Abuse of process
... there remains a cottage industry in applications for non party costs orders against credit hire companies, who suffer the indignity of not only seeing the credit hire charges go up in smoke, but are then asked to pay for the bonfire of their aspirations too.
In addition, procedural tangles still vex the courts. One case that caught my eye recently is that of Cable v Liverpool Victoria Insurance Company  EWCA Civ 1015 an interesting appeal on the use (or misuse) of the part 8 procedure which stands as the third and last stage of a claim brought under the Pre-Action Protocol for Low Value Personal Injury Claims in road traffic accidents.
The case is interesting (and useful) for the detailed systematic analysis it gives of the much misunderstood and misapplied doctrine of abuse of process. It is accordingly appropriate to start with the court's consideration of that doctrine:
42. Although we were referred to a large number of authorities on abuse of process, the relevant principles can be summarised shortly. The classic summary of abuse of process can be found in the speech of Lord Diplock in Hunter v Chief Constable of West Midlands Police  AC 529 at 536C: “My Lords, this is a case about abuse of the process of the High Court. It concerns the inherent power which any Court of Justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, it would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute amongst right-thinking people. The circumstances in which abuse of process can arise are very varied… it would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limited to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power”
This passage has been cited many times since, most recently by the Supreme Court in Summers v Fairclough Homes Limited  UKSC 26,  1 WLR 2004, a case where the claimant had greatly exaggerated his long-term disabilities.
43. A working definition of abuse of process, adopted by both leading counsel in this appeal, was set out by Lord Bingham, then Lord Chief Justice, in Her Majesty’s Attorney General v Paul Evan John Barker  1 F.L.R. 759. At paragraph 19 he defined an abuse of the process as “a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process”.
44. Thus a failure to comply with the CPR or its Practice Directions can constitute an abuse of process: see for example Lewis v Ward Hadaway (a firm)  EWHC 3503 (Ch), and Liddle v Atha & Co Solicitors  EWHC 1751 (QB),  1 WLR 4953. These cases involved the deliberate understating of the value of the claim on the claim form in order to avoid paying higher court fees. In both cases, it was found that this amounted to an abuse of process.
45. A claim must be clearly shown to be an abuse before it can be struck out: see Stuart v Goldberg Linde  EWCA Civ 2,  1 WLR 823 at . The striking out of a claim is a draconian remedy and one that should be seen as a last resort. In Summers, Lord Hope said:
“48. It is in the public interest that there should be a power to strike out a statement of case for abuse of process, both under the inherent jurisdiction of the court and under the CPR, but the Court accepts the submission that in deciding whether or not to exercise the power the court must examine the circumstances of the case scrupulously in order to ensure that to strike out the claim is a proportionate means of achieving the aim of controlling the process of the court and deciding cases justly.
Coulson LJ who gave the judgment of the court was careful to distinguish between the question of abuse of process, and the separate question as to whether a finding of abuse of process, mandated a strike out of a claim. These questions are quite distinct: and it is an error of law for a court to ellide the two questions:
49. As noted at para 42 above, the court has a wide discretion as to how to exercise its case management powers. These include the power to strike out the whole or any part of a statement of case at whatever stage it is made, even if it is made at the end of the trial. However the cases stress the flexibility of the CPR: see eg Biguzzi per Lord Woolf MR at p 1933B, Asiansky Television v Bayer-Rosin  EWCA Civ 1792;  CPLR 111 per Clarke LJ at para 49 and Aktas v Adepta  EWCA Civ 1170,  QB 894, where Rix LJ said at para 92:
“Moreover, it should not be forgotten that one of the great virtues of the CPR is that, by providing more flexible remedies for breaches of rules as well as a stricter regulatory environment, the courts are given the powers and the opportunities to make the sanction fit the breach. That is the teaching of one of the most important early decisions on the CPR to be found in Biguzzi v Rank Leisure plc.”
The draconian step of striking a claim out is always a last resort, a fortiori where to do so would deprive the claimant of a substantive right to which the court had held that he was entitled after a fair trial. It is very difficult indeed to think of circumstances in which such a conclusion would be proportionate. Such circumstances might, however, include a case where there had been a massive attempt to deceive the court but the award of damages would be very small.”
Coulson LJ then set out his conclusions on whether misuse of the Part 8 procedure, perhaps using it as a Trojan horse to obtain a stay of proceedings, avoid a limitation point and obtain time to build a case was to be viewed through the lens of the 2 stage approach to abuse of process, or whether the application to lift the stay in the instant case, was to be viewed through other lenses and different criteria applied.
61. In a case of this kind, a defendant may become aggrieved at the claimant’s conduct during the RTA Protocol process itself, or during or at the end of any stay sought and imposed by reference to Practice Direction 8B. The defendant can then raise his or her concerns by, for example, opposing the lifting of the stay or opposing any transfer to CPR Part 7. Mr Allen QC was anxious to point out that this was the focus of the enquiry before DJ Campbell, and that continuing the stay or transferring the claim was a single discretionary decision, in which the allegations of abuse of process were just one factor to be considered. It is right that Judge Pearce appeared to approach the issue in Lyle on the same basis, as did Judge Wood QC in the present case.
62. In my view, this emphasis on the discretionary power to lift or maintain the stay (or to transfer the claim to Part 7 or refuse the transfer) risks avoiding the reality of the situation which has arisen. In this sort of case, if a permanent stay is maintained, or an otherwise valid claim is not transferred to Part 7 where it belongs, then the defendant will have achieved his/her aim, because the proceedings will, to all intents and purposes, have come to an end. But since it is accepted that the proceedings cannot remain in a sort of legal limbo, this approach presents the striking out as an act of kindness, putting useless proceedings out of their misery. I consider that such an approach puts the issues the wrong way round. If the defendant is seeking to prevent a valid claim from going further, then no matter the mechanism by which that debate comes before the court, the judge must grapple with the central dispute: should the claim be allowed to proceed, or should it be struck out? That issue will be informed (but not decided) by the answer to the prior question: has there been an abuse of process?
63. In the recent case of Asturion Foundation v Alibrahim  EWCA Civ 32,  1 WLR 1627, this court was considering a unilateral decision by the claimant not to pursue its claim for a period of time whilst maintaining an intention to do so at a later date. The court found that this may well constitute an abuse of process, but did not necessarily do so (see paragraph 61 of the judgment of Arnold LJ). More importantly for present purposes, the court set out the correct approach to an application to strike out for an abuse of process. It said that it was a two-stage test. First the court has to determine whether the claimant’s conduct was an abuse of process. Secondly, if it was, the court has to exercise its discretion as to whether or not to strike out the claim (see paragraph 64). It is at that second stage that the usual balancing exercise, and in particular considerations of proportionality, becomes relevant.
64. Furthermore, it seems to me that applying this two-stage test in circumstances like this not only provides clarity and simplicity, but it also avoids the sort of confusion that was identified by Turner J in Liddle v Atha. In that case the judge noted at paragraph 20 of his judgment that, in the lower court, the parties had agreed that, if there was an abuse of process, the application to strike out would automatically succeed. The judge was not satisfied with that, saying that he remained to be persuaded that the finding of abuse automatically gave rise to the striking out of the claim. As Asturion has subsequently demonstrated, Turner J was right to be doubtful: they are different questions and the finding of abuse of process does not lead inexorably to the striking out of the claim.
Defining the issue in this way, meant that a sharp focus was brought to bear on the county court judgments below: and it was thus apparent that the judges in Liverpool had applied the wrong test.
65. Did DJ Campbell adopt the correct two-stage test? In my view, she did not. Judge Wood QC did not believe that she had, because he upheld her decision on the express (but incorrect) basis that the two-stage test (what he called “the stepped approach”) did not apply to the applications before her. In addition, having assumed an abuse of process, it seems to me that DJ Campbell then proceeded, rather like the parties in Liddle v Atha, on the erroneous basis that this would, at the very least, give rise to a prima facie right to strike out the claim. There is no reference in her judgment to some of the basic principles which I have outlined above (doubtless because the relevant authorities were not cited to her and because Asturion had not even been decided in October 2018). I am left with the impression that, just as Judge Pearce did in Lyle, DJ Campbell concentrated on her overall discretionary powers as to whether or not to lift the stay or transfer to Part 7, rather than focussing first on the issue of abuse and then considering the proportionate sanction.
The Court of Appeal then went on to apply its own discretion and the appeal was allowed. I think this is an interesting and useful decision. Since the Jackson Report with its infamous characterisation of the civil justice system as gripped by a "culture of non-compliance" and the Mitchell debacle, I have long thought that county court judges have been too ready to strike out claims. This authority will give them pause, and make them take a more analytical view to the procedural defaults that occur from time to time, and ask whether strike out, really is the proportionate sanction to apply.