Mortgage Trust Ltd v Willmett Solicitors (a firm) & Anor

When deciding whether prolonged inactivity justifies striking out a claim for want of prosecution, the court must consider all the relevant circumstances. Judicial checklists may assist, but must not replace that evaluative exercise. Relevant matters include the length and explanation of the delay, the claimant’s obligation to prosecute diligently, whether the conduct approaches an abuse of process, and the nature and seriousness of prejudice caused to the defendant. Prejudice is not confined to whether a fair trial remains possible. It may include substantial effects on the defendant’s personal, financial and business position. Where proceedings have been left in abeyance without an order permitting that course, the court may refuse reactivation and strike out the claim.

Mortgage Trust Limited issued proceedings in 2013 against Willmett Solicitors, arising from an allegedly failed mortgage transaction and claims including breach of trust, breach of fiduciary duty, breach of contract and negligence. The firm later entered liquidation. The claimant obtained permission to continue the proceedings but did not pursue its application for default judgment after November 2014.

In 2017 the claimant sought to reactivate the proceedings and obtain judgment. Kerry Smith, who had subsequently been added as an individual defendant and had been an equity partner when the cause of action accrued, applied to strike out the claim under CPR 3.4(2). The central issue was whether the claimant’s delay, together with the prejudice caused to Ms Smith, justified striking out the proceedings for want of prosecution.

1. The applications were determined by considering all the relevant circumstances, including the position of Ms Smith. The court declined to treat the judicial factors identified in Annodeus Entertainment Ltd v Gibson (unreported 2 February 2000) as a rigid checklist, having regard to the warning in Audergon v La Baguette Ltd (Court of Appeal 23 January 2002).

2. The claimant’s conduct came close to an abuse of process. After its requests for default judgment had been refused, it should either have renewed an application for judgment, discontinued the proceedings, or obtained the court’s authority for the proceedings to be adjourned generally with permission to restore. It did none of those things and left the proceedings inactive from November 2014 until May 2017.

3. The claimant had no good reason for that delay. Having issued proceedings near the end of the primary limitation period, it was under a heightened obligation to prosecute them diligently. The relevant prejudice was not limited to whether the claim could still be tried fairly. The court had to consider the effect of the delay on Ms Smith’s personal and financial position.

4. The delay caused serious and significant prejudice. Ms Smith had taken financial steps in reliance on the apparent disappearance or reduction of the threat of enforcement, including steps connected with her divorce and proposed sale of property. The exceptional circumstances, together with the claimant’s inactivity and conduct approaching abuse, made it wrong to permit judgment to be entered or enforced against her personal estate.

5. The claim was struck out. It was unnecessary to decide whether the claimant required permission to lift any stay under CPR 15.11; even if the stay had not operated, the claimant’s failure to take a proper procedural course meant that reactivation required consideration of whether the proceedings should instead be struck out for want of prosecution.