduct? Since the malicious prosecution claim was, on paper, worth 3 or 4 times the trespass claim, what was the incentive to keep quiet about that larger claim in order to obtain some reamendments – many of which were trivial – to the lesser claim? No obvious incentive occurred to me. When the question was put to Mr Croskell, he fairly agreed that he could not think of one. In my view, there was none. I consider that the absence of a motive lessens still further the likelihood of dishonesty.

1. 1. In my judgment, the highest that it might be put is that, at the hearing on 12 August 2020, the appellants deliberately chose to focus on the trespass claim, and avoided any express reference to the malicious prosecution claim. But the respondents did exactly the same thing. That is the shadowboxing to which I have already referred at paragraph 29 above. So if any conduct could be labelled as less than straightforward, it occurred on both sides. The court cannot allow one side to be penalised, and the other to be rewarded when, on this premise, both have behaved in precisely the same manner.

1. 1. Moreover, I consider that Mr Croskell was wrong to say that the respondents did not know where they stood in August 2020: on the contrary, the letter before action on 17 May had told them precisely. If they were truly unsure of the status of the intended malicious prosecution claim, they only had to raise it in unambiguous terms at the hearing before DJ Stewart. They did not do so but, if they had done, I am in no doubt that the first appellant would not have said the malicious prosecution claim had been abandoned. That would be contrary to all the evidence, including his unchallenged witness statement.

1. 1. I accept that, if a litigant deliberately misleads a court to obtain some clearly advantageous order, and then subsequently seeks to do something which is contrary to what that litigant told the court, then that may qualify as an abuse of process. So if DJ Stewart had raised in the clearest terms the possibility of a future malicious prosecution claim, and if the first appellant had said in equally clear terms that he would abandon that claim in order to obtain his reamendments to the trespass claim, and DJ Stewart had said expressly in his order that the only reason that he was allowing the reamendments was on the condition that the malicious prosecution claim had been abandoned, then an abuse of the process may well be made out (although whether that would justify a strike out is a different question). But for the reasons that I have given, that is a long way from this case: if anything, the note of 12 August 2020 indicates the opposite, because it suggests that there may be consolidation in the future (see paragraphs 27 and 28 above).

7.4 Oppression

1. 1. The second potential element of abuse is oppression. Mr Croskell submitted that it was oppressive when, in October 2020, the malicious prosecution claim was issued, after the first appellant had promised that Version 5 was the last word. But that turns on the assumption that the first appellant was referring to both claims when he was answering DJ Stewart’s questions and, as I have explained, he was not. There was nothing oppressive about the making of the malicious prosecution claim itself; the relevant cause of action had accrued less than a year before.

1. 1. Moreover, if the malicious prosecution claim had been identified in August 2020 and dealt with at that time in the way envisaged by DDJ Payne, it would not have been oppressive: as he said, the claim would have been allowed by way of an all-in set of amendments. If it was not oppressive in August 2020, it could not have become so by October. The only thing that was lost was that delay of two months, at a time when the trespass claim was still not beyond the pleading stage. In the context of this case, I simply do not accept that that amounted to oppression.

1. 1. I have not forgotten that one of Mr Croskell’s points was that, in addition to the five versions of the trespass particulars of claim in the papers, there were as many as four others, and that the respondents felt oppressed by the constant regurgitation of the same or similar allegations in these different versions of the pleadings. I acknowledge the difficulty and disruption that such conduct may cause. But the answer for a disgruntled defendant is to ensure that the litigation is closely case-managed by the court, so as to bring about a trial sooner rather than later. The solution is not to make the numerous interlocutory applications that the respondents chose to make, each of which have failed either in whole or in part, and each of which have caused delay, extra costs and additional stress. That brings me onto the third possible element of abuse, namely delay.

7.5 Delay

1. 1. It was assumed by both judges below that the appellants were responsible for the unacceptable delays that had occurred in the trespass claim, and that this was relevant to the striking out. Indeed that assumption seems to have been the springboard for the conclusion that, since no further delays could be countenanced in this case, the second malicious prosecution claim had to be struck out.

1. 1. The first point to make is that, as explained in paragraph 59 above, although delays alone can sometimes justify striking out, it is usually necessary for there to be some form of additional factor. But that does not mean that a court is powerless in the face of delay. Far from it. The use of ‘final’ and ‘unless’ orders will achieve, by active case management, either the efficient progress of the litigation, or its early demise. Furthermore, the rigorous policing of the relief from sanctions regime under CPR rule 3.9, following the decision of this court in Denton v TH White [2014] EWCA Civ 906; [2014] 1 WLR 3296, makes it most unlikely that a serial offender who delays proceedings unduly will ever get his or her case to court. But none of that arises in this case, nor was the application to strike out put on that basis.

1. 1. Secondly, I consider that both judges were wrong to blame the appellants for the delay, particularly since neither embarked on any sort of analysis to justify the assumption that they had made. I accept that the appellants were responsible for some minor delays. But I consider that the respondents were responsible for a much greater share of the delay overall: there was the first application to strike out (which was only successful in part and ultimately reversed by later decisions of the court) which took up 5 months in 2019; their ultimately futile application to enter judgment on the counterclaim which wasted time and costs for almost a year from September 2019 to August 2020; and the 5 months they waited (from October 2020 to March 2021) before seeking to strike out the malicious prosecution claim on a basis that was known to them from the outset.

1. 1. So if we freeze time when DDJ Payne reached his decision in August 2021, it is easy to say that the delays were unacceptable. But those delays were, on any view, the responsibility of both parties, and primarily the fault of the respondents, for the reasons that I have explained. August 2021 was the time for the court to get these claims by the scruff of the neck, manage them together, and make clear directions leading to a prompt trial. It was not the appellants’ fault that a further two years were then lost down another procedural rabbit hole of the respondents’ making.

7.6 Summary

1. 1. For these reasons, I consider that the three elements of possible abuse alleged here – deception, oppression and delay – have not been made out. So if the rule in Henderson v Henderson did not apply, there was no freestanding abuse of process. Moreover, even if a less generous view is taken of the appellants’ conduct than that which I have set out above, I am in no doubt that this case has not come close to surmounting the high hurdle demonstrated by the authorities on striking out, which I have summarised at paragraphs 56 to 59 above. This is not on any view a case of abuse of process that could justify the striking out of an arguable, in-time claim.

8 CONCLUSIONS

1. 1. If my Lords agree then, for the reasons that I have given, this appeal will be allowed. The claim for malicious prosecution is reinstated. If the parties are unable to resolve their differences by way of mediation, then these claims must be listed for case management directions as soon as possible.