HT-2023-000311 - [2024] EWHC 3449 (TCC)

In the course of submissions, I have been referred to the decisions in Nomura International plc v Granada Group Ltd [2007] EWHC 642; USAF Nominee No. 18 Ltd v Watkin Jones & Son Ltd [2021] EWHC 3173 (TCC); Bam Glory Mill Ltd v Balicrest Ltd [2018] EWHC 3926 (TCC); Nash v 4M Ltd [2021] EWHC 3611 (TCC); and Children’s Arc Partnerships v Kajima Construction Europe [2022] EWHC 1595 (TCC). For the purposes of this decision, I intend to concentrate on the decisions in Nomura and USAF Nominee.

Nomura was a decision of Cooke J, and the paragraphs that I have been taken to and that are particularly relevant are paragraphs 37 and 41. The position in that case was that Nomura issued proceedings when it did not know if a claim was going to be made against it and it did not know to whom it might pass on that claim and on what basis. At paragraph 37, Cooke J said this:

“In my judgment, when regard is had to these authorities [that is those that had been cited to him] the key question must always be whether or not, at the time of issuing a writ, the claimant was in a position properly to identify the essence of the tort or breach of contract complained of and if given appropriate time to marshal what it knew, to formulate particulars of claim. If the claimant was not in a position to do so, then the claimant could have no present intention of prosecuting proceedings, since it had no known basis for doing so. Whilst therefore the absence of present intention to prosecute proceedings is not enough to constitute an abuse of process, without the additional absence of known valid grounds for a claim, the latter carries with it, as a matter of necessity, the former. If a claimant cannot do that which is necessary to prosecute the claim by setting out the basis of it, even in a rudimentary way, a claimant has no business to issue a claim form at all ‘in the hope that something may turn up’. The effect of issuing a writ or claim form in such circumstances is, so the plaintiff/claimant hopes, to stop the limitation period running and thus deprive the defendant of a potential limitation defence. The plaintiff/claimant thus, unilaterally, by its own action, seeks to achieve for itself an extension of the time allowed by statute for the commencement of an action, even though it is in no position properly to formulate a claim against the relevant defendant. That must, in my judgment, be an abuse of process and one for which there can be no remedy save that of striking out the proceedings so as to deprive the claimant of its putative advantage. The illegitimate benefit hopefully achieved can only be nullified by this means. Whatever powers may be available to the court for other abuses, if this is an abuse, there is only one suitable sanction.”

Later, at paragraph 41, Cooke J he said this:

“In my judgment, therefore, if Nomura, at the time of issuing its claim form, was not in a position to do the minimum necessary to set out the nature of the claim it was making, it would be seeking an illegitimate benefit, namely the prevention of further time running under the Limitation Acts for a claim which it could not properly identify or plead. That would be an abuse of the process of the court. Insofar as it sought to make any claim in contract, it would be necessary for it to be able to identify the particular contract and the alleged breach. … For the purposes of negligent misstatement, Nomura would have to be able to identify what advice or information was inaccurate and what was given negligently, at least in essence. If Nomura was not in a position to do this, it was not in a position properly to issue a claim, since it could not have proceeded properly to plead particulars of claim without the off- chance occurring that something would turn up. In such circumstances it could have no present intention to pursue a claim since it had no sufficient idea of the claim it wished to pursue.”

I take from that decision, as Cooke J said, that, in and of itself, having no present intention to proceed with a claim is not an abuse of process. However, it is an abuse of process to issue proceedings if the claimant has no known basis for doing so. That is variously formulated as not being able to identify the essence of the tort or breach of contract and, most particularly, described as the claimant not being able to do the minimum necessary to set out its claim or not being able to set out its claim in even the most rudimentary way.

In USAF Nominee v Watkin Jones & Son, in which I observe the claim was not struck out, Eyre J, having considered the Nomura case, started at [26] by saying this:

“I am satisfied that it is an abuse of process for a party to commence proceedings which that party does not intend to pursue and where the existence of a genuine claim depends on something turning up with the true reason for issuing proceedings being to forestall a limitation period. In those circumstances, a claimant is using the issuing of the claim as a way of gaining extra time for that notional something to turn up and thereby gaining an extension of a limitation period. That is abusive conduct. However, in my judgment, that case is very different from the situation in which a party believes that it has a claim and where the general nature of that claim can be stated, albeit the full details of the particulars of claim are not able to be finalised at the time of issue of the claim. In the latter situation, it would not be an abuse of process to issue proceedings provided there was a genuine intention to pursue those proceedings at least while the claimant is actively engaged in gathering material for particularisation and where the claimant believes that it will be able to do so within the time in which it would be required to provide particulars.”

Pausing there, the first part of that paragraph seems, if anything, slightly stronger than what Cooke J had said in Nomura in that it seems to contemplate that not intending to pursue proceedings alone may be sufficient reason to regard the proceedings as an abuse. But it seems to me that that should properly be read as meaning that it would be an abuse to start proceedings where the claimant really does not know if it has any claim at all and just wants to buy time to establish whether it does have a claim: that is, waiting to see if something turns up.

Mr Justice Eyre continued at [27]:

“It is important generally and in the circumstances of this case to keep in mind the distinction between abuse of the Nomura kind and a failure to comply with CPR Part 16.2. The latter failing can be a sign of the former abuse but it is not conclusive and the two failings are different.”

And at [28]:

“If there is abuse of the Nomura kind, then the proceedings are an abuse and are liable to be struck out, even if something does turn up which would warrant the bringing of proceedings and even if that something turns up shortly after proceedings have been issued. That is the consequence of the fact that the court has to consider whether the proceedings were abusive at the time they were issued.”

Later, at [60], he said this:

“The next point is that Mr Towse in his witness statement pointed to the scale of the investigations which the claimant is having to undertake because of the number of properties, and in particular of high-rise properties, for which it is responsible. He drew my attention to that in part to advance it as an explanation for the absence of more detailed particularisation of the claim. That, in my judgment, is of minimal if any relevance. If the claimant had no genuine belief that it had a current claim and no proper basis for issuing a claim, then just issuing proceedings to extend the limitation period in the hope that something would turn up and that it would have time to investigate the position more fully in respect of Jennens Court would not stop the proceedings being abusive. That would be so even if the reason was not some general inactivity on the part of the claimant but the other demands on the claimant’s resources and the need to investigate other properties. Moreover, that is of minimal relevance because the key to the question of whether there is abuse is not the subjective motive of the claimant but the objective analysis or the effect of what is being done. The fact that a claimant does not regard its conduct as being abusive and believes that what it has done is legitimate is not an answer if, on an objective basis, the court were to find that the actions were abusive.”

Again, pausing there, it seems to me that those paragraphs reinforce the view that I have already expressed that what is key is not whether there is an intention, looked at subjectively or even objectively, to pursue proceedings, but rather that the key issue is whether the claimant is able to set out the minimum of, or the most rudimentary version of, the claim that it seeks to advance against the defendant.

These passages also indicate that the appropriate approach is to focus on the position at the time of the issue of the claim and not on what happens afterwards. That must be right in principle. If it is an abuse to issue proceedings at the time they are issued, the abuse is not somehow remedied by subsequent events. However, all cases turn on their own facts and what happens afterwards may provide some relevant evidence as to what the position was at the time of the issue of the proceedings. There should not, therefore, be some cut-off at the point of the issue of proceedings in terms of the consideration of the surrounding evidence.