Morgan Sindall Construction and Infrastructure Limited v Capita Property and Infrastructure (Structures) Limited & Anor.

Putting a claim on hold during proceedings can amount to abuse of process, but prolonged delay alone does not. The court must determine whether the claimant deliberately paused the action, considering subjective intention inferred from the evidence, the reason and duration of the pause, and the wider procedural history. Starting proceedings with no intention of pursuing them is graver than later warehousing, although both may be abusive. The analysis has two stages: first abuse, then proportionality of strike-out. Pre-action delay may inform both stages, and prejudice need not be proved. A defendant alleging warehousing must act promptly. Keeping strike-out in reserve while substantive steps continue may make relief disproportionate. The application was dismissed because the pause was intended to align related insurer proceedings, a course the defendant had encouraged.

The claimant, a design and build contractor, brought a professional negligence claim concerning alleged failures by its consulting engineer to identify and warn about defective steelwork design. The steelwork subcontractor was insolvent and in administration. The claimant obtained default judgment against it and pursued related proceedings against its insurers.

The First Defendant applied to strike out the claim as an abuse of process, alleging that the claimant had delayed before issuing the claim and had later put it on hold while pursuing the insurer proceedings. The claimant accepted that progress had been slow but said the proceedings were being coordinated for a legitimate commercial purpose. The issues were whether the claim had deliberately been put on hold, whether that amounted to abuse, and whether strike-out would be proportionate.

The application was dismissed.

1. Warehousing is not a technical legal term. It describes a range of conduct in which proceedings are deliberately not pursued. Such conduct can amount to abuse even without proof of prejudice, but not every delay or period during which proceedings are paused is abusive. The court considered Grovit v Doctor [1997] 1 WLR 640, Arbuthnot Latham Bank v Trafalgar Holdings Ltd [1998] 1 WLR 1426 and Asturion Foundation v Alibrahim [2020] EWCA (Civ) 32.
2. There is a legally relevant distinction between commencing proceedings with no intention of bringing them to a conclusion and commencing them with an intention to proceed but later pausing them. The former is the graver abuse. The latter may nevertheless amount to abuse, and the distinction may affect the proportionate sanction.
3. The analysis has two stages: first, whether the conduct amounted to abuse; and secondly, whether strike-out was a proportionate response. The first stage requires examination of the claimant’s subjective intention, inferred from the evidence as a whole. Delay caused by incompetence or similar failings is not this form of abuse, although it may justify other procedural consequences. The court adopted the summary in Alfozan v Quastel Midgen [2022] EWHC (Comm) 66.
4. Pre-action delay is not itself the abuse of an action which has already been commenced. It may, however, support an inference of warehousing, make a claimed justification for later delay less persuasive, and increase the risk of staleness and prejudice. Duration, repeated periods of inactivity and the absence of consent or a court order are relevant, but no single factor is conclusive.
5. The claimant had deliberately paused this action while seeking to clarify and coordinate the related insurer proceedings. Those proceedings were distinct, but the proposed coordination was commercially sensible and had been encouraged by the First Defendant when the stay was agreed. In those circumstances, the conduct was not improper warehousing.
6. Alternatively, strike-out would not have been imposed even if abuse had been established. A party alleging this form of abuse must act promptly. The First Defendant allowed the revived proceedings to continue, participated in mediation and waited before applying. Keeping strike-out in reserve until mediation failed made relief disproportionate. Costs were summarily assessed at £95,000.