Habib Bank Ltd v Abbeypearl Ltd & Ors

An appellate court should uphold a case-management decision striking out proceedings for delay where the judge was entitled to conclude that a fair trial was no longer possible. The assessment must consider both the claim and any defence or counterclaim capable of extinguishing it. Long delay is particularly material where disputed issues depend on recollection, missing or unreliable documents, and witness evidence concerning events many years earlier. Persistent failure to comply with directions is relevant under the overriding objective and may justify strike-out under the Civil Procedure Rules. The appellate question is whether the judge was clearly wrong, not whether the appellate court would have exercised the discretion differently.

Habib Bank Ltd appealed against an order made by Judge Kershaw QC in the Mercantile Court at Manchester on 14 December 1999. The judge struck out the bank’s statement of case and the statements of case of the first and third defendants under CPR 3.4(2)(c), finding repeated non-compliance with orders and that a fair trial was no longer possible.

The action had begun in 1991 and concerned banking transactions, guarantees, alleged dishonest conduct at the bank’s Manchester branch, and a substantial set-off and counterclaim. The bank had failed to progress the proceedings for lengthy periods despite directions. The central issue on appeal was whether the judge was clearly wrong to conclude that a fair trial of the claim and counterclaim could no longer take place.

1. Appeal dismissed. The judge’s order striking out the proceedings was upheld. The application to extend time was dismissed, costs were subject to set-off, £9,000 was ordered on account, and permission to appeal was refused.
2. The relevant question under CPR 3.4(2)(c), read with the overriding objective in CPR 1.1, was whether a fair trial was no longer possible. The same practical test applied whether the matter was considered under the Civil Procedure Rules or article 6(1) of the European Convention on Human Rights.
3. The judge was entitled to consider the claim together with the defence and counterclaim. The counterclaim and alleged set-off could, if established, extinguish the bank’s claim. It was therefore necessary to assess the effect of delay on the whole dispute rather than on isolated accounting issues.
4. The delay was extreme. Directions made in 1992 and again in 1995 were substantially ignored, and the action remained far from trial readiness. The passage of time impaired recollection and witness evidence, while the bank’s own documents were affected by admitted dishonesty and destruction or absence of records.
5. The conclusion that a fair trial was no longer possible was not clearly wrong. The Court of Appeal considered that the judge was clearly right. Earlier pre-CPR dicta did not materially assist the bank, and the claimant could not rewrite the procedural history to avoid the consequences of its prolonged default.

• Court of Appeal (Civil Division): appeal from the order of Judge Kershaw QC in the Mercantile Court at Manchester dated 14 December 1999; appeal dismissed. The application to extend time was dismissed and permission to appeal was refused.