Good Reason to Delay?
Morgan Sindall Construction and Infrastructure Ltd v Capita Property and Infrastructure (Structures) Ltd & Anor  EWHC 166 (TCC)
By way of a background, the First Claimant issued proceedings against two Defendants Capita Property Ltd (“D1”) and Sabre Structures Ltd (“D2”). The Claimant also issued separate (but related) proceedings against Aviva, the Second Defendant’s insurer, alleging the insurer is liable under the Third Party (Right Against Insurers) Act 1930.
Proceedings were issued in 2017 and during December of that year, a stay in proceedings was approved owing to a Default Judgment against D2. Between 2018 and 2022, the Claimant and D1 negotiated, arranging a triple mediation however this failed to resolve the proceedings resulting in a CMC date being put into place. In December 2022, the First Defendant applied to strike out the action on the basis the Claimant had abused the legal process by engaging in a three-year stalling or ‘Warehousing’ and this amounted to an abuse of process. The Claimant argued that as Aviva had become involved, they wanted to streamline the process by running all claims concurrently.
It is common knowledge that the term “warehousing” is potentially an abuse of process. In this case, the judge confirmed there was a contrast between proceedings issued with an intent of stalling or “warehousing” the case is in -a different category to those issued where there has been subsequent delay.
Mr Justice Eyre said…
“So it is right to say that a distinction is drawn between the two kinds of abuse: starting proceedings with no intention of continuing them; and starting with an intention of continuing but then putting the case on hold in the course of proceedings. The former is the graver abuse. That does not, of course, mean that putting proceedings on hold in the course of proceedings is not an abuse: the authorities are clear that it can be. The distinction between the two categories can be relevant to sanction and in particular to whether the proportionate response is striking out.”
In Asturion (Asturion Foundation v Alibrahim  EWCA (Civ) 32;  WLR 1627), Arnold LJ said, at , that a two-stage process was to be adopted. The two stages being: first, determining whether the Claimant’s conduct was an abuse of conduct; second, deciding whether the court should exercise its discretion so as to strike out the claim.
The court then held in favour of the Clamant and refused the D1’s strikeout application, finding:
“… I am satisfied that it was not abuse here to put this action on hold for significant periods of time to await the clarification of the position vis-à-vis Aviva and/or to bring into line with the Aviva action. The key is that the reason for putting matters on hold was to line up with the Aviva claim and to get all the parties, including Aviva, to the stage of a mediation together or of being able to combine the proceedings. That was a sensible course and it was, moreover, one which the First Defendant had, at the time a stay was imposed, indicated in clear terms that it believed it to be appropriate. In addition, the First Defendant’s continued acceptance of that appropriateness was indicated at least to some extent by its participation in the tripartite mediation when the action was revived.”
What to take away?
This case confirms that parties should pursue litigation in the most time-efficient manner. Invariably, there will always be genuine reasons for delay however continued correspondence and engagement should be encouraged to demonstrate that the case is still progressing. This should, hopefully, deter any risk to an application to strikeout.
A party should always show continued engagement with the legal process (i.e., continued correspondence with other the parties; being amenable to compromise; seeking to resolve the proceedings; making any relevant applications to the court, etc.) to demonstrate that they are progressing their claim.
Jason Green, Legal Costs Negotiator