When tomorrow never comes

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When tomorrow never comes

Published 25 March 2022

In the late 1990s the Court adopted the term ’warehousing’ to describe what was, effectively, the ‘storage’ of litigated claims. Lord Woolf made clear that with the introduction of the Civil Procedure Rules, warehousing would not be acceptable use of the court process.

Case

In Alfozan v Quastel Midgen LLP [2022] EWHC 66 (Comm) the High Court considered the Second Defendant’s application to strike out a claim on the basis of warehousing.

The court struck out the claim after considering the issue in two stages. First, was the claimant’s conduct of the claim an abuse of the court’s process? Secondly, if so, was striking out the claim proportionate?

Here the court considered the claimant had done the minimum necessary to preserve the claim, having (i) not complied with the Pre-action Protocol, (ii) issued, then served the proceedings shortly prior to expiry of the respective permitted periods and (iii) provided draft Amended Particulars of Claim some 17 months after conceding this was required.

The court concluded that while provision of security for costs and the draft Amended Particulars, indicated an intention to pursue the claim, the overall picture was one of minimal activity and indicated that the claimant was warehousing his claim as he issued it with no intent to pursue. Importantly, the claimant failed to properly explain the history.

As to proportionality, the Second Defendant was prejudiced by the absence of the First Defendant and the draft Amended Particulars remained inadequate. While striking out is a draconian sanction, the court was not confident that lesser orders would change the claimant’s attitude. The Second Defendant, in pressing the claimant, had arguably done more than might reasonably be expected. In neglecting the claim, the Claimant had forfeited the right to have the case considered on merit.

Comment

Whilst cases are inevitably fact-specific, it may surprise defendants that an apparently intransigent (and uncommunicative) claimant should be given an opportunity to take the claim forward after months or even years of delay.

Claimants providing proper justification and demonstrating real intention to progress a claim will have better prospects of avoiding a finding of abuse of process or receiving a lesser sanction.

Defendants would likely welcome the  conclusion that provision of security for costs was not an overriding consideration. However, defendants without such security, will be in a stronger position if pursuing a similar application.

In a warehousing case, the defendant’s prospects will be enhanced if it can demonstrate prejudice (such as the loss of witnesses reducing the prospects of a fair trial) but a lack of proactivity by the defendant may nonetheless frustrate an attempt to strike out the claim. Whilst defendants might reasonably ask why they should be expected to push a claimant to make its own case, they should take note.

Authors

Laura Stonier

Laura Stonier

Manchester

+44(0)161 934 3282

Martin Paxton

Martin Paxton

Manchester

+44 (0)161 934 3104

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