Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | LORD WOOLF, MR |
| Judgment Date | 16 December 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J1216-15 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | QBEN1 97/0128/E |
| Date | 16 December 1997 |
[1997] EWCA Civ J1216-15
The Master of the Rolls
(Lord Woolf)
Lord Justice Waller
Lord Justice Robert Walker
QBEN1 97/0128/E
LTA 97/6774/J
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(SIR RONALD WATERHOUSE Sitting as a High Court Judge)
Royal Courts of Justice
Strand
London WC2
MR M STRACHAN QC and MR P KNOX (Instructed by Messrs Coldham Shield Mace, London, E17 3HT) appeared on behalf of the Second and Third Defendants/Appellants.
MR T MOWSCHENSON QC and MR A DE GARR ROBINSON (Instructed by Messrs Sheridans, London WC1R 4QL) appeared on behalf of the Respondent.
MR J ALTHAUS (Instructed by Messrs Aslam & Co, London, W3) appeared on behalf of the Applicant.
The Respondent was not represented and did not attend.
This is a judgment of the Court. This judgment relates to an appeal and an application for leave to appeal. The appeal is in the case of Arbuthnot Latham Bank Limited & Ors v Trafalgar Holdings Limited and Mr & Mrs Ashton. The application for leave to appeal is in the case of Chishty Coveney & Co v Ibrahim Khan Raja. We are giving a joint judgment which relates to both cases, because although they were heard on different dates, they raise an identical issue. That issue is the appropriateness of a Court striking an action out where there has been considerable delay if:
(i) the cause of action relied upon by the plaintiff in the proceedings would be statute barred if the action were to be struck out, but
(ii) the plaintiff has another cause of action upon which he has not so far relied for recovering the money or property the subject matter of the existing action and the cause of action is subject to a longer limitation period which has not expired, and
(iii) if the original action is struck out, the probabilities are that fresh proceedings will be commenced which will rely upon the cause of action which is not statute barred.
The two cases also provide a convenient opportunity for this court to give some guidance for the assistance of the profession, as to the likely consequences in the future of excessive delay in the conduct of legal proceedings now that the courts are in the process of implementing changes requiring the parties to conduct their litigation with reasonable expedition.
The Background to the Two Cases
The Arbuthnot Latham Bank Case ("The Bank Case")
This is an appeal against a decision of Sir Ronald Waterhouse, sitting as a High Court Judge, on 31 July 1996, when he dismissed a summons by Mr & Mrs Ashton to strike out the action which had been brought against them.
The claim against Mr & Mrs Ashton arose in this way. Mr Ashton was the first defendant's, Trafalgar Holdings Limited, representative in the United Kingdom. On 28 January 1987, Mr & Mrs Ashton signed a guarantee to meet on demand the liabilities of Trafalgar to Arbuthnot Latham Bank Limited ("the Bank"). Two years later on 2 March 1989 Mr & Mrs Ashton granted the Bank a legal charge over their home ("the mortgage"). Under the mortgage Mr & Mrs Ashton covenanted to discharge on demand all their liabilities to the Bank.
By letter dated 8 June 1989, the Bank demanded from Trafalgar payment of money then due amounting to over £720,000 plus interest. When that sum was not paid, on 31 July 1989, the Bank demanded from the Ashtons the somewhat larger sum which by that time was allegedly due. Nothing was paid and on 23 August 1989 the Bank issued a writ endorsed with a statement of claim against Trafalgar and the Ashtons. Trafalgar did not serve a defence but the Ashtons did so. In the defence they contended that :
(i) no debt was due from Trafalgar,
(ii) the guarantee was subject to collateral warranties which made it unenforceable in the circumstances, and
(iii) in the case of Mrs Ashton the guarantee was obtained by undue influence.
Trafalgar took no further part in the proceedings but in relation to the Ashtons pleadings closed on 29 May 1990 and discovery was completed on 6 June 1991. On 7 June 1991, an order was made substituting Nordbanken London Branch as the plaintiff. Thereafter no step was taken until Securum Finance Limited wrote to the Ashtons on 20 March 1996. This was followed by the Ashtons on 3 May 1996 issuing a summons to strike out the claim against them on the grounds of delay.
Sir Ronald Waterhouse :
(1) dismissed the summons to strike out.
(2) Gave the plaintiffs leave to join Securum Finance Limited as the third plaintiffs.
(3) Gave the plaintiffs leave to issue a summons before the Master seeking leave to amend the Statement of Claim, and
(4) refused the Ashtons leave to appeal.
On 9 October 1996 Master Trench gave the plaintiffs leave to amend their Statement of Claim so as to include a claim based on the covenant in the mortgage.
It is common ground between the parties that the plaintiffs original claim on the guarantee was a claim to which a six year limitation period applied and that period had expired on 14 August 1995. It is also common ground that in relation to the claim under the mortgage, the limitation period is 12 years and that period has not expired. (See section 8 in relation to an action upon a speciality and section 20 of the Limitation Act 1980) In his judgment, Sir Ronald Waterhouse concluded that there had been inordinate and inexcusable delay. In their evidence, the plaintiffs explained the delay by stating that the debt was assigned to the company now known as Securum UK Limited on 21 December 1992. After that assignment, that company became "in essence an asset recovery and debt collection company". It had inherited a large portfolio of bad debts some of which ran into 7 figures. It was therefore decided that the plaintiffs would deal with only those loans within their portfolio which required urgent action and, as in this case they had security, it was not regarded as an urgent situation and so it was not initially actively pursued. In addition Mr & Mrs Ashton were not only defending but also counter claiming against the plaintiffs and they appeared not anxious to pursue their counter claim.
Mr & Mrs Ashton's defence turned substantially on oral evidence and the judge records that it is conceded by the plaintiff that the passage of time may have affected their recollection of events and this would impinge upon their oral evidence. But he drew attention to the fact that many important matters were recorded in correspondence and it is part of the Ashtons' case that the proceedings against them should have been deferred until 1994 because of an undertaking they have been given. It was however, on the basis that a fresh action could be brought by the plaintiffs based on the mortgage which would not be statute barred that the judge dismissed the defendant's application. By inference it appears that the judge would have come to a different decision, because of the anxiety to which the Ashtons had been subjected and their dimming recollection, if a fresh action could not have been brought.
Chishty Coveney & Co (A Firm) v Ibrahim Khan Raja ("The Accountant's Case")
In this action the plaintiff are a firm of accountants. They issued proceedings on 7 July 1986, over 11 years ago, for professional fees amounting to almost £84,000 and interest. Mr Raja disputes that sum is a reasonable price for the services which he received. In addition he alleges that his signature was obtained by the plaintiff to a piece of paper by fraud and that this was used subsequently to represent that he had agreed to a charge. He also made a counter claim suggesting that the plaintiff had been in breach of duty and removed certain property to which he was not entitled. A second action was commenced on 7 July 1986 for further fees and a third action was commenced naming a sum of over £157,000, including interest, based on an alleged compromise agreement. On 2 December 1992 the plaintiff's actions were struck out by the Master but on an appeal on 22 October 1993 the three actions were reinstated. They were subsequently consolidated and various directions were given which the defendant suggests were not complied with in time. The defendant contends that he has suffered serious prejudice. First because he suffered a heart attack in April 1994 and has ever since been less active and secondly because his recollection of events is now poor. He further suggests that he has been subject to additional tension and pressure because of the action not being resolved.
After the appeal against the striking out had been allowed, the plaintiff changed solicitors. While it is conceded that there has been inexcusable delay, it is submitted that the delay was neither intentional nor contumelious.
By an order of 11 August 1997 Master Hodgson dismissed all three actions. The Master also ordered that the plaintiff should pay the defendant's costs for the actions including the costs of the application. However, as both parties were legally aided he ordered that "such costs are not to be enforced without leave of the Courts". He also granted a legal aid taxation but indicated that the Taxing Master should consider the costs of photocopying up to a 1000 documents and whether the costs of doing this should be allowed. On 28 July 1997 His Hon Judge Roger Cox, sitting as a Deputy Judge of the High Court, dismissed the appeal. He also ordered the defence and counter claim to be struck out...
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