National Westminster Bank Plc v Rabobank Nederland

A trial court has jurisdiction to strike out a claim or severable part of it of its own motion during trial. The jurisdiction derives from the court’s case-management and strike-out powers and is analogous to the pre-trial no realistic prospect of success test.

Its exercise after trial has begun is, however, likely to be very rare. The court must consider uncalled evidence, possible adverse inferences, the risk of an initial assessment proving wrong on appeal, disruption or retrial, and whether the saving in time and costs is substantial. The court should refuse the application where a material, even small, risk remains that further evidence could improve the claim sufficiently to justify its continuation.

National Westminster Bank sought, during the trial of Rabobank’s counterclaim, to strike out a newly amended part of that counterclaim. The relevant allegations concerned whether the bank had induced Price Waterhouse to breach contractual or professional duties owed to Yorkshire Food Group, or had become a joint tortfeasor, by influencing its investigation and disclosure of Mr Firth’s personal borrowings.

The amendment had initially been refused on case-management grounds but was allowed by the Court of Appeal. After two Price Waterhouse witnesses had given evidence, National Westminster Bank argued that their evidence eliminated the necessary causal link and that no further evidence could alter the position. The central issue was whether the court should exercise its own-motion jurisdiction to strike out the relevant part before the trial and evidence were complete.

1. Jurisdiction. The court had jurisdiction to strike out a claim or severable part of a claim of its own motion immediately before or during trial. This followed from the combined effect of CPR 1.4, CPR 3.3, CPR 3.4, CPR 24.2 and 3PD 1.2, together with the inherent jurisdiction of the court.
2. Applicable approach. The jurisdiction involved a test analogous to the pre-trial requirement that the claim have a realistic prospect of success. The court had to consider the evidence already called, evidence that remained available from either party, and any adverse inferences that might arise from the defendant encouraging an early termination. The court also had to avoid placing itself in the position of forming an initial view on incomplete evidence and later reconsidering the matter after the full trial.
3. Exceptional nature of the power. Mid-trial strike-out should generally be even more exceptional than accepting a submission of no case to answer without requiring the defendant to elect whether to call evidence. There should be complete certainty that no further evidence could materially strengthen the claim, substantial savings compared with the overall trial costs, and a disruption risk capable of being contained if the decision were reversed on appeal.
4. Application. The evidence of the two Price Waterhouse witnesses made the causal element of Rabobank’s case difficult to establish, but National Westminster Bank’s witness had not yet given evidence. His evidence might, however unlikely, provide a basis for concluding that the conversation had caused the witnesses to misunderstand the scope of their remit or otherwise affected their conduct. Rabobank was not precluded from relying on other evidence to show that its witnesses had innocently misrecollected matters, subject to avoiding surprise and injustice.
5. The court therefore declined to strike out the relevant part of the counterclaim at that stage.

The Court of Appeal had allowed Rabobank’s earlier appeal against refusal of permission to amend the counterclaim. Its reasons had not yet been given when this ruling was made. The present court declined to strike out the amended causes of action during the continuing trial.