England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CHANI 96/1704/B

Royal Courts of Justice

Strand, London WC2

Thursday, 15th January 1998

B e f o r e :

LORD JUSTICE NOURSE

LORD JUSTICE PILL and

LORD JUSTICE THORPE

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GIRDHARIMAL CHORARIA

Plaintiff (Respondent)

-v-

NIRMAL KUMAR SETHIA

Defendant (Appellant)

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MR J MUNBY QC and MR H REZA (instructed by Messrs Minaides Robson, London WC2) appeared on behalf of the Appellant Defendant.

MR C MACDONALD QC and MISS C BURGIN (instructed by Messrs Selwyn Tash & Co., London N3) appeared on behalf of the Respondent Plaintiff.

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J U D G M E N T

(As Approved by the Court)

Crown Copyright

Thursday, 15th January 1998

LORD JUSTICE NOURSE: Broadly stated, the plaintiff's claim in this action is for sums of about US$645,000 and US$268,000 alleged to have been owed to him by the defendant since as long ago as June 1982 or before. On 4th April 1996 Deputy Master Weir dismissed the action for want of prosecution, but on 12th November 1996 his decision was reversed on an appeal to Mr Justice Rimer. With the leave of Lord Justice Peter Gibson the defendant now appeals against the judge's decision, relying primarily on the subsequent decisions of the House of Lords in Grovit v. Doctor [1997] 1 WLR 640 and of this court in Arbuthnot Latham Bank Ltd. v. Trafalgar Holdings Ltd. (16th December 1997 - unreported).

As stated more fully by the judge, the plaintiff's claim is for (1) repayment of a loan of US$645,436 allegedly made to the defendant on or about 4th March 1982 and repayable by 4th June 1982 and (2) US$268,297.50 allegedly due from the defendant as the unpaid price for 830 ounces of gold, title to which is said to have been delivered on 12th March 1982. It follows that in the ordinary course both claims would have become statute-barred by 4th June 1988 at the latest. The writ was not issued until 10th January 1990. However, as the judge put it, the plaintiff claims to overcome that difficulty by relying on a written acknowledgement dated 23rd December 1986, on which footing the limitation period did not expire until 22nd December 1992. The defendant denies that the transactions were entered into and claims that the acknowledgement was a forgery.

The judge said that the essential issues raised by the case fell within a narrow compass. He identified them to be: (1) was an oral agreement for a loan made in March 1982 and, if so, on what terms; (2) was the loan made to the defendant; (3) was an oral agreement for the sale of gold also then made; (4) was the title to the gold delivered to the defendant; and (5) is the 1986 acknowledgement genuine and, if so, did it operate to extend the limitation period? The judge added, at p.13G of the transcript:

"The issues are not complicated, although issue (5) was always going to require expert handwriting evidence. This is, however, by no means a heavy action. In December 1994 it was regarded as a two day case suitable for part two of the witness list."

Before the judge the defendant sought to strike out the action on two grounds, the second being the familiar ground under the second limb of Birkett v. James [1978] AC 297, namely inordinate and inexcusable delay on the part of the plaintiff giving rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendant. The judge dealt with the second ground first, prefacing his consideration of it with the significant observation that it was not alleged that there had been any contumelious conduct on the part of the plaintiff, i.e. conduct within the first limb of Birkett v. James .

Having fully and carefully reviewed the material events, the judge found that there had been inordinate and inexcusable delays in the prosecution of the action, totalling over four years since about April 1990. That finding has not been questioned by the plaintiff in this court. The judge then considered the defendant's case on prejudice and concluded that he had not discharged the requisite burden of establishing a substantial risk of relevant prejudice. He accordingly rejected the second of the two grounds relied on by the defendant.

The first ground was the plaintiff's failure to set the action down by 17th April 1995 in accordance with an order made by the master on 16th December 1994, for which purpose the defendant relied on RSC O.34, r.2(2). In considering that ground, the judge read a passage from the judgment of Sir Thomas Bingham MR in Costellow v. Somerset County Council [1993] 1 WLR 256, to which reference will be made in due course. Having said that the deputy master's decision to dismiss the action had been based on the view that the nature of the plaintiff's delays was such as to require the "special treatment" referred to by the Master of the Rolls, the judge expressed himself as follows at p.27D:

"I do not, for my part, agree that the case should be so regarded. The delays have been very serious in their extent and they have included the omission to comply timeously with an order for setting down. But, subject to one matter, I am not persuaded that the plaintiff's defaults were such as to remove the case from the ordinary run of want of prosecution cases into a case deserving special treatment. Failures to observe orders of the court, for example for the provision of particulars, etc., are unfortunately not a rarity but do not ordinarily justify the plaintiff being treated in a special way unless the breach is of a peremptory order. Nor do I consider that the mere fact that the delays in this case have been greater than is perhaps more commonly found requires the court to regard the case as falling into a special category."

I will refer to the reservation there made by the judge in due course.

In this court the defendant's case has been presented by Mr Munby QC, who did not appear below. His primary submission is that the conduct of the plaintiff has amounted to an abuse of the process of the court, so that the action falls to be dismissed on that ground alone (without the need to show prejudice to the defendant), either under the first limb of Birkett v. James or by an application of the independent principle which has now been authoritatively recognised in the two recent decisions referred to at the outset of this judgment. Since it is agreed that if this submission is made out the defendant will be entitled to succeed on the appeal, the argument has so far been confined to that question. We now give judgment on it.

The material passage in Lord Diplock's speech in Birkett v. James [1978] AC 318, is the following:

"The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g., disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or (2) [inordinate and inexcusable delay etc.]"

Until 1992 it seems to have been generally assumed that the test posed by this first limb could not be satisfied by any amount of inordinate and inexcusable delay, even where there had been numerous breaches of the rules or even disobedience to non-peremptory orders. However, in Culbert v. Stephen G. Westwell & Co. Ltd. [1992] 2 PIQR 54, 65, a case where it was held that prejudice had been established, Parker LJ, with the agreement of Nolan and Kennedy LJJ, added a further ground of decision:

"There is however in my view another aspect of this matter. An action may also be struck out for contumelious conduct, or abuse of the process of the court or because a fair trial of the action is no longer possible. Conduct is in the ordinary way only regarded as contumelious where there is a deliberate failure to comply with a specific order of the court. In my view however a series of separate inordinate and inexcusable delays in complete disregard of the rules of court and with full awareness of the consequences can also properly be regarded as contumelious conduct or, if not that, to an abuse of the process of the court. Both this and the question of fair trial are matters in which the court itself is concerned and do not depend on a defendant raising the question of prejudice.

In my judgment the way in which the action has been conducted does amount to an abuse of the process of the court and it would be a further abuse of process if the action were allowed to proceed."

Although there was no express reference to the first limb of Birkett v. James , it is clear that the further ground of decision was based on that limb.

Parker LJ's observations were referred to in this court in Teale v. McKay [1994] 3 PIQR 508, in Ashworth v. McKay Foods Ltd. [1996] 1 WLR 542 and, more recently, in Barclays Bank plc v. Maling (23rd April 1997 - unreported). Although they were not approved and adopted in any of those cases, nor were they disapproved. Indeed, having formed the basis of one of the grounds of decision in Culbert, they could not have been disapproved. Meanwhile this court had given its decision in Costellow v. Somerset County Council , in which it appears that Culbert was not cited.

In Costellow the principal concern of the court was to consider the position in the ordinary kind of case under the second limb of Birkett v. James where it is confronted not only with an application by the defendant to have the action dismissed but also with an application by the plaintiff for an extension of time. However, at [1993] 1 WLR 264F, Sir Thomas Bingham MR, having observed that cases involving procedural abuse or questionable tactics might call for "special treatment", said:

"So, of course, will cases of contumelious and intentional default and cases where a default is repeated or persisted in after a peremptory order. But in the ordinary way, and in the absence of special circumstances, a court will not exercise its inherent jurisdiction to dismiss a plaintiff's action for want of prosecution unless the delay complained of after the issue of proceedings has caused at least a real risk of prejudice to the defendant. ... Save in special cases or exceptional circumstances, it can rarely be appropriate, on an overall assessment of what justice requires, to deny the plaintiff an extension (where the denial will stifle his action) because of a procedural default which, even if unjustifiable, has caused the defendant no prejudice for which he cannot be compensated by an award of costs."

It was on the first part of that passage and the Master of the Rolls' reference to special treatment that the deputy master principally relied in dismissing the present action.

I now come to the two most recent decisions. Grovit v. Doctor was a libel action in which the deputy judge, in striking it out, had been quite satisfied on the evidence that the plaintiff had had literally no interest in actively pursuing the litigation, a view effectively adopted in this court where it was said that the evidence suggested that the plaintiff had intended to maintain a state of anxiety on the part of the defendants. At the beginning of his speech, with which Lords Goff of Chieveley, Nicholls of Birkenhead, Steyn and Clyde agreed, Lord Woolf referred to the two limbs or principles under Birkett v. James and pointed out that in that case the House had been concerned only with the application of the second. At p.642H, he said:

"Although principle (1) links abuse of process with delay which is intentional and contumelious, the prevention of abuse of process has by itself long been a ground for the courts striking out or staying actions by virtue of their inherent jurisdiction irrespective of the question of delay and Lord Diplock's statement of the principles does not affect this separate ground for striking out or staying proceedings."

At p.647F-G, Lord Woolf said:

"I am satisfied that both the deputy judge and the Court of Appeal were entitled to come to the conclusion which they did as to the reason for the appellant's inactivity in the libel action for a period of over two years. This conduct on the part of the appellant constituted an abuse of process. The courts exist to enable parties to have their disputes resolved. To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceedings is brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action. The evidence which was relied upon to establish the abuse of process may be the plaintiff's inactivity. The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution. However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v. James [1978] AC 297. In this case once the conclusion was reached that the reason for the delay was one which involved abusing the process of the court in maintaining proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings."

The abuse of process in Grovit v. Doctor was continuing litigation with no intention of bringing it to a conclusion. There is no suggestion of anything like that in the present case. However, the facts of "the Accountants Case" in Arbuthnot Latham Bank Ltd. v. Trafalgar Holdings Ltd. (I should state that we only have an unapproved transcript of the judgment) appear to have been very comparable to those with which we are here confronted. In that case the overall delay was nearly 11 years and in December 1992 the master had struck out the action, together with two other actions, although all three were later reinstated by the judge. The judgment of the court (Lord Woolf MR, Waller and Robert Walker LJJ) was delivered by the Master of the Rolls. At p.9 of the transcript, having referred to the facts I have recited, he said of the Accountants Case:

"Although there had not been a peremptory or an unless order made in this case which had not been complied with there had been a total disregard of the rules by both parties and the overall conduct of this case amounted to an abuse of the court. This was not a situation where the normal timetable provided for in the rules had been placed on one side by the action being adjourned as in Barclays Bank v. Maling . If an action has already been struck out, the duty on the party to comply with the rules if the action is restored is heavier than it would be if the action had proceeded dilatorily without a previous intervention of the court of this sort. The conduct of the defendant may also have been remiss. However, this is not a matter upon which the plaintiff can rely when there has been an abuse of process."

It is clear, as Mr Macdonald QC, for the plaintiff, accepts, that the dismissal of the action was affirmed on the ground that the conduct of the plaintiff had amounted to an abuse of process. That was the ground of the court's decision.

The real importance of Arbuthnot Latham in its application to the present case lies in the observations of the court which appear at the end of the judgment under the heading "The future". Earlier, reference had been made to the authorities from Birkett v. James onwards, it being acknowledged that delay alone , even delay of 11 years, does not amount to an abuse of process. The passage I have read from the judgment of Parker LJ in Culbert had also been quoted in full, it being observed that his comments were highly relevant in relation to the Accountants Case.

All the observations of the court under the heading "The future" are of importance. I will confine myself to reading two passages at p.10. The first is this:

"In Birkett v. James the consequence to other litigants and to the courts of inordinate delay was not a consideration which was in issue. From now on it is going to be a consideration of increasing significance. Litigants and their legal advisers must therefore recognise that in the future any delay which occurs will be assessed not only from the point of view of the prejudice caused to the particular litigants whose case it is, but also in relation to other litigants and the prejudice which is caused to the due administration of civil justice. The existing rules do contain time limits which are designed to achieve the disposal of litigation within a reasonable time scale. Those rules should be observed."

Then follows the passage which is the most relevant to the decision of the present case:

"It is already recognised by Grovit v Doctor [1997] 1 WLR 640 that to continue litigation with no intention to bring it to a conclusion can amount to an abuse of process. We think that the change in culture which is already taking place will enable courts to recognise for the future, more readily than heretofore, that a wholesale disregard of the rules is an abuse of process as suggested by Parker LJ in Culbert v Stephen Westwell (supra). While an abuse of process can be within the first category identified in Birkett v. James it is also a separate ground for striking out or staying an action (see Grovit v Doctor 642H to 643A) which does not depend on the need to show prejudice to the defendant or that a fair trial is no longer possible. The more ready recognition that wholesale failure, as such, to comply with the rules justifies an action being struck out, as long as it is fair to do so, will save much time and expense relating to questions of prejudice, and allow the striking out of actions whether or not the limitation period has expired."

Mr Macdonald submits that in Arbuthnot Latham this court only intended to state the law as it would be applied in regard to breaches of the rules or orders committed after that case had been decided. I am quite unable to accept that submission. The actual decision in the Accountants Case, the adoption of the observations of Parker LJ in Culbert and the terms of the third passage I have read from the judgment all combine to make it clear that the court was declaring the law as it was then and as it is now.

The law, as it applies to this case, may therefore be stated thus. Although inordinate and inexcusable delay alone, however great, does not amount to an abuse of process, delay which involves complete, total or wholesale disregard, put it how you will, of the rules of court with full awareness of the consequences is capable of amounting to such an abuse, so that, if it is fair to do so, the action will be struck out or dismissed on that ground. With regard to the facts of this case, I would add that a disregard of a non-peremptory order must, if anything, be a fortiori to a disregard of the rules.

That is the principle on which the court must now act. Whether it is identified as being comprehended within the first limb of Birkett v. James or as one having an independent existence appears to be a point of no importance. I have already said that it is clear that the relevant ground of decision in Culbert was based on the first limb of Birkett v. James . In other words, it was there effectively held that the plaintiff's conduct had been intentional and contumelious. In my view that conclusion was well justified on the facts of the case, which demonstrated not only the plaintiff's complete disregard of the rules but also his full awareness of the consequences. He had, at the least, been reckless as to the consequences of his conduct and, on general principles, that was enough to establish that the defaults had been intentional and contumelious.

I now turn to the facts of the present case. Mr Munby submits that there were at least ten separate periods of inordinate delay and breaches of the rules or non-peremptory orders committed by the plaintiff. The earlier breaches, which are not effectively disputed by Mr Macdonald, included, first, a failure to take out a summons for directions until 27th May 1992, two years after the time prescribed by the rules; secondly, a failure to answer interrogatories, which involved disobedience to two orders of the master, the second dated 13th March 1991, by which the plaintiff was required to answer them before 3rd April 1991. The failure was partial, but a third order was required in order to achieve full compliance, which did not take place until 11th August 1992. Thirdly, Mr Munby relies on a failure to serve a list of documents until 13th January 1995, four years and nine months after the time prescribed by the rules; fourthly, on a failure to take any steps in the proceedings between 21st July 1992 and 17th October 1994, when the plaintiff first served a notice of intention to proceed; and, fifthly, on a failure to take out the summons for directions until 16th November 1994, four and a half years after the time prescribed by the rules.

Serious though those breaches (especially of the two orders for interrogatories) clearly were, it is on the plaintiff's subsequent breaches that Mr Munby mainly relies. In order to put them in context I must start with the notice of intention to proceed of 17th October 1994, over two years having then elapsed since the plaintiff had taken any step in the action. On 15th November 1994, no doubt prompted by the service of that notice, the defendant served a summons to strike out the action for want of prosecution and on the following day the plaintiff took out the summons for directions to which I have referred. That summons came before Master Barratt on 16th December 1994, when certain directions were given, expressed to be without prejudice to the defendant's application to strike out. They included directions for the exchange of witness statements by 14th March 1995 and for the plaintiff to set down the action on or before 17th April 1995. The direction for the exchange of witness statements contained a further direction for copies to be lodged with the court upon setting down for trial. It appears that not only the plaintiff but also the defendant was in breach of the direction for the exchange of witness statements. However, it seems clear (and I do not understand Mr Macdonald to argue the contrary) that the combined effect of the two orders was that the plaintiff was obliged to set down the action on or before 17th April and at least to lodge copies of his own side's witness statements with the court by that date.

On 2nd February 1995, before the dates for performance of the orders had arrived, the defendant's application to strike out the action came before Master Barratt, when it was dismissed. At the end of his judgment, Mr Justice Rimer considered the possibility that the plaintiff had survived that application by making representations to the master to the effect that it would be unjust to dismiss the action as he was finally on the home straight towards trial and was about to set the action down. That was the reservation made by the judge to which I earlier referred. However, he was not satisfied on the evidence that any such representations were made and Mr Munby accepts that he cannot question the judge's view. He does, however, make two points. First, he relies on the evidence of the defendant's solicitor, who was present on 2nd February 1995, that the master expressed grave concern as to the delay that had occurred to date. Secondly, he points to the fact that the master did not give the plaintiff his costs in any event, but only in the cause. Mr Macdonald accepts that that shows that the master took the view that the plaintiff had been substantially responsible for the delay to date.

In clear breach of the order of 16th December 1994, the plaintiff failed to set the action down for trial on or before 17th April 1995 and to lodge his own witness statements with the court by that date. He had not taken those steps, or indeed any other step in the proceedings, by 7th February 1996 when he was obliged to serve another notice of intention to proceed. He had not taken them by 5th March 1996 when the defendant issued his second application to dismiss the action which is now before the court. It appears that the action was eventually set down at some time before that application came before the deputy master in the following month. The plaintiff's witness statements have never been lodged with the court.

On those facts, Mr Munby's assessment, deliberately worded, is that, given the need for expedition once the writ had been issued so late in the day, it was scandalous that a piece of litigation as straightforward as this should have found itself in the state that it did when it came before Mr Justice Rimer in November 1996. In particular, given that the plaintiff had escaped the striking out of the action at a time when the date for compliance with the order to set down had not arrived, it was scandalous that he did not comply with it until nearly a year after the due date and then only after a further application to dismiss the action had been issued.

In spite of Mr Macdonald's excellent argument to the contrary, I am quite satisfied that the plaintiff's conduct did amount to an abuse of process and that the action should be dismissed on that ground.

At this point I refer to the terms in which the deputy master expressed himself, which were in my view relatively mild and entirely justified. After referring to the judgment of Sir Thomas Bingham MR in Costellow ending with the passage I have myself read, he said:

"This is not a case of contumelious default but it is a case where delay and default have continued and persisted after some extremely serious steps had been taken only weeks previously by way of sanction. I do not think that it would take the matter any further to attempt to decide whether the repeated delay or the breach of the recent specific orders is the more serious factor; they are both part and parcel of the same failure, failure to do extremely necessary and urgent work. In so far as specific time limits were laid down by the orders, the Plaintiff's failure to proceed diligently with the action becomes all the more apparent and serious. I think this is a very striking example of what the Master of Rolls in Costellow had in mind as a case requiring special treatment - that is to say that the action may properly be dismissed without the Defendant having to establish a real risk of prejudice."

In my judgment the plaintiff's failure to comply with the order to set down for over a year after he had survived the first application to strike out was, at the least, a piece of breath-taking insouciance. Combining it with all the previous defaults, especially his failure to comply with two orders for interrogatories, I think that he acted in wholesale disregard of his obligations under the rules and orders of the court, the first application to strike out having made him fully aware of the consequences of his conduct. As Lord Justice Pill has pointed out, there might very well have been an implied representation by the plaintiff before the master on 2nd February 1995 that he would thereafter get on with the action and set it down as he had been ordered. At least there must have been an assumption on the part of all concerned that that would be the course which the plaintiff would take. The assumption was wholly falsified. He having acted recklessly as to the consequences, I think that the plaintiff's conduct was intentional and contumelious within the first limb of Birkett v. James and that justice requires that the action should be dismissed on that ground.

At the very start of his submissions Mr Macdonald pointed out, correctly, that Mr Justice Rimer's decision, having been given in the exercise of his discretion, can only be interfered with by this court if he acted on some error of principle or the decision was plainly wrong. Mr Macdonald submits that the judge did in effect consider the question of abuse of process in the passage I have read from his judgment starting at p.27D. I cannot accept that submission. It is, I think, important to bear in mind that the case was not presented to him as one of contumelious conduct. The point dealt with by the judge in that passage was one which arose from the deputy master's decision and his application of Costellow. As it has transpired, the deputy master's decision was entirely justified under the law as it has now been declared and I think that if it had been so declared before the matter came before Mr Justice Rimer he would very likely have affirmed the decision and not reversed it. But whether that be right or wrong, and while it is no fault of the judge, it must be said that his own decision was not given in accordance with the law as it has now been declared. Accordingly, it is both permissible and necessary for this court to interfere.

Mr Macdonald has also submitted that if this action is dismissed on these facts the door will be opened to a wholesale circumvention of the second limb of Birkett v. James . I do not myself see the matter in that way. I think it clear that the facts of the present case are of an exceptional nature. I certainly do not speculate on what other facts might or might not fall within the principle as it now stands. But I think that Mr Macdonald's fear that the decision in this case will open the door to a wholesale circumvention of the second limb of Birkett v. James is almost certainly misplaced.

Two further points must be mentioned. First, in the light of the observations in this court in Teale v. McKay and Ashworth v. McKay Foods Ltd. no criticism can attach to junior counsel for the defendant for not presenting the case to Mr Justice Rimer as one of contumelious conduct. Until the observations of Parker LJ in Culbert were adopted and approved in Arbuthnot Latham their authoritative status was far from established. Secondly, it is evident that the solicitors and counsel who now represent the plaintiff, not having been instructed until after the action had been dismissed by Deputy Master Weir on 4th April 1996, can have had no part at all in the conduct which has led to its dismissal.

For the reasons I have given, I would allow the appeal and dismiss the action.

LORD JUSTICE PILL: The present issue is whether, in the assumed absence of relevant prejudice to the defendant, the plaintiff's claim should be struck out for want of prosecution.

Mr Macdonald QC, for the plaintiffs, relies upon the continuing authority of Birkett v. James [1978] AC 297. In terms of failures to comply with orders of the court, the present case is not exceptional, he submits. Ordinary cases should not be struck out as an abuse of process when the procedure for dealing with them is provided by the second limb of the test in Birkett v. James stated by Lord Diplock at p.318E-G. To constitute an abuse there must be a deliberate affront to the authority of the court and incompetence and delay cannot constitute such an affront. The present case, he submits, does not cross the line between incompetence on the one hand and an affront to the authority of the court on the other.

Giving the judgment of this court in Arbuthnot Latham Bank Ltd. v. Trafalgar Holdings Ltd. (16th December 1997) Lord Woolf MR stated at page 10 of the unapproved transcript:

"It is already recognised by Grovit v Doctor [1997] 1 WLR 640 that to continue litigation with no intention to bring it to a conclusion can amount to an abuse of process. We think that the change in culture which is already taking place will enable courts to recognise for the future, more readily than heretofore, that a wholesale disregard of the rules is an abuse of process as suggested by Parker LJ in Culbert v. Stephen Westwell (supra). While an abuse of process can be within the first category identified in Birkett v. James it is also a separate ground for striking out or staying an action (see Grovit v Doctor 642H to 643A) which does not depend on the need to show prejudice to the defendant or that a fair trial is no longer possible. The more ready recognition that wholesale failure, as such, to comply with the rules justifies an action being struck out, as long as it is fair to do so, will save much time and expense relating to questions of prejudice, and allow the striking out of actions whether or not the limitation period has expired."

I do not accept Mr Macdonald's submission that the court in Arbuthnot was concerned only with future conduct of parties to litigation; that is, conduct following the decision in Arbuthnot. While guidelines were given for the future, the court upheld the striking out of the accountants' action in Arbuthnot and the counterclaim on the basis of the conduct of the parties in the case. Lord Woolf stated that there had been:

"... a total disregard of the rules by both parties and the overall conduct of this case amounted to an abuse of the court."

In the present case there had been a very long delay. There were numerous breaches of the rules by the plaintiff and three court orders were required before answers to interrogatories were provided. Lord Justice Nourse has set out the history of the litigation. The first application to strike out was made by a summons of 15th November 1994 against that background. After the service of the summons to strike out, the master gave directions on 16th December 1994, inter alia:

"That the signed witness statements of the oral evidence which each party intends to lead on any issue of fact to be decided at the trial of this action be exchanged by 14 March 1995, copies to be lodged with the court together with the pleadings upon setting down for trial. That the plaintiff do on or before 17 April 1995 set down this action in part 2 of the witness list."

These orders were stated to be "without prejudice" to the defendant's application to strike out the action. The application to strike out was heard on 2nd February 1995. The master had before him an affidavit of the plaintiff's solicitor. Describing the history of the action, the solicitor stated:

"On 16 December 1994 Master Barratt ordered that without prejudice to the defendant's application he would order directions [most important of all] that this action be set down for trial on or before 17 April 1995."

Mr Munby QC accepts, for present purposes, the judge's finding that in declining to strike out the action Master Barratt did not rely upon an express representation on behalf of the plaintiff that the action would be set down within the time required by the order. However, setting down is an important step in an action. The plaintiff's solicitor was plainly aware of the importance of setting down in this case against the earlier background and he acknowledged that in his affidavit. In declining to strike out the action, the master was aware of the order for setting down on or before 17th April 1995. In declining to strike out, he would, and should, assume the plaintiff's obligation to comply with that order. Had the matter been raised with the plaintiff, I have no doubt that the plaintiff's solicitor would have accepted unconditionally an obligation to set down in accordance with the order.

Mr Macdonald accepts that there was an expectation that the order would be complied with. No explanation has been given or attempted as to why the case was not set down. It was not set down for over a year after the time required. The obligation to comply with the order would rightly be assumed by the court which declined to strike out the action. An express undertaking to set down would in my judgment have been superfluous in the circumstances and the fact that no representation was made is in my judgment immaterial for present purposes.

Mr McDonald submits that only an honest intention to set down should be assumed and failure to set down was mere incompetence and not an abuse of the process of the court. I do not agree. Against the background in the present case of delays, non-compliance with rules and with orders, the failure to set down in compliance with the court order, when striking out of the action was decided upon an assumption that the order would be complied with, amounted to such an affront to the court as to be an abuse of process.

Mr Justice Rimer declined to strike out, reversing the decision of the master. He gave judgment in the case before the decision of this court in Arbuthnot. He considered whether the case was in a special class deserving special treatment adverse to the plaintiff; adopting, that is, the language of Sir Thomas Bingham MR in Costellow v. Somerset County Council [1993] 1 WLR 256. The judge held that there was no such requirement. He held that it might have been regarded as deserving special treatment had an assurance been given that the action would be set down. For the reasons I have given, the giving or not giving of an express assurance is not the critical factor on the present facts and for present purposes. It must have been the assumption of all concerned that the earlier order of the court would be complied with and this case is not one which should be treated in the ordinary way in Costellow terms.

I agree with Lord Justice Nourse that the appeal should be allowed and the action dismissed.

LORD JUSTICE THORPE: I am in complete agreement with both judgments.

Mr Munby convincingly demonstrates that the evolution from Culbert v. Stephen G Westwell & Co. Ltd. in 1992 through Grovit v. Doctor to Arbuthnot Latham Bank Ltd. v. Trafalgar Holdings Ltd. in 1997 establishes the principle that a wholesale disregard of the rules of the court, coupled with an awareness of the consequence, may amount to an abuse of process justifying an order striking out the action without the need to show prejudice to the defendant or that a fair trial is no longer possible. For the purposes of the determination of the first issue argued, we proceed on the footing that there is no prejudice to the defendant and that a fair trial is still possible. Thus the only question is whether the history reveals that wholesale disregard, coupled with an awareness of the consequence.

In my judgment Mr Macdonald's endeavours to present the facts as a run-of-the-mill case of inordinate and inexcusable delay are valiant but vain. If this case were indeed run-of-the-mill, it would be a condemnation of our civil justice system. For all the reasons stated by my Lord, Lord Justice Nourse, I agree that it is properly classified as exceptional. I only add that the setting down of the action, probably in April 1996, was not only a belated compliance with the order of 16th December 1994, but also a flawed compliance, since the witness statements were still lacking.

Mr McDonald submitted that it would be punitive and unjust to deny the plaintiff his right to trial in the absence of prejudice to the defendant and when a fair trial was still possible. But that submission conflicts with the reality derived from events both before and after the issue of the writ. The plaintiff asserts that he made a three-month loan to the defendant of about US$650,000 in March 1982 and that in the same month he sold him gold to the value of about US$270,000. Accordingly, the defendant has owed him over US$900,000 since at least June 1982. It would be hard to describe simpler commercial transactions. If a businessman conducts his affairs according to ordinary commercial practice, he calls for repayment on the due date. If requests for repayment prove unavailing, he sues. If he depends on the civil justice system for recovery, he co-operates with the system to recover his due debt as soon as possible. After more than 15 years, has this plaintiff any real commitment to recovery? I cannot see that it is either punitive or unjust to withdraw an option which he appears to have been so ambivalent in pursuing.

I, too, would allow the appeal.

Order: appeal allowed; order of Rimer J set aside and action dismissed; plaintiff to pay the defendant's costs of the action down to and including this appeal.