CAN A COURT STRIKE OUT A CASE ON THE GROUNDS THAT THE CLAIMANT HAS NO REAL INTENTION OF PROCEEDING TO TRIAL? IT CAN – BUT NOT IN THIS CASE
In Lloyd v Hayward & Anor [2024] EWHC 2033 (Ch) HHJ Keyser KC (sitting as a Judge of the High Court) considered the question of whether the delay in the progress of an action should lead to it being struck out as a abuse of process. The judgment contains a detailed consideration of the principles and case law relating to “Grovit” abuse – where a litigant is conducting litigation with no real intention of proceeding to trial. The case also shows that a defendant, bringing a counterclaim, has particular difficulties when seeking to argue abuse of process in this context. The duty to proceed on the counterclaim is similar, if not identical, to the duty to proceed on the claim.
“I note that the defendants have counterclaimed in these proceedings and are to be regarded as claimants for the purpose of the counterclaim. Any points that can be taken against the claimant in respect of delay or warehousing can, as it seems to me, be taken equally against the defendants.”
“Grovit abuse is not about stealing a march: it is about not wanting to march at all.”
THE CASE
The claimant brought an action relating to issues arising from a partnership and/or joint venture in relation a business park. Pre-action disclosure was sought in 2017, proceedings were issued in 2020 and a defence and counterclaim served in October 2020. A reply to defence to counterclaim was served in November 2020. There was then a stay for one month and a period of procedural inactivity (but some correspondence) until a CCMC was listed for a hearing on 26 March 2024. On 24 March 2024 the defendants applied to strike out the case. The CCMC was adjourned with the defendants being ordered to pay the claimant’s costs.
THE BASIS OF THE DEFENDANTS’ APPLICATION
“The basis of the application, in a nutshell, is that the claimant (so it is said) has, or at various times has had, no genuine intention of taking his claim to trial.” It was said that this amounted to an abuse of process.
THE JUDGE’S CONSIDERATION OF THE LAW
The judgment contains a detailed consideration of the rules, relevant principles and relevant authorities. The issue was whether litigation was being conducted with no real intention of taking the matter to trial, following the decision of the House of Lords inGrovit v Doctor [1997] 1 WLR 640.
“Grovit abuse is an inherently serious matter, both because it involves a subjective intention that is repugnant to the proper conduct of litigation and because of its effect on the efficient administration of the justice system as a whole and individual cases in particular. The overriding objective itself identifies the need to ensure that cases are dealt with expeditiously and fairly and the importance of having regard to the resources of the court and the calls of other court users. Further, the jurisdiction to strike out for Grovit abuse specifically does not depend on prejudice to the defendant in the particular case. For my part, I should be hesitant to say, with the deputy judge in Quaradeghini, that it will be “relatively rare” that the court will respond in the first instance by striking a claim out; I should be equally reluctant to call strike-out the “normal” approach. Sometimes it will be the just and proportionate response and sometimes it will not be. This is a matter for the court in the light of all the circumstances of the case.”
THE JUDGE’S DECISION IN THIS CASE
The judge addressed two issues:
- Was there an abuse of process in this case ?(The judge found that there was not).
- If there was an abuse of process should the action be struck out? (The judge found it should not).
The judge found that there had been inordinate delay. Some of this was due to the court’s own failure to list a CCMC. The delay did not provide evidence that the claimant had no intention of taking the matter to trial. Further the counterclaiming defendant was also under a duty to progress the counterclaim.
“Discussion
Is there abuse of process?
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- By way of preliminary observation, I note that the defendants have counterclaimed in these proceedings and are to be regarded as claimants for the purpose of the counterclaim. Any points that can be taken against the claimant in respect of delay or warehousing can, as it seems to me, be taken equally against the defendants. When I asked Mr Healey to tell me his position on this, he asked to take instructions. The response, as I understood it, was that the defendants accept that, if the claim were to be struck out, so should the counterclaim be; though the defendants have not gone so far as to concede that, if it were inferred that the claimant’s subjective intentions gave rise to abuse of process, it ought also to be inferred that their intentions did also. In my view, however, if the claimant’s conduct of the claim were found to constitute an abuse of process, the corresponding inactivity of the defendants would at least be relevant to a consideration of the sanction that would be appropriate to impose upon the claimant.
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- The period of inactivity that could itself constitute abuse of process has to be post-commencement. Although the defendants complain of delay, or at least lack of promptness, between the issue of the claim form and service on the defendants, the period requiring serious consideration is between May 2021 and December 2023. That was an inordinate period of delay or procedural inactivity. The basic question is whether the reason for it was that the claimant lacked an intention to bring the proceedings to a conclusion. I agree with Mr Healey that the reason for this period of delay is the “key to this application” (skeleton argument, paragraph 40).
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- Any pre-commencement delay (that is, prior to April 2020) is relevant at this stage of the enquiry only insofar as it is of assistance in enabling the court to draw inferences as to the subjective intentions of the claimant during the period of post-commencement delay. I do not consider that the pre-commencement delay in this case is evidence from which subsequent lack of the intention to pursue the claim can properly be inferred, though it could perhaps support such an inference drawn on other grounds. The parties maintained an amicable working relationship until September 2017, so it is hardly surprising that no proceedings were brought before then. Further, Mr Healey conceded that, for the purposes of this application, the court ought to proceed on the assumption that the claimant’s case as to the termination of the partnership or joint venture (namely, that it occurred in September 2017 at the earliest) is correct. Thereafter the claimant took prompt steps to obtain documents in support of a prospective claim. The period of inactivity between October/November 2018 and April 2020 is relevant, and it does appear to indicate some nervousness about incurring costs in the pursuit of the proposed claim. Such nervousness is, however, understandable in the light of the defendants’ initial estimate of the costs of disclosure. (In the defendants’ Precedent H dated 4 March 2024, the total under the Disclosure phase was £22,290. I cannot avoid the suspicion that the estimate in the pre-action disclosure provisions was given in terrorem.) Anyway, the claimant did eventually decide to commence the claim.
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- Once the proceedings had been commenced, the claimant gave proper indications of an intention to pursue them. After April 2021, however, the claimant did nothing of a procedural nature to advance the claim until December 2023. I do not find that this was due to an intention not to pursue the claim to a conclusion.
1) As Eyre J observed in Morgan Sindall at [35]-[36], the distinction between warehousing and undue delay, though fine, is real and turns on the claimant’s intentions; the court must guard against making undue assumptions.
2) The court failed in its responsibility to list a CCMC. This does not excuse the claimant’s inaction, because the claimant could have queried the position with the court and requested it to list a CCMC well before he actually did so in December 2023. (So too, of course, could the defendants.) Nevertheless, it was the court that was required to list the CCMC; the court’s failure to do so, coupled with its failure in the order dated 7 January 2021 to make any provision for what should happen at the end of the stay, meant that the proceedings were actually in limbo. If the court had actively managed the case from the outset, as it was obliged to do, the procedural delay could not have occurred. I accept that there is some force in Mr Healey’s point that the opportunity for Grovit abuse will commonly only exist where there is some failure by the court to keep a firm hold of the management of the case. Even so, the court’s failure in this case provides at least a context for considering the claimant’s procedural inaction and it is, in my view, relevant to a consideration of the inferences as to the claimant’s subjective intentions properly to be drawn from that inaction.
3) Also relevant is that the defendants were not pressing for the proceedings to be taken forward. Indeed, for a period of nearly two years, between April 2021 and April 2023, they appear to have (so to speak) pulled down the shutters; more than that, they left a threat of an application for summary disposal hanging in the air, at least so far as the claimant was concerned. The defendants’ unresponsiveness during this period seems to me to be relevant when deciding what may properly be inferred about the claimant’s intentions at the time.
4) In her witness statement, Ms England states (paragraph 43):
“Mr Redfern had been so adamant that a strike out application would be forthcoming that we did wait to receive this before taking any additional steps in order to avoid costs being incurred.”
That is to put the matter too strongly—Mr Redfern’s letter of 23 April 2021 implied the possibility that the defendants would backtrack on their stated intention; anyway, Ms England could always have asked for confirmation whether the application would be made—but I do accept that the intimation of an application for summary determination probably led the claimant to a “wait and see” approach. Ms England further states (paragraph 41):
“Following a further period of silence on the part of the Defendants’ solicitors, from about August or September 2022, we went about collecting evidence from a number of different witnesses on behalf of the Claimant. That witness evidence forms the basis of the evidence that the Claimant will rely on. We also regularly consulted counsel during that period.”
Some additional support for this is provided by the claimant’s Precedent H, which shows that by 29 February 2024 the claimant had incurred costs of £121,000, including £11,000 in respect of disclosure (as against £8,000 for estimated costs) and £22,000 in respect of witness statements (as against roughly the same amount for estimated costs). The incurred costs for these phases included disbursements in respect of counsel: £1,087.50 for disclosure, and £5,312.50 for witness statements. By themselves, the figures in the Precedent H do not prove precisely when the costs were incurred; even so, they are consistent with the evidence in Ms England’s witness statement. Although the use of this period to collect evidence does not justify a failure to take steps to obtain the listing of a CCMC, it does suggest that the procedural inaction was not due to a lack of intention on the claimant’s part to take the claim to final resolution. Mr Healey submitted that to use the period to gather evidence made matters worse: he said this was a case of stealing a march on the defendants (skeleton argument, paragraph 43). There is nothing in that objection: the defendants were just as able as the claimant to ask the court to list a CCMC, and if they chose to use the interim to sit on their hands without doing anything to prepare their case that is their own lookout. Further, Grovit abuse is not about stealing a march: it is about not wanting to march at all.
5) During the period of inordinate delay (May 2021 to December 2023) the claimant was not entirely silent vis-à-vis the defendants. Ms England wrote regarding mediation on 28 June 2021 but received no reply. She wrote again on 7 March 2022 and received a fairly impolite reply. The claimant’s solicitor wrote, without prejudice save as to costs, in April 2023. By themselves, these (somewhat desultory) communications do not prove an intention to progress the case. It would be wrong, however, to take the period as one of pure silence, and the silence was only ever broken by the claimant.
6) In December 2023 the claimant asked the court to list a CCMC. That is itself evidence of an intention to pursue the claim. It is possible that such an intention could have supervened upon a prior intention not to pursue the claim. However, the claimant’s conduct in and after December 2023 does not itself support an inference that the claimant had previously not intended to pursue the claim. Further, the claimant’s request for a CCMC was of his own volition: he was not being pressed by the defendants or threatened with an application to strike out for abuse of process. This piece of positive evidence of an intention to pursue the claim is available courtesy of the defendants’ wholescale inaction, in that it would not have been available if they had made the application in, say, November 2023; to that extent, the defendants might be said to be hoist by their own petard.
EVEN IF THE CLAIMANT’S CONDUCT DID AMOUNT TO AN ABUSE OF PROCESS THE JUDGE WOULD NOT STRIKE OUT THE CLAIM
If there were an abuse of process, what should be the response?
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- If I thought that the claimant’s conduct did amount to abuse of process, I would not strike out the claim. My views as to the correct approach in law appear sufficiently from what I have already written. In considering all the circumstances of the case, I mention in particular the following matters.
1) Any Grovit abuse and post-commencement delay have occurred because of the court’s failure actively to manage the case and to list a CCMC. Even assuming that the claimant’s conduct was nevertheless abusive, this factor is of considerable significance in considering what response is just and proportionate.
2) If the claimant abused the process of the court, so did the defendants, who stood as claimants on their counterclaim.
3) Further, the defendants’ conduct of the proceedings, in respect in particular of the extended disclosure exercise, the response to communications from the claimant’s solicitors and the response to the court’s failure to list a CCMC, has been both dilatory and poor. Even if the counterclaim is ignored, the very best that could possibly be said for the defendants is that they were content to let sleeping dogs lie—something that is no longer acceptable.
4) The present application was not made promptly; indeed, it was made so late as to cause the CCMC to be abortive. (Cf. Morgan Sindall at [104].)
5) Even if it were to be accepted that the claimant formerly lacked the intention to pursue the proceedings, the evidence is that he now has that intention and, indeed, has spent a considerable amount of money on the litigation. That would not mean that there was no abuse of process at the former stage. But it is relevant to a consideration of the just and proportionate response to any such abuse in the altered circumstances, particularly where the claimant’s change of mind must be considered spontaneous and is not a mere reaction to an initiative taken by the defendants.
6) There is no real evidence of prejudice by reason of the delay. If the defendants’ ability to deal with witness evidence is harmed by their own inaction in 2022 and 2023, that is the consequence of their own choice. Lack of prejudice is not relevant to the existence of abuse, but it is capable of being relevant to the exercise of the court’s discretion in the face of abuse and in my view it would be relevant here.
7) The court now has a hold of these proceedings and can manage them in a way that ensures their prompt and efficient progression to trial. Had it not been for the present application, the CCMC would have taken place and the necessary directions would have been given.
Conclusion