Page 1

All England Law Reports/1998/Volume 2/Arbuthnot Latham Bank Ltd and others v Trafalgar Holdings Ltd
and others; Chishty Coveney & Co (a firm) v Raja - [1998] 2 All ER 181

[1998] 2 All ER 181

Arbuthnot Latham Bank Ltd and others v Trafalgar Holdings Ltd and others; Chishty
Coveney & Co (a firm) v Raja

COURT OF APPEAL, CIVIL DIVISION

LORD WOOLF MR, WALLER AND ROBERT WALKER LJJ

24, 25 NOVEMBER, 16 DECEMBER 1997

Practice  Dismissal of action for want of prosecution  Inordinate delay without excuse  Action being
statute-barred if struck out  Plaintiff having second possible cause of action subject to longer and unexpired
limitation period  Plaintiff likely to commence second action if original action struck out  Whether
appropriate to strike out original action.

In two cases the issue arose as to the appropriateness of a court striking out an action for delay where the
cause of action relied on by the plaintiff in the proceedings would be statute-barred if the action were struck
out, but the plaintiff had another cause of action on which he could rely which was not statute-barred.

In the first case, the plaintiff bank issued a writ in August 1989 against T Ltd for the payment of moneys due,
and against T Ltd's UK representative, A, and his wife, who had both signed a guarantee to meet T Ltd's
liabilities to the bank on demand. Mr and Mrs A had also granted the bank a legal charge over their home,
under which they covenanted to discharge on demand all their liabilities to the bank. T Ltd took no further
part in the proceedings, but pleadings in relation to Mr and Mrs A closed in May 1990 and discovery was
completed in June 1991. In May 1996 Mr and Mrs A issued a summons to strike out the plaintiff's claim on
grounds of delay, the six-year limitation period applying to the claim on the guarantee having expired in
August 1995. The bank explained the delay by stating that the debt had been assigned to a debt collection
company, which had inherited a large portfolio of bad debts and which had given low priority to the claim
against Mr and Mrs A because the debt was secured. The judge found that there had been inordinate and
inexcusable delay, but dismissed the summons on the basis that the bank could commence a new action
based on the mortgage. Mr and Mrs A appealed contending, inter alia, that they would have a defence to any
claim based on the mortgage.

In the second case the plaintiff firm of accountants issued proceedings against the defendant in July 1986 for
professional fees and interest. Those sums had been secured by a charge on the defendant's property. Two
further actions for fees and interest were also commenced. In December 1992 the actions were struck out,
but were reinstated on appeal in October 1993. In August 1996, however, on the defendant's application, the
master again dismissed all three actions on the ground of inexcusable delay, and the judge dismissed the
plaintiff's appeal. The plaintiff applied for leave to appeal.
 Page 2

Held  On an application to dismiss an action for want of prosecution on the ground of delay, a defendant
was entitled to assume that normally the court would determine the issue on the basis of the claim which had
been pleaded and which was before the court. Thus, if that cause of action was statute-barred, the action
could be dismissed notwithstanding that the plaintiff could rely on another
[1998] 2 All ER 181 at 182

cause of action which was not statute-barred and the court should not embark on an investigation of the
merits of defences which would be raised to such a fresh claim unless they were obviously unfounded.
Moreover, although an action would not normally be dismissed for delay if the limitation period had not
expired, that consideration was not as important where the proceedings constituted an abuse of process.
While delay alone did not amount to an abuse of process, a series of separate inordinate and inexcusable
delays in complete disregard of the rules of the court and with full awareness of the consequences could do
so; and if an action had already been struck out, the duty on a party to comply with the rules if the action was
restored was heavier than it would be if the action had proceeded dilatorily without a previous intervention of
the court. It followed that in the first case the judge had erred in his approach and the appeal would therefore
be allowed. However, since in the second case there had been a total disregard of the rules and the overall
conduct of the case amounted to an abuse of process, the judge had been correct to dismiss the actions.
Accordingly, the application for leave to appeal would be dismissed (see p 187 f, p 188 a to g, p 189 e f, p
190 d e j to p 191 b and p 192 g, post).

Birkett v James [1977] 2 All ER 801, Culbert v Stephen Westwell & Co Ltd [1993] PIQR P54 and Grovit v
Doctor [1997] 2 All ER 417 applied.

Per curiam. (1) The gradual change to a court controlled case management system which is taking place
imposes additional burdens on the courts, and it is in the interests of litigants as a whole that the court's time
is not unnecessarily absorbed in dealing with satellite litigation which non-compliance with the timetables laid
down in the rules creates. Litigants and their legal advisors must therefore recognise that any delay which
occurs from now on will be assessed not only from the point of view of the prejudice caused to the particular
litigants whose case it is, but also in relation to the effect it can have on other litigants who are wishing to
have their cases heard and the prejudice which is caused to the due administration of justice (see p 191 e to
g, post).

(2) The unofficial practice of banks and others, faced with a multitude of debtors, to initiate a great many
actions and then select which of those proceedings to pursue at any particular time, should cease in so far
as it is taking place with the consent of the court or other parties. Although it is arguable that to date such
practices do not constitute an abuse of process, this will no longer be the case. This new approach will not
be applied retrospectively to delays which have already occurred but will apply to future delays (see p 192 c
to f, post).

Notes

For dismissal of actions for want of prosecution, see 37 Halsbury's Laws (4th edn) paras 447449, and for
cases on the subject, see 37(3) Digest (Reissue) 6779, 32933345.

For striking out for abuse of process, see 37 Halsbury's Laws (4th edn) paras 434, 435.
 Page 3

Cases referred to in judgment

Barclays Bank plc v Maling [1997] CA Transcript 849.

Barclays Bank plc v Miller (Frank, third party) [1990] 1 All ER 1040, [1990] 1 WLR 343, CA.

Birkett v James [1977] 2 All ER 801, [1978] AC 297, [1977] 3 WLR 38, HL.

Culbert v Stephen Westwell & Co Ltd [1993] PIQR P54, CA.

[1998] 2 All ER 181 at 183

Dept of Transport v Chris Smaller (Transport) Ltd [1989] 1 All ER 897, [1989] AC 1197, [1989] 2 WLR 578,
HL.

Grovit v Doctor [1997] 2 All ER 417, [1997] 1 WLR 640, HL.

Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666, CA.

Janov v Morris [1981] 3 All ER 780, [1981] 1 WLR 1389, CA.

Teale v McKay [1994] PIQR P508, CA.

Cases also cited or referred to in skeleton arguments

Ackbar v C F Green & Co Ltd [1975] 2 All ER 65, [1975] QB 582.

Aiken v Stewart Wrightson Members' Agency Ltd [1995] 3 All ER 449, [1995] 1 WLR 1281.

Allen v Sir Alfred McAlpine & Sons Ltd [1968] 1 All ER 543, [1968] 2 QB 229, CA.

Art Reproduction Co Ltd, Re [1951] 2 All ER 984, [1952] Ch 89.

Barber v Staffordshire CC [1996] 2 All ER 748, CA.

Barclays Bank Ltd v Beck [1952] 1 All ER 549, [1952] 2 QB 47, CA.

Barnes v Glenton [1899] 1 QB 885, CA.

 Page 4

Beoco Ltd v Alfa Laval Co Ltd [1994] 4 All ER 464, [1995] QB 137, CA.

Brisbane City Council v A-G for Queensland [1978] 3 All ER 30, [1979] AC 411, PC.

Central Electricity Generating Board v Halifax Corp [1962] 3 All ER 915, [1963] AC 785, HL.

Christy (Thomas) Ltd (in liq), Re [1994] 2 BCLC 527.

Cia de Electricidad de la Provincia de Buenos Aires Ltd, Re [1978] 3 All ER 668, [1980] Ch 146.

Collin v Duke of Westminster [1985] 1 All ER 463, [1985] QB 581, CA.

Dingle v Coppen [1899] 1 Ch 726.

DSV Silo- und Verwaltungsgesellschaft mbH v Sennar (owners) [1985] 2 All ER 104, [1985] 1 WLR 490, HL.

Ezekiel v Orakpo [1997] 1 WLR 340, CA.

Government of India, Ministry of Finance (Revenue Division) v Taylor [1955] 1 All ER 292, [1955] AC 491,
HL.

Henderson v Henderson (1843) 3 Hare 100, [184360] All ER Rep 378, 67 ER 313, V-C.

Hicks v Newman [1990] CA Transcript 392.

Holmes v Cowcher [1970] 1 All ER 1224, [1970] 1 WLR 834.

Hopkinson v Tupper [1997] CA Transcript 468.

Lazenby (James) & Co v McNicholas Construction Co Ltd [1995] 3 All ER 820, [1995] 1 WLR 615.

Lloyd, Re, Lloyd v Lloyd [1903] 1 Ch 385, CA.

Lloyds Bank Ltd v Margolis [1954] 1 All ER 734, [1954] 1 WLR 664.

Martin's Mortgage Trusts, Re, C & M Matthews Ltd v Marsden Building Society [1951] 1 All ER 1053, [1951]
Ch 758, CA.
 Page 5

National Westminster Bank plc v Kitch [1996] 4 All ER 495, [1996] 1 WLR 1316, CA.

Poole v Poole (1871) LR 7 ChApp 17.

Pople v Evans [1968] 2 All ER 743, [1969] 2 Ch 255.

Roebuck v Mungovin [1994] 1 All ER 568, [1994] 2 AC 224, HL.

Romain v Scuba TV Ltd [1996] 2 All ER 377, [1997] QB 887, CA.

SCF Finance Co Ltd v Masri [1985] 2 All ER 747, [1985] 1 WLR 876, CA.

Shtun v Zalejska [1996] 3 All ER 411, [1996] 1 WLR 1270, CA.

Sutton v Sutton (1882) 22 Ch D 511, CA.

Talbot v Berkshire CC [1993] 4 All ER 9, [1994] QB 290, CA.

Trill v Sacher [1993] 1 All ER 961, [1993] 1 WLR 1379, CA.

Yew Bon Tew v Kenderaan Bas Mara [1982] 3 All ER 833, [1983] 1 AC 553, PC.
[1998] 2 All ER 181 at 184

Appeal and application

Arbuthnot Latham Bank Ltd and ors v Trafalgar Holdings Ltd and ors

The second and third defendants, Peter John Ashton and Pauline Hilda Ashton, appealed with
leave granted by Potter LJ on 12 January 1997 from the order of Sir Ronald Waterhouse sitting as
a judge of the High Court made on 31 July 1996 dismissing their summons for the dismissal of the
action brought by the plaintiffs, Arbuthnot Latham Bank Ltd, Nordbanken London Branch and
Securum Finance Ltd, for want of prosecution. The facts are set out in the judgment of the court.

Chishty Coveney & Co (a firm) v Raja

The plaintiff firm, Chishty Coveney & Co, applied for leave to appeal from the order of Judge Roger
Cox, sitting as a deputy judge of the High Court, dismissing an appeal from the order of Master
Hodgson made on 2 July 1997, dismissing three actions brought by the plaintiff against the
defendant, Ibrahim Khan Raja, for professional fees. The facts are set out in the judgment of the
court.
 Page 6

Mark Strachan QC and Peter Knox (instructed by Coldham Shield & Mace) for Mr and Mrs Ashton.

Terence Mowschenson QC and Anthony de Garr Robinson (instructed by Sheridans) for the plaintiffs.

Justin Althaus (instructed by Aslam & Co) for the plaintiff firm.

Mr Raja did not appear.

Cur adv vult

16 December 1997. The following judgment of the court was delivered.

LORD WOOLF MR.

This judgment relates to an appeal and an application for leave to appeal. The appeal is in Arbuthnot Latham
Bank Ltd and others v Trafalgar Holdings Ltd and others. The application for leave to appeal is in Chishty
Coveney & Co v Raja. We are giving a joint judgment which relates to both cases, because although they
were heard on different dates, they raise an identical issue. That issue is the appropriateness of a court
striking an action out where there has been considerable delay if: (i) the cause of action relied upon by the
plaintiff in the proceedings would be statute-barred if the action were to be struck out, but (ii) the plaintiff has
another cause of action upon which he has not so far relied for recovering the money or property the subject
matter of the existing action and the cause of action is subject to a longer limitation period which has not
expired, and (iii) if the original action is struck out, the probabilities are that fresh proceedings will be
commenced which will rely upon the cause of action which is not statute-barred.

The two cases also provide a convenient opportunity for this court to give some guidance for the assistance
of the profession, as to the likely consequences in the future of excessive delay in the conduct of legal
proceedings now that the courts are in the process of implementing changes requiring the parties to conduct
their litigation with reasonable expedition.
 Page 7

THE BACKGROUND TO THE TWO CASES

The Arbuthnot Latham Bank case (the bank case)

This is an appeal from a decision of Sir Ronald Waterhouse, sitting as a High Court Judge, on 31 July 1996,
when he dismissed a summons by Mr and Mrs Ashton to strike out the action which had been brought
against them.
[1998] 2 All ER 181 at 185

The claim against Mr and Mrs Ashton arose in this way. Mr Ashton was the first defendant's, Trafalgar
Holdings Ltd (Trafalgar), representative in the United Kingdom. On 28 January 1987 Mr and Mrs Ashton
signed a guarantee to meet on demand the liabilities of Trafalgar to Arbuthnot Latham Bank Ltd (the bank).
Two years later on 2 March 1989 Mr and Mrs Ashton granted the bank a legal charge over their home (the
mortgage). Under the mortgage Mr and Mrs Ashton covenanted to discharge on demand all their liabilities to
the bank.

By letter dated 8 June 1989, the bank demanded from Trafalgar payment of money then due amounting to
over £720,000 plus interest. When that sum was not paid, on 31 July 1989, the bank demanded from the
Ashtons the somewhat larger sum which by that time was allegedly due. Nothing was paid and on 23 August
1989 the bank issued a writ indorsed with a statement of claim against Trafalgar and the Ashtons. Trafalgar
did not serve a defence but the Ashtons did so. In the defence they contended that: (i) no debt was due from
Trafalgar, (ii) the guarantee was subject to collateral warranties which made it unenforceable in the
circumstances, and (iii) in the case of Mrs Ashton the guarantee was obtained by undue influence.

Trafalgar took no further part in the proceedings but in relation to the Ashtons pleadings closed on 29 May
1990 and discovery was completed on 6 June 1991. On 7 June 1991 an order was made substituting
Nordbanken London Branch as the plaintiff. Thereafter no step was taken until Securum Finance Ltd wrote to
the Ashtons on 20 March 1996. This was followed by the Ashtons on 3 May 1996 issuing a summons to
strike out the claim against them on the grounds of delay.

Sir Ronald Waterhouse dismissed the summons to strike out, gave the plaintiffs leave to join Securum
Finance Ltd as the third plaintiffs, gave the plaintiffs leave to issue a summons before the master seeking
leave to amend the statement of claim, and refused the Ashtons leave to appeal.

On 9 October 1996 Master Trench gave the plaintiffs leave to amend their statement of claim so as to
include a claim based on the covenant in the mortgage.

It is common ground between the parties that the plaintiffs' original claim on the guarantee was a claim to
which a six-year limitation period applied and that period had expired on 14 August 1995. It is also common
ground that in relation to the claim under the mortgage, the limitation period is 12 years and that period has
not expired (see s 8 in relation to an action upon a speciality and s 20 of the Limitation Act 1980). In his
judgment, Sir Ronald Waterhouse concluded that there had been inordinate and inexcusable delay. In their
evidence, the plaintiffs explained the delay by stating that the debt was assigned to the company now known
as Securum UK Ltd on 21 December 1992. After that assignment, that company became 'in essence an
asset recovery and debt collection company'. It had inherited a large portfolio of bad debts some of which ran
into seven figures. It was therefore decided that the plaintiffs would deal with only those loans within their
portfolio which required urgent action and, as in this case they had security, it was not regarded as an urgent
 Page 8

situation and so it was not initially actively pursued. In addition Mr and Mrs Ashton were not only defending
but also counterclaiming against the plaintiffs and they appeared not anxious to pursue their counterclaim.

Mr and Mrs Ashton's defence turned substantially on oral evidence and the judge records that it is conceded
by the plaintiff that the passage of time may have affected their recollection of events and this would impinge
upon their oral evidence. But he drew attention to the fact that many important matters were recorded in
correspondence and it is part of the Ashtons' case that the
[1998] 2 All ER 181 at 186

proceedings against them should have been deferred until 1994 because of an undertaking they have been
given. It was however, on the basis that a fresh action could be brought by the plaintiffs based on the
mortgage which would not be statute-barred that the judge dismissed the defendant's application. By
inference it appears that the judge would have come to a different decision, because of the anxiety to which
the Ashtons had been subjected and their dimming recollection, if a fresh action could not have been
brought.

Chishty Coveney & Co v Raja (the accountants' case)

In this action the plaintiffs are a firm of accountants. They issued proceedings on 7 July 1986, over 11 years
ago, for professional fees amounting to almost £84,000 and interest. Mr Raja disputes that sum is a
reasonable price for the services which he received. In addition he alleges that his signature was obtained by
the plaintiff to a piece of paper by fraud and that this was used subsequently to represent that he had agreed
to a charge. He also made a counterclaim suggesting that the plaintiff had been in breach of duty and
removed certain property to which he was not entitled. A second action was commenced on 7 July 1986 for
further fees and a third action was commenced naming a sum of over £157,000, including interest, based on
an alleged compromise agreement. On 2 December 1992 the plaintiff's actions were struck out by the master
but on an appeal on 22 October 1993 the three actions were reinstated. They were subsequently
consolidated and various directions were given which the defendant suggests were not complied with in time.
The defendant contends that he has suffered serious prejudice. First, because he suffered a heart attack in
April 1994 and has ever since been less active, and secondly, because his recollection of events is now
poor. He further suggests that he has been subject to additional tension and pressure because of the action
not being resolved.

After the appeal against the striking out had been allowed, the plaintiff changed solicitors. While it is
conceded that there has been inexcusable delay, it is submitted that the delay was neither intentional nor
contumelious.

By an order made on 2 July 1997 Master Hodgson dismissed all three actions. The master also ordered that
the plaintiff should pay the defendant's costs for the actions including the costs of the application. However,
as both parties were legally aided he ordered that 'such costs are not to be enforced without leave of the
Courts'. He also granted a legal aid taxation but indicated that the taxing master should consider the costs of
photocopying up to a thousand documents and whether the costs of doing this should be allowed. On 28 July
1997 Judge Roger Cox, sitting as a deputy judge of the High Court, dismissed the appeal. He also ordered
the defence and counterclaim to be struck out without any order as to costs, save for the costs of the appeal
which should be paid by the plaintiff to the defendant, with the enforcement of the order adjourned generally.
The judge also confined the order of the master about the non-enforcement of the order for costs to the
period during which the plaintiff was legally aided.

On 7 October 1997 Schiemann LJ gave leave to appeal on the costs point and although he stated 'you may
argue the other two [points]', it was thought necessary to renew the application for leave and it is that
 Page 9

renewed application to which this judgment relates.

The authorities on striking out

Although there is a continuous stream of satellite litigation coming before the courts over the issue of delay,
the main principles applicable are now clearly established. The starting point is invariably the House of Lords
decision in Birkett
[1998] 2 All ER 181 at 187

v James [1977] 2 All ER 801, [1978] AC 297. In the very careful and helpful argument which was advanced
by both sides in the bank case appeal we were taken through speeches in Birkett v James and in particular
the speech of Lord Diplock. The position shortly is as follows. (1) An action should only be dismissed for
want of prosecution where (a) the plaintiff's default has been intentional and contumelious, or (b) where there
has been inordinate and inexcusable delay giving rise to a substantial risk that a fair trial would not be
possible or to serious prejudice to the defendant. (2) Before the limitation period has expired an action will
not normally be dismissed for inordinate and inexcusable delay if fresh proceedings for the same cause of
action could be initiated.

The House of Lords in Birkett v James were not, however, by setting out these principles, acquiescing in
delay. They indicated that the court should exercise such powers as they have to ensure that an action is
pursued with due diligence. Thus Lord Diplock said ([1977] 2 All ER 801 at 807, [1978] AC 297 at 321):

'The court may and ought to exercise such powers as it possesses under the rules to make the
plaintiff pursue his action with all proper diligence, particularly where at the trial the case will
turn upon the recollection of witnesses to past events. For this purpose the court may make
peremptory orders providing for the dismissal of the action for non-compliance with its order as
to the time by which a particular step in the proceedings is to be taken. Disobedience to such
an order would qualify as intentional and contumelious  But where no question of
non-compliance with a peremptory order is involved the court is not in my view entitled to treat
as inordinate delay justifying dismissal of the action in accordance with the second principle
 a total time elapsed since the accrual of the cause of action which is no greater than the
limitation period within which the statute allows the plaintiffs to start that action.'

In Birkett v James the House of Lords also explained why whether the limitation period has expired is so
significant. The reason is that in the absence of some conduct which means that a second action could be
stayed, it would not benefit the defendant to have the first action struck out since this would only result in
further proceedings which would inevitably cause more expense and delay.

If however the limitation period has expired, the same logic does not apply. It also does not apply where the
defendant to the fresh action is able to show that it is 'open to doubt and serious argument whether the
cause of action asserted  would be time-barred if fresh proceedings were issued'. In such circumstances
the interests of justice may be best served by dismissing the action and leaving the party whose action has
been struck out to bring fresh proceedings if he chooses to do so. This was established by this court in
Barclays Bank plc v Miller (Frank, third party) [1990] 1 All ER 1040, [1990] 1 WLR 343. In that case
Staughton LJ explained the reason for this approach. He pointed out ([1990] 1 All ER 1040 at 1044, [1990] 1
WLR 343 at 348):

'The alternative is that masters, and judges on appeal and even this court, may become
embroiled, on an application to dismiss for want of prosecution, in long and elaborate
 Page 10

arguments as to whether some future action, if it were brought, would be time-barred. There is
a good deal to be said for the view that masters should not have that task forced upon them
when the problem may never arise and, if it does arise, could perhaps more conveniently be
considered in another way.'

[1998] 2 All ER 181 at 188

The fact that the limitation period has not expired, does not figure to the same degree in a case where there
has been contumelious conduct on behalf of a plaintiff or where the proceedings which are being struck out
constitute an abuse of process (see Grovit v Doctor [1997] 2 All ER 417, [1997] 1 WLR 640). In such
circumstances, the plaintiff may well find that if he brings fresh proceedings after the original proceedings are
struck out they are stayed because of his conduct.

For this purpose delay alone even delay of 11 years does not amount to an abuse of process. This was
made clear in the recent case of Barclays Bank plc v Maling [1997] CA Transcript 849, a copy of which was
placed before us. In that case there was delay of this order but for a substantial proportion of the period of
delay the court had made an order that the action against the relevant defendant was to be adjourned
generally with liberty to restore pending proceedings against his wife which in fact were never pursued. With
that background Aldous LJ following Teale v McKay [1994] PIQR P508 said:

'That case is a clear indication that mere delay, whether or not caused by incompetence,
cannot amount to an abuse of process which will enable an action to be struck out. What is
needed is disregard of the court's orders. It may be that deliberate as opposed to negligent
disregard may not be required (see Hytec Information Systems Ltd v Coventry City Council
[1997] 1 WLR 1666).'

The court distinguished Culbert v Stephen Westwell & Co Ltd [1993] PIQR P54. It did so because in
Culbert's case the defendants 'had come to court to progress the action with the result that an unless order
had to be made' on four occasions. In that situation Parker LJ said in Culbert's case [1993] PIQR P54 at
P65P66:

'There is however in my view another aspect of this matter. An action may also be struck out for
contumelious conduct, or abuse of the process of the court or because a fair trial of the action
is no longer possible. Conduct is in the ordinary way only regarded as contumelious where
there is a deliberate failure to comply with a specific order of the court. In my view however a
series of separate inordinate and inexcusable delays in complete disregard of the rules of the
court and with full awareness of the consequences can also properly be regarded as
contumelious conduct or, if not that, to an abuse of the process of the court. Both this and the
question of fair trial are matters in which the court itself is concerned and do not depend on the
defendant raising the question of prejudice. In my judgment the way in which the action has
been conducted does amount to an abuse of the process of the court and it would be a further
abuse of process if the action were allowed to proceed. In my judgment also, a fair trial is no
longer possible. I am aware that liability is not seriously in doubt, indeed it may already have
been decided in the plaintiff's favour but I can see no real possibility of a fair trial on quantum
when even now the plaintiff's claim is still far from clear.'

These comments of Parker LJ are highly relevant in relation to the accountants' case.

In Grovit v Doctor [1997] 2 All ER 417 at 423, [1997] 1 WLR 640 at 646, in a speech with which the other
members of the House agreed, I referred to the decision of the House in Dept of Transport v Chris Smaller
(Transport) Ltd [1989] 1 All ER 897, [1989] AC 1197. In his speech in that case Lord Griffiths emphasised
 Page 11

that 'a far more radical approach is required to tackle the problems of delay in the litigation process than
driving an individual plaintiff away from the courts when his culpable delay has caused no injustice to his
opponent' (see [1989] 1 All ER 897
[1998] 2 All ER 181 at 189

at 903, [1989] AC 1197 at 1207). He suggested that the remedy lay in the introduction of court controlled
case management techniques. I pointed out in my speech, that the position had not improved since the
decision in the Chris Smaller case. I went on to indicate that it was at least open to question whether it is not
preferable to await the outcome of the implementation of the new rules (which at the present time are being
drafted) before making a substantial inroad on the principles established in Birkett v James.

THE APPLICATION OF THE AUTHORITIES TO THE PRESENT CASES

The bank case

The previous authority which is closest to the bank case is the decision of this court in Barclays Bank plc v
Miller [1990] 1 All ER 1040, [1990] 1 WLR 343. Sir Ronald Waterhouse distinguished Miller's case because if
fresh proceedings were commenced, he took the view that the bank would succeed. There was not the same
uncertainty as to the outcome of the fresh proceedings as there was said to be in Barclays Bank plc v Miller.

Was the judge right in adopting this approach? We do not think so, for reasons advanced by Mr Strachan QC
on behalf of Mr and Mrs Ashton. Those reasons are as follows. (1) There is no dispute in this case that in
relation to the only cause of action pleaded on behalf of the bank, any fresh proceedings would be
statute-barred, both as to principal and interest. In Birkett v James no consideration was given to a situation
where the only claim which had been relied on would be statute-barred if the action was dismissed but there
was another cause of action which would not be barred. When considering whether or not to strike out a
claim for delay, a defendant is entitled to assume that, normally the court will determine the issue, as to
whether to strike out on the basis of the cause of action which has been pleaded and is before the court. The
defendant is entitled to say if the other requirements laid down in Birkett v James are met the claim which
had been made should be determined in my favour. There may be exceptional circumstances where this
approach will not be adopted by the courts but that will be an exceptional situation.

(2) Mr Mowschenson QC on behalf of the plaintiffs accepts the plaintiffs may not recover as much interest in
the second action as they would have recovered in reliance upon the first cause of action, (see s 20(5) of the
Limitation Act 1980), but he submits that the plaintiffs can recover the principal sum and all the interest by
relying on their remedies as mortgagees. This will involve appointing a receiver to sell the property which
constitutes the security, taking possession and exercising the statutory powers of sale under the Law of
Property Act 1925, s 101 or by bringing an action for foreclosure. He submits the plaintiffs would then
recover all moneys owing from the Ashtons whether time-barred or not. However the plaintiffs in seeking to
enforce their rights in this way, would be taking a wholly different course from that which they had chosen to
take so far and it is inappropriate to take into account possibilities of this sort in determining what should be
the outcome of the very different action which the plaintiffs have relied on so far. In addition, if the plaintiffs
sought to rely on the mortgage in this way, the Ashtons would still seek to rely upon the defences which they
say they would have if the existing action was dismissed and the plaintiffs started further proceedings based
upon the covenant contained in the mortgage.

(3) If the existing action is dismissed, in relation to an action based on the covenant contained in the
mortgage, Mr Strachan submits on behalf of Mr and Mrs Ashton that they would have the following
defences(a) the fact that the
[1998] 2 All ER 181 at 190
 Page 12

statute-barred claim would not be a liability. By their covenant the Ashtons only promised to discharge on
demand all their 'liabilities' to the bank. Those 'liabilities' would be under the guarantee which they gave to
the bank and would not include sums which were payable under the guarantee which were not recoverable.
They would not be liabilities for the purpose of the mortgage; (b) the general principle is that a plaintiff should
bring forward at the outset his whole case. Accordingly, it would be not open to the plaintiff to rely upon a
cause of action which he could have relied on in the original action to provide a foundation for the second
action relating to the same subject matter; (c) that in any event because of the provisions of s 20(5) of the
Limitation Act 1980, the plaintiffs would not be able to recover in the second action any interest in relation to
which six years had expired from the date upon which it became due prior to the commencement of the
action. This point is not disputed by the plaintiffs; (d) finally it is said that the Ashtons would be entitled to
their costs of the only action which has been brought against them and furthermore the plaintiffs would not
be able to bring any further action until those costs had been paid. This would benefit the Ashtons.

Apart from the point which depends upon s 20(5) of the Limitation Act 1980 and the situation as to costs, the
defences which the Ashtons propose to rely on in a second action are submitted by Mr Mowschenson to be
wholly without foundation. This is to overstate the position. They cannot be dismissed out of hand. Mr
Strachan is therefore on strong ground when he submits that on an application to strike out, the court should
not embark upon an investigation of the merits of defences which would be raised if a claim, which has not
yet been made, were to be brought unless they are obviously unfounded. As Mr Strachan rightly points out,
the task of courts in considering applications to strike out is difficult enough without having to explore issues
which are far from straight forward and would, as here, require careful examination.

It is submitted on behalf of the plaintiffs, that if the court were to dismiss the present proceedings this would
bring the law into contempt in the eyes of the ordinary member of the public. The ordinary member of the
public would regard it as a 'lawyers' game' to strike out a claim for a sum of money on the grounds of delay
when an action could be brought for the very same sum of money the next day.

That this would be the reaction of the public is far from clear. Their reaction is equally likely to be that the
striking out of the action was richly deserved the plaintiffs having allowed this action to go to sleep for just
over four and a half years because they had actions against other parties to which they wished to give
priority.

The accountants' case

Much of what has already been said in the bank case is also relevant to this case. However, the position of
the defendant in this case is even stronger. He is entitled to draw attention to the overall delay of nearly 11
years and the fact that the action had already been struck out on a previous occasion, although subsequently
that order had been set aside. Although there had not been a peremptory or an unless order made in this
case which had not been complied with there had been a total disregard of the rules by both parties and the
overall conduct of this case amounted to an abuse of the court. This was not a situation where the normal
timetable provided for in the rules had been placed on one side by the action being adjourned as in Barclays
Bank plc v Maling. If an action has
[1998] 2 All ER 181 at 191

already been struck out, the duty on a party to comply with the rules if the action is restored is heavier than it
would be if the action had proceeded dilatorily without a previous intervention of the court of this sort. The
conduct of the defendant may also have been remiss. However, this is not a matter upon which the plaintiff
can rely when there has been an abuse of process. The counterclaim has been correctly struck out as well.

The plaintiff has however still leave to appeal in relation to the order of costs made by the judge. The order
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for costs is not the subject of this judgment. However, it is very much to be hoped that an appeal in regard to
costs will not be pursued bearing in mind that the parties were in receipt of legal aid so the practical
consequences of the orders for costs which were made must be limited.

THE FUTURE

In his speech in the Chris Smaller case, Lord Griffiths identified the advantages which could accrue from a
civil procedural process which was subject to 'court controlled case management techniques' (see [1989] 1
All ER 897 at 903, [1989] AC 1197 at 1207). This process is now being introduced. The new unified rules are
intended to come into force in April 1999. However, many aspects of the process can be introduced while the
existing Supreme Court and County Court Rules are in force. Most of the powers which the court requires for
the purposes of case management are already contained in the existing rules.

The gradual change to a managed system which is taking place does impose additional burdens upon the
courts, involving the need for training and the introduction of the necessary technological infrastructure. It is
therefore in the interests of litigants as a whole, that the court's time is not unnecessarily absorbed in dealing
with the satellite litigation which non-compliance with the timetables laid down in the rules creates. The
substantial argument which was advanced before Sir Ronald Waterhouse and this court in relation to the
bank case is just one instance of a phenomenon which is regularly taking up the time of the courts. In Birkett
v James the consequence to other litigants and to the courts of inordinate delay was not a consideration
which was in issue. From now on it is going to be a consideration of increasing significance. Litigants and
their legal advisers, must therefore recognise that any delay which occurs from now on will be assessed not
only from the point of view of the prejudice caused to the particular litigants whose case it is, but also in
relation to the effect it can have on other litigants who are wishing to have their cases heard and the
prejudice which is caused to the due administration of civil justice. The existing rules do contain time limits
which are designed to achieve the disposal of litigation within a reasonable time scale. Those rules should be
observed.

It is already recognised by Grovit v Doctor [1997] 2 All ER 417, [1997] 1 WLR 640 that to continue litigation
with no intention to bring it to a conclusion can amount to an abuse of process. We think that the change in
culture which is already taking place will enable courts to recognise for the future, more readily than
heretofore, that a wholesale disregard of the rules is an abuse of process as suggested by Parker LJ in
Culbert v Stephen Westwell & Co Ltd. While an abuse of process can be within the first category identified in
Birkett v James it is also a separate ground for striking out or staying an action (see Grovit v Doctor [1997] 2
All ER 417 at 419, [1997] 1 WLR 640 at 642643) which does not depend on the need to show prejudice to
the defendant or that a fair trial is no longer possible. The more ready recognition that wholesale failure, as
such, to comply with the rules justifies an action being struck out, as long as it is just to do so, will avoid
much time and expense being incurred in investigation questions of prejudice,
[1998] 2 All ER 181 at 192

and allow the striking out of actions whether or not the limitation period has expired. The question whether a
fresh action can be commenced will then be a matter for the discretion of the court when considering any
application to strike out that action, and any excuse given for the misconduct of the previous action (see
Janov v Morris [1981] 3 All ER 780, [1981] 1 WLR 1389). The position is the same as it is under the first limb
of Birkett v James. In exercising its discretion as to whether to strike out the second action, that court should
start with the assumption that if a party has had one action struck out for abuse of process some special
reason has to be identified to justify a second action being allowed to proceed.

It has been the unofficial practice of banks and others who are faced with a multitude of debtors from whom
they are seeking to recover moneys to initiate a great many actions and then select which of those
proceedings to pursue at any particular time. This practice should cease in so far as it is taking place without
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the consent of the court or other parties. If there is good reason for doing so the court can make the
appropriate directions. Whereas hitherto it may have been arguable that for a party on its own initiative to in
effect 'warehouse' proceedings until it is convenient to pursue them does not constitute an abuse of process,
when hereafter this happens this will no longer be the practice. It leads to stale proceedings which bring the
litigation process into disrespect. As case flow management is introduced, it will involve the courts becoming
involved in order to find out why the action is not being progressed. If the claimant has for the time being no
intention to pursue the action this will be a wasted effort. Finding out the reasons for the lack of activity in
proceedings will unnecessarily take up the time of the court. If, subject to any directions of the court,
proceedings are not intended to be pursued in accordance with the rules they should not be brought. If they
are brought and they are not to be advanced, consideration should be given to their discontinuance or
authority of the court obtained for their being adjourned generally. The courts exist to assist parties to resolve
disputes and they should be used by litigants for other purposes. This new approach will not be applied
retrospectively to delays which have already occurred but it will apply to future delay.

The appeal of the Ashtons will therefore be allowed, the judge's order set aside and the plaintiffs' claim
dismissed. The counterclaim will also be dismissed. In the accountants' case the application for leave to
appeal will be refused.

Appeal allowed. Application for leave to appeal refused.

Kate O'Hanlon Barrister.