Denning Sotomayor Limited v Western Avenue Properties Limited & Anor

This is an appeal against the order of Master Davison dated 16 July 2024. The Appellant was the Second Defendant to the claim. By the Master’s order, he struck out the counterclaim brought by the Defendants. The appeal proceeds with permission having been granted by Sir Stephen Stewart on 11 March 2025. I have been greatly assisted by the clear and focused submissions from counsel. They had both appeared at the hearing before the Master.

The First Defendant, Sadhana Soni, is a solicitor. On 16 October 2015 she caused the Second Defendant, now the Appellant, to be incorporated. At all material times she was its sole director and shareholder.

On 13 July 2017 the Claimants, now the Respondents, issued a claim against the Defendants contending that they had acted in breach of confidence and/or breach of fiduciary duties owed to the Claimants.

On 14 July 2017 the Claimants applied for an interim injunction restraining the Defendants from acting for a particular client and from acting for or advising anyone in connection with any claim or dispute against the Claimants. On 26 October 2017 HHJ Curran KC granted the Claimants the injunction they sought.

On 21 November 2017 the Defendants filed their Defence, giving notice of an intention to apply to extend time to bring a counterclaim. On 4 December 2017 HHJ Curran QC gave the Defendants permission to rely on an amended defence and counterclaim.

In February 2018, the Claimants applied for security for costs in relation to the counterclaim, seeking in the region of £81,000.

On 27 July 2018, following a contested hearing, Master Davison ordered the Defendants to pay £40,000 security for costs in relation to the counterclaim. His order included a provision to the effect that “In the meantime all further proceedings on the Counterclaim be stayed”.

At some point in July 2018 the Claimants filed a Part 18 request for further information on a draft re-amended counterclaim they had provided (for which permission was never granted).

On 22 August 2018 the Defendants paid the £40,000 security into court.

The next pertinent event was not until 3 May 2023. On that date, Master Davison ordered that the Defendants’ solicitors, Kennedys, could come off the record as acting for the Defendants on the counterclaim. They remained on the record in relation to the claim.

On 6 June 2023, the Defendants made an application to strike out the claim on the grounds that (i) the Claimants were “resting” on their interim injunction, and that was abusive; and (ii) there had been a want of prosecution of the claim since 2018.

On 7 December 2023, 4 days before the hearing of the Defendants’ application, the Claimants consented to the strike out of the claim. A consent order was filed reflecting that the claim was struck out, the injunction was discharged and the Claimants would pay the Defendants’ costs of the claim. On the same day, the Claimants made an application to strike out the counterclaim on the grounds that (i) it too was an abuse of process; alternatively (ii) for want of prosecution.

The Claimants’ application was heard by Master Davison on 16 July 2024. He allowed the application and struck out the counterclaim. Accordingly, it was not necessary for him to determine two further applications made by the Defendants, dated respectively 27 April 2018 and 18 December 2023, to re-amend their counterclaim and list the matter for directions.

The First Defendant has subsequently assigned her rights in the litigation to the Appellant.

At [1]-[9] the Master set out the factual history in accordance with the summary I have given above.

At [10], he addressed the relevant law, citing the following principles set out in paragraph 3.4.16 of the White Book 2024.

First, delay alone, even if it was inordinate and inexcusable, could not be an abuse of process. However, abuse of process might arise when delay was combined with some other relevant factor: Wearn v HNH International Holdings Limited [2014] EWHC 3542 (Ch), per Barling J.

Second, evidence of a very long period of procedural inactivity by the claimant often gives rise to an inference that the claimant has no real intention of progressing the claim. However that inference can be rebutted if there is a satisfactory explanation for the delay: Alfozan v Quastel Midgen LLP [2022] EWHC 66 (Comm), per HHJ Pearce, Sitting as a High Court Judge.

At [11], the Master made the following findings about the delay in the counterclaim:

“Here there is no real or satisfactory explanation for the delay. Mr Hunter submitted that the parties had treated the claim and the counter claim as “on hold” or “paused”. I think a much more likely explanation is that the claimants for their part had obtained what they needed by way of the interim injunction and the defendants for their part could not prosecute or pursue the counterclaim without the risk of provoking the claimants into action on the claim and therefore, consciously or by default, decided to let sleeping dogs lie. To put that slightly differently it seems to me that the defendants had only conditional intent to pursue the counterclaim, namely that it would be pursued if, and only if, the claim was revived”.

At [13] he concluded that the situation fell “squarely” into the principle identified by Arnold LJ in Asturion Fondation v Alibrahim [2020] EWCA Civ 32 at [55], to this effect:

“…it is likely to be an abuse of process for the claimant unilaterally to decide not to pursue a claim for a substantial period of time, even if the claimant remains intent on pursuing the claim at some future point”: [13].

The Master observed that it was “not really open” to the Defendants to “apply the full rigour of the cases on abuse of process through delay to the [C]laimants but not to themselves”. He quoted the evidence of the Defendants’ solicitor which emphasised the requirement that cases should be dealt with expeditiously and fairly, criticised the Claimants for “inordinate and inexcusable delay”, and observed that the Claimants had “entirely failed to progress their claim and it seemed had no intention of doing so”. As counsel for the Claimants had invited him to do, he concluded that if the word “counterclaim” was substituted in the Defendants’ evidence for the word “claim”, this was a proper case where the counterclaim should be dismissed for want of prosecution: [14]-[16].

He concluded that there was also force in the argument by counsel for the Claimants, to the effect that the Defendants had been “approbating and reprobating”, namely “castigating action on the part of the claimants but seeking to excuse exactly the same inaction on their own part”. He observed that in general the law frowns upon such conduct, citing Express Newspapers plc v News UK Ltd [1990] 1 WLR 1320 (Ch): [17].

The Master continued:

“18.

I think that the claimant has shown that the delay is of such a scale as compels the inference that the defendants were warehousing the counterclaim, ie. had no real intention, beyond the conditional intention I have mentioned, of pursuing it. I also agree that the defendants have been guilty of tactical manoeuvring in that they consciously did not bring forward their application for directions in the counterclaim until the claim was struck out.

19.

It is true that the claimants too could have brought this up by cross-applying at an earlier stage to strike out the counterclaim, but that does not change or detract from the fact that the defendants in my view, and on the evidence I have before me, deliberately maintained a discreet silence on the counterclaim until the claim against them was done and dusted.

20.

I think the delay here does amount to an abuse of process. The inference of tactical warehousing is not rebutted by the fact that the defendants paid the security for costs into court six years ago, nor by the fact that they applied to re-amend (again six years ago). Indeed, the latter point scarcely helps them because having made that application in April 2018, they ignored a perfectly reasonable request for further information made in July 2018 and never until now pursued the application to re-amend.

21.

I do think that in the exercise of the discretion that I have, I should strike out the counterclaim. The defendants are in serious breach of the overriding objective. It seems to me that there is, or should be, parity with the treatment of the claimants’ claim. The delay here is inordinate and inexcusable and (though not strictly relevant to the application) the claimants would be prejudiced by it. Prejudice is to be inferred from the scale of the delay and the nature of the counterclaim”.

Under CPR 52.21(3), the appeal court will allow an appeal where the decision of the lower court was “(a) wrong; or (b) unjust because of a serious procedural or other irregularity in the proceedings in the lower court”.

The White Book 2025 at paragraph 52.21.5 explains that “wrong” in CPR 52.21(3)(a) means that the court below (i) erred in law or (ii) erred in fact or (iii) erred (to the appropriate extent) in the exercise of its discretion.

The following principles summarised in the same paragraph are also pertinent:

This ground relates to the Master’s criticism of the Defendants for “approbating and reprobating” in [17] of his judgment.

This was a phrase drawn from Express Newspapers at 1329F, where Sir Nicholas Browne-Wilkinson V-C held as follows:

“There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance.”

The Appellant’s case is that it is clear from this passage that the mischief to which the rule against approbation and reprobation is aimed is inconsistency. A party must be saying with one breath that something is acceptable, and with another breath that the same thing is unacceptable. It does not prevent a party from saying that one thing is acceptable, but that some different thing is unacceptable.

However, here, there was a fundamental difference between the conduct of the parties. The Claimants/Respondents were “sitting” on their interim injunction; and it was that which made their delay in progressing the claim particularly egregious: see, for example, Havering LBC v Persons Unknown [2021] EWHC 2648 (QB); [2021] 4 WLR 135 at [86], per Nicklin J. The Appellant/Ms Soni were doing no such thing. It was therefore perfectly permissible for them to criticise the Claimants/Respondents, for conduct different to what they were doing. They were not, and could not have been, approbating and reprobating.

Accordingly, the Appellant contends that the Master fell into error by treating the two parties as being in the same position, as was exemplified by his use of the phrase “the same inaction” [my emphasis].

In my judgment the Master fully understood the procedural history and formed an unimpeachable conclusion as to the tactical positions that had been adopted by each party. True it is that, in Havering, Nicklin J deprecated the practice of “sitting” on an interim injunction; but Asturion defined a wider form of abuse of process, namely deliberately deciding not to pursue a claim for a substantial period of time (“warehousing”), for whatever reason. Here, the Master was fully entitled to consider that both parties had engaged in “the same inaction”, even if their motives were slightly different. In those circumstances he was entitled to accept that there was force in the observation that the Defendants were approbating and reprobating.

Moreover, it is clear from the totality of the Master’s judgment that the “approbating and reprobating” point was, at most, a secondary reason for his conclusion that there had been an abuse of process. Rather, he based his decision primarily on a careful consideration and application of Asturion, as the Claimants/Respondents had invited him to do in their written and oral submissions.

In particular, the Claimants/Respondents had referred the Master to Asturion at [64], where Arnold LJ rejected the submission that an application to strike out on the ground of abuse of process by warehousing fell to be analysed in three stages, holding that “[t]here were only two stages in the analysis: first, the Court should determine whether the Claimant’s conduct was an abuse of process; and if so, secondly, the Court should exercise its discretion as to whether to strike out the claim”.

The Master’s judgment at [13]-[17] and [19]-[22] makes clear that he applied this two-stage test: he concluded that there was an abuse and then exercised his discretion to strike out the claim.

Accordingly, the “approbating and reprobating” point was not determinative of his decision.

I therefore dismiss Ground 1.

Under this ground the Appellant contends that the Master erred by failing properly to take into account the wider circumstances of the case: he wrongly laid all the blame for the delay at the door of the Appellant/Ms Soni, when in reality, both parties had delayed in the proceedings. On that basis the Appellant contends that the Master was wrong to find that the Appellant/Ms Soni had “unilaterally” delayed, such that their conduct fell within the Asturion principle.

I cannot accept this criticism of the Master. He was repeatedly critical of the Claimants/Respondents as well as the Appellant/Ms Soni. At [4] he noted that “nothing at all happened for very nearly five years” between August 2018 and June 2023. This reflected a failure by both parties to do anything in the litigation during that period of time. At [5], he recorded that the Claimants had accepted that they had failed to progress the claim expeditiously. At [11] he made findings about the tactical positions adopted by both parties, leading to the delay. At [19] he acknowledged that the Claimants could have brought the matter before the court more promptly by cross-applying at an earlier stage to strike out the counter claim; and at [21] he referred to his view that there should be “parity” between the parties.

He had not, therefore, only been critical of the Appellant/Ms Soni for the delay. He fully understood that both parties had made tactical decisions that had led to the delay and was critical of them both for it.

Ultimately the question for the Master was whether the Appellant/Ms Soni’s conduct amounted to an abuse of process. He was justified in concluding as he did at [18] and [19], that they had warehoused the counterclaim, having no real intention of pursuing it beyond the conditional intention he had noted at [11]; and that they had deliberately delayed progressing the counterclaim until the claim against them was concluded. His reasoning was reinforced by the fact that they had not replied to the Part 18 request or progressed their application to re-amend their counterclaim, both of which dated back to 2018: [20]. He was entitled to conclude that this was “unilateral” conduct by the Appellant/Ms Soni with respect to the counterclaim that engaged the Asturion principle.

Ground 2 is therefore dismissed.

Under Ground 3 the Appellant challenges the exercise of the Master’s discretion to strike out the counterclaim, as set out at [21] of his judgment. It is contended that this was flawed, because there was no proper basis on which he could infer prejudice to the Respondents: none had been identified by the Respondents, nor was there any evidence of actual prejudice.

In my judgment the Appellant cannot meet the high bar for challenging on appeal a decision made in the exercise of judicial discretion, in any of the ways summarised at [26(iv)] above.

First, the Master was entitled, as he did, to infer that there would be prejudice to the Claimants/Respondents from the “scale of the delay” which was extensive: in the region of 6 years.

Second, he can be taken to be aware of the “nature of the counterclaim” as all the relevant statements of case including the proposed re-amended counterclaim were in the bundle for the hearing; and the representatives’ notes make clear that he was taken to the ignored July 2018 Part 18 request on more than one occasion during the hearing. This made clear that documentation and witness evidence would be required for the determination of the counterclaim.

Both of these matters, as noted by the Master at [21], justified him in inferring prejudice.

Ground 3 is therefore also dismissed.

Accordingly, for all these reasons, despite Mr Hunter’s comprehensive submissions, this appeal is dismissed.