Philip Morris v Knights Professional Services Limited & Ors

Warehousing is an abuse of process where proceedings are issued but, without good reason, are not pursued in accordance with the rules and are instead conducted at the claimant’s convenience. Issuing proceedings in the hope of settlement is not itself abusive. The court must first determine whether there is an abuse and then decide whether strike-out is a proportionate response, having regard to available case-management powers and the prospect of a fair trial.

For limitation under Limitation Act 1980, knowledge of negligence is unnecessary. The claimant must know the material damage and the factual essence of the act or omission alleged to have caused it. Whether advice from the allegedly negligent adviser constitutes appropriate expert advice is fact-sensitive.

The claimant brought professional-negligence and related contractual claims against successor solicitor practices and a barrister. The claims arose from advice and drafting concerning an earn-out option in a 2006 sale agreement and subsequent litigation, which failed when the option-extension provision was held unenforceable.

The defendants applied for strike-out for breach of an order, abuse of process through warehousing, and inadequate pleading. The third defendant also sought summary judgment on limitation. The claimant sought summary judgment against the third defendant and permission to re-amend the Particulars of Claim. The central issues were whether the claim had been warehoused, whether strike-out was proportionate, whether the limitation claim had a realistic prospect of success, and whether the proposed pleading was sufficiently particularised.

1. Failure to comply with order. The claimant admitted breach of the order requiring clarification and documents. Strike-out was refused. The order was not peremptory, the breach did not threaten a fair trial, and the court had less severe enforcement powers. Any further order would need to state precisely what compliance required.
2. Warehousing. The relevant conduct was post-service inactivity. Delay before proceedings, including issuing near the limitation deadline or serving late within the claim-form period, was not itself evidence of abuse. The court adopted the two-stage approach identified in Alfozan: determine abuse first, then decide whether strike-out is proportionate. The claimant’s conduct, viewed cumulatively, supported an inference that he intended to pursue the claim only at his convenience. Issuing in the hope of settlement was legitimate; the abuse lay in issuing proceedings and then failing, without good reason, to progress them.
3. Although the claim had been warehoused, strike-out was refused. The core allegations were understandable, the relevant documents had largely been in the defendants’ possession, a fair trial remained possible, and active case management and peremptory orders could secure future compliance. The claim was therefore capable of being managed proportionately.
4. Limitation. Under section 14A of the Limitation Act 1980, the claimant had to show a realistic, rather than fanciful, prospect of proving that the relevant knowledge arose within three years before proceedings. Knowledge required awareness of sufficiently serious damage and the factual essence of the act or omission alleged to constitute negligence, not knowledge that the conduct was legally negligent. The claimant’s case that he acquired the essential knowledge only when the underlying judge held the option unenforceable was realistically arguable, particularly in light of sustained positive advice from his solicitors and counsel. Summary judgment for the third defendant was refused.
5. Summary judgment for the claimant was also refused. Although drafting an unenforceable agreement called for an explanation, the claimant still had to prove the limitation issue and the third defendant retained a realistic prospect of defending it at trial.
6. Pleading and amendment. The core allegations were sufficiently intelligible. Certain proposed allegations were irrelevant, internally inconsistent, or insufficiently particularised under CPR r 16.4(1)(a). The court struck out the incurable inconsistent allegations and refused permission for one amendment, but adjourned the remaining pleading issues to allow a compliant re-amended draft. This approach reflected the overriding objective, whose purpose was compliance rather than punishment.

First-instance decision. The judgment records that the underlying contractual claim was dismissed by HH Judge Bird on 24 March 2017 and that the Court of Appeal upheld that decision on 11 December 2018, but gives no citation for those decisions.