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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		The Law Courts Openshaw Place, Preston PR1 2LL
		11/03/2009

Mr Justice DAVID CLARKE:

Introduction

1. At the conclusion of the hearing on 24 February 2009 I announced that I would grant the Defendants' application to strike out this action as an abuse of the process of the Court, but that I preferred to put my reasons into writing in a clear and concise form. This I now do.
2. This is the second action brought by the Claimants against the Defendants, claiming damages for breaches of professional duty owed by the Defendants to the Claimants in connection with previous litigation eventually settled in October 2000 on a "drop hands basis". That previous litigation comprised a number of actions or potential actions arising from economic damage allegedly caused to the Claimants and their company, Coverhills Ltd, by the operation of an illegal cartel and/or conspiracy on the part of motor manufacturers and parts distributors. Those original proceedings had been in existence since 1992 and the Defendants were the third firm of solicitors involved on the Claimants' behalf. The proceedings were in a difficult procedural state when the Defendants assumed conduct in May 1996.
3. In April 2003 an action against the present Defendants was launched in the Queen's Bench Division in the Royal Court of Justice. I shall refer to this as "the first action". It too has had a highly complicated procedural history. Apart from the period from 4 March 2004 to 28 September 2005 when Abbotts were on the record as their solicitors, the Claimants have been litigants in person. The procedural history is full set out in the chronology on page 37 of bundle FAC1 and does not need to be repeated.
4. For present purposes it is important to have regard to the present status of the first action. It arises from the proceedings before Master Eyre on 18 October 2005 and the orders made by him on that day and on 5 January 2006. The latter order was made without a hearing, both parties being content with that course, but the Master provided written reasons for his decision.
5. Before October 2005 there had been a number of hearings before the Master in relation to the state of the pleadings. The Particulars of Claim had been served on 5 October 2004 claiming some £8m damages from the Defendants. That pleading was very long and was regarded by the Defendants, rightly in my view, as confused and difficult to follow. Their interpretation of the claims set out in the pleading was that they were three in number, as follows:

"Claim 1: alleged that the Defendant, in conducting the original litigation, failed to identify and take into account an allegedly significant limitation date of 20 June 1997 (which was said to be 6 years after the Claimants discovered the original Defendants' deliberate concealment per section 32 of the Limitation Act 1980); the Claimants alleged that the Defendant should have taken various steps to issue new actions and/or cure difficulties with the existing issued claims before that date;

"Claim 2: alleged that the Defendant failed to inform the Claimants of a Part 36 Offer of £705,000 made in March 2000 in the original litigation.

"Claim 3: alleged that the Defendant negligently conducted the professional negligence actions that followed on from the demise of the original litigation on a drop hands basis."

6. A Part 18 Request was served with the Defence on 29 April 2005 and a Case Management Conference ("CMC") took place before the Master on 23 June 2005. On that occasion the Master ordered that as well as answering the Part 18 Request, any proposed amendment to the Particulars of Claim should be served by 21 July 2005. A further CMC was fixed for 17 August 2005.
7. By that date the Claimants had served a Reply which dealt, in part at least, with the Part 18 Request, and in particular appeared to abandon any separate claim under (c) above. Accordingly the Defendants applied for the relevant paragraphs of the Particulars of Claim to be struck out at the resumed CMC.
8. On 17 August 2005 the Master struck out those paragraphs (by consent of counsel then appearing for the Claimants) and directed that the Claimants serve by 21 September 2005 a fresh pleading reflecting that order. On that day the Claimants purported to do so but the fresh pleading appeared to resurrect the deleted allegations and was again long and (in the view of the Defendants) confusing and difficult to follow.
9. On 18 October 2005 the matter came back before the Master, who accepted the substance of the Defendants' complaint. In a carefully drawn order, he directed as follows:

" IT IS ORDERED THAT

1. The application be refused, save as follows;

2. There be liberty to the Claimants to restore the application by no later than the 30^th November 2005 for hearing on notice, provided they comply with the following requirements:

(1) The Claimants must by no later than the 15^th November 2005 file and serve on the Defendants new draft Amended Particulars of Claim.

(2) There must be no reference in that new draft to the allegations already struck out, and in particular to the intended actions for professional negligence against former solicitors.

(3) The Claimants must set out their allegations:

[The order then specified the precise requirements of a concise pleading.]

3. The action be stayed FORTHWITH pending further order.

4. The Claimants pay the Defendants' costs of today, assessed summarily at £2,000."

10. This made clear to the Claimants, who were by now once again litigants in person, precisely what they were required to do. The Claimants thereafter provided two fresh drafts, one dated 8 November 2005 and the second dated 22 November 2005, on which date they also issued an application notice seeking a stay of the proceedings (notwithstanding that the action was already stayed at that date) pending an application to the European Court of Human Rights.
11. The Defendants took the view that the fresh pleadings again failed to comply with the requirements of clarity and conciseness, and with the Master's specific directions, and wrote to the Court accordingly. On 5 January 2006 the Master, considering the matter without a hearing (as to which both sides had consented), dismissed the application to amend the Particulars of Claim and confirmed that the action remained stayed until further order. He provided written reasons, recording as follows:

"1. The Claimants have now set out their allegations in a draft consisting of some 90 paragraphs, covering at least 20 pages of text. Even then, the Claimants seek in the draft to refer additionally to no fewer than 5 volumes of copy documents.

2. The allegations are set out:

(1) At enormous length;

(2) Without the least regard for any of the requirements of the order made last October, apart from the use of red ink for adjustments;

(3) So as to make it almost impossible to discern any facts that could possibly provide even some of the ingredients of action."

12. The Master then went on to set out his understanding of the Claimants' core allegations and added a number of further comments about the pleading, highlighting the difficulties in ascertaining the case which the Defendants would have to meet. He concluded by saying that the action appeared to be without merit and that the Claimants' application was accordingly refused.
13. The Claimants sought and obtained permission to appeal against the orders of 18 October 2005 and 5 January 2006 to a judge of the Queen's Bench Division. Wilkie J heard the appeal on 13 September 2006 and dismissed it. As appears from his judgment, he took some time and care to elicit from the First Claimant the nature of the various claims against the original Defendants and what had become of them, and thus to elicit the basis of the claim against the Defendant solicitors. At paragraph 29 he said :

"It has taken quite a time for me to try to tease out those pieces of information and certainly they are not apparent from the amended pleadings. If Mr and Mrs Watson want to proceed with these claims it would be advisable for them at the very least, if my summary of the position is accurate, to try to replicate at least those material facts in the pleaded case which would, of necessity, restrict the scope of the claim which the Defendant has to meet."

14. Wilkie J went on to describe further elements of the claims, as he understood them, and went on in paragraph 38:

"….if in due course he wishes to try to amend the pleading …. in order to comply with the requirements of Master Eyre, he might do worse than refer to this judgment which, in however imperfect a way, has attempted to identify what the essence of the claims are that he wishes to make against the Defendant"

15. The Claimants sought to appeal against the decision of Wilkie J. I have read a detailed note of the hearing on 14 November 2006 before May LJ (as he then was), who was at pains to explain to the Claimants the difficulties they faced in pursuing a second appeal and the reasons why he could not entertain it.
16. Thus, as at the end of 2006, the first action had been stayed, and remained so pending any further order of the Court in that action. It still remains stayed. It has not been dismissed or struck out or terminated in any other way. Nor is the status of that action affected by any decision of mine.
17. The present action ("the second action") was commenced against the Defendants in the Preston District Registry by claim form issued on 9 April 2008 and served with Particulars of Claim on 7 August 2008. It is clear that the Claimants devoted considerable care to the preparation of the Particulars of Claim, particularly in an attempt to be clear and concise, so that the pleading runs to no more than 10 pages with Schedules attached. It may be, though I seriously doubt it, that with a fresh pleading in the first action in this or a similar form the Claimants might have persuaded the Master to lift the stay. But the question before me is a different one; I am concerned only with the second action.
18. The Defendants apply to strike it out on two grounds. First, they contend that it is an abuse of the process of the Court because it is duplicative, being an attempt to re-litigate in a fresh action issues which are already before the court in the existing (albeit stayed) action. Thus, it is an attempt by the Claimants to circumvent the procedural problems which have beset that action, particularly the stay, without first overcoming those problems and satisfying the costs obligations which would fall upon them. Secondly, it is argued that the issue of the second action itself constitutes a breach of the order of Master Eyre dated 15 October 2005.

Abuse of process

19. The principle which I must apply is set out in the opinion of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1. Having reviewed a series of cases in which litigants had sought to advance in fresh actions claims which they could or should have pursued in earlier proceedings, starting with Henderson v Henderson (1843), he said at page 31:

"The underlying public interest is . . 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. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised the, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice."

20. I am referred also to the decision of the Court of Appeal in Sinclair v British Telecommunications plc [2001] 1 WLR 38, in which fresh actions were brought in respect of claims similar to those made in an earlier action stayed for want of prosecution. This was held to be an abuse of process, the Claimant not having satisfied the order for costs made in the earlier proceedings.
21. The present case differs from these earlier cases because the first action remains in existence. It remains open for the Claimants to put their house in order in accordance with the directions of Master Eyre and the observations of Wilkie J. On one view that might alone have been enough to justify striking out the second action, but I should first summarise the submissions made by Mr Watson as to why the action was commenced and the Claimants' perception of what it should achieve. I must also consider whether the subject-matter of the second action is indeed similar to that of the first, or whether it arguably introduces fresh issues or causes of action which cannot be pursued in the first.
22. Mr Watson explained to me that the second action was issued to protect himself and his wife against the perceived risk of a three-year limitation argument arising from material only disclosed by the Defendants to the Claimants in July 2005.
23. Early in the history of the first action, in August 2003 before service of the Particulars of Claim, the Master ordered the Defendants to deliver the Claimants' files to them. This was done, over 500 files of papers being delivered. In June 2005 the Claimants sought disclosure of further files, and it was discovered by the Defendants that four files were still at the premises of their external storage facility, where they had been misfiled under the name "Waston". These were retrieved and provided to the Claimants in July 2005.
24. On examining these files the Claimants took the view that they contained evidence of fraud and deliberate concealment on the Defendants' part. In particular, Mr Watson draws attention to a calculation of the Claimants' loss which was presented to the Legal Services Commission in September 2000 and to an accompanying handwritten file note (p 322-4 of bundle FW3). He says that this is evidence that the Defendants deliberately reduced the claim below its true worth so as to bring about the loss of public funding. He also complains that the Defendants wrongly limited the claim, excluding losses sustained by the company from January 1987 to the date of the liquidation in 1991 which should have been included in reliance on section 32 of the Limitation Act 1980.
25. In support of his allegations of dishonesty, Mr Watson also referred to file notes at pages 189-191 of FW3, concerning problems with the assigned rights action whereby the Claimants were seeking to recover the Company's losses. (These file notes were discovered misplaced in separate files examined by the Claimants in October 2003; they were not among the papers misfiled and disclosed much later). The note of 10 January 2000 is highlighted for its reference to "the impact on Irwin Mitchell".
26. It is to be noted that the last of this material was supplied to the Claimants in July 2005, at a time when the action was not stayed and well before the final attempts to plead the case in satisfactory form. The Claimants cannot, and do not, contend that the new action is based on any further material made available to them since then.
27. Mr Watson does however argue that there are still important missing documents. He attaches particular significance to the absence of a full file note of the meeting of 28 September 2000, when public funding was lost and the decision was made to discontinue the main cartel action and the other claims against the original Defendants. He points to the fact that many documents were shredded in July 2001 and alleges that this was deliberate concealment on the part of the Defendants.
28. The Claimants feel strongly, and Mr Watson advances this point of view forcefully (albeit always courteously), that the dishonesty and fraud of the Defendants is clearly demonstrated by the material now available. In my view the evidence falls far short of justifying any such conclusion.
29. In the course of Mr Watson's submissions it seemed to me that although the Particulars of Claim in the new action is not expressly framed in terms of fraud, dishonesty and fraud have become the main thrust of his complaint. Furthermore, at one stage in his argument it seemed possible that the Claimants might not have been able to introduce that new cause of action into the existing proceedings after the expiration of the relevant limitation period.
30. I have therefore, with Mr Hubble's assistance in his reply to Mr Watson's submissions, examined the allegations contained in the Particulars of Claim alongside those made in the final draft in the first action, dated 22 November 2005. I have reached the clear conclusion that there is nothing new of substance in the fresh Particulars of Claim which was not included, albeit in a much more prolix and unstructured way, in the draft pleading dated 22 November 2005 which was before Master Eyre and Wilkie J.
31. In particular, the allegation of dishonesty and fraud is not new. It is that the Defendants deliberately concealed their own mistakes; see paragraph 39 of the Particulars of Claim. A similar allegation was made in the first action; at paragraph 64(c) of the November 2005 draft it was said that

"the Defendants' advice was false and/or misleading. The Claimants believe the Defendants knew the advice was false. The Claimants believe the advice was given for an improper purpose, namely to cover up the Defendants' mistakes . . "

32. The primary allegations identified by Wilkie J (see paragraph 13 above) are repeated in the pleading in the second action. The allegation that the Defendants missed the limitation period of 20 June 1997 is made in both pleadings; see paragraph 42 (a)-(f) in the first action and paragraph 21 in the new Particulars of Claim. That relating to section 32 of the Limitation Act 1980 appears at paragraphs 29 and 42(h) respectively. The allegation of failure to notify the Claimants promptly of the Part 36 Offer is made in both actions; see paragraphs 58 and 60(e) in the first action and paragraph 27 in the new pleading.
33. Mr Hubble has been conscious of the particular obligation of fairness on counsel appearing against litigants in person. He draws my attention to the fact that one particular allegation is new, not being expressly made in the November 2005 pleading. This is the allegation that the Defendants deliberately devalued the claims so as to procure the withdrawal of public funding in September 2000.
34. This allegation is, however, not clearly articulated in the pleading in the second action anyway; it was made by Mr Watson in his oral submissions to me. Paragraphs 30-32 of the Particulars of Claim fall far short of alleging that the valuation was deliberately reduced for an ulterior purpose. Furthermore, the allegation of downward valuation by the Defendants at that time, in breach of their professional duty to the Claimants, does appear at paragraph 62-63 of the draft Amended Particular in the first action; see particularly paragraph 63(c). All that is missing is the specific accusation that the Defendants did this deliberately in order to bring about the withdrawal of funding.
35. My conclusion is that there is nothing truly new in the second action and that it is clearly duplicative of the issues raised in the first. Applying the approach of Lord Bingham in Johnson (supra), I have no hesitation in holding that the second action amounts to an abuse of the process of the court. All the claims it raises, so far as they can be understood from the Particulars of Claim, are claims made in the first action and capable of being pursued in it, subject to the Claimants complying with the court's proper requirements imposed on them to justify the present stay being lifted.

Breach of order

36. Having reached this conclusion, it is not necessary for me to deal in detail with the alternative formulation of the Defendants' application to strike out the action. The Order of Master Eyre dated 15 October in the first action, and indeed the judgment of Wilkie J dismissing the appeal against it, were silent as to any other proceedings, and I do not think the commencement of the second action in 2008 should properly be regarded as a breach of that order. Accordingly I found my decision solely on the first ground.

Postscript

37. I conclude with two observations. First, I expressly do not base my decision at all on the fact that the Claimants issued the second action in the Preston District Registry, near their home in Lytham, rather than in the Royal Courts of Justice where the first action has proceeded. If they had been justified in issuing it at all, considerations of health, advancing years, weight of paper and expense would have made it convenient and sensible for them to proceed locally. The Defendants rightly point out that no application was ever made to transfer the first action from London; if that action is ever revived, it will be open to the Claimants to seek to transfer it or at least (more realistically perhaps) to apply for the trial to be heard at a location in the north of England.
38. Secondly, I would like to record that I recognise, though I can do nothing to assuage, the extent of the Claimants' disappointment with the legal system in the course of their long-sustained efforts to achieve a successful result. I should not be taken to imply that their claims in the original proceedings had merit, but the process itself has not been satisfactory. Via the internet I have been able to read the judgment of Waller LJ in the Court of Appeal on 22 July 1998, over ten years ago, setting out in detail the sorry history of the proceedings in the lower court which had never reached the stage of trial on the merits. I realise that this is hollow recognition, and can provide no real comfort to the Claimants, but I make it none the less.