Pell Frischmann Consultants Ltd & Anor v Prabhu & Ors

A genuine claim is not an abuse of process merely because proceedings were brought for a tactical or collateral advantage, including to secure determination by the court rather than a pensions ombudsman. Strike out for abuse is reserved for clear and obvious cases. Breach of pre-action requirements ordinarily attracts case-management or costs sanctions, not strike out. A prospective costs order in trust litigation should be made only where the trial judge could properly exercise the costs discretion in one way only. A personal claim for enhanced pension benefits, brought for the claimant’s own benefit, does not fall within the usual categories for costs out of a trust fund.

The claimant companies sponsored a defined-benefit pension scheme. The fourth defendant, a former employee and scheme member, claimed an enhanced pension said to arise from a 1991 letter. The companies sought declarations that the enhancement had not been validly granted.

Before serving a defence, the fourth defendant applied to strike out the claim as an abuse of process, principally because proceedings had been issued before completion of the scheme’s internal dispute procedure and would prevent a complaint to the Pensions Ombudsman. Alternatively, he sought a prospective costs order against the scheme or the companies.

1. Strike out. The application was dismissed. The companies had a genuine legal dispute and were entitled to ask the court to determine it. Their tactical motive of obtaining court proceedings, with possible costs consequences and oral evidence, did not make the claim abusive. The existence of the Pensions Ombudsman did not oust the court’s jurisdiction. Under the Pension Schemes Act 1993, court proceedings could prevent investigation by the Ombudsman, but the statutory scheme did not give the Ombudsman precedence where no complaint was already in play.
2. The principles in Goldsmith v Sperrings Ltd, [1977] 1 WLR 498, Broxton v McClelland, [1995] EMLR 485, and JSC BTA Bank v Ablyazov (No. 6), [2011] 1 WLR 2966, supported the conclusion that motive was generally irrelevant where a genuine grievance existed and that only the clearest cases warranted strike out.
3. The companies had not complied strictly with the Practice Direction Pre-Action Conduct Protocol. Nevertheless, the parties understood the essential issues. The Protocol identified possible sanctions, including a stay or costs order, but did not provide for strike out. The breach therefore did not justify terminating the claim.
4. The authorities on submission to jurisdiction did not assist because jurisdiction was accepted. The issue was whether the proceedings were abusive or whether another forum was preferable, not whether the court lacked jurisdiction.
5. Prospective costs. The application was also dismissed. The claim was personal to the fourth defendant and was brought for his own benefit. It was not a category 2 Re Buckton claim. The correct test was whether the trial judge could only exercise the costs discretion in favour of payment from the fund. That test was not satisfied. The broader discretion applicable by analogy with derivative actions did not arise.