Louise Keith v Micah Lucian Alexander Benka & Anor

In February 2014 Mr Benka issued proceedings in the county court against Ms Keith. He was at the time the registered proprietor of a property known as Fairwarp. The building consists of a large country house converted into six separate and self-contained apartments or flats (“the flats”). The flats are all let on long leases. Mr Benka was the lessee of three of them. Ms Keith was the lessee of flat 6 under a 99 year lease granted in 1959.

By his Particulars of Claim Mr Benka alleged that Ms Keith was in breach of various covenants in the lease; that there were arrears of rent amounting to £600; and arrears of service charge amounting to £23,258.34. Paragraph 21 of the Particulars of Claim alleged that Mr Benka had served a section 146 notice outlining the breaches and paragraph 29 claimed forfeiture. Some of the alleged breaches took place in 2007, and many of them concerned behaviour by Ms Keith’s sub-tenants, also stretching back to 2007. The section 146 notice on which he relied had been served in April 2013. Ms Keith’s Defence denied the breaches, denied having received a valid section 146 notice and in the alternative claimed relief against forfeiture.

At the time the proceedings were issued section 168 of the Commonhold and Leasehold Reform Act 2002 restricted a landlord’s ability to serve a section 146 notice. Before such a notice could be served, the tenant either had to admit the breach, or there had to be a finding of breach, either by the court or the FTT. Section 168 (4) provided:

The appropriate tribunal in England is the FTT. Section 81 of the Housing Act 1996 imposed similar restrictions on the exercise of a right of forfeiture; and service of a section 146 notice relating to service charges. Section 176A (1) of the 2002 Act provides:

The specified Acts include the 2002 Act itself. Section 176A (4) provided:

Schedule 12 paragraph 3 of the 2002 Act provided:

CPR rule 56.4 provided that a practice direction might set out special provisions with regard to claims under various Acts, including the 2002 Act.

On 23 January 2015 Ms Keith applied to strike out the claim on the ground that Mr Benka had not been entitled to serve a section 146 notice because section 168 was not satisfied. DJ Bell heard that application on 2 February 2015. He refused to strike out the claim on that ground; but he referred issues about whether there had been a breach of covenant to the FTT. He further ordered that the proceedings in the county court should be stayed, pending determination by the FTT. But he also gave liberty to apply.

Paragraph 15 of Practice Direction 56 as it stood in 2015, (at least as printed in the White Book) provided:

Despite the fact that, in England, functions formerly exercised by the LVT had been transferred to the FTT, the Practice Direction was not amended (and was still in its unamended form in 2019). Nor was it amended to reflect the power of transfer conferred by section 176A (as opposed to Schedule 12 paragraph 3). In its current form PD 56 para 16 provides:

Paragraph 15 still appears in the Practice Direction, but it is now limited to proceedings in Wales. Nevertheless, in both forms of the Practice Direction, the initiative of transfer is placed on the court itself. For reasons that are unexplained, in this case after the Order of DJ Bell the county court did not comply with the Practice Direction.

Rule 28 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 deals with transferred cases. The relevant parts of that rule provide:

It appears, therefore, that the FTT’s case management powers are triggered by the receipt by the FTT of the transferred case. Since the FTT did not receive DJ Bell’s order of 2^nd February 2015, those powers did not arise.

There matters stood until 20 September 2019 when Ms Keith applied to the county court to strike out the claim. The application was made on three grounds, two of which are relevant to this appeal:

CPR rule 3.4 (2) provides:

Ms Keith supported her application with a witness statement. She pointed out that some of the pleaded allegations related to matters far in the past, and that it would be difficult, if not impossible, to trace those involved or any witnesses. The claim for arrears of service charge was unparticularised, and it would be necessary to go back over many years to see whether statutory requirements relating to service charges had been complied with. It would not be possible to have a fair trial. She went on to say that the existence and continuation of the proceedings made it impossible for her to sell her flat, which is what she wanted to do. Any purchaser would have to be told that there was an outstanding dispute and would be deterred from buying either at all or otherwise than at a very low premium to reflect the risk involved.

In his evidence in response, Mr Benka asserted many times that Ms Keith could have taken the matter forward. He also vehemently denied being in breach of DJ Bell’s order. He said that he had “not filed a claim immediately with the FTT as it was not necessary given that the court order did not require him to do so and he was concerned for the welfare of the other long leaseholders.” It is, however, plain that he considered that the initiative to effect the transfer to the FTT was his. In an email to Ms Keith’s solicitor sent on 17 February 2015, Mr Benka had said:

In his witness statement he made the point that although he could have taken steps to progress the claim, so too could Ms Keith. He went on in his witness statement to explain why he had not taken any step:

Tellingly, but not surprisingly, he did not say that he was expecting or relying on either the county court or the FTT to take the initiative. It is clear from his email of 17 February 2015 that he considered that the initiative lay with him.

DDJ Anstis heard the application on 3 December 2019. By that time over five years had elapsed since the claim was issued; and over four and a half years had elapsed since DJ Bell’s order. DDJ Anstis struck out the claim. In recounting the procedural history he said:

His reasoning in deciding to strike out the claim is encapsulated in the following two paragraphs:

His order recorded that:

Mr Benka applied for permission to appeal on 24 December 2019. He had overlooked the fact that, in the meantime, he had executed a transfer of the freehold to Fairwarp Management Ltd (“FML”); and that FML had become the registered proprietor on 20 December 2019. That omission was rectified by joining FML to the proceedings.

HHJ George heard the appeal on 11 January 2023. As HHJ George correctly said at [49] DJ Bell’s order does not order “the parties” to make an application to the FTT. It refers the matter to the FTT without directing either party to do anything. That is consistent with the Practice Direction. DDJ Anstis’ error in that regard is then carried through into his reasoning on the application itself. In paragraph [11] he regarded Mr Benka as having been obliged by the order to do something; and at [12] he said in terms that there had been a breach of DJ Bell’s order.

Having referred to authority on the approach the court takes to delay, HHJ George held that DDJ Anstis was wrong to strike out the claim. No discretion had arisen under CPR 3.4 (2) (wrongly transcribed at CPR 3.42) because there had been no breach of DJ Bell’s order by either party. She went on to say that even if Mr Benka had sought to take action he would have had to apply to lift the stay. Alternatively, she said, Ms Keith could have contacted the court to find out what was going on. She concluded at [67]:

Accordingly, she allowed the appeal.

The relevant documents were eventually transferred to the FTT in February 2023.

Mr Grundy KC, on behalf of Ms Keith, accepts that Mr Benka was not in breach of DJ Bell’s order; and consequently, that DDJ Anstis did not have the power to strike out the claim under CPR 3.4 (2) (c). But, he says, HHJ George was wrong to say that DDJ Anstis had no discretion to exercise. On the contrary, CPR 3.4 (2) (b) gave him the ability to determine that the lengthy delay of itself amounted to an abuse of process; and following that, to strike out the claim.

The categories of abuse of process are not closed, and do not necessarily depend on a failure to comply with rules of court or court orders. Lord Diplock began his speech in Hunter v Chief Constable of the West Midlands [1982] AC 529 by saying:

One such case (as in Hunter itself) is a collateral challenge to a previous decision.

So the main question in this case is whether the lapse of time in bringing a claim to a conclusion, unaccompanied by any breach of a rule of court or court order can amount to an abuse of process; and, if so, whether on the facts of this case, it does.

The recent learning on the subject begins with the decision of the House of Lords in Grovit v Doctor [1997] 1 WLR 640. In August 1989 Mr Grovit launched a claim against a number of defendants. The only extant claim was one for libel. A defence to the claim was filed in October 1989. In July 1990 a judge directed the trial of a preliminary issue. Nothing more seems to have happened until the defendant applied to strike out the claim. The reported account of the facts does not reveal any breach of a court order or rule. The deputy judge struck out the claim in October 1992; and his decision was upheld by the Court of Appeal. The deputy judge found that Mr Grovit had no interest in actively pursuing the litigation and that as far as he was concerned it was “dead in the water”. He then asked himself whether the courts were powerless unless the defendant could show prejudice, and decided that they were not. This court upheld his decision, although both Evans and Glidewell LJJ found that there was prejudice to the defendants in that they were in a state of anxiety prolonged by the litigation. Lord Woolf, with whose speech their Lordships agreed dismissed Mr Grovit’s appeal. He said:

What amounted to the abuse was Mr Grovit’s lack of intention to bring the matter to a conclusion.

Grovit v Doctor was considered by the Privy Council in Icebird Ltd v Winegardner [2009] UKPC 24. That case concerned a right of way over Ms Winegardner’s land to which Icebird was entitled. It claimed that Ms Winegardner was obstructing that right. It began proceedings in September 2000; and a defence was filed in December. The statement of claim was amended in November 2001. Nothing was done for the following two years. In February 2004 Ms Winegardner applied to strike out the claim. One of her grounds was that Icebird had failed to issue a summons for directions, within the time laid down by the rules. Lyons J heard the application. He found that the delay was inordinate (with which the Board agreed). He also took the view that the opinion that Ms Winegardner was “severely prejudiced” by the delay because the existence of the litigation constituted a blight on her title. Lord Scott said:

Having considered Grovit v Doctor, Lord Scott went on to say:

He went on to say:

Having considered the issues in the litigation, the Privy Council concluded that the delay did not prevent a trial of any of the issues. Icebird was thus allowed to proceed with the action on terms.

In Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426 Lord Woolf MR confirmed, by reference to an earlier decision of this court decided the day before judgment in Grovit v Doctor that delay alone, even of 11 years, does not amount to an abuse of process. The particular case to which he referred (Barclays Bank plc v Maling) was one in which the court itself had made an order that the action was to be adjourned generally with liberty to restore. But it is clear that, as a matter of case management, Lord Woolf did not approve that course. He said at 1437:

We were referred to the decision of Barling J in Wearn v HNH International Holdings Ltd [2014] EWHC 3542 (Ch). That was a case which turned on its own facts and did not, in my view, lay down any point of principle.

This court considered the “warehousing” of claims in Asturion Foundation v Alibrahim [2020] EWCA Civ 32, [2020] 1 WLR 1627. Arnold LJ set out the history of the litigation. At [11] he recorded:

At [47] Arnold LJ reiterated the point that mere delay, however, inordinate and inexcusable, does not without more constitute an abuse of process. Having considered a number of authorities, Arnold LJ said at [61]:

He added at [64] that the approach fell into two stages:

In considering the facts of the case he attached considerable significance at [71] to the fact of the court’s oversight in failing either to make an order for directions or to list the CMC.

Contrary to Mr Grundy’s submissions, I do not consider that DDJ Anstis decided the original application on two separate and independent grounds. I consider that a fair reading of his judgment shows that what he took to be a breach of DJ Bell’s order by Mr Benka was the foundation of both limbs of his decision. It is, to say the least, unfortunate that he was not referred to the Practice Direction. In so far as it could be said that he did consider the question of delay as a free-standing ground, the judge did not identify what turned mere delay into an abuse of process other than his erroneous belief that Mr Benka was in breach of DJ Bell’s order.

It follows, in my judgment, that HHJ George was entitled to set aside his decision and make her own.

Nevertheless, I consider that HHJ George was wrong to say that CPR 3.4 (2) could not apply unless there had been a breach of a rule or order. The power to strike out under CPR 3.4 (2) (b) is available even if there has been no breach. Mr Gatty submitted that HHJ George was correct to say that no discretion had arisen under CPR 3.4 (2). She must be taken to have referred not merely to 3.4 (2) (c), but also to 3.4 (2) (b). If there was no abuse of process, there was no discretion to exercise under CPR rule 3.4 (2) (b). That is not my reading of her judgment. The three paragraphs of her judgment which contain her analysis are replete with statements that Mr Benka was not in breach of the order. There was no consideration of any other form of abuse of process.

In my judgment, she was therefore wrong to say that DDJ Anstis had no discretion to exercise; and because she took too narrow a view of the court’s power to strike out, she exercised no discretion of her own.

It follows, in my judgment, that it is open to this court to take its own view.

Mr Gatty submitted that “delay” does not exist in the abstract. It can only mean delay in doing something that ought to be done. Since DJ Bell’s order did not require Mr Benka to do anything; and, in addition, the proceedings were stayed, there was nothing that he could have done. It cannot be an abuse of process not to progress a claim where (a) there has been no breach of an order of the court (b) there has been no breach of the CPR and, moreover (c) the court has itself stayed the action.

The question whether there has been an abuse of process requires the court to consider the length of the delay and the reason for it, objectively considered: Asturion at [61].

In deference to Mr Gatty’s submission, I shall avoid the use of the word “delay.” The lapse of time between DJ Bell’s order and the hearing before DDJ Anstis was extremely long (five years since the claim was issued; and over four and a half years since DJ Bell’s order). It is true that Mr Benka was not obliged by DJ Bell’s order to take any positive step. But what were stayed were the court proceedings, not the overall resolution of the dispute. That, in my judgment, is a distinguishing feature of the stay in this case. Mr Benka did not suggest that he was powerless. He could, at the very least, have applied to lift the stay or have made enquiries of the court or the FTT to find out what was going on. Although section 168 (4) of the 2002 Act specifically empowers “the landlord” to apply to the FTT for a determination of breach, Mr Grundy did not suggest that Mr Benka could have made his application to the FTT under that power, given that the matter had been placed in the hands of the court. Nor was it suggested that Mr Benka had been in breach of any of the FTT’s own rules of procedure.

In fact Mr Benka had done nothing to progress his claim. Even in the two months or more that elapsed between the application to strike out on 20 September 2019 and the hearing on 3 December 2019 Mr Benka did nothing. The FTT finally received the documents in February 2023, after the appeal to HHJ George, and so will be faced with determining whether there were breaches of covenant committed well over a decade earlier.

The lapse of time is, in my judgment, lengthy. Nevertheless, I consider that we are bound by authority to hold that the lapse of time, without more, does not amount to an abuse of process.

The ostensible reason for not progressing the claim was out of consideration for other leaseholders. I find it very difficult to understand why other leaseholders would be inconvenienced or affected by proceedings in the FTT between Mr Benka and Ms Keith. I do not consider that Mr Gatty was able to provide a cogent explanation. Mr Benka also said that it made sense to delay proceedings until he was “compelled” to proceed. That, to my mind, is no good reason at all. An intention not to prosecute a claim until compelled to do so can properly be described as “warehousing” the claim. But it is necessary to consider objectively the reason for the delay. Mr Benka’s own perception is not determinative. As Mr Gatty said, the courts do not punish thought crimes. In this case it is hard to avoid the conclusion that the objective reason for the lapse of time was a combination of the court’s own oversight in not complying with the Practice Direction, coupled with the stay. The court’s own part in the lapse of time (either by adjourning the case generally as in Barclays Bank or by failing to embody directions in an order and listing a CMC as in Asturion) is a highly relevant factor in deciding whether there has been an abuse of process.

Unlike the Icebird case, in this case there is evidence that the delay has caused prejudice to Ms Keith. It seems to me to be almost self-evident that the existence of a pending forfeiture action makes a long lease unmortgageable and probably unsaleable except to a cash buyer at a reduced price. But if evidence were necessary, Ms Keith says so. Although Ms Keith’s flat was sublet during the pendency of the proceedings, I consider that given the long history of acrimonious relations between Mr Benka and Ms Keith, there is no reason to doubt her wish to sell and to extricate herself from Fairwarp.

In addition, after this lapse of time there is, in my view, considerable force in Ms Keith’s assertion that a fair trial of these historic breaches will be very difficult, if not impossible. Some of them are, by now, statute barred even allowing for the fact that the lease was made under seal.

Does this combination of factors amount to an abuse of process? I do not accept that in considering an allegation that a claim has been “warehoused” it is a precondition of abuse of process that there has been either a breach of a court order or a breach of a rule of the CPR; although the existence of either will clearly be a highly relevant factor. But in Grovit itself none of the courts who considered the question treated a breach as a necessary condition. What, in my judgment, tips the balance in this case is the existence of the stay coupled with the court’s own error in not transmitting the order for transfer to the FTT. As Mr Gatty put it, to strike out the claim would be to punish Mr Benka for the court’s mistake.

Mr Gatty has persuaded me that we would be extending the law by holding that on the particular facts of this case there has been an abuse of process sufficient to justify the striking out of Mr Benka’s claim. I reach this conclusion with reluctance, because the claim is thoroughly stale, and it may well be that DJ Bell ought to have struck it out back in 2015 on the ground that at that time Mr Benka was not entitled to serve a section 146 notice. But that decision was not appealed, and it is now too late to do so.

I would dismiss the appeal.

I agree.

I also agree.