England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		11th April 2006

Mr Justice Calvert-Smith :

1. Between 1991 and 1993 more than £130,000 was withdrawn from a bank account of the Second Claimant at the Defendant bank. The monies were withdrawn under the signature of M Das who was, purportedly, a signatory to the account.
2. On 4 August 1997 the Second Claimant issued proceedings against the Defendant in the sum of £133,370 claiming that the Defendant had allowed those withdrawals in breach of their duty to the Second Defendants ("the first proceedings").
3. On 26 July 2000 Master Hodgson made an "unless order" in respect of certain matters in the first proceedings. In September 2000 the Second Claimant was made bankrupt.
4. On 6 October 2000 Buckley J struck out the first proceedings to comply with the "unless order".
5. On 1 December 2000 Buckley J heard an application to set aside the "unless order" and the order to strike out. The application was refused. Leave to appeal was also refused. According to the Second Claimant there is an appeal pending against those decisions although I was shown no evidence of this.
6. Subject therefore to the possibility of a live appeal pending since December 2000 the decision of 1 December 2000 brought the first proceedings to an end.
7. Two years later on 12 December 2002 the First Claimant issued proceedings (the second proceedings) against the Defendant and the Second Claimant. The subject matter of this claim was as has been conceded before me, the same as that in the first proceedings. It is wholly unclear what the First Claimant was alleging against the Second Claimant. This claim was never served on the Defendant.
8. Nearly two more years went by. On 12 November 2004, in the absence of the Defendant, but after hearing from the First Claimant and the Second Defendant in person Master Yoxall ordered the amendment of the claim form to add Mr Das, until then the Second Defendant, as the Second Claimant. The Defendant was ordered to serve its defence by 28 January 2005.
9. The order of Master Yoxall was served on the Defendant on 30 November 2004. This was the first notice the Defendant had of the second proceedings, by then nearly two years old.
10. On 20 December 2004 the Defendant received the amended statement of claim and supporting documents from the First Claimant and at once instructed solicitors, Mathews, Arnold, and Baldwin ("MAB"), albeit not the solicitors who had acted for it in the first proceedings.
11. On 21 January 2005 the Claimants wrote objecting to the instruction by the Defendant of MAB because of an alleged conflict of interest.
12. On 25 January 2005 the Defendant issued an application for to strike out the second claim, alternatively for summary judgment and the next day applied to Master Turner for further time to serve supporting evidence. This application was granted.
13. On 31 January the Claimants applied for and obtained judgment in default before Master Rose, who was clearly ignorant of Master Turner's earlier order, and a few days later of his own motion set the judgment in default aside.
14. On 24 February 2005, apparently for the first time since the claim was issued, the parties appeared together before Master Rose for a case management conference. The Claimants attempted without success to reinstate their judgment in default and were refused leave to appeal. They, or at least the Second Claimant, repeated their objections to MAB acting. The same day Ms Stothard made her first witness statement. This, with the documents produced to it, formed the basis of the Defendant's application before me.
15. The following day, without notice, the Second Claimant attempted without success to set aside Master Rose's orders.
16. On 29 April and 19 May 2005 there were hearings before Master Rose without notice to the Defendant who received notice of the May hearing the day after the hearing.
17. On 7 June 2005 the Claimants issued applications in respect of the conflict of interest point and for orders reversing the decisions of Master Rose.
18. On 9 June 2005 there was another case management conference with all parties present. The Second Defendant sought an adjournment of the hearing on the grounds that his dog was sick. There were three applications of which the Defendant was informed: (1) to set aside the order of Master Rose of 24 February setting aside the default judgment obtained by the Claimants; (2) to dismiss the bank's application for summary judgment and strike out; and (3) for an injunction to stop MAB acting for the Defendant. The Claimants were ordered to serve their application notices on the bank and on MAB and any evidence in support by 30 June 2005.
19. On 29 July 2005 a hearing of the Claimant's application for an injunction and the Defendant's application for strike out was adjourned by the court on paper because Mr Das had a problem with his feet.
20. On 10 August 2005 Ms Stothard produced her second statement. On 12 August 2005 Walker J ordered that the Claimants' and the Defendant's respective applications be heard together at the earliest convenient date.
21. On 13 October 2005 a date was fixed for the applications for 23 January 2006. In December the Claimants applied for an adjournment of that hearing on the grounds of the First Claimant's father's ill health. On 19 January 2006 the date was refixed for 14 March 2006.
22. On 13 March 2006 there was a further application by the Second Claimant before me, without notice to the Defendant, to adjourn the hearing for the following day on the grounds of the Second Claimant's father-in-law's ill health and against the hope that with a adjournment solicitors could be instructed on behalf of both claimants. I refused that application which was presented on behalf of the Claimants by Mr Das junior, the son of the Claimants.
23. I now summarise the matters before me for decision.

(a) The Claimants' application to injunct MAB from acting for the Defendant (see para 11 above);

(b) The Defendant's application to strike out the second claim alternatively for summary judgement (para 12 above);

(c) The Claimants' application to set aside the order setting aside the summary judgment (para 13 above);

(d) The Claimants' application for adjournment so as to be able to instruct solicitors;

(e) The Claimants' application for an order requiring their previous solicitors to produce the files from the first claim.

24. I now summarise my decisions:

(a) No conflict of interest has been made out so as to give rise to the granting of an injunction.

(b) The second proceedings amount to an abuse of the process of the court and must be struck out under Rule 3.4(2)(b) CPR.

(c) The second proceedings were brought outside the limitation period for such proceedings and must be struck out on that ground too.

(d) In the alternative, for these and other reasons, the claim discloses no real prospect of success and there must be summary judgment under Part 24 CPR.

(e) The application to set aside the order setting aside the order for summary judgment is misconceived and totally without merit.

(f) Because of the decisions at (a) – (c) above the application to strike out the Defendant's application is likewise totally without merit.

(g) Applications concerning the papers with previous solicitors and the possible instruction of new solicitors are likewise totally without merit.

Conflict of Interest

25. MAB were first instructed in the second proceedings in December 2004. In January 2005 the Defendant discovered that the Second Claimant might be bankrupt and tried to ascertain the true position. They were informed that he remained undischarged. In fact it now appears – from a document produced to me during the hearing – that the bankruptcy was discharged in September 2004. (In explaining to me why he had applied to amend the statement of claim to show him as a complainant rather than a defendant the second claimant said that it was because of his discharge from bankruptcy.)
26. In January 2005 before the position was completely clear to the Defendant the Second Claimant wrote objecting to MAB representing the Defendant because they were acting as the solicitors for the Trustee in Bankruptcy in respect of the Second Claimant's bankruptcy. What had happened was that the solicitor instructed by the Trustee had left the firm for which she worked in March 2004 and had taken the Das bankruptcy file with her to MAB.
27. The Defendant's solicitors immediately examined the position. Having not been involved in the first proceedings they had no reason to know of the bankruptcy. Both clients, the bank and the Trustee in Bankruptcy were informed. Neither claimed a conflict of interest and both expressed their consent to MAB continuing to act. Steps were taken to ensure that the individual solicitors concerned had no contact beyond the initial joint decision to inform their respective clients.
28. One of the matters put forward in support of the Defendant's application was a claim that Mr Das was still incapable of bringing this claim since even though his bankruptcy has never been discharged the Trustee in Bankruptcy has not assigned the proceedings to him. Mr Das complained that as a discharged bankrupt he had every right to bring them. In deciding the abuse of process application I have not found it necessary to decide whether the Defendant's contention is valid. If it is valid I find that there is no conflict of interest disclosed such as to trigger injunctive relief. First, the two clients perceived no such conflict and second, they consented to MAB acting. If however the contention is wrong then there can be no possible conflict since the Defendant's relationship with MAB in connection with these proceedings began three months after the Second Claimant's discharge from bankruptcy. In fact shortly before the proceedings before me the solicitor concerned with the bankruptcy matter left MAB to work elsewhere and took the file with her.

Abuse of Process

29. I summarise the points made in support of the application by counsel for the Defendant:

(a) The second proceedings amount to an attempt to relitigate the first proceedings. Such changes in the subject matter as there are are cosmetic. The other matters argued amount to attempts to appeal against the original judgment of Mr Justice Buckley and do not amount to reasons for instituting fresh proceedings.

(b) The addition of Mrs Das as the First Claimant is also cosmetic. If she has or had an interest in the account, which was not a joint account but to which she was signatory, there is no reason for her not to have been a claimant in the earlier proceedings.

(c) The second claim makes unparticularised allegations arising from the same facts of defamation and loss of profits, neither of which were alleged in the first proceedings but both of which could have been.

(d) The allegation that the Second Claimant was unaware of the hearing before Mr Justice Buckley on 6 October 2000

(i) Has no bearing on the issue of abuse;

(ii) Is not born out by the facts;

(iii) Was a matter before Buckley J when he heard the Second Claimant's application to set aside his order on 1 December 2000; and, in addition

(iv) In fact it had been made clear in correspondence to the Second Claimant that he must attend the hearing on 6 October 2000.

(e) The new evidence alleged to exist was all in the hands of the Claimants before October 2000 and, in any event, it has no bearing on the issue of abuse.

(f) The pattern of unilateral action by the Claimants in both proceedings, and of barely credible reasons for asking for adjournments up to and including this hearing, lends support to the proposition that the Claimants are and have been manipulating the process of the court.

30. Against that the Claimants argue that:

(a) Since the proceedings were struck out for procedural failing rather than after a decision on the merits the court should be slow to hold that the second proceedings are an abuse of the process;

(b) That the second proceedings are significantly different from the first;

(c) The Defendant's own behaviour has been such as to frustrate or conceal evidence which supports the claim and that the Defendant should not be allowed to benefit from such behaviour;

(d) For much of the first and all of the second proceedings allowance should be made for the fact that the Claimants are not lawyers and have suffered the further handicap that papers which are still in the hands of their original solicitors may have advanced their case.

Abuse of Process – the Law

31. In argument I was referred to a number of cases;

Johnson v Gore Wood [2002] 2 AC 1

Meretz Investments & Another v ACP Ltd [2006] EWHC 74 (Ch)

Re Norris [2001] 1 WLR 1388

Arnold v National Westminster Bank plc [1991] 2 AC 93

Two passages from the speeches of their lordships in Johnson v Gore Wood were relied on in particular:

"It may very well be, as has been convincingly argued (Watt, "The Danger and Deceit of the Rule in Henderson v Henderson: A new approach to successive civil actions arising from the same factual matter" (2000) 19 CLJ 287), that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made, which was addressed to res judicata. But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before." [pp 29-30]

"However this may be, the difference to which I have drawn attention is of critical importance. It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen's right of access to the court conferred by the common law and guaranteed by article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression. In Brisbane City Council v Attorney General for Queensland [1979] AC 411, 425 Lord Wilberforce, giving the advice of the Judicial Committee of the Privy Council, explained that the true basis of the rule in Henderson v Henderson 3 Hare 100 is abuse of process and observed that it "ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation"."

[p 58]

32. The withdrawals the subject of the second proceedings are the same withdrawals as in the first, the failures alleged against the Defendant are the same failures to check that the signatory to the withdrawals was indeed an authorised signatory and to make enquiries of the account holder before allowing those withdrawals. The additional allegations – of defamation of the 1^st Claimant, and consequential damages on behalf of both Claimants are without any evidential foundation and could in any event have been pleaded in the first proceedings.
33. In reaching my decision I have had well in mind the difficulties facing an unrepresented litigant in person trying to bring proceedings against a well-resourced bank such as the Defendant. I have also had in mind conduct which a party represented by solicitors and counsel might be thought reprehensible would not be understood to be reprehensible by an unrepresented party. Having made those allowances, I do find that the second proceedings are indeed an attempt to relitigate the first proceedings, that the conduct of the Second Claimant in both proceedings has been marked by continued procrastination and that the alleged differences between the two claims are indeed cosmetic and designed to justify what is in effect a disguised appeal against the order of Buckley J.
34. The First Claimant as a new feature in the second proceedings:

(a) If the First Claimant had an interest in the account she could have been joined in the first proceedings;

(b) If, as the Claimants contend, she did not join in the first proceedings for cultural reasons the fact is that, as between the Defendant and the Claimants, the claim is identical. There was no reason, as there was in Johnson v Gore Wood, for the Second Claimant not to take part in the first action.

(c) In any event, on the assumption that the First Claimant did have an interest in the account, she would have been a beneficiary under a trust with the Second Claimant as trustee for both claimants. A beneficiary may not relitigate matters already litigated by a trustee – see Meretz.

35. New evidence and the Defendant's behaviour:

In truth there was no new evidence to which my attention was drawn which had emerged either between October 2000 and December 2002 or subsequently. No evidence – as opposed to allegations in court – was produced to support the contention that the late production of any evidence by the defendant was deliberate or that it had prevented the claimants from pursuing the first claim.

36. Procrastination:

(a) There was a delay of two years between the order of Buckley J and the issue of the second proceedings;

(b) The second proceedings were not served on the Defendant until almost two years had elapsed from their issue and, following an amendment to the statement of claim which had itself been made without notice;

(c) In spite of orders of the court and many written requests from the Defendant's solicitors the Claimants failed to serve all of their application notices in these proceedings on the Defendant;

(d) The Claimants failed to attend hearings to fix the trial of the applications pleading ill health;

(e) The day before the first day of the hearing before me the Claimants' son appeared without notice to request an adjournment on the grounds of his grandfather's ill health and his parents' consequent emotional state. In fact the Second Claimant appeared before me on both the following day and on the resumed hearing and took an active part in the proceedings. He addressed me in person and he was clearly instructing his son who acted as his spokesman, with my leave.

(f) An examination of the first proceedings from the "unless order" until the final disposal by Buckley J paints a very similar picture. In particular, no attempt was made to comply with or set aside the "unless order" in the 28 days set down for compliance. The hearing of 6 October 2000 was well known to the Second Claimant who attempted to "duck the issue" by using his recent bankruptcy as an excuse. The claim now made that that hearing was held without notice to the Second Claimant is simply false.

Limitation Period

37. The parties agree that, in accordance with the principle set out in National Bank of Commerce v National Westminster Bank [1990] 2 Lloyd's Reports 514 and Bank of Baroda v Mahomed (CA), The Times 10 December 1998. The limitation period in this case, in which breach of contract by wrongful debit is alleged, is 6 years and, at the latest, runs from the date of the first demand for repayment and that on the assumption that the First Claimant had a beneficial interest in the account giving her a right to sue, the first demand by the Second Claimant was in effect a demand on behalf of both claimants.
38. The Claimants maintain that the first demand was the statement of claim in the first proceedings dated 4 August 1997. The Defendant maintains that the first demand was that referred to by the Second Claimant in his statement in support of the first claim namely 19 February 1996. That demand, as set out in the same statement, was effectively repeated on many occasions during 1996 in particular in correspondence from June to September of that year.
39. The second claim was issued on 12 December 2002.
40. The Claimants point out that the documents referred to in the Second Claimant's statement are not before this court. They submit that the letter of 19 February 1996 was or may have been "without prejudice", and referred me to the cases of Bradford & Bingley v Rashid [2005] EWCA Civ 1080 and Rush & Tomkins v Greater London Council [1981] AC 1280.
41. I therefore find that letter of 19 February 1996 and the subsequent correspondence did amount to demands for repayment and mean that the second claim is time barred. This letter, unlike the correspondence in Bradford & Bingley v Rashid, is not relied on by the Defendants as constituting an admission of liability. On the contrary, it contains as assertion of liability and a threat that unless payment is forthcoming the Claimant will refer the matter to the banking ombudsman.
42. In addition to the submissions on abuse of process and limitation, the Defendant sought to challenge the second proceedings on two further grounds.
43. First, they submitted that since the second, unamended claim, of 12 December 2002 was not served on the Defendant within 4 months as required by CPR 7.5(2), it had lapsed by the time of the hearing before Master Yoxall two years later. It was submitted therefore that the purported amendment of 12 November 2004 was to a dead claim and that the amendment to it and the order to re-serve the claim could not bring it back to life.
44. While the point may be valid, in view of the abuse of process and limitation period matters which were fully argued and occupied three times the time originally allocated for this hearing; and because the Second Claimant and his son had not had notice that this point was to be taken I did not hear argument upon it and make no decision as a result.
45. Second, the Defendant submitted that as an undischarged bankrupt the Second Claimant had no standing to bring the second claim. As indicated earlier, I did not make a decision on this matter. Even if it had been decided against the Second Claimant it would not have affected the First Claimant's right to bring a claim if the claim was neither an abuse of process nor time-barred.

The Claimants' Further Applications

46. The judgment in default was obtained in breach of the orders of Master Yoxall and Master Turner on 12 November 2004 and 26 January 2005 respectively. It was also obtained after the Defendant had issued its application for the summary judgment on 25 January 2005. Master Rose therefore had no alternative than to set aside the order for summary judgment (CPR 12.3(3)).
47. Applications for adjournment based upon the possibility of instructing fresh solicitors in respect of these applications and the claim generally:

I have considered the position carefully both when the Claimants' son appeared before me on 13 March 2006 and at the two hearings on 14 March 2006 and 24 March 2006. Two possibilities were put before me. One firm of solicitors wanted time to consider whether they would act on a conditional fee agreement basis. Another suggested that given time they may be able to act for the Claimants if the Legal Services Commission were to grant legal aid and the Claimants' previous solicitors returned such files as they still have.

48. This case, in one form or another, has been going on for nearly 10 years. For more than two years the Claimants had solicitors representing them during the first proceedings. More than 5 years have elapsed since the Second Claimant parted company with those solicitors. The second claim was issued, apparently without the benefit of legal representation, and the various applications, including that for judgment in default were made by the Claimants (or one of them) in person. This application, made after this hearing has already been adjourned at the Claimants' request on a number of occasions since July 2005, is in my judgment another recourse to the sort of procrastination which has characterised the Second Claimant's conduct throughout both proceedings.

Conclusion

49. Accordingly I make the order sought by the Defendant that the proceedings be struck out under Rule 3.4 CPR and to award summary judgment against the Claimants. I refuse the applications of the Claimants.