Abuse of process – when does “warehousing” justify a strike out?

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A defendant faces a stale claim where the claimant has done nothing to progress it for months, perhaps years. Can they apply to strike it out, confident of success, or do they risk tickling the sleeping dragon and kick-starting the claim, with an adverse costs order to boot? We look at the question of when delay becomes abusive “warehousing” in the light of recent guidance given in Asturion Foundation v Alibrahim.

Introduction of the CPR

When the Civil Procedure Rules appeared in 1998, their architect Lord Woolf anticipated that stale claims and applications to dismiss proceedings for want of prosecution would be a thing of the past. A year earlier, in Arbuthnot Latham Bank Ltd v Trafalgar Holdings, Lord Woolf first used the term to “warehouse” in relation to proceedings:

“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, where 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 …”.

Lord Woolf’s optimism about the independent involvement of the courts in “case flow management” may have been misplaced, particularly in the current climate where a shortage of judges and court staff means that any judicial intervention, unprompted by a party, is unlikely. Claims can languish for a long period without the court getting involved, and in such cases the defendant is left in a quandary.

Abuse of process – the options

The court can strike out a statement of case as an abuse of process under CPR 3.4(2)(b). There are several grounds for doing so including a wholesale disregard of the rules (Choraria v Sethia), issuing to stop the limitation period running without being able properly to formulate the claim (Nomura v Granada) or deliberately paying an insufficient issue fee (Lewis v Ward Haddaway).

Where the abuse lies in delay, it may be established via two separate routes:

  1. Want of prosecution on the principles set out in Birkett v James. This requires the defendant to prove inordinate and inexcusable delay so as to cause a real risk of prejudice to the defendant or to the ability to conduct a fair trial.
  2. Deliberate delay by the claimant indicating no present intention to pursue the proceedings can amount to an abuse of process (Grovit v Doctor). This route does not require the defendant to prove prejudice or to show that a fair trial is impossible nor do they need to show that the claimant has abandoned the claim.

The second form of abuse of process is often described as “warehousing”, although the judge in Asturion held that not every delay described as “warehousing” is necessarily an abuse, nor is delay alone enough to constitute an abuse (Icebird Ltd v Winegardner).

The claim in Asturion

The claimant, Asturion, is a Liechtenstein foundation controlled by a board that was set up to hold and manage assets for members of the Saudi royal family. The defendant is one of the widows of the late King Fahd.

The dispute concerns the transfer in 2011 of one of four properties (Kenstead Hall in London, value £28 million) to the defendant for no consideration by a member of the claimant’s board at the time. In April 2015 the claimant began proceedings alleging that the transfer was void or voidable. The action proceeded slowly with a period of inactivity between November 2016 and August 2017. In September 2017 the defendant applied to strike out the claim, relying on what was said to be an admission of “warehousing” by the claimant while related proceedings in Liechtenstein were resolved.

The Liechtenstein proceedings

In December 2015 the defendant had made an application in Liechtenstein to remove the three members of the claimant’s board. The Liechtenstein court dismissed the application in December 2016 and the defendant appealed successfully. A cross appeal confirmed the dismissal of one board member but reinstated the other two. Further cross appeals were pending at the date of the hearing before the master in England.

The English proceedings

The master struck out the claim for “warehousing” abuse of process. This decision was reversed on appeal. The primary reason for this was the nature of the Liechtenstein proceedings, which had been brought by the defendant solely to undermine the legitimacy of the claim against her. The period of delay was not great in the circumstances, given that the claimant had good reason to believe that the defendant was content not to press on with the English proceedings. The parties were not in breach of any directions and good parts of the time taken might equally be laid at the defendant’s door since she took extended periods to formulate her defence and then put forward amendments.

Strike out - relevant factors

It is not enough for the defendant to prove deliberate delay amounting to an abuse of process. They must also persuade the judge that the abuse is serious enough to justify striking out the claim. The following factors are often relevant to this exercise of discretion.

Other proceedings The existence of other proceedings is not a prerequisite for a strike out – a claimant could “warehouse” the proceedings for other reasons – but if the claimant is pursuing proceedings against third parties, whether at home or abroad, without informing the English court, that will be an abuse that could warrant a strike out. Claims were struck out in these circumstances in Societe Generale v Goldas and Solland International Ltd v Clifford Harris & Co. The decision on appeal in Asturion seems fair given that the defendant made the application in Liechtenstein in order to thwart the claimant’s action in England.

How long does the delay have to be? This obviously depends on the reason for the delay and whether the claimant has breached any rules or directions, but it probably needs to be getting on for a year. The period was about eight years in Societe Generale and more than two years in Solland. The period of inactivity does not have to have continued up until the hearing.

How stale is the claim? The fact that the claim is started towards the end of the limitation period and is therefore already stale will make a strike out more likely (this was material in Solland).

Does the defendant’s conduct matter? This is a delicate topic. In the Birkett v James context, it has been said that defendants can no longer let sleeping dogs lie (Asiansky Television Plc v Bayer-Rosin). By contrast, in Solland where the claimant has deliberately “warehoused” the claim, the defendants’ failure to prompt the claimant to act during the period of delay was held not to absolve the claimants of guilt. However, if the defendant itself has contributed to any delay (as in Asturion), this will weigh against them and make a strike out less likely.

Comment

It is difficult to strike out a claim for “warehousing” but by no means impossible. Had the foreign proceedings in Asturion been begun by the claimant and not by the defendant, the strike out would probably have been upheld on appeal.

The present climate may also favour such applications. The pressures on judges and court administration have led to several strong statements about the need to inform the court about the progress of an action. The Commercial Court is particularly hot on this – see for example Griffin Underwriting Ltd v Varouxakis (Free Goddess) where the parties had not told the court about an agreed stay. The parallel with the requirement to tell the court about the possible need for successive related claims against the same or different defendants is clear (see this briefing). Parties who manipulate the litigation process without keeping the court informed do so at their peril.

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