The road not taken

It has been rightly observed, that all good things must come to an end, but credit hire cases just go on and on. Some firms have so much work, so many claims to process and so few bodies to do them, that from time to time, procedural default occurs and a claim is struck out.

An application for relief from sanction might be made. But sometimes a second set of proceedings is simply issued, particularly if there are no limitation difficulties. In such circumstances, will the second set of proceedings be allowed to proceed, or will itself be vulnerable to an application for strike out as an abuse of process?

The most recent authority on striking out  second actions in such circumstances (although it does not concern a credit hire claim) is that of Davies v Carillion Energy Services Limited [2017] EWHC 3206 (QB) where Mr Justice Morris carried out an exhaustive survey of the authorities on when it is appropriate to strike out a second action. He observed:

29 The cases fall into two of the categories of abuse of process. The first category is where a party brings a second action in respect of matters which were  raised in a first action but where that action had been struck out on procedural grounds and without any consideration of the merits. Cases which, on the facts, fall within this first category are Arbuthnot Latham Bank Ltd v Trafalgar Holdings Limited (1997) CA 16 December 1997, Securum , supra, Collins , supra, Cranway , supra, Aktas , supra and the recent decision of HH Judge Gregory in Liverpool County Court in Maritime Transport Ltd v Mills dated 22 June 2017. Collins appears not to have be cited in any previous case before it was cited in the Maritime Transport case.

30 The second category is where a party seeks to raise in a second action issues or facts which could and should have been, but were not, raised in a first action, which action had resulted in a substantive adjudication or settlement. This category of case concerns the type of abuse identified in the well known case of Henderson v Henderson (1843) 3 Hare 100 and is the subject of the leading modern authority of Lord Bingham in Johnson v Gore Wood . In my judgment, the subsequent decision in Aldi falls into this second category; the analysis of Thomas and Longmore LJJ is based squarely on Henderson v Henderson and Johnson v Gore Wood and none of the pre-2007 first category cases appears to have been cited in Aldi . Stuart v Goldberg Linde likewise falls into this category.

31 Since Aldi , in Aktas , the Court of Appeal cited both lines of authority in a case falling into the first category. In the present case, District Judge Stuart did the same. More recently, in Maritime Transport HH Judge Gregory identified the possibility of different approaches derived from the two lines of authority. The distinction between these two categories was clearly identified by Chadwick LJ in Securum §15; whilst in Aktas at §53 Rix LJ seemed to suggest that first category is a sub-set of the second category.

He then gave his own analysis as follows:

52 First, the line of cases of Arbuthnot , Securum and Collins are authority for the following:

(1) Where a first action has been struck out as itself being an abuse of process, a second action covering the same subject matter will be struck out as an abuse of process, unless there is special reason: Securum §34, citing Arbuthnot , and Aktas §§ 48, 52.

(2) In this context abuse of process in the first action comprises: intentional and contumelious conduct; or want of prosecution; or wholesale disregard of rules of court: Aktas §§72 and 90.

(3) Where the first action has been struck out in circumstances which cannot be characterised as an abuse of process, the second action may be struck out as an abuse of process, absent special reason. However in such a case it is necessary to consider the particular circumstances in which the first action was struck out. At the very least, for the second action to constitute an abuse, the conduct in the first action must have been “inexcusable”.Collins §§24-25 and Cranway §20.

53 Secondly, Johnson v Gore Wood , Aldi and Stuart v Goldberg are all cases of the Henderson v Henderson type of abuse, where the first action has been resolved by way of adjudication or settlement and where it is said that issues which should have been brought in the first action are being sought to be re-litigated. In such cases:

(1) Whether a second action raising matters which could have been, but were not, raised in the first action is an abuse of process is not a matter of discretion, but is a judgment to be made by the first instance judge, assessing and balancing all the relevant factors in the case.

(2) On appeal from a first instance judge’s decision, the appeal court will interfere only where the judge has taken into account immaterial factors, omitted to take account of material factors, erred in principle or come to a conclusion that was impermissible or not open to him or was wrong: Stuart §82.

(3) Even if there is a finding of abuse of process, the court still has a remaining discretion not to strike out, but only in very unusual circumstances: Stuart §24 and Aktas §53.

54 Thirdly, there is a tension between these two lines of authority, which Rix LJ sought to address in Aktas at §53. Even if, as there suggested, the first category of case is to be regarded as an example of the general principles established in Johnson and Aldi , it is difficult to see how, in a “procedural” case, the two approaches can be applied in tandem. If both approaches are to be applied, it is not clear at what point in the analysis the “special reason” identified in Securum / Collins comes into consideration: in the first stage of the assessment of all relevant factors or at the second stage of residual discretion, if abuse is found; nor is it clear what factors come into play in the second stage, if all relevant factors have been considered in the first stage.

He decided:

55 Against this background, I conclude as follows:

(1) Where a first action has been struck out for procedural failure, the Court should apply the Securum / Collins approach I set out in paragraph 52 above. Even if Aldi and Stuart state general principles which are now applicable to all categories of abuse of process, I am not satisfied that there is any case authority which has specifically disapproved of the detailed analysis in Securum , Collins and Aktas of cases of procedural failure. Indeed Securum and Collins were not considered in either Johnson or Aldi . In Aktas , Rix LJ did not indicate disapproval of Securum .

(2) However given the introduction, since those cases, of amendments to CPR 1.1 and given developments in Mitchell and Denton , the “special reason” exception identified in Securum and Collins falls to be more narrowly circumscribed. Where the conduct of the first action has been found to have been an abuse of process or otherwise inexcusable, then the second action will be struck out as an abuse of process, save in “very unusual circumstances”. (Other terminology might equally be used to indicate this strict approach). In addition, in a case where the first action was not itself an abuse of process, whether the conduct in that action was “inexcusable” might fall to be assessed more rigorously and in the defendant’s favour. However, even post-Jackson, ultimately, the importance of the efficient use of resources does not, in my judgment, trump the overriding need to do justice: see Aktas §92.

(3) A single failure to comply with an unless order is not, of itself , sufficient to conclude that the second action is an abuse of process.

It follows that if a case implodes and is struck out, there may be no obvious right answer as to what to do: the facts and history must be very carefully scrutinised, to determine whether proceedings can simply be re-issued or whether an application for relief from sanction should be made to avoid another potentially fatal application to strike out.

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