Asturion Fondation v Alibrahim

The claimant appeals with the permission of Arnold J against the order of Deputy Master Cousins dated 11 September 2018, by which he struck out its claim on the basis that delays in its pursuit amounted to an abuse of process of the type that has become known as "warehousing". The Master's decision was given in a written judgment handed down on that date, and was to some extent expanded on in reasons he gave for refusing permission to appeal. The Defendant by her respondent's notice seeks to uphold the decision by relying on the matters referred to by the Master in his judgment at the handing down. Neither judgment appears to have been reported. For ease of reference I have attached the written judgment as an appendix to this judgment, and quoted the relevant paragraphs from the supplementary reasons below.

The claimant (which I will refer to as "the Foundation") is an entity established in Liechtenstein. It has separate legal personality and is controlled by a board, and was set up to hold and manage certain assets for the benefit of certain members of the Saudi Royal family. The defendant is one of the widows of the late King Fahd, who died in 2005. In 2011 Maître Faisal Assaly ("Mr Assaly"), who was one of the members of the board of the Foundation, executed transfers of four high value properties to the defendant. No consideration was paid. Mr Assaly claims to have acted on the basis of oral and written instructions given by the late King. Mr Assaly died in 2015.

These proceedings concern one of those properties, Kenstead Hall in London. It is a substantial property; the value stated when the transfer was registered was £28m. The claimant's allegations, very broadly, are that Mr Assaly did not have the power or authority to act on the part of the Foundation in making the transfer, and that in so acting he was in breach of the purposes of the Foundation and/or acting under a fundamental mistake. In consequence, it is said, the transfer is void or voidable. The claim is strongly disputed on all counts, but the application before the Master did not involve any consideration of its merits.

The other properties were in Germany, France and Spain (the last owned through a Spanish entity in which the Foundation has an interest). Similar proceedings, also strongly contested, have been issued in France and Spain. There is no claim in respect of the German property because, the claimant says, the defendant had disposed of it before proceedings could be begun.

The evidence before the Master consisted of two witness statements by the defendant's solicitor and one from the claimant's solicitor, with exhibits. In addition there was an agreed chronology which includes certain matters relating to the overseas proceedings, not all of which were expressly referred to in the witness statements.

In the first witness statement in support of the application the defendant's solicitor complains that the claimant "failed from July 2016 onwards to take any substantial steps to progress this litigation" and that the claimant had admitted in correspondence in August 2017 "that it had decided not to prosecute its claim in England because of existing proceedings in Liechtenstein. This unilateral decision to warehouse its claim had… never been communicated to the defendant, nor did the claimant ever seek to

The Liechtenstein proceedings referred to were an application by the defendant made in December 2015 to remove the three members of the board of the Foundation on the basis, inter alia, that they were acting improperly by instituting and pursuing against her these proceedings and the similar claims in France and Spain. She complained forcefully about the costs being incurred in those proceedings, improperly as she alleged, both insofar as they depleted the assets of the Foundation and as they fell on her. Her application was thus a collateral attack by which the defendant sought to block or thwart the claims against her.

This claim was issued on 10 April 2015. The claimant immediately applied to register notice of a pending land action against the property, the effect of which, the defendant says, is to prevent any dealing with the property. A brief summary of the procedural history after that is as follows:

It is relevant also to note what was happening in the Liechtenstein proceedings during the period the defendant complains of:

The defendant also applied in the alternative for security for costs. In the event, just before the Master's hearing, it was agreed that the claimant would provide security in the sum of £800,000. The correspondence also deals with requests by the defendant for security. I summarise that, again briefly, since it was relied on before the Master and on appeal in relation to striking out.

In his written judgment the Master summarised the relevant law as follows:

“THE PRINCIPLES OF LAW

Striking out the Claim as an abuse of process

20.

The power of the Court to strike out a statement of case is set out in CPR.3.4. CPR r.3.4(2)(b) provides that the Court may strike out a statement of case if it appears to the Court that the statement of case is an abuse of the Court’s process or is otherwise likely to obstruct the just disposal of the proceedings. The Defendant relies upon authority in support of the proposition that where a party commences or continues litigation with no intention to bring the matter to a conclusion, that can amount to an abuse of process. The case of Grovit v Doctor is cited in support of the proposition, per Lord Woolf:-

“…I am satisfied that both the deputy judge and the Court of Appeal were entitled to come to the conclusion which they did as to the reason for the appellant’s inactivity in the libel action for a period of two years. This conduct on the part of the appellant constituted an abuse of process. The Courts exist to enable parties to have their disputes resolved. To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceedings are brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action. The evidence which was relied upon to establish the abuse of process may be the plaintiff’s inactivity. The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution. However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v James. In this case once the conclusion was reached that the reason for the delay was one which involved abusing the process of the court in maintaining proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings.”

21.

The Defendant submits that it is an abuse of process to put litigation on hold pending the outcome of proceedings abroad. Reliance is placed upon the judgment of Popplewell J in Société Générale v Goldas Kuyumculuk Sanayi Ithalat Ihracat A.S. : -

"[60] The second abuse [of the claimant] lies in the decision to put the proceedings on hold. I reject Mr Moverley Smith’s submission that

Société Générale had decided to abandon the proceedings. None of the

documents he referred to cast any serious doubt on what Mr Surgeoner said was the nature of the decision made. Nevertheless, that decision was abusive.

[61]

Even before the introduction of the CPR and the overriding objective, a party was not allowed simply to put proceedings on hold and to await the outcome of developments or litigation abroad without the sanction of the Court. In Battersby v Anglo-American Oil Co Ltd Lord Goddard giving the judgment of the Court of Appeal said ‘It is for the court and not for one of the litigants to decide whether there should be a stay.’ In Arbuthnot Latham Bank Ltd v Trafalgar Holdings Lord Woolf MR stated: -

‘[It has been the unofficial practice of banks and others who are faced with a multitude of debtors from whom they are seeking to recover monies to initiate a great many actions and then select which of those proceedings to pursue at any particular time]. Whereas hitherto it may have been arguable that for a party on its own initiative to, in effect, ‘warehouse’ proceedings until it is convenient to pursue them does not constitute an abuse of process, where hereafter this happens this will no longer be the practice. It leads to stale proceedings which bring the litigation process into disrespect. As case flow management is introduced, it will involve the courts becoming involved in order to find out why the action is not being progressed. If the claimant has for the time being no intention to pursue the action this will be a wasted effort. Finding out the reasons for the lack of activity in proceedings will unnecessarily take up the time of the court. If, subject to any directions of the court, proceedings are not intended to be pursued in accordance with the rules they should not be brought. If they are brought and they are not to be advanced, consideration should be given to their discontinuance or authority of the court obtained for their being adjourned, generally. The courts exist to assist parties to resolve disputes and they should not be used by litigants for other purposes.

[62]

The introduction of the CPR marked a change of emphasis in favour of attaching more importance to compliance with the rules, and furthering the overriding objective, with the impact on the court system and other court users in mind as well as that on the parties. Under CPR Rule 1.1(2)(d) and Rule 1.3 Société Générale was under an obligation to help the Court to ensure that the claim was dealt with expeditiously. This it singularly failed to do.

[63]

For a claimant unilaterally to warehouse proceedings is therefore an abuse of process, and may be a sufficiently serious abuse to warrant striking out the claim in appropriate cases under the line of authority from Grovit v Doctor….; see Solland International Ltd v Clifford Harris & Co...”.

22.

In this context it is to be noted that the term “warehouse” or “warehousing” proceedings seems to have been used as a term of art for the first time in the case of Arbuthnot [Latham] Bank Limited v Trafalgar Holdings.

23.

Thus, in essence warehousing is more than mere delay which in itself is not an abuse of process. On the contrary, warehousing is the issuing and maintaining of proceedings with no real intention of carrying them through to trial, save possibly at some unspecified future date of convenience to the claimant. ”

He then summarised the submissions of the parties, which I will not repeat, and set out his conclusion and reasons as follows:

“THE DECISION

35.

Having regard to the legal principles and the factual circumstances, to which reference has been made above, I have come to the conclusion that the Application should succeed, and the Claim should be struck out.

36.

My reasons are as follows:

(1)

In my judgment, although Berwin Leighton Paisner writing on behalf of the Asturion Fondation in their letter dated 23rd August 2017 did not actually use the word to “warehouse” its claim, I find that the words “... there was no immediate need to push ahead with directions to trial” carries the same meaning. I therefore agree with Leading Counsel for the Defendant that this was, in effect, a unilateral decision on the part of the Asturion Fondation, and that such action amounted to an abuse of process entitling the Court to strike out the claim.

(2)

There was a long period of inactivity on the part of the Asturion Fondation as to the conduct of the litigation. The Claim Form and the original Particulars of Claim were issued as long ago as 10th April 2015, and almost 2½ years later there had been virtually no progress in the conduct of the litigation by the Asturion Fondation.

(3)

It is also to be noted that it took more than 12 months for the Asturion Fondation to provide the information as to whether or not it consented to the Defendant’s filing and serving the amended Defence.

(4)

As to the question of providing information as to the nature and location of the Asturion Fondation’s assets, again as long ago as 16th October 2015 Berwin Leighton Paisner on behalf of the Asturion Fondation declined to provide any meaningful information as to request made for security for costs. It failed to deal constructively with the requests made. There was no meaningful engagement. It merely stated that the Fondation had sufficient assets with which to satisfy any costs order or judgment.

(5)

No particulars of the Asturion Fondation’s assets and liabilities have ever been provided. The Defendant was in effect left to infer the standing or otherwise of the Asturion Fondation’s assets. This approach is to be contrasted with that adopted in the other European litigation.

(6)

In the evidence filed in response to the Application in March 2018 the Defendant was little the wiser with regard to the issue of security for costs, as demonstrated in the Witness Statement of Mr Shear.

(7)

The point should also be made that the Notice has effectively prevented any dealings with the Property in the meantime.

(8)

The decision to place the English proceedings on hold for a substantial period of time is, in my judgment, amply demonstrated when regard is had to the factual circumstances. I do not accept the reason put forward that the Defendant was somehow at fault in issuing her proceedings in Liechtenstein. The reason given somewhat belatedly that the Asturion Fondation’s authority to conduct the current proceedings was coming under sustained attack in that jurisdiction cannot, in my judgment, be justified as a reason why there was no progress in the current litigation.

(9)

To echo the words of Lord Woolf in Grovit v Doctor, “...to commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceedings are brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action.”

(10)

In my judgment these words are entirely apposite to the current circumstances.

(11)

Finally, I should state that in the circumstances I do not consider that it is unjust and disproportionate or the Court to strike out the Claim in its entirety at this stage. I do not accept the reasons put forward by Leading Counsel that in the alternative the Court could adopt another approach so as to enable the Asurion Fondation to proceed with the litigation.”

In giving his reasons for refusing permission to appeal the Master amplified this somewhat and made specific reference to part of the witness statement of the claimant's solicitor, as follows:

“5… In paragraph 36(1) of the Judgment, I acceded to the arguments promoted by Mr Reed QC that the words contained within that letter from Berwin Leighton Paisner meant that the view was taken that there was no immediate need to push ahead with the action to trial. In effect the Court found that this sentiment carries the same meaning as the manifestation of the intention to ‘warehouse’ the claim.

6.

I therefore agree with Mr Reed that this in fact demonstrated a unilateral conscious decision on the part of the Claimant, Asturion Foundation, not to pursue its action. This, as the Court found, amounted to an abuse of process, entitling the Court to strike out the claim.

7.

In support of that interpretation, the Court in the Judgment did make reference to the second witness statement of Mr Graham Shear dated 20^th March 2018. Although the contents of paragraphs 21, 22 and 23 of his witness statement were not recorded, as such, in the Judgment, the evidence before the Court from Asturion was the following:

"There was an assumption made, as a result of the circumstances set out above in paragraph 21, that the defendant was content that neither party should incur further costs in relation to the initial proceedings save to the extent that they were necessary."

In paragraph 23, Mr Shear then goes on to say:

"It is right that we did not write in terms confirming this but, given the substantial delays which there have been in correspondence from the defendant ..."

The argument put forward by the Defendant is that she is not to blame in relation to the non-progress of litigation, which seemed to be the implication in the above statements. The assumption that Mr Shear had made about the stance taken by the Defendant was not justifiable in the circumstances.

8.

Thus, I came to the conclusion in the Judgment that there was a demonstration of intention to warehouse, with no manifest desire to push ahead with litigation here in this country. This, as I have stated, is to be contrasted with the aspect in relation to litigation in other jurisdictions where there seemed to be some considerable degree of activity.”

There are effectively three grounds of appeal:

Mr Mumford submits that it was not alleged, and the Master had not found, that the claimant had no intention ever to proceed with its claim, but only to suspend progressing the English litigation until resolution of the Liechtenstein proceedings that challenged its competence to do so. A decision to suspend was not necessarily abusive. He suggested that cases could be categorised into four types:

Types 1 and 2 he submitted were abusive, but types 3 and 4 amounted to mere delay, which of itself did not constitute abuse. The test for abuse could not depend on whether there was a conscious decision to pause the litigation; almost any case in which there was in fact delay was bound to involve some element of decision not to take further steps.

In his skeleton Mr Reed submitted that the Master had found as a fact that the claimant had "warehoused" its claim, and correctly held that this amounted to abuse. He does not however contend that the Master found, or could properly have found, that there was no intention ever to proceed with the claim, only that the claimant decided to pause proceedings pending those in Liechtenstein. He submitted there were only three categories of case; his first and third corresponded to Mr Mumford's Types 1 and 4; in between was a single category in which the claimant has no intention for the time being and/or pending some contingency to proceed to trial, but may do so in the future. A conscious decision not to pursue the English litigation pending the outcome of other litigation abroad was, he said, abusive as a matter of law.

In oral submissions he said that even if his middle category could be divided into two as Mr Mumford had submitted (a) this case fell into Mr Mumford's Type 2 because progress was halted pending on a contingency, ie the outcome of the Liechtenstein proceedings and (b) even if it fell into a separate Type 3, cases in that category might still be found to be abusive and the Master had correctly done so in this case.

I start with a general point, which is relevant because of the extent to which the submissions focused on the term "warehousing" and whether any challenge to the Master's conclusion on that point involved a challenge to a finding of fact, with the additional hurdles that would present on appeal. It seems to me that logically the court's task on an application such as was before the Master can be divided into three stages; (a) finding the facts as to what has happened (b) determining whether those facts show an abuse of the court's process and (c) if so deciding whether in the circumstances it is just to strike out a case or impose some other (or no) sanction. I recognise that in many cases these considerations may be taken together- in a number of the cases cited to me the court's conclusion was expressed as being that it had not been shown there was a sufficient abuse to justify striking out, which elides the second and third stages.

The third stage is an exercise of discretion, and any appeal is subject to the well known limitations on interference by the appeal court. But the second stage it seems to me is neither fact nor discretion but a matter of law. The appeal court may reach its own conclusion on matters of law and overturn the decision under appeal if it differs. Mr Reed submitted to me that the Master's finding of abuse was an evaluative decision with which the appeal court should be slow to interfere, referring to Datec Electronics Holdings Ltd v UPS Ltd ([2007] UKHL 23) and the passage from the judgment of Clarke LJ in Assicuranzioni Generali SpA v Arab Insurance Group ([2002] EWCA Civ 1642) approved by Lord Mance at para 46. But that passage was related to decisions of fact, as Clarke LJ made clear in para 16 of his judgment. So was the question before the House of Lords in Datec itself (whether the most likely cause of non delivery of parcels was theft by the carrier's employees).

No doubt some conclusions on points of law involve multi factorial evaluations, based on the facts found, but that does not turn them in to determinations of fact. An appeal court, starting from facts that are either agreed or have been found by the trial judge, gives due regard to the conclusion of the trial judge but may be in just as good a position as he or she was to reach evaluative conclusions of law and is entitled, indeed bound, to overturn it if satisfied that it is wrong, see Dinglis Management Ltd v Dinglis Properties Ltd [2019] EWCA Civ 127 at para 26, for example.

"Warehousing" is a term that has come to be used to describe some circumstances that have been found to be abusive. Its use in relation to a particular set of facts seems to have been either as a shorthand description of the circumstances found, as a prelude to determining whether those facts constitute abuse, or a shorthand description of a type of abuse that has been found.

Consequently the submission that the Master had found as a fact that there had been warehousing cannot assist, since, to the extent he stated such a conclusion it would at most be an elision of his conclusions on the facts and his decision as a matter of law that those facts amounted to abuse.

As to the relevant law, counsel are agreed on many issues:

I am not however persuaded that the authorities establish any principle that delay that might be described as warehousing is always and necessarily an abuse of process. The starting point for such a proposition seems to be the passage quoted by the Master from the judgment of Lord Woolf MR in Arbuthnot Latham, but that is in very general terms, and does not set out any comprehensive consideration of what would or would not amount to "a party on in its own initiative… in effect 'warehous[ing]' proceedings until it is convenient to pursue them". If one looks back at the facts of the case for the context of that statement, the claimant bank had sued a principal debtor company and two individual guarantors. The company entered no defence. It is not clear if it was ever pursued further. The claim against the guarantors proceeded to disclosure, and then no further steps were taken for almost 5 years. When it was taken up again, it was by an assignee of the debt (apparently a second assignee, see p 1429H). That company had acquired a large portfolio of the bank's bad debts and prioritised other claims among them, see p 1430C. So the reference to having a multitude of debtors and selecting which to pursue at a particular time was aimed at parties with large volumes of bad debts to collect who issued many claims and pursued only some of them, in that case leaving others in abeyance for many years.

It would not in my view be possible to derive anything more from this than that in some circumstances long delay may amount to abuse of process without it being necessary to show prejudice to a defendant, and that the sort of mass acquisition of bad debt portfolios and selective pursuit of debtors as and when it suited the creditor was one such circumstance. It could not be said that by describing this as "warehousing" Lord Woolf MR was creating or defining any precisely identifiable term or set of circumstances that inevitably amounted to abuse. Further, it was plainly regarded as relevant that in the case before the court a substantial time had elapsed without progress; it must I think be unlikely the same conclusion would have been reached if the delay had been only weeks or months while the assignee took reasonable steps to get to grips with the volume of cases it had acquired. If that is right, the mere decision to pause progress on a particular claim would not necessarily abusive, but it might become so if maintained for an unreasonable time.

It is true that in Societe Generale Popplewell J said (at para 63, cited by the Master) "For a party unilaterally to warehouse proceedings is therefore an abuse of process, and may be a sufficiently serious abuse to warrant striking out the claim in appropriate cases…". But he was not thereby stating that some hard edged category of circumstances called warehousing existed, into which that case fell, rather it seems to me he was describing the circumstances of the case that he held to amount to abuse. Those circumstances can be seen from his judgment to be:

“24 At about this time [May 2008] SocGen decided not to progress the English proceedings, at least for the time being… The decision is described in these terms: "In the light of the advice from Pekin, SocGen subsequently took the decision to advance matters by instituting bankruptcy proceedings against Goldas in Turkey. The intention in relation to the English claims was to keep the position under review and revisit the matter once the outcome of the Turkish bankruptcy proceedings was known."

54 SocGen then took a conscious decision to try to recover what it claimed was due not in England, but in Turkey by means of insolvency proceedings, again in the knowledge that Turkish service was disputed and Dubai service had not been effected. That involved a delay of some 8 years which was only brought to an end by the defendant's applications…

56 Moreover SocGen's conduct of the proceedings has amounted to an abuse in three separate respects…

60 The second abuse lies in the decision to put the proceedings on hold. I reject Mr Moverley Smith's submission that SocGen had decided to abandon the proceedings... Nevertheless that decision was abusive.”

The abuse in relation to delay therefore consisted of taking no steps to progress the proceedings for over 8 years (in which, it was accepted, they had not been validly served) pursuant to a conscious decision to try and recover the same loss through alternative proceedings in Turkey. The English proceedings were a fallback, only to

I note the decision in the case was not in fact that the proceedings should be struck out because of these abuses, but that the abuses were factors against granting relief from the failure to serve the claim in time. Having refused that relief, such that the defect in service was incurable, the claim was struck out for non- service (see para 73).

That decision shows therefore circumstances of deliberate delay, short of an intention to abandon the claim, that were held to be abusive and were described as warehousing. It does not establish any "test" for what is or is not warehousing, or that anything which is described as warehousing is necessarily an abuse.

I note also that in Grovit v Doctor, a stronger case in that it was found that the claimant had not merely paused proceedings but had no real intention ever to pursue them, Lord Woolf MR said only that continuing the proceedings in such circumstances "can" amount to an abuse of process. It would be strange if he intended in Arbuthnot Latham to hold as a general proposition that the less strong situation of a decision to pause progress must lead to a finding of abuse.

In Solland International Ltd v Clifford Harris & Co ([2015] EWHC 3295 (Ch)) Arnold J upheld on appeal the order of Master Bowles striking out a professional negligence claim, inter alia on the ground that delay in pursuing it for two periods totalling about 3 ½ years amounted to an abuse of process. The Master rejected submissions that this delay was satisfactorily explained or excused by the claimants being "distracted" by pursuit of other unrelated litigation. It was contended that the Master had wrongly found that the claimants had formed the intention to abandon the proceedings, but should instead have found that they only intended to "put them on hold". In relation to that Arnold J held:

“69 Turning to the second contention, the Master accepted that, during the first period, it could be said that the Appellants had left this litigation "in the sidelines". Thus the Master made essentially the very finding that the Appellants say that he should have made. That finding does not assist the Appellants. On the contrary, it amounts to a finding that, unilaterally and without the consent of the Respondent or the court, the Appellants (to use the Appellants' own terminology on this appeal) "put the litigation on hold for the time being". That amounts to an admission that the Appellants did not intend to pursue the litigation to trial, or other proper resolution, for an indeterminate period: in other words, an admission of "warehousing" the litigation. As Lord Woolf made clear in Arbuthnot, this is not acceptable and can constitute an abuse of process. Contrary to the Appellants' argument, it was not necessary in order for the Master to find abuse of process established for him to find that the Appellants had decided permanentlyto abandon the litigation (even if they subsequently changed their mind).

70 So far as the second period is concerned, the Master accepted that the Appellants were giving some consideration, albeit upon a desultory basis, as to whether, or when, they might elect to continue the claim. Again, this is essentially the finding that the Appellants say that he should have made: as the Appellants themselves put it on this appeal, "nothing had changed" during this period. In other words, having unilaterally warehoused the litigation (for a period of 9 months), the Appellants had gone no further than thinking about unwarehousing it (for a period of 17 months and without actually doing so)…

73 Conclusion. I therefore conclude that the Master was entitled to find that the Appellants were guilty of an abuse of process on the basis that, during the period from 27 April 2012 until at least 13 August 2014, they did not intend to pursue this claim to trial or other proper resolution. That was on any view a substantial period, but all the more so having regard to how stale the claim already was at the beginning of that period.”

Arnold J thus held that delay while having no present intention to pursue a claim for an indeterminate period (without having decided to abandon it) could be described as warehousing and can constitute an abuse, and that in the circumstances of the case (a period of over two years where the claim was already stale) the Master was entitled to conclude it was an abuse. His decision does not support any clear test of what circumstances would justify a conclusion of abuse, rather it shows that the court will evaluate the circumstances in which the delay occurred and the reasons for it and in appropriate cases may conclude they do show abuse.

In Braunstein v Mostazafan & Janbazan Foundation ([2000] EWCA Civ 123) the Court of Appeal heard a second appeal on an application to strike out a solicitor's claim for fees in circumstances where there had also been a delay in pursuing proceedings for about 3 ½ years in all. Mr Reed points out the application was made on the basis of want of prosecution under Birkett v James, but that is not the whole position; the court dealt with a second basis in which abuse of process was alleged relying on Arbuthnot Latham and Grovit. One unusual fact was that the claimant said he had refrained from pursuing the proceedings because for most of the period he had been negotiating settlement with a Mr Jafari, whom he understood to be a representative of the defendant, though that was subsequently denied. Harrison J (with whom Mance LJ agreed) said:

“26.

However, before I come to deal with the issue of prejudice I should first deal with an abuse of process argument which was raised on behalf of the defendant. It was based on the deliberate decision of the plaintiff to put his action on ice, or to "warehouse" the proceedings, from mid-1995 to April 1997 during which time he was negotiating with Mr Jafari in the belief that Mr Jafari was acting on behalf of the defendant. According to the plaintiff, Mr Jafari told him on several occasions that the defendant had requested that the action should not be progressed whilst negotiations were continuing. He therefore took no further steps to progress the action as he had no reason to doubt Mr Jafari's word…

32.

For my own part, I am not persuaded that the conduct of the plaintiff was sufficiently serious as to amount to an abuse of process. The length of time for which the negotiations were carried on by the plaintiff without progressing the action from mid-1995 to April 1997 was less than half the time involved in the case of Cooperative RetailServices Ltd v Guardian Assurance plc, and the overall period of inordinate and inexcusable delay in that case was 5 years and 5 months compared to the period of 3 1/2 years in this case. Furthermore, it is implicit in the findings of the judge that the plaintiff believed that Mr Jafari was acting on behalf of the defendant, albeit that he can quite properly be criticised for failing to check the authenticity of Mr Jafari's authority to negotiate, either with the defendant or with the defendant's solicitor. Looking at the matter in the round, however, I do not consider that, as a matter of fact and degree, this is a case where it can be said that the plaintiff's conduct was such as to amount to an abuse of process so that it should be struck out without prejudice having to be shown.

33 It follows that this appeal must be decided under the second limb of Birkett v [James]…”

Harrison J was content to apply the term "warehousing" to the fact that progress was suspended for a period, but he did not treat that label as determinative; he went on to consider whether the conduct was sufficiently serious to amount to an abuse. Taking account of the circumstances of the delay, he concluded it was not, and accordingly the applicant would have to satisfy the Birkett v James criteria.

Mr Reed submitted this argument had only been raised on appeal and there was no evidence of a deliberate decision to put the proceedings on hold, so it was understandable the argument had been rejected. I do not accept that; if the Court of Appeal allowed the argument to be run for the first time they plainly dealt with its merits, and either found or assumed in favour of the appellant that there had been a deliberate decision to put the claim "on ice", as recorded in the passage cited.

In Wearn v HNH International Holdings Ltd ([2014] EWHC 3542 (Ch)) Barling J found that long delay, which he found to be inordinate and inexcusable, was transformed into abuse of process by a number of factors, including wholesale disregard of the Rules and directions, reliance on inappropriate "expert" advice, maintaining allegations of fraud and forgery over a long period which were later abandoned (see paras 111-112 of the judgment). He concluded however that the claimant could not be said to have "warehoused" the claim:

“113 HNH has submitted that there is a further such factor, in that the claimant has "warehoused" his claim until it is convenient for him to pursue it. Mr Nathan argued strongly that this is very far from true, and that the claimant has at all times been seeking to advance the proceedings. In my view the claimant has generally been reluctant to take the matter forward until his expert had completed investigations to his and the claimant's satisfaction, and was in a position to present a winning hand to HNH and the court. The claimant's conduct in this regard, although not consistent with the aims of the CPR, is not the same as warehousing a claim without any firm intention of proceeding, or until convenient. Although I do not say that the claimant's approach could not constitute the "extra ingredient" required to transform delay into an abuse, it is not necessary to decide this point, as there are other factors present here.”

This appears to have been a case of a claimant who at all times intended to proceed with his claim but delayed in progressing the court proceedings for reasons connected with the litigation. He was in the meantime pursuing actions relevant to the claim, such as allowing his expert to pursue investigations intended to establish the alleged fraud. The Judge held that those reasons and his conduct amounted to abuse of process, but not on the grounds of "warehousing" as he had not intended to put the claim on hold "until convenient to pursue it".

In Grenda Investments Ltd v Barton ([2017] EWHC 2371 (Comm)) the reason for failing to proceed with the action was said to be the desire of the claimant to retain the defendant's cooperation in other unrelated litigation. In an extempore judgment Picken J said:

“29 It is Mr Hext's submission that in the present case there was a significant period of delay and that that period of delay is explicable (as he would suggest, only explicable) from at the latest November 2015 onwards as a result of a deliberate decision on part of Grenda not to proceed with litigation in order not to discourage Mr Barton from providing the assistance that was required from him in relation to the Orb Litigation. During that period, Mr Hext submits, Grenda did not have an intention to bring the proceedings to a conclusion and, accordingly, an abuse has been committed by Grenda. Mr Hext observes that it does not assist Grenda that subsequently, once Mr Barton's help was no longer needed, the Orb Litigation having settled, Grenda changed its position and sought to revive the proceedings…

31

The Court is… being invited to draw the inference that Mr Ruhan (and, accordingly Grenda) made a decision not to pursue the proceedings in order to retain Mr Barton's co-operation. The difficulty with this is that Mr Ruhan's (and Grenda's) conduct in not progressing the proceedings between late 2015 and October 2016 is as consistent with a decision to suspend proceedings as it is with deciding not to pursue the proceedings forever and a day...

32

… I do not consider that this is a case where what has happened is the type of warehousing of proceedings described by Lord Woolf in the Arbuthnot Latham case. Mr Slade in his witness statement has described how Mr Ruhan was heavily involved in the Orb Litigation in the relevant period. That plainly was the position. It seems to me that, in the circumstances, it is not altogether surprising that the present proceedings were not his main priority. In those circumstances, I struggle to see that what has happened in relation to the present proceedings amounts to any type of warehousing…

34 I am clear from this evidence is that this is not a case where there has been warehousing of the sort described. In short, I am not satisfied in the present case that there has been significant delay, which can only be explained by a clear intention, supported by evidence, not to pursue the proceedings against Mr Barton and, accordingly, that Grenda's inactivity is capable of amounting to an abuse of process. I am not able, in the circumstances, to draw the inference that the inactivity was consistent, and only consistent, with a decision not to pursue the Grenda proceedings.”

Mr Reed submits that this is wrong, and fails to recognise that the decision in Arbuthnot Latham was not based on a finding of an intention that the proceedings would never be pursued. I agree that Picken J did not acknowledge that point, but it is in my view also clear from his judgment that he had regard to the circumstances in which and the reasons why the litigation was not progressed and did not regard them as either indicative of abuse or comparable to those in Arbuthnot Latham.

What these cases show, in my judgment, is that it is now established that delay may amount to abuse of process in circumstances short of a finding that the claimant has permanently abandoned any intention to pursue them, but that the court will examine all the circumstances in which the delay occurred, including the length of the delay, the degree of the claimant's responsibility for that delay and the reasons given for it, and assess whether they amount to abuse of process, as distinct from "mere" delay. "Warehousing" may be descriptive of some circumstances that show abuse, primarily where for an extended period the claimant has no present intention of pursuing the claim but keeps it going in case it decides to do so in the future, but application of that term is not determinative one way or the other. If abuse is found, the question then arises whether striking out is an appropriate sanction.

The cases do not support the classifications put forward by counsel, whether into three or four groups. There is no mention of any such classification or the distinctions it implies, and the number of cases is too few to enable them to be sorted helpfully into any such hierarchy. They are better approached as requiring an overall assessment of the circumstances than an attempt to sort the facts of a particular case into this category or that.

The cases do not in my judgment establish the proposition that Mr Reed relies on, that any decision to pause proceedings dependant on a contingency, or dependant on the outcome of other litigation, amounts to abuse of process as a matter of law. That proposition in my view could not be justified, for many reasons, but I would observe in particular:

Of the three cases relied on in which abuse, short of a decision to abandon, has been found, only one (Societe Generale) involved any such identified contingency, in that the claimant held the English proceedings in reserve while it pursued its claims in Turkey. But the circumstances of that case were very different from this; the claimant had elected to pursue the same relief in Turkey as was sought here, and did so for a very extended period during which it maintained in force a Draconian freezing injunction imposing significant restrictions on the defendant's business effectively, as the court found, in improper aid of the Turkish proceedings. Concluding the Turkish proceedings was not a step required for or related to the conduct of the English proceedings, but only provided the circumstances in which the claimant might or might not have resumed the English claim if it was then expedient to do so.

In contrast, the contingency relied on here is directly relevant to the English proceedings, since the Liechtenstein litigation seeks to undermine entirely the legitimacy of pursuing the English claim, and to criticise, in vehement terms, the conduct of the claimant in bringing it and the costs it incurred in doing so. No doubt the fact that that challenge was on foot did not have the effect that the board members were constitutionally unable to act until it was resolved, but it is very understandable that they might be reluctant to take steps they did not have to, and which might (as their witness noted) have led to increased criticism of them in the Liechtenstein court.

The other cases were Arbuthnot Latham and Solland. In the former, there was no contingency identified, the claim and many others lay fallow simply on the basis the bank (or the debt recovery company that purchased the portfolio) might or might not pursue them as and when it was convenient to do so. There was no reason connected with the claim for putting it on hold in this way, and the result was that it hung over the defendants indefinitely. That was what Lord Woolf MR declared to be an abuse, but it has very little relation on the facts to this case.

Nor does Solland. The claimant there simply ceased progressing the claim without any reason relevant to the claim itself for doing so. There was no particular end point in sight for that delay, and the excuse given, that the claimant was concentrating on unrelated litigation, was not a good reason. No particular "decision" to delay was identified, and it would have been artificial to do so. The length of the delay and the absence of good reason for it were what made it abusive, not any question whether the delay did or did not commence with a subjective decision by the claimant.

In contrast where there was an understandable reason, connected with the litigation, for pausing progress, even where it was not held to be a good reason it has not been found to be abusive warehousing- see Grenda and Wearn.

The Master gave a composite set of reasons for his conclusions both on the question whether there had been an abuse of process and whether it justified striking out. Those that relate directly to the decision not to progress the claim are in subparagraphs (1) and (8)-(10) of para 36 of his judgment.

As to para (1) the Master concluded that the letter stating that "there was no immediate need to push ahead with directions to trial" meant the same as "warehousing" and amounted to an abuse. With respect, I disagree. Those words themselves show only a decision not for the time being to progress the claim, which on its own is only delay. It would only be possible to characterise that as "warehousing" and/or abusive if some additional factors were considered, including the reasons for delay and the length of it.

The Master does not say that he interprets the decision as one to await events in the Liechtenstein proceedings, but I infer that is what he meant, since it is the tenor of the letter quoted. If so, it was not a decision comparable to any of the circumstances previously characterised as abuse, whether or not labelled as warehousing. As Mr Mumford submits, it was no part of the defendant's case that the claimant had permanently decided not to proceed with the claim (notwithstanding the assertion in correspondence that it had been "abandoned") and if it had been, a letter referring to "no immediate need" could not justify a finding of permanent abandonment. It was the claimant's evidence that it at all times intended to pursue the English claim, unless it was prevented from doing so by the defendant's application in Liechtenstein, and it was vigorously contesting that application precisely so that it would be able to pursue its claims in England and elsewhere.

The Liechtenstein proceedings were, for the reasons given above, directly relevant to carrying on the English claim, even if not an essential prerequisite to doing so. Accordingly, there was understandable reason to await their outcome. Such a decision does not put the claim to one side until the claimant decides for its own reasons it is convenient to pursue it, but until a serious objection by the defendant to its doing so is resolved. Nor was the litigation in Liechtenstein an alternative way of achieving the same end such that the English claim was kept as a fallback or collateral aid to those proceedings.

In para (8) of his reasons, and again in his judgment at the handing down, the Master said he did not accept as a reason that the defendant was at fault by issuing the Liechtenstein proceedings, but fault on her part had never been suggested by the claimant. He also stated that the reason had been given "somewhat belatedly" that those proceedings attacked the authority to conduct the English case, but that was in my view unjustified; it was the reason set out in the letter of 23 August 2017 in immediate response to the allegation of abandonment.

He went on to say it could not be justified as a reason why there was no progress in the English litigation. If he meant only that it was not a good reason for suspending progress without the express agreement of the defendant or approval of the court, I would agree. But I do not agree that it demonstrates abuse of process on the claimant's part.

In paras (9) and (10) he quoted again from Grovit v Doctor and said that the reference to commencing or continuing litigation with no intention to bring it to a conclusion was "entirely apposite to the current circumstances". But, with respect, it was not; those remarks were directed to a finding of a permanent intention not to proceed, which as noted above the defendant had not alleged and the Master had not found.

I would accept that the Master was entitled to have regard to other circumstances surrounding the claim in considering whether the delay complained of amounted to abuse in context (and, if it did, whether striking out was justified). Those may include any previous periods of delay, particularly if they have occurred in breach of directions or have been such that the claim is stale. But in my view it was overstating the facts to say that by August 2017 there had been a "long period of inactivity" by the claimant or "virtually no progress" in the litigation. The period complained of was since July 2016, but before that date, and between July and November, there was correspondence relating to progressing the claim which, while not exactly displaying urgency, could not in my view be regarded as seriously out of the ordinary in its pace. The parties were not in breach of any directions, and good parts of the time taken might equally be laid at the defendant's door in that she took extended periods to formulate her defence and then put forward amendments.

The real period of inactivity was between November 2016 and August 2017. I do not seek to condone it, and no doubt the proper course would have been to seek to agree a pause with the defendant pending the outcome in Liechtenstein, or an order from the court. But it was not a particularly long period and there was good reason to believe the defendant was content not to press on; it was the avowed object of her Liechtenstein claim to stop the English proceedings (and she applied for a formal stay herself of the French claim, though the claimant resisted that) and although she professed concern at delay she did not herself make the application for directions she threatened in November 2016.

The Master adversely compared the level of activity in progressing the English claim with that in the proceedings in France and Spain, but that was in my view unjustified; to the extent those proceedings are dealt with in the evidence it is mainly in the agreed chronology, from which it appears that such steps as the claimant took in those claims during this period were almost entirely either (a) necessary to deal with court orders or (b) responses to appeals and applications made by the defendant, in both cases being steps necessary to preserve the claimant's ability to proceed if her Liechtenstein application failed. There were no comparable developments in the English claim that required action (or reaction) on the claimant's part.

The Master referred in paras 4, 5 and 6 to the lack of constructive response by the claimant to requests for information about its assets and security. But I agree with Mr Mumford that these were not matters that related to any delay or could elevate delay into abuse. First, the claimant's position on these requests was made clear long before the delay complained of and did not change in the period of delay complained of. Second, it was entitled to take the stance it did, albeit that may have enhanced the prospects of the defendant obtaining security if she made an application for it (see Sarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120). The defendant may have regarded that stance as obstructive, but if the claimant was not obliged to cooperate by disclosing its assets that non cooperation could not itself be an abuse or turn its other actions into abuses.

At para (7) the Master stated that the Notice at the Land Registry had prevented any dealings with the land in the meantime. Mr Reed's submission was that that notice should be regarded as akin to a freezing injunction, which was one of the factors establishing abuse in Societe Generale. The Master did not draw that analogy, and it would be a weak one. The Notice only has the effect of preserving the claim against the asset that is the subject of it. It is justified as long as it is to protect a claim the claimant intends to proceed with. It does not interfere with the defendant's assets or rights in any other way and is much less Draconian than the worldwide freezing order affecting the business and all assets of the defendant in the Societe Generale case which, the court found, was effectively maintained in aid of the Turkish proceedings. I accept that having lodged such a Notice a claimant should get on with its claim, but because of the relatively lower level of interference with the defendant's rights the imperative to do so is not as strong, and the potential implication that delay is abusive is much weaker, in my judgment, than in the case of a freezing order. The seriousness of any restricting effect in this case is also lessened by the fact there is no evidence of any transaction the defendant contemplated that might have been frustrated by the existence of the Notice.

Taking account of all these circumstances, in my judgment neither the decision of the claimant to pause proceedings nor the delay that in fact followed it could properly be regarded as amounting to abuse of process.

For these reasons, in my judgment the Master's conclusion that the decision to pause progress was an abuse of process was wrong as a matter of law, whether he is taken as so deciding as the inevitable consequence in law of such a decision or by evaluating that decision together with the surrounding circumstances, and the appeal should therefore be allowed on that ground.

In light of my conclusion on Ground 1 it is not strictly necessary to deal with this, but I do so in case I am found wrong on the first ground.

I can deal with this shortly; insofar as the Master found as a fact that the claimant had decided in or about November 2016 not for the time being to take any further steps to progress the English claim, pending the outcome of the Liechtenstein proceedings and unless the defendant pressed it to do so, in my judgment he was entitled to do so as a matter of inference from the letter of 23 August 2017. The witness statement of Mr Shear before him was to similar effect. It was a "unilateral" decision insofar as it was not agreed with the defendant or approved by the court. I do not accept the submission that the letter shows only a mistaken assumption that the defendant would be content with this course; that would be only a reason why the claimant took its decision.

As stated above I do not consider para (1) of the Master's reasons to be a finding that the claimant had decided never to proceed with the English claim. Nor is that the tenor of the additional reasons he gave at the handing down. For the reasons given above I do not consider that the Master's conclusion that the decision to pause was the same as "warehousing" was a finding of fact.

Nor is it strictly necessary to deal with the grounds related to discretion as to sanction, but in case the matter goes further and I am held to be wrong on the question of the existence of abuse, I should say that I accept the submission that the Master had regard to matters irrelevant to the exercise of his discretion and/or erred in principle in the exercise of that discretion in so far as (a) he took into account the lack of information provided about assets and failure to offer security and (b) he appears to have indicated he regarded the decision to pause as showing no intention to bring the claim to a conclusion, or being equivalent to such an intention.

The former seems to me an entirely separate matter to the question of abuse by pausing progress; the defendant was at all times entitled to apply for security and eventually did so as an alternative to her striking out application. As to the latter, as indicated above it was not alleged there was no intention ever to proceed, and I do not consider the Master made (or could properly have made) a finding of such an intention. Reference to it was therefore irrelevant or an error of principle. I would set aside the exercise of discretion, and if undertaking it myself I would conclude striking out was not justified, for essentially the same reasons I have set out above in evaluating the question of abuse. If (contrary to my conclusion above) there was an abuse, it was of a relatively minor nature. In addition, the question of prejudice is relevant at this stage, and no real prejudice to the defendant has been shown. Further, striking out the English claim would create an unjustified anomaly between the position here and in other jurisdictions where what is fundamentally the same claim against her is proceeding (or has proceeded) to determination on the merits.