Watford Control Instruments Limited v Colin Brown

A claimant’s unilateral failure to progress proceedings for a substantial period may constitute abuse of process, even where it retains an intention to pursue the claim. The court must assess the claimant’s reasons objectively and then separately decide whether strike-out is a proportionate sanction.

Strike-out is a last resort. The court should consider lesser sanctions, including security for costs, costs consequences and loss of interest. Want of prosecution requires inordinate and inexcusable delay together with substantial risk to a fair trial or serious prejudice. A legal assignment of a chose in action requires notice to the debtor before proceedings are commenced.

The claimant brought proceedings against the defendant, a former director of the company from which the claimant said it had acquired the relevant cause of action. It alleged breaches of fiduciary duty and trust arising from the defendant’s alleged use of company funds for personal purposes.

The defendant applied to strike out the claim for abuse of process, want of prosecution and lack of standing. The claimant had taken no substantive steps for nearly two and a half years after a case management conference. The parties also disputed whether contractual documents had assigned the claim and whether a later deed could cure any defect.

1. Abuse of process. A claimant’s unilateral decision to leave proceedings dormant while intending to pursue them later may constitute abuse, but it does not do so automatically. The court must consider the reasons for the inactivity, their objective strength and the length of the delay. The burden lies on the applicant. This was the applicable approach under Grovit v Doctor, Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd, Solland International Ltd v Clifford Harris & Co and Asturion Foundation v Alibrahim.
2. The claimant’s explanations were only partly persuasive. The overall delay, including extended periods without contacting the court or advancing an issued application, amounted to abuse in the Grovit sense.
3. Sanction. Abuse does not invariably require strike-out. The claim was arguable, a fair trial remained possible, and the defendant’s health difficulties were caused by the existence of the litigation rather than the delay itself. The proportionate sanction was security for the defendant’s costs, disallowance of the claimant’s costs incurred between September 2019 and September 2022, and potential costs consequences for the strike-out application. Loss of interest during the relevant period was also indicated as a possible consequence.
4. Want of prosecution. The court applied the principles in Birkett v James and Owners and/or Bailees of the Cargo of the Ship Panamax Star v The Owners of the Ship Auk. There were no hard and fast rules, and the court had to consider all circumstances, the possibility of a fair trial and alternative sanctions. Strike-out on this ground would also have been disproportionate.
5. Standing. The Deed of Variation excluded the relevant claim from the defined Book Debts and treated the claimant as having conduct and control as agent, rather than as assignee. The later deed evinced an intention to assign, but, under Compania Colombiana de Seguros v Pacific Steam Navigation Co, notice was required for a legal assignment before proceedings began. Without such notice, the assignment could operate only in equity. The claimant was required to apply to amend its pleading to rely on that equitable assignment, with the assignors probably joined.
6. The claim was not struck out. Consequential matters, including the amount of security and further case management directions, were adjourned.