English and Welsh Courts - Miscellaneous

IN THE COUNTY COURT AT WREXHAM

		Sitting at: Cardiff Civil Justice Centre 2 Park Street Cardiff
		30th April 2015

JUDGE KEYSER QC:

Introduction

1. This is a hearing to determine the particular issues identified in paragraph 7 of the Order made by His Honour Judge Seys Llewellyn Q.C. on 14 November 2014, namely: (a) whether the current proceedings are a nullity; (b) whether the current proceedings are permitted to be validated; (c) the costs of the defendant's application for the proceedings to be struck out; and (d) any consequential orders.
2. The issues arise in the following way. These are proceedings for damages for personal injuries and consequential losses. They proceeded to trial on liability, on which the claimant was successful, and to the making of interim payments on account of damages, both voluntarily and pursuant to court orders. Directions were given for the trial on quantum of damages. Only then did it occur to anyone that there might be a problem: between the date when the cause of action accrued and the date when the proceedings were commenced, the claimant had been made bankrupt and had been discharged from bankruptcy; the cause of action had therefore vested in his trustee in bankruptcy; but the claim was brought by the claimant, and the trustee was never joined as a party and did not assign the cause of action to the claimant. The defendant now says that the proceedings are and always have been a nullity or, as I shall from time to time put it, incurably bad. The claimant says that the proceedings can be saved by the annulment of the bankruptcy (for which he has applied) or by the assignment of the cause of action to the claimant (which is a more disputable remedy) or by the joinder of the trustee in bankruptcy as claimant in substitution for the present claimant.
3. I shall set out the facts in a little more detail but shall try to mention only such facts as are relevant to understanding the issues.

The background

4. On 18 August 2007 the claimant suffered serious injuries in an accident that occurred, as has been found and as I shall suppose, by reason of the negligence of the defendant's servants or agents. On 7 November 2007 the claimant was made bankrupt upon his own petition; the order recites that the petition was presented that same day (cf. rule 6.42 of the Insolvency Rules 1986). On 19 December 2007 the Official Receiver was appointed as trustee in bankruptcy upon the filing of the decision not to call a creditors' meeting (see section 293(3) of the Insolvency Act 1986). Accordingly, the claimant's estate then vested in the Official Receiver as trustee (see section 306). By section 283(1) the estate comprised all property belonging to or vested in the claimant at the commencement of the bankruptcy. That property included his right of action against the defendant, even though that is a so-called hybrid right, because that part of the right of action that related to physical injury was personal to the claimant and would be held by the trustee for the benefit of the claimant: see section 436 of the Act; see also Heath v. Tang [1993] 1 W.L.R. 1421 (CA), Ord v. Upton [2000] Ch. 352 (CA), and Hayes v. Butters [2014] EWHC 4557 Ch On 25 April 2008 the claimant was discharged from his bankruptcy pursuant to section 279(2), now repealed, which provided for discharge before the standard 12-month period had elapsed.
5. The present proceedings were commenced on 12 August 2010, shortly before the expiry of the limitation period. It is unnecessary to recite in great detail the history of the proceedings but the following points may be noted. In February 2011 the defendant filed a Defence denying liability and commenced Part 20 proceedings against another party. I can ignore the Part 20 proceedings. In August 2011 the claimant gave to the defendant disclosure and inspection of documents, which included the documents relating to the bankruptcy. Both sides knew of the bankruptcy. Neither side adverted to its possible relevance.
6. On 17 February 2012 the district judge allocated the case to the multi-track and directed that there be a split trial with liability and medical causation being dealt with as a preliminary issue and further directions on quantum to be given if necessary upon the conclusion of that trial. The trial of liability was heard by Mr. Recorder Bush over two days in August 2012. On 5 October 2012 he gave judgment for the claimant for an amount to be decided by the court and directed that there be a case management conference to consider directions in respect of the assessment of damages. He also ordered that the defendant make an interim payment on account of damages in the sum of £20,000 by 2 November 2012. On 17 January 2013 extensive directions were given for the assessment of damages. In July 2013 the claimant applied for an interim payment on account of damages and for the appointment of a litigation friend on the ground that he lacked capacity to conduct the proceedings. On 12 August 2013 Judge Seys Llewellyn Q.C. adjourned that application but ordered that the defendant pay a further sum of £40,000 by way of interim payment on account of damages. On 21 October 2013 District Judge Davies gave further directions for the assessment of damages, including a direction that the matter be listed for a three-day trial within a window commencing on 23 June 2014. On 14 January 2014 His Honour Judge Jarman Q.C. varied the directions, vacated the listing that had been given for 25-27 June and re-listed the trial for 17-19 December 2014. In March 2014 the claimant changed his solicitors. Irwin Mitchell LLP, who now act for him, took over the conduct of the case on his behalf. On 1 May 2014 Mr. Reorder Bush made an order appointing the claimant's wife as his litigation friend and giving further directions for the assessment of damages. Those directions included a direction that the parties "do participate in the joint settlement meeting to take place no later than 14/11/14, if so advised". A pre-trial review was set for October, then for November 2014.
7. On 22 August 2014 the claimant's solicitor, Mr Bett, wrote to his counterpart in respect of a proposed meeting. The letter, however, was largely taken up with a statement by Mr. Bett of his realisation that there was a problem over the bankruptcy. He set out some of the history and said, "I feel duty bound to advise you, however, that it is likely that the bankruptcy was not annulled prior to the commencement of the substantive proceedings." He went on to say that the present proceedings might be defective. "If that is the case my preliminary views are that the proceedings cannot be regularised by substitution of the claimant for the trustee in bankruptcy and that the substantive proceedings are likely to be struck out as being irretrievably void further to Millburn-Snell v Evans". The letter suggested that it would be something of a waste of time to take the point, because new proceedings could be brought. If one may say so, full marks to Mr. Bett for identifying the problem. It is remarkable that the case had proceeded all the way to a two-day trial, conducted (as I am told) by leading counsel for the claimant, without the point ever being noticed.
8. In early November 2014 the defendant filed at the Court of Appeal an appellant's notice seeking permission to appeal against the order of Mr. Recorder Bush dated 5 October 2012. On 12 November 2014 the claimant, acting by his wife as litigation friend, filed an application under the Insolvency Rules 1986 for annulment of the bankruptcy order pursuant to section 282(1)(b) of the Insolvency Act 1986 on the ground that the debts and expenses of the bankruptcy had all been paid in full. The ground was somewhat anticipatory, as the debts and expenses still have not been paid. The application has been twice adjourned and is currently listed for hearing next week, on 6 May 2015.
9. The pre-trial review came before Judge Seys Llewellyn Q.C. on 14 November 2014. The problem caused by the bankruptcy was raised before him. He vacated the trial and gave directions, including those that I have mentioned. On 26 November 2014, pursuant to an undertaking given to Judge Seys Llewellyn Q.C. the defendant filed an application notice seeking an order "striking out the Claimant's claim on the grounds that it is a nullity, the cause of action not being vested in the [claimant] at the time the claim was issued or at all."
10. The position regarding the application to annul the bankruptcy is set out, so far as evidence is concerned, in particular in the witness statement dated 17^th December 2014 of Mr Bett. He states, "Alternatively [that is, in the alternative to achieving an annulment] the Claimant has liaised with the trustee in bankruptcy to identify whether with appropriate undertakings the trustee in bankruptcy will be prepared to assign the cause of action to the Claimant or his litigation friend such that the current proceedings can be rectified."

The defendant's application

11. I turn in that context to the defendant's application. It has two rather different strands, which need to be distinguished. First, it is said that the proceedings are simply a nullity and that they must therefore be stopped. Second, in the alternative, it is said that the continuation of the proceedings now that the claimant knows he cannot maintain them would be an abuse of process and that therefore he must be prevented from seeking to maintain them and they must be struck out. The second way of putting the matter may not fall strictly within the terms of the application notice but it is squarely before the court and has been fully argued.
12. I turn to the first basis of the application, namely that the proceedings are a nullity. The argument is that, as the claimant did not have a right of action when he commenced the case, the proceedings are a nullity in the sense of being incapable of redemption or incurably bad. The defendant contends that the authorities establish that a claim that is commenced when the claimant does not own a cause of action is fundamentally flawed and cannot be saved by the subsequent acquisition of a cause of action.
13. To speak of the proceedings as a "nullity" might seem surprising. When one looks at the claim form and the particulars of claim, one sees nothing untoward about them; they are perfectly normal documents for a personal injury claim. The defendant's essential complaint is that the claimant did not have a right to sue when the claim was commenced. That is correct: the right of action was not vested in him when the claim form was issued. But that fact need not entail anything more than that, unless he can do something to rectify the problem, the claim must fail. One should not, I think, ignore the fact that there is nothing at all necessary or obvious in saying that, where a person commences proceedings for a remedy for a cause of action that he does not have, the proceedings are a "nullity". Lots of claims are brought by people who, for all manner of reasons, have no right of action. That does not make the proceedings a nullity. It makes them hopeless, which is a different thing. Although this might seem like verbal nit-picking, I do not consider it to be entirely without importance. Language can mislead, especially if it seems to make unnecessary metaphysical claims. The language of nullity is hallowed, as I accept, by high authority. But it seems to me to give rise to the danger, which (with great respect) even the Court of Appeal has not always avoided, of resting analysis on avoidable language. So in at least one case the court has reasoned that, as the proceedings had no existence, certain things could not be done in them. Such reasoning seems to me to be trapped in forms of expression. If one is to call proceedings a nullity, it should be as the conclusion rather than the basis of the argument.
14. The principal case on which reliance is placed is the decision of the Court of Appeal in Ingall v. Moran [1944] 1 K.B. 160. The plaintiff issued the writ on 17 September 1942 purportedly as administrator of his son's estate, but only on 13 November 1942 did he take out letters of administration. The defendant contended that, as the plaintiff was not at the time when the writ was issued the administrator of his son's estate, he had no title to sue. The principal point argued before the Court of Appeal, as appears in the judgment of Scott LJ at 163, was the defendant's plea that the action was never properly constituted in that, while it purported to be a representative action by the plaintiff as administrator, the grant of letters of administration followed the issue of the writ. Scott LJ said at 164 to 165:

"The cause of action arose, and was vested in the deceased lad, at the moment when he was injured … That chose in action was his. … If he had left a will, it would at the moment of his death automatically have vested in his executor. As he died intestate, it vested in the President of the Probate, Divorce and Admiralty Division, and remained in him until letters of administration were issued. Then - and not before - it would automatically pass from the President to the administrator. As the writ was issued on September 17, 1942, and there was no grant till November, it follows, necessarily, that at the time of writ issued the plaintiff had no shadow of title to his son's surviving chose in action, in respect of which he purported to issue a writ, falsely (although no doubt quite innocently) alleging that he issued it as administrator. It purported to launch a representative action under Or. III, r. 4 - an action in which he confessed, first, that he was not suing in his own right, and, secondly, that he had no right in that action to prosecute any claim except in his representative capacity. … Such an action was, in my opinion, incapable of conversion by amendment into a valid action - just as much so as if he had issued a personal writ claiming to be lawfully possessed of the estate of the deceased and had subsequently asked leave to amend by substituting a representative claim. It is true that when he got his title by the grant of administration he prima facie became entitled to sue, and could then have issued a new writ, but that was all. An application by him to treat the original writ of September 17 as retrospectively valid from that date would have been refused by the court, not only because it might prejudice existing rights of defence, but because it would not be permissible under the Rules of the Supreme Court or the Judicature Acts. The old writ was, in truth, incurably a nullity. It was born dead and could not be revived. If that conclusion is right it follows equally that the statement of claim was not delivered in any action recognized by the Rules of the Supreme Court, and all subsequent proceedings in the supposed action, including the judgment of the learned county court judge, were likewise nugatory, for, if the action and the pleadings were bad, there was no valid action before the learned judge to try and it is our duty to say so."

At 166 Scott LJ said:

"It follows that on the issue raised by each plea he is driven back to the same replication, viz. the doctrine of relation back but, in my opinion, that doctrine does not help him on either plea. If the writ was bad when issued, the action was never commenced."

These passages put the matter in two related but not obviously identical ways: first, the plaintiff did not have the cause of action when he commenced proceedings and his later obtaining of the cause of action did not render the claim good; second, the writ was a nullity and there was no valid action before the learned judge to try. The second way of putting the matter goes beyond the first matter unless nullity is merely a way of saying that the plaintiff did not have the cause of action he claimed to have. For my part, respectfully, I should think that the first way sufficed and that it was enough to say that the trial judge had a valid case to hear, in that there was something to try and give judgment on, even if the result had to go one way.

15. Luxmore LJ dealt with the matter at pages 168 and 169. At 168 he said:

"It is true that, when a grant of administration is made, the intestate's estate, including all choses in action, vests in the person to whom the grant is made, and the title thereto then relates back to the date of the intestate's death, but there is no doubt that both at common law and in equity, in order to maintain an action the plaintiff must have a cause of action vested in him at the date of the issue of the writ."

That, as it seems to me, is the critical point in Ingall v. Moran. At 169 Luxmore LJ said:

"I have no doubt that the plaintiff's action was incompetent at the date when the writ was issued and that the doctrine of the relation back of an administrator's title to his intestate's property to the date of the intestate's death when the grant has been obtained cannot be invoked so as to render an action competent which was incompetent when the writ was issued. In my judgment, the learned judge was wrong in coming to the contrary conclusion. It follows that no proper action was commenced before the statutory period of limitation expired."

Goddard LJ said at 170: "The question is whether he was entitled to sue when he did. If he was not it follows that the action is bad as being brought by a person who had no title to sue and no other question will arise". At 172 he said: "The result is that this action was and always remained incompetent and judgment ought to have been entered for the defendant."

16. Precisely the same point in Millburn-Snell v. Evans [2011] EWCA Civ 577. The facts of that case were in material respects identical to those of Ingall v. Moran. The personal representatives of an intestate deceased brought a claim to vindicate a cause of action that the deceased had held but they commenced proceedings before taking a grant of administration. His Honour Judge Langan Q.C. followed Ingall v. Moran and held that, unless CPR r. 19.8 assisted the claimants, the claim would have to be struck out as a nullity. (I should say that the point under r. 19.8 does not arise in this case.) His decision was upheld by the Court of Appeal, where the lead judgment was given by Rimer LJ. At [14] Rimer LJ said:

"It is agreed that Judge Langan was correct that, subject only to any help that the claimants may derive from Part 19.8(1), their claim was a nullity that must be struck out and could not be retrospectively validated by a grant of letters of administration. That is because whereas an executor derives his title to sue from the will and not from the grant of probate—and so can validly sue before obtaining a grant (although he will have to obtain it later in order to prove his title)—an administrator derives his title to sue solely from the grant of administration (see Chetty v. Chetty [1916] 1 AC 603, at 608, 609, per Lord Parker of Waddington)."

At [15] he said that the point was illustrated by Ingall v. Moran, and at [16] he continued:

"I regard it as clear law, at least since Ingall, that an action commenced by a claimant purportedly as an administrator, when the claimant does not have that capacity, is a nullity. That principle was recognised and applied by this court in Hilton v. Sutton Steam Laundry [1946] KB 65 (per Lord Greene MR, at 71) and Burns v. Campbell [1952] 1 KB 15 (per Denning LJ, at 17, and Hodson LJ, at 18). In Finnegan v. Cementation Co. Ltd [1953] 1 QB 688, Jenkins LJ said, at 700:

'As to the law, so far as this court is concerned it seems to me to be settled by Ingall v. Moran and Hilton v. Sutton Steam Laundry and, I may add, by Burns v. Campbell, that an action commenced by a plaintiff in a representative capacity which the plaintiff does not in fact possess is a nullity, and, further, that it makes no difference that the claim made in such an action is a claim under the Fatal Accidents Acts which the plaintiff could have supported in a personal capacity as being one of the dependants to whom the benefit of the Acts extends.'"

Hooper LJ agreed with Rimer LJ, as did Lord Neuberger MR, who said at [42]:

"[W]hatever one's views of the value of the principle applied and approved in Ingall v. Moran [1944] KB 160, it is a well-established principle, and, once one concludes that it has not been abrogated by CPR Part 19.8, it was the judge's duty to follow it, as it is the duty of this court, at least in the absence of any powerful contrary reason. The need for consistency, clarity and adherence to the established principles is much greater than the avoidance of a technical rule, particularly one which has a discernible purpose, namely to ensure that an action is brought by an appropriate claimant."

17. For the defendant, Mr. Mitchell submits that the principle in these decisions applies squarely to the present case. It is not the narrow point that proceedings commenced by an administrator of a deceased's estate before he has taken a grant are a nullity and beyond redemption or remedy. It is the wider point that this conclusion, namely that the proceedings are a nullity, follows from the requirement that a claimant cannot maintain a cause of action that was not vested in him at the time of the commencement of the proceedings. That is the principle referred to by Luxmore LJ in Ingall v. Moran at 168.
18. Neither Ingall v. Moran nor Millburn-Snell v. Evans concerned proceedings brought by a person who had been subject of a bankruptcy order in circumstances where the cause of action was vested in the trustee in bankruptcy. I have been referred to a number of cases that do concern that situation. Mr. Grundy relies on them as showing that the present proceedings are not in any sense a nullity, albeit that they stand in need of steps to regularise them. Mr. Mitchell submits that, insofar as dicta in the cases appear to support that position, they are either obiter or per incuriam or both.
19. It is well to have in mind what is the criterion by which decisions are to be regarded as per incuriam. In Morelle Limited v. Wakeling [1955] 2 QB 379 the Master of the Rolls, giving the judgment of Court of Appeal, said at 406:

"As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned: so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong. This definition is not necessarily exhaustive, but cases not strictly within it which can properly be held to have been decided per incuriam must, in our judgment, consistently with the stare decisis rule which is an essential feature of our law, be, in the language of Lord Greene M.R., of the rarest occurrence."

More recently, in Lloyd v. London Borough of Lewisham [2013] EWCA Civ 923, in the context of failure to refer to a specific statutory provision, Arden LJ, with whose judgment Jackson and McCombe LJJ agreed, cited Morelle v. Wakeling and said:

"For an omission to consider a particular provision to result in a decision being per incuriam it must be shown that the provision means that the conclusion that was reached cannot stand".

To put the point shortly: it would not be open to me, sitting as I am in the county court, to decline to follow a decision of the Court of Appeal or the High Court simply on the ground that I might think the decision a bad one or even wrong; that would be a recipe for anarchy. I can refuse to follow an otherwise binding decision only on the basis that it involves a clear and certain mistake, whether of logic or of oversight of an incontrovertible principle or rule of law that is determinative of the case and dictates a different result.

20. With that preamble I turn to some further cases. The first of those, Smith v. Henniker- Major & Co [2003] Ch 182, is not a bankruptcy case. The claimant purported to effect the assignment by a limited company to him of a cause of action. He then commenced proceedings. The point was taken that the assignment was invalid, as indeed it was. So the claimant procured the execution by the company of a deed of ratification of the earlier deed of assignment and applied for permission to amend the particulars of claim to rely on the deed of ratification. Permission was refused at first instance and again on appeal by the Court of Appeal, where the decision was based on the exercise of a discretion having regard to delay and prejudice. One of the arguments raised by the defendants was the wider ratio in Ingall v. Moran. At [92] Robert Walker LJ said that the first argument raised by counsel for the defendant "was that at the time of issue of the claim form Mr. Smith had no cause of action at all, or, if different, no title to sue at all, and that the claim form was, therefore, a nullity or of no effect and could not be cured by amendment". The judge rejected that argument. At [93] Robert Walker LJ said that he had been right to do so, and he continued:

"Mr Symons relied on the decision of this court in Ingall v Moran [1944] KB 160. But that decision was on a different point (change of capacity); was described (while still extant) as a blot on English jurisprudence; and has since been overturned by section 35(7) of the Limitation Act 1980 and CPR r 17.4(4). So far as it embodied any larger principle it has been overtaken by the modern approach as described by Evans LJ in Hendry v Chartsearch Ltd [1998] CLC 1382, para 23. In that case this court disapproved the more rigid approach adopted in Eshelby v Federated European Bank Ltd [1932] 1 KB 254."

The other members of the court, Carnwath and Schiemann LJJ, expressly agreed with Robert Walker LJ on this point, although they disagreed with him on a different matter.

21. The approval in Smith v. Henniker-Major & Co of the dicta of Evans LJ in Hendry v. Chartsearch Ltd [1998] EWCA (Civ) 1276 involved the adoption under the CPR of the approach that had been taken latterly under the Rules of the Supreme Court. In Hendry v. Chartsearch Ltd, in a passage which received the approval of Henry and Millett LJJ, Evans LJ referred to the submission that "leave to amend cannot or should not be given unless the party seeking leave to add a fresh cause of action had some cause of action at the date of the writ or counterclaim" and at [23] he continued:

"I would reject this submission. The scope of the RSC has been extended since the days when Eshelby was decided in 1932. In accordance with modern practice generally, the court has a general discretion which should not be restricted by hard-and-fast rules of practice, if not of law, such as that which is suggested here. The judge therefore was wrong to consider that the court had no power to give leave to make the re-amendment. In my view, he was wrong also to consider that the discretion was somehow restricted by what he called 'the principle set out in Eshelby and in Roban' (page 22). It is a general power which in modern parlance has to be exercised in accordance with the justice of the case."

22. One bankruptcy case involving slightly different questions from those in the present case was Nelson v. Nelson [1997] 1 WLR 233. The plaintiff instructed solicitors to apply for an injunction, which they did successfully. They then learned that the plaintiff was an undischarged bankrupt he therefore had no cause of action. The injunction was duly discharged. The question was whether the solicitors were liable for wasted costs. As they had acted entirely innocently and in good faith, they were not. At 236 Peter Gibson LJ began his judgment:

"The central question on this appeal is not, pace Mr. Evans for the third defendant, the effect of the bankruptcy order upon the rights of the bankrupt in relation to the property owned by him. That effect is plain, having regard to section 306 of the Insolvency Act 1986, which vested in the trustee in bankruptcy property such as the bankrupt's claimed interest in 18, Arundel Gardens, Ilford on the bankruptcy. Instead the question to be answered is whether the bankrupt had the capacity to retain a solicitor to commence the proceedings which he did commence. Those proceedings are not a nullity such as would have been the case if the plaintiff did not exist. But they were liable to be stayed or struck out because the bankrupt did not have any interest in the property, such interest as he did have prior to the bankruptcy order having vested in the trustee in bankruptcy. They might be stayed pending the decision of the trustee in bankruptcy to take over the proceedings. Alternatively if the trustee did not wish to do so, a defendant could apply to strike out the action."

It can be said that that passage is obiter dictum. But, given its source and (with respect) the clarity and force of its reasoning, it is not to be brushed aside. Mr. Mitchell also says that the dictum is inconsistent with Ingall v. Moran. However, it is consistent with the approach in Smith v. Henniker-Major & Co and Hendry v. Chartsearch Ltd. It is also, as will be seen, consistent with the approach that has always been taken by the Court of Appeal in the bankruptcy cases, at least in modern times. In my judgment, Peter Gibson LJ was not nodding Homerically; he was expressing the usual understanding of the position.

23. In Pickthall v. Hill Dickinson LLP [2009] EWCA Civ 543, the claimant brought a claim for damages for professional negligence against solicitors. Between the alleged accrual of the cause of action and the issue of the claim form he had been made bankrupt and had been discharged from bankruptcy. When he issued proceedings he knew that he had no right to bring the claim, which was vested in the trustee in bankruptcy, though he hoped to obtain an assignment. He commenced proceedings before taking an assignment with a view to avoiding a limitation defence. After commencement of the proceedings he then took the assignment of the cause of action. Mann J, with whose judgment Thomas and Laws LJJ agreed, identified at [1] the issue before the Court of Appeal: "the extent to which it is an abuse of the process for a claimant to commence proceedings without having the relevant cause of action vested in him, and whether it would be right to allow him to amend his pleadings to plead a subsequent assignment of that cause of action when that assignment took place outside the relevant limitation period." At [15] he said:

"So I turn to consider the basis on which it is said that the proceedings in this case were an abuse. In my view the starting point is that where a man starts proceedings knowing that the cause of action is vested in someone else, then it is hard to see why those proceedings are not an abuse. He has started proceedings in which, even if he proves all the facts he wants to prove and establishes all the law he wants to establish, he will still lose because he does not have a right to sue. It is hard to see how that cannot be an abuse. Only people who own causes of action, or who have an appropriate interest in proceedings, have any business asserting the cause of action or starting proceedings. Any other use of the court's proceedings is improper. The position would be likely to be otherwise if the claimant does not know, or is uncertain, as to whether he has title to the relevant cause of action. In those circumstances, at least until it is authoritatively determined that the claimant does not own the cause of action, it may well not be appropriate to characterise the proceedings as an abuse, but that is different from the case currently under consideration."

24. Having found that the proceedings were an abuse and that, unless they could be rendered non-abusive by amendment, they should therefore be struck out, he continued:

"26. That being the case, I think that it provides the answer to the second of the two questions before us, namely whether permission to amend to plead the cause of action ought to have been given. The purist view might well be that proceedings which are started by someone without the relevant cause of action vested in them are fundamentally technically flawed and cannot be saved by a subsequent assignment and pleading of that assignment. While amendments are to some extent retrospective in their effect, that retrospectivity does not affect the date from which the assignment vests the cause of action in the claimant, so that as at the date of commencement of proceedings he still did not have the relevant cause of action in his hands on which the court is asked to adjudicate. However, if that is the purist view, it has been overtaken by the practical one adopted by the courts which allow such a thing – see the cases gathered together and cited in Smith v Henniker-Major & Co [2002] BCC 544 at 553-4. Permission can apparently even be given where a limitation period expires after a failed assignment – see Smith v Henniker-Major on appeal at [2003] Ch 182.

27. However, it would in my view be wrong to grant that permission. A permitted amendment would not so much cure the abuse of process as be a reward for it. It seems to me to be wrong in principle to confer such rewards on those who act in that way. This is not a point which is dealt with in Smith v Henniker-Major at either level. That case had some elements in common with the case before us - the claimant did not have the cause of action vested in him at the date that he sued (albeit that in that case it was because of an invalid assignment) and he sought to fix the problem by taking a later assignment and then amending to plead it. However, the factual basis on which that case was proceeding did not seem to include the fact that the claimant knew that he did not have the cause of action when he started his proceedings. The debate about amendment therefore did not take place against a background of a finding of abuse of process. The case therefore does not help us, and certainly contains nothing to gainsay what I consider to be the proper approach as set out at the beginning of this paragraph.

28. The learned judge … therefore failed to take a central point into account and it falls us to consider the exercise of the discretion afresh. For the reasons just given I would determine it against the claimant and refuse him permission to amend to plead the assignment."

25. That is a clear holding that the proceedings were not a nullity in the sense of being incurably bad; to put it another way, it is a clear holding that the fact that a claimant commences a claim when the cause of action is vested in his trustee in bankruptcy does not mean that the proceedings are incapable of remedy because of a rule that the cause of action must be vested in the claimant at the date of the issue. That is part of the ratio of the case, because the Court of Appeal refused the amendment on the basis of the exercise of discretion. The discretion was exercised against the claimant because to exercise it in his favour would be to reward an abuse. Not only the fact of the exercise of discretion but the reasoning at [26] shows clearly that the wider principle from Ingall v. Moran, on which Mr. Mitchell relies, does not have the effect for which he contends.
26. Mr. Mitchell says that neither Ingall v. Moran nor Millburn-Snell v. Evans was mentioned in Pickthall. That does not assist him. The narrow point of decision in those cases, namely that proceedings brought in a representative capacity by an administrator before taking a grant are incurably bad, had no application. The wider point of decision, namely that proceedings brought before the claimant has a cause of action are incurably bad, might indeed have applied but was expressly considered to have been displaced by a new approach. Mann J expressly followed the approach in Smith v. Henniker-Major, where Ingall was cited and regarded as representing an outdated rule of practice. It is impossible to say that the decision in Pickthall was per incuriam.
27. In Haq v. Singh [2001] EWCA (Civ) 957, the claimant, a discharged bankrupt, commenced a claim on a hybrid cause of action (in the sense previously explained) that had arisen before her bankruptcy. More than seven years after the proceedings had commenced the defendants amended their Defence to plead that the claimant lacked capacity to bring the proceedings because the cause of action vested in her trustee. The claimant then took an assignment of the cause of action from the trustee. The judge held that the assignment cured the defect in the claimant's standing and gave her permission to plead the assignment. That latter point is important. It is clear on principle and authority that the claimant needed to plead her right as assignee and required permission to amend for that purpose. The Court of Appeal was concerned only with the question whether permission to amend should be given after expiry of the limitation period under CPR r. 17.4(4). So far as material, r. 17.4 provided as follows:

"(1) This rule applies where (a) a party applies to amend his statement of case in one of the ways mentioned in this rule, and (b) a period of limitation has expired."

"(4) The court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings were started or has since acquired."

The decision in the case was that r. 17.4(4) did not apply, because the claimant's capacity was unaltered. In this context capacity was taken to refer to the question whether one sued in a personal capacity or in any one of however large a number of representative capacities. The claimant in Haq v Singh had sued and proposed still to sue in a personal capacity. The rule, therefore, was not engaged.

28. Two points may be noted about Haq v. Singh. First, although Ingall v. Moran was cited and its relevance to the question of r.17.4 (4) was discussed, the reasoning and decision in Haq v Singh are entirely inconsistent with the proposition that the claim in that case was a nullity in the sense of being incurably bad from the very beginning. The short reason why the claim in Haq v Singh could not be saved was merely that there was an accrued limitation defence. Second, both Arden LJ at [21] – [22] and Pill LJ at [29] – [33] made obiter dicta to the effect that r. 17.4(4) had removed the effect of Ingall v. Moran. The logic of the argument was in essence that the point in Ingall v. Moran was that the plaintiff was actually suing in a personal capacity, however much he might have claimed to the contrary, and was not permitted to amend the proceedings to sue in a representative capacity that he had not formerly possessed, whereas r. 17.4(4) now gave that power. As Arden LJ, said, this was a point that did not arise for decision in Haq v. Singh. It is right to observe that in Millburn-Snell v. Evans the Court of Appeal followed and applied Ingall v. Moran, which was directly on point on its narrow ratio and was said to be authority for the proposition that "an action commenced by a claimant purportedly as an administrator when the claimant does not have that capacity is a nullity" (per Rimer LJ at [16]). Rimer LJ questioned the correctness of Arden and Pill LJJ's assessment of the effect of r. 17.4(4) on Ingall v. Moran. However, he did not question the correctness of the decision in that case or the reasoning behind it.
29. Pathania v. Adedeji [2014] EWCA (Civ) 681 was a case where the claimant had the right to commence the proceedings but became bankrupt after commencement of proceedings and before trial. It therefore has a material difference from this case. Floyd LJ, with whom Rafferty and Maurice Kay LJJ agreed, referred to authorities including Heath v. Tang and Pickthall and said this:

"15. Where a bankrupt is commencing or pursuing a claim which he knows he does not have the abuse of process in commencing or pursuing that claim is obvious. No claimant is entitled to sue on a right which he knows belongs to someone else. The abuse lies in knowingly pursuing a claim which, as at presently constituted, is bound to fail. The abuse does, however, depend on actual knowledge of the lack of title to the cause of action, not on what he or she ought to have known.

16. Nevertheless, where an action is commenced or continued after the cause of action has vested in a trustee in bankruptcy the action does not abate and the position is capable of being regularised by the joinder of the trustee or by the taking of an assignment from him. Whether the court will permit that to happen will involve in exercise of discretion. It will be necessary to have regard to the interests of those likely to be affected, including the creditors in the bankruptcy. The court would be likely to stay the action until the position in the bankruptcy is clarified."

That passage treats the commencement and continuance of proceedings as materially similar, in that each situation raises the question of abuse of process. The reasoning is entirely inconsistent with supposition that the commencement case—that is, a case such as the present—ipso facto involves a nullity in the sense of an incurable defect. There is no proper basis for saying that this decision, which is consistent with Pickthall and with all the other bankruptcy cases, was decided per incuriam.

30. In this lengthy consideration of the cases, I have to some extent been reinventing the wheel. I think it would have sufficed to refer to a short and, so far as concerns me, binding consideration of this point by Nugee J in Munday v. Hilburn [2014] EWHC 4496 (Ch). That case was materially similar to this case. It involved the commencement of proceedings by a discharged bankrupt in circumstances where the cause of action was vested in the trustee in bankruptcy. There was a complication regarding a jointly owned cause of action, but that is not critical for present purposes. Much of the judgment concerned abuse of process but at [47] – [50] Nugee J held that the lack of a cause of action on the part of the claimant when the proceedings were commenced did not make the proceedings a nullity or, as he well put it, incurably bad. That conclusion was based on what might be called the Hendry v. Chartsearch Ltd line of authorities. Nugee J cited that case and Smith v. Henniker-Major & Co, as well as other decisions in the Court of Appeal and the High Court that I have not felt it necessary to refer to, and showed that the approach in those cases has been treated as binding and authoritative in the Court of Appeal and that it had direct application to the case before him, which is materially identical to the case before me. It is in my judgment far too late to rely on the incantation of Ingall v. Moran as an answer to what is clearly established law. In these circumstances it is unnecessary for me to say more on Ingall v. Moran, which can now be regarded as good authority only for its narrow ratio but not for its wider ratio. However, among the observations that might be made about that case I mention two. First, it related to a question of the capacity in which the plaintiff sued, which is different from the question in this case. Second, it may be that its wider ratio depended on a rule of practice that plainly no longer applies, because as the Court of Appeal has consistently recognised in recent decisions a case is not incurably bad because it relies on a cause of action that does not vest until after the proceedings have been commenced.
31. For these reasons, the application to strike out the claim as being a nullity must fail.
32. I turn to the second basis of the application, namely that the claim should be struck as being an abuse of process. It is well established that it is an abuse of process of the court for a claimant to commence proceedings or to continue them at a time when he knows that the cause of action is not vested in him. I have already referred to the relevant passages in Pickthall. In Munday v. Hilburn Nugee J held that Pickthall was authority only for the proposition that it is an abuse for a claimant to issue proceedings knowing that he does not have a cause of action at the date of issue: see [16] and [19] – [20]. Nugee J also referred to the Pathania case; at [20] he said that it was authority for the proposition that "it is an abuse not only to issue proceedings knowing that the cause of action is not vested in you but to continue them". At [45] Nugee J referred to the case before him and said this (the italics are mine):

"It follows, in my judgment, that there was in fact no abuse of process established either in the claimant's issuing these proceedings or in continuing these proceedings. I think it is important to add that this does not mean that the Court is powerless to stop claims going forward where a claimant in fact has no standing but due to erroneous advice of his lawyers wrongly believes he does. In order to succeed at trial, a claimant must, of course, not only show that there is a good claim vested in someone but that it is vested in him. If, therefore, it an be shown that the claim, whether good or bad, is incontrovertibly not vested in him and for that reason the action is doomed to failure, whatever its merits, the court must be in a position to stop the claim proceeding to trial. I do not see any procedural difficulty in this. The defendant in an appropriate case can apply to strike the claim out on the basis that the statement of case discloses no reasonable cause of action, see CPR rule 3.4(2)(a), or can apply for what is often called reverse summary judgment, see CPR Part 24, or can apply to have the matter determined as a preliminary issue. All that I have decided is that he cannot strike out on the basis that there is an abuse of the Pickthall type unless he establishes that the claimant either brought or continued the action knowing that the cause of action was not vested in him. Of course, if the Court rules, despite the claimant's advisers' best endeavours, that the cause of action is not vested in him, then it would constitute an abuse for the claimant to continue with the action thereafter, at any rate if the position could not be cured."

33. For the defendant Mr. Mitchell accepts that the claimant did not know when he issued proceedings that the cause of action was not vested in him; it was a point that passed everyone by. However, he submits that he now knows that he has no cause of action and that it would be an abuse of process for him to continue the proceedings with that knowledge. Therefore, the proceedings should be struck out. Mr. Mitchell's primary submission is that strike-out must follow immediately and as a matter of principle. His secondary position in the alternative is that it would be wrong to defer the matter, because there is no evidence of any realistic prospect that the proceedings can be cured. The application for annulment was made a little over five-and-a-half months ago. It has been twice adjourned. There is no evidence that the monies are available to pay the debts and expenses of the bankruptcy. There is no evidence that the trustee is ready and willing to take over the proceedings. How long, he asks, is the matter to be allowed to go on?
34. I have read and taken into account the evidence filed in support of the application to annul the bankruptcy and the evidence contained in what has been called the "bankruptcy bundle" forming one of the bundles for this hearing. Mr. Grundy accepts that there is no formal evidence before the court as to the up-to-date position. The evidence relates to the position in December last year. Mr. Grundy pretty much implied, though he stopped short of conceding, that there is no real likelihood that the bankruptcy will be annulled on 6 May. He tells me – and from him I accept – that the figure provided to the claimant's solicitors as required to be paid for annulment is £23,529. He humorously remarked that, if the defendant were to make an interim payment on account of damages, the claimant would be able to afford the cost of obtaining annulment. Mr. Mitchell was entitled to respond with equal humour that the defendant is not required to pay for the rope for its own gallows. Mr. Grundy suggested that the claimant's efforts to raise the funds necessary to obtain an annulment have not been assisted by the defendant's present application. There is no evidence before me as to what efforts have been made latterly to raise money or as to the effect that the application has had on those efforts. However, it is inherently probable that the fact that there is a pending application to have the proceedings struck out as incurably bad or a nullity has been less than helpful. Mr. Grundy also said that communications with the trustee have been marked by misunderstanding and have been less than productive. He told me without demur that the claimant values his claim at about £3 million and that the defendant's counter-schedule is about £500,000.
35. The position, in my judgment, is as follows. First, the claimant cannot be permitted to pursue the proceedings substantively, now that it is known that he has no standing to pursue them. Second, it does not follow, and there is no rule of law requiring, that the axe must fall forthwith and without delay. It is obvious that the court cannot entertain conduct that abuses its process. Nevertheless, the question of strike-out remains discretionary. Merely to say "Never mind" and to wink at the continued conduct of the proceedings without a vested cause of action would be a manifestly wrongful exercise of the discretion; as I say, one cannot allow a substantive pursuit of proceedings that would constitute an abuse. But there is no reason of principle why a stay cannot be imposed for the purpose of giving a reasonable opportunity to cure the defect in the proceedings, now that I have ruled that it is capable of cure. The authorities to which I have referred, including in particular the decision in Pathania and the judgment of Nugee J in Munday v. Hillburn, make it clear that the abuse is to allow the claimant to continue with the proceedings if the position cannot be cured.
36. There are two obvious ways in which the proceedings might be cured. The first is annulment of the bankruptcy, with a re-vesting of the cause of action in the claimant; see section 282(4) of the Insolvency Act 1986, and Nugee J in Munday at [62]. The second is substitution of the trustee as claimant. There is a third possible route of cure, namely the assignment of the cause of action by the trustee to the claimant. That would require an amendment of the claim outside the limitation period. My present view, which I express tentatively, is that that is unlikely to be a productive course. I have regard to Haq v. Singh in that regard. It seems to me likely that the correct approach would be, if there were an assignment, to require the commencement of a new claim. Two things prevent me from saying anything definitive on this point or from purporting to rule on it. First, the matter has not been the subject of full argument before me. Second, this is a personal injury claim, which might possibly raise different questions on post-limitation amendment from those which arose in Haq v Singh. The short point is that I have no such application before me and I think it imprudent to purport to rule on such an application in advance of it being made.
37. The present situation needs to be seen in the context of the proceedings as a whole; I refer to the summary given earlier in this judgment. I have regard to the duration of the proceedings, to the steps that have been taken in them, and to the unhappy oversight on the part of all that has led to the circumstances that now obtain. I have regard to the prejudice that would be caused at this stage by the loss of a perfectly good claim. On the other hand, I have regard to the prejudice that would be caused to the defendant by simply allowing these proceedings to go into prolonged limbo where they are incapable of being pursued. It seems to me that the proper course is to grant a reasonable but defined period within which, in the light of my judgment, efforts can be made to regularise the claim. A period of three months seems to me to be appropriate. The period must be long enough to enable sensible though urgent communications to take place with the trustee and to enable concentrated efforts to be made to raise funds, if that course is thought amenable now that the legal position has been clarified. I am at the present time unwilling to countenance any longer period, having regard to the time that has already elapsed since the application for annulment was made, to the lack of recent evidence, and to the nature of the further information I have received as to what has and has not been achieved since the application was made.
38. The order that I propose to make is as follows. First, I shall declare that the proceedings are not a nullity in the sense of being incurably bad by reason of the fact that when they were commenced the cause of action was vested not in the claimant but in his trustee in bankruptcy. Second, I shall declare that the continued conduct of these proceedings by the claimant will be an abuse of process unless the irregularity in their constitution, namely that the cause of action is not vested in the person pursuing them, is remedied. I shall order that, unless by 4pm on 30 July 2015 one of the following shall have occurred, namely (a) the claimant's bankruptcy shall have been annulled and the cause of action against the defendant re-vested in him or (b) the claimant's trustee in bankruptcy shall have filed an application notice for an order substituting him as claimant or (c) the claimant shall have taken an assignment of the cause of action and shall have filed an application notice for an order giving him permission to amend the claim form and/or particulars of claim to plead his right by assignment, the claim shall stand struck out as being an abuse of process. As I hope I have made clear, an order in those terms does not purport to be a predetermination of either of the possible applications mentioned.