Abuse of process

An issue that arises from time to time in credit hire claims is that of abuse of process. The categories of abuse of process are famously never closed, but the cases tend to arise in two particular contexts. The first is where a set of proceedings are struck out and whether after a failed application to reinstate or not, a second set of proceedings will be embarked upon. The default position for a compensating party is to assert that the second set of proceedings are an abuse of process.

The second is where a “claim” to use that term neutrally, is parcelled up and divided out between various representatives instructed by the claimant or on behalf of the claimant. This can be on the basis of a division between insured and uninsured losses, where an insurer is pursuing their outlay utilising a right of subrogation and the claimant herself is seeking to recover her uninsured losses, or may be where one firm acts in respect of the claimant’s claim for damages for personal injuries and another firm acts in respect of her property damage claim: the principal element of which will be a claim for the credit hire charges.

If the claim is settled piecemeal, or in “bits” it can be tempting for a compensating party to assert that there has been either a general settlement, or compromise of all issues, by the fact of settlement and any later proceedings for unsettled heads of loss are necessarily abusive.

This latter context often arises and is complicated by the Low Value Claims Protocol, which is sometimes asserted to be a “complete code” (show me where it says that in the Protocol) or which displaces the common law principles which otherwise govern any settlement made between two parties (how? and by what authority?)

An application to strike out for abuse of process will usually be heard by a District Judge. Over the years I have watched with interest the willingness of the District Bench to strike out cases vary depending on the vagaries of appellate authority.

Before 1999 the approach was highly formalised. Fondly, I remember my 3 lever arch files of authorities on the various flavours of dismissal for want of prosecution, re-instatement after automatic striking out and abuse of process.

After 1999 and before 2013, the District Bench took a pragmatic approach to default and relief from sanction, applying the nuanced approach in the former rule 3.9 CPR checklist.

In 2013-2014 the axe descended as a result of the short lived Mitchell heresy. I never did find out what happened to all those cases which were struck out after Mitchell and pre-Denton. Were they appealed? Did litigants live with the consequences?

Now, and post the decision of the Court of Appeal in Cable v Liverpool Victoria Insurance Company [2020] EWCA Civ 1015 a more nuanced approach to abuse of process arguments again applies.

A useful recital and examination of authority on the topic of abuse of process is to be found in the case of Davies v Carillion Energy Services Ltd and another [2017] EWHC 3206 (QB) where Morris J analyses and explained a very long line of authority in these terms:

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 concluded:

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.

Consideration of Davies and Cable thus form a useful starting point (though not the only point) for the consideration of authority and the approach that the court should apply when deciding an application to strike out.

The whiplash reforms are now not far away. I suspect that once the new Protocol with its labyrinthine provisions has been considered, and the potential for whiplash claims involving credit hire to dissolve into a big procedural mess has been understood by compensating parties, many more such applications alleging abuse of process will follow.

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