Ustimenko v Prescot Management Company Ltd.

The Defendant (“PMCL”) apply by Notice dated 23 May 2007 for summary judgment against Mr Ustimenko, or for an order striking out parts of the claim against them made by Mr Ustimenko, in proceedings commenced by a Claim Form issued on 28 February 2007. PMCL also apply for a civil restraint order against Mr Ustimenko. Mr Ustimenko applies by an (unissued) Notice dated 1^st May 2007 for the dismissal of PMCL’s Part 20 counterclaim against him.

PMCL is the management company of a block of flats. All the leaseholders of the block of flats are shareholders. Mr Ustimenko is one of the leaseholders. In September 2002 PMCL wrote to Mr Ustimenko demanding payment of arrears of service charges. Mr Ustimenko was of the view that the service charges had risen excessively. There was a suggestion that Mr Ustimenko would apply to the Leasehold Valuation Tribunal (“LVT”), but he did not do so. On 11 October 2002 PMCL wrote that if he did not do so, PMCL would commence proceedings. PMCL suggested a resolution out of court. No application was made to the LVT at that stage, and nothing came of the out of court settlement proposal.

On 14 July 2003 PMCL issued proceedings in the Clerkenwell County Court in respect of the non-payment of service charges for the year 2003 against Mr Ustimenko. It also issued similar proceedings against two other leaseholders. The County Court transferred the determination of questions arising in these claims to the LVT, and that Tribunal issued its determination on 28 July 2004.

The LVT determined that the amounts of service charges claimed from Mr Ustimenko (and the other leaseholders) were payable by them. According to paragraphs 10 and 32 of its Determination, claims in respect of three earlier years were also considered. The amounts claimed and found payable were: 2000 - £125.37, 2001 - £155.22, 2002 - £534.38 and 2003 - £2,436.38. That is a total of £3,251.35. While finding in favour of PMCL, the LVT did express views that “the style and efficiency of PMCL’s management was open to considerable improvement” (para 26), but that it had not “abused its rights or used them oppressively, particularly in connection with the present proceedings or their initiation” (para 29).

Mr Ustimenko appealed against that decision to the Lands Tribunal (“LT”). That Tribunal issued its Decision on 14^th July 2005, adding an Addendum on Costs on 14^th August 2005. As appears from para 4 of its Decision, before the LT Mr Ustimenko agreed to limit his appeal to four matters in the estimate of expenditure for 2003.

The LVT, in paras 14, 15 and 31 of its Determination, had been highly critical of the presentation of Mr Ustimenko’s case before it. He was then represented by a student lawyer, but the LVT attributed most of the blame to Mr Ustimenko himself. The LT, in para 4 of its Decision, observed that Mr Ustimenko had presented his case succinctly and efficiently thereby enabling the appeal to be disposed of with only a morning’s hearing. The LT dismissed the appeal.

Mr Ustimenko applied for costs, notwithstanding that he had been unsuccessful. He criticised PMCL’s conduct of the matter as unreasonable. The LT held that there was no basis for it to make an order for costs in favour of Mr Ustimenko. The LT also commented:

“We are … not satisfied that the matters complained of were deliberate attempts by [PMCL] to disrupt the course of the appeal, although some of the steps were misdirected. We are further not satisfied that some modest delay in compliance with the Tribunal’s directions amount to abusive or vexatious conduct”.

The matter went back to the County Court. On 22 August 2005 Mr Ustimenko applied to dismiss the claim on the grounds that the outstanding service charge had been paid. By 13 September 2005 Mr Ustimenko had paid his arrears for years up to and including 2003. That left outstanding PMCL’s claims for interest and costs. That application was dismissed by DJ Jackson in October 2005. On 14 July 2006 judgment was entered for PMCL by DJ Manners for the then outstanding service charge, £1,914.51, including interest of £1,200. PMCL also sought to recover its costs of the proceedings, including those before the LVT and the LT, under the terms of the lease, alternatively the CPR, and these claims were allocated to the multitrack. Mr Ustimenko has paid all but the £1,200.

On 7^th August 2006 Mr Ustimenkco applied for permission to make a counterclaim. On 10^th January 2007 that application was dismissed, in part because it involved a claim for defamation, in respect of which the County Court has no jurisdiction. The draft Counterclaim was substantially similar to the contents of the Claim Form of February 2007. Mr Ustimenko has said that he was told to issue proceedings in the High Court. I do not accept that. He may well have been told that any defamation proceedings would have to be issued in the High Court, but that is not the same thing.

On 17th August 2006 Mr Ustimenko applied for the costs claim to be dismissed. On 1^st September 2006 that application was dismissed by DDJ Wallis. This part of the claim came before Mr Recorder Williamson QC on 12 June 2007.

Mr Ustimenko made four applications in the County Court by notice dated 10^th June 2007: a) that PMCL’s claim be struck out, b) for a stay of proceedings pending the outcome of a case against another leaseholder, c) a stay with a direction to reach an out of court settlement and d) an adjournment of the hearing fixed for 12 June 2007 due to his illness. On 11^th June the Recorder refused the application to adjourn. On 12^th June Mr Ustimenko did not attend at court. In his absence the Recorder held that PMCL was entitled to recover its costs as claimed. He awarded PMCL its costs on an indemnity basis. He referred to the criticisms of the presentation of Mr Ustimenko’s case made by the LVT in paras 15 and 31 of its Decision, and held that Mr Ustimenko’s conduct had led to an increase in the costs which should be reflected in his order. He ordered that Mr Ustimenko pay £45,000 on account. I have the note of a judgment of 12 June 2007 made by PMCL’s solicitors, there being as yet at least no transcript, and no order drawn up, other than the Civil Restraint Order.

The Recorder then dismissed each of the other three of Mr Ustimenko’s applications. He stated that each of these three (but not the application for an adjournment) were wholly without merit. He also stated that the applications of 22^nd August 2005 and 17^th August 2006 were without merit. On this basis, and of his own motion, he made a Limited Civil Restraint Order. Mr Ustimenko was restrained, for the duration of the proceedings, from making any further application in the County Court proceedings without first obtaining the permission of HHJ Mitchell.

Mr Ustimenko has told me that he has applied to set aside the judgment entered in his absence on 12 June.

On 22 May 2007 Mr Ustimenko wrote to this Court applying for an adjournment of the hearing on 19^th June. He enclosed a letter from his doctor dated 16^th May 2007. On 14^th June Pitchers J held that the medical evidence did not establish that Mr Ustimenko is unfit to attend the hearing and declined to take the case out of the list. Mr Ustimenko did appear to conduct his case before me. While I accept that he was under some stress, he appeared to be able to conduct the case as well as might be expected of a litigant in person in his position.

The Claim Form is in six parts: Background, Breach of Lease, Disrepair, Harassment Libel and Defamation, Abuse of County Court Procedures, Damages and Costs. Mrs Mahony raises no point on the section headed Disrepair, except that, if she is successful on her other applications, then she submits that this part of the claim should be transferred to the County Court.

She relies on CPR Parts 3.4(2) and 24 in relation to all her submissions on the Claim Form, and, in addition, on the Defamation Act 1996 s.8 in relation the section including Libel and Defamation claims. So far as material, CPR Parts 3.4 and 24 provide:

“3.4

(2) The court may strike out a statement of case if it appears to the court –

(a)

that the statement of case discloses no reasonable grounds for bringing or defending the claim;

(b)

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; …

(6)

If the court strikes out a claimant's statement of case and it considers that the claim is totally without merit –

(a)

the court's order must record that fact; and

(b)

the court must at the same time consider whether it is appropriate to make a civil restraint order.

24.2

The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –

(a)

it considers that –

(i)

that claimant has no real prospect of succeeding on the claim or issue; … and

(b)

there is no other compelling reason why the case or issue should be disposed of at a trial.”

The Defamation Act 1996 s.8 provides:

“8.

(1) In defamation proceedings the court may dispose summarily of the plaintiff’s claim in accordance with the following provisions.

(2)

The court may dismiss the plaintiff’s claim if it appears to the court that it has no realistic prospect of success and there is no reason why it should be tried…”

The test to be applied under CPR Part 24 and under s.8 of the Defamation Act is the same, namely whether there is a prospect of success that is not fanciful.

I shall consider the points made under the various headings in the following order: Breach of Lease, Harassment, Libel and Defamation, Abuse of County Court Procedures, Background, Damages and Costs.

There are a number of sub-issues. First Mr Ustimenko claims a refund to the leaseholders of sums totalling £745.02 attributable to the years 1999, 2000, 2001, for failure by PMCL to comply with the consultation requirements of the Landlord and Tenant Act 1985 s.20, as amended by the Commonhold and Leasehold Reform Act 2002. Next Mr Ustimenko claims unspecified damages for breach by PMCL of the requirement under s.21 of the 1985 Act for statements of account to be made available to tenants not later than six months after the end of the accounting period. He lists the due and actual dates in respect of each of the years 1997 to 2005.

Miss Mahoney submits that the issue of Mr Ustimenko’s liability for service charge arrears up to and including 2003 was determined by the LVT and LT, that these points were not raised in those proceedings, although points under s.20B were raised before the LVT (see para 25 of its Determination), and there was no appeal to the LT on those points. In the circumstances she submits that it is an abuse of the process of the court for Mr Ustimenko to seek to raise points in 2007 in relation to the years prior to 2003 which he could have raised in the LVT proceedings. Further she submits that the claims are in respect of periods preceding six years before the issue of these proceedings in February 2007, and so are statute barred. Miss Mahoney submits that the claim cannot be advanced where there is no damage claimed.

PMCL also deny that they have acted in breach of the consultation requirements, but do not rely upon that in support of the application for summary judgment.

I accept the submissions for PMCL. If these alleged breaches were to be relied on by Mr Ustimenko, then the time for raising them was in the proceedings before the LVT. It is too late now. There must be finality in litigation. It is an abuse of process to seek to raise these points now after all that has occurred in the County Court litigation. Further, the claims are statute barred, and there is no apparent damage for the alleged breach in failing to make accounts available on time.

Next Mr Ustimenko claims breaches of ss. 21A and 21B of the 1985 Act as amended.

Miss Mahoney submits that s.21A (Withholding of service charges) and s.21B (Notice to accompany demands for service charges) were not in force. That is correct, and the claims are misconceived for that reason. The claims would in any event be hopeless, because, as Miss Mahoney submits, there is no claim to have withheld service charges on the basis of these sections, and no apparent damage to be claimed. There is no reasonable ground for bringing this claim.

Next Mr Ustimenko claims that works and repairs inside individual flats have been paid for out of service charges. He lists eleven items referred to in invoices dated 2002, totalling £6,600.06. He asks for an order excluding these items from the service charge bill.

Miss Mahoney repeats the submission that these are points that should have been raised, if at all, in the LVT proceedings. In fact the first six (including the largest) items were referred to in Mr Ustimenko’s Grounds of Appeal to the LT, but not pursued on appeal.

I accept Miss Mahoney’s submission. It is an abuse of process to raise these matters now.

There is an overlap between the claims for Defamation and Harassment, and between the other claims and the harassment claim. It is convenient to take the Defamation claims first.

There are three publications relied on. The first is a letter dated 13 September 2004 addressed “Dear Residents” and signed by Matthew Hall as Chairman of PMCL. It describes itself as giving an update on the LVT proceedings. It refers to Mr Ustimenko and two other leaseholders. It is not necessary to set out the full words complained of. They include:

“These three individuals are defaulters under the terms of the lease and seem to believe that all other leaseholders should have to pay for them to live in the building … The net effect of all this is that these three individuals are indirectly attacking you as individual leaseholders…”

On 22^nd September 2004 Mr Ustimenko sent to Mr Hall a letter before action, but did not commence libel proceedings before issuing the present claim in 2007.

Miss Mahoney makes a number of submissions in relation to this letter. These include that the claim is statute barred by s.4A of the Limitation Act (the one year time limit for libel actions), that the words are not capable of being defamatory, and that there would be unanswerable defences both in qualified privilege and justification.

I need only consider the defence of limitation, which clearly applies. For that reason there is no prospect of Mr Ustimenko succeeding on this claim.

Before reaching this conclusion, I considered Mr Ustimenko’s submission, made in writing and orally, that he should have an extension of time. By consent, I took this as an indication of an intention to make an application under the Defamation Act 1996 s.32A (no such application has in fact been made).

The delay of over two years is a long delay in this context. There is no good reason for it, although I appreciate that Mr Ustimenko has been devoting a great deal of his time to different aspects of this litigation during that period. I do not think the delay has affected the availability or cogency of any evidence, but I do not think it would be just or equitable to exclude the one year time limit. I do not consider that Mr Ustimenko will suffer any prejudice by being subject to the time limit and I consider that PMCL (and the other leaseholders) would suffer prejudice if he were not. This is not a libel action that could reasonably be expected to improve Mr Ustimenko’s relationship with his fellow leaseholders, which he described to me as being now a difficult one. Each side would incur very substantial costs. The amount of damages that Mr Ustimenko could expect to recover for such a limited publication would be modest at best (assuming that he were to establish malice on the part of Mr Hall, as he would have to defeat the defence of qualified privilege). In fact a libel action along these lines would, in my view, be a disaster for everyone concerned.

The second publication that Mr Ustimenko relies on is an alleged slander. On 30 May 2004 the police recorded a complaint. It does not name Mr Ustimenko, but I accept that he has a strong case that it is he who is referred to as the suspect. It records that the suspect said to the complainant that “he would see [the complainant] dying”. There is also a strong case that the complainant is Mr Cosgrove, who was employed as the estate manager by PMCL.

The police appear to have been sympathetic to Mr Ustimenko. The report of the interview with him includes:

“Whilst speaking to the suspect he seemed very highly-strung and was very concerned that police were even talking to him, he considers this a civil matter and believes that he is being picked on because he is somehow perceived as the ringleader of the tenants. I tend to agree with his perception that the complaint has been made simply to distress him, which it clearly has done”.

Miss Mahoney submits that this claim is again out of time and that a defence of qualified privilege would be bound to succeed.

In the light of the comments of the police, I would not strike this claim out on the ground that a defence of qualified privilege would be bound to succeed. It is true that complaints to the police are generally held to be made on an occasion of qualified privilege. But there is material here on which a plea of malice might have been founded, so as to defeat that defence in this case (I say nothing as to whether it would have succeeded at trial or not).

But the claim is out of time. And in my view it would not be just and equitable to exclude that time limit. There is no good explanation for the delay. In this case I consider it likely that the delay will have affected the availability or cogency of any evidence, since the complaint is of slander to a police officer, relating to words allegedly spoken by Mr Ustimenko to Mr Cosgrove over the telephone. The damages that Mr Ustimenko might expect from a slander to a police officer such as is alleged would not be large, if he won the action (as to which I express no view). The costs to each side would be substantial, and would be likely to be disproportionate to any benefit that Mr Ustimenko might hope to achieve.

The third publication complained of is an e-mail, also dated 30 April 2004. It relates to the same incident as the alleged slander. It is from a Mr A Barber and addressed to Mira Barhillel, copied to four others (including Mr Matthew Hall). The sender and three of the recipients have e-mail addresses “@hamptons-int.com”.

Miss Mahoney submits that this publication is time barred. In addition, she raises issues of reference (Mr Ustimenko is not named), meaning, publication (PMCL’s case is that Mr Barber was not their employee or agent) and justification. I would not dismiss the claim for any of the reasons other than limitation. The other points are ones on which Mr Ustimenko would have a real prospect of success, and I could not determine them summarily. But the limitation point is one on which Mr Ustimenko has no prospect of success. Further, I would not consider it just and equitable to exclude the one year time limit, for reasons which are set out above in relation to the other two publications. The number of publishees who would have understood the words complained of to refer to Mr Ustimenko is again small, with the consequence that any award of damages would not be large if Mr Ustimenko succeeded at trial (as to which I express no view).

Mr Ustimenko complains that the claim against him has had to be amended several times, and that PMCL has incurred groundless costs. He complains that the costs incurred are disproportionate to the sums in issue.

Miss Mahoney submits that these complaints are a reference to the proceedings which have been concluded against him at every stage, and, in relation to costs, concluded against him on 12^th June 2007. Moreover, she submits that substantial costs have been incurred as a result of the various unsuccessful applications made by Mr Ustimenko, referred to above.

Abuse of civil proceedings is not a cause of action known to the law. Where there has been abuse of civil proceedings, the court hearing those proceedings and determining issues of costs has power to address such abuse in the orders for costs it makes in those proceedings. There is no basis for bringing separate proceedings.

Costs are normally awarded against the unsuccessful party, in this case Mr Ustimenko. The LT explained in the Addendum on costs the position in relation to costs (para 6), including that tribunal’s view of the conduct of PMCL. There is no reasonable ground for bringing this claim.

This head of complaint is made up of one particular incident not yet considered, together with all the other matters of which Mr Ustimenko complains, including matters he pleads under the heading Background. He alleges that the claim by PMCL was frivolous, a tool to intimidate him, pursued unreasonably with the need for amendments, and that the views expressed by the LVT which were critical of PMCL provide some justification for his own stance.

The Protection from Harassment Act 1997 provides, so far as material:

“1.

(1) A person must not pursue a course of conduct—

(a)

which amounts to harassment of another, and

(b)

which he knows or ought to know amounts to harassment of the other.

(2)

For the purposes of this section, the person whose course of conduct is in question ought to know that it amounts to harassment of another if a reasonable person in possession of the same information would think the course of conduct amounted to harassment of the other.

(3)

Subsection (1) does not apply to a course of conduct if the person who pursued it shows— …

(c)

that in the particular circumstances the pursuit of the course of conduct was reasonable.

3 ... (2) On such a claim, damages may be awarded for (among other things) any anxiety caused by the harassment and any financial loss resulting from the harassment.

7 ... (2) References to harassing a person include alarming the person or causing the person distress.

(3)

A “course of conduct” must involve conduct on at least two occasions...

(4)

“Conduct” includes speech.”

The one incident relied on in addition to the other matters Mr Ustimenko has pleaded is an incident in February 2002. He alleges that he was attacked by Mr Cosgrove after Mr Ustimenko (at a time when he was a director of PMCL) had voted against a salary increase for Mr Cosgrove.

There are thus two alleged incidents involving Mr Cosgrove, one in February 2002 and one in April 2004.

Miss Mahoney submits that Mr Ustimenko has no real prospect of succeeding on the issue that these incidents or matters are “a course of conduct” within the meaning of the Act. The words “a course of conduct” are ordinary English words.

So far as the proceedings are concerned, a claim by an unsuccessful litigant in Mr Ustimenko’s position that the successful litigant has harassed him is one that is very difficult indeed to imagine could ever succeed. I see no arguable basis for Mr Ustimenko to persuade a court to differ from the views expressed by the LT in their Addendum on costs. Litigation is by its nature stressful and distressing, especially for the losing party. But normally it will be within the exclusion of s.1(3)(c). I see no prospect whatever of Mr Ustimenko succeeding in his claim that in the conduct of the proceedings in the County Court and the LVT and LT, (taken for the legitimate purpose of collecting arrears of service charge), PMCL has been guilty of harassment.

I see no real prospect of Mr Ustimenko succeeding on the issue that the two alleged incidents involving Mr Cosgrove, the first of which had nothing to do with the dispute over service charges, are so linked as to be capable of being described as a course of conduct.

While the publication of words can be harassment, I see no real prospect of Mr Ustimenko succeeding on the issue that the three alleged defamatory publications (by Mr Hall, Mr Cosgrove and Mr Barber) are a course of conduct by PMCL. Looking at the matter overall, I see no real prospect of Mr Ustimenko succeeding on his claim in harassment, whether the incidents are taken together or in different combinations.

Mr Ustimenko claims that he has suffered seriously in his health. He is clearly a gifted and intelligent man. He states that he was project manager of a high profile project implementing a new examination system for Cambridge University, earning substantial sums of money. PMCL do not ask me to dismiss or strike out that part of the claim.

I do not doubt that Mr Ustimenko has a good prospect of establishing that he has suffered distress and that he has suffered the loss of earnings. Whether these matters are attributable to the Disrepair claim that will go forward in any event is not for me to say.

The only words in this part of the claim that Miss Mahoney makes submission upon are those that refer to the harassment and abuse of process claims. It follows from the decisions that I have reached on these claims that the consequential references in the Claim Form under Damages must also be struck out. They are the words “PMCL’s further launched their campaign ….”Abuse of Court Procedures” section of this submission”, and “traumas from harassment… preparation of defence” and “and harassment”.

The Part 20 claim is for £3,578.77 alleged to be arrears of service charge. Of this £905 relates to a cheque dated 7^th January 2005 from Mr Ustimenko which it is said was dishonoured, but the credit for which was erroneously not reversed in the service charge account for Mr Ustimenko. The balance relates to subsequent periods.

Mr Ustimenko submits that this should be dismissed. First he maintains that he has paid everything up to date. But on this application he submits that issues of arrears of service charge have been litigated in PMCL’s claim brought in 2003 in the County Court (CK302309) and that this counterclaim should be advanced, if at all, in County Court proceedings.

PMCL produced an account which Miss Mahoney submits shows that as at 30 May 2007 there was still money owing.

I cannot determine whether money is owing or not. This is not a trial, and there is conflicting evidence. Mr Ustimenko chose to commence these proceedings in the High Court. I accept that the Counterclaim is better determined in the County Court, but in the light of the conclusions I have reached, that is where it will be determined in any event.

It follows that I dismiss in their entirety Mr Ustimenko’s claims under the headings Breaches of Lease, Harassment Libel and Defamations and Abuse of Court Procedures. I also strike out from the section headed Background the words which Mrs Mahoney identified in a marked draft that she produced at the hearing. None of that is now necessary or relevant to the claim under the heading Disrepair, which is the only part of the claim to go forward. In addition I strike out the passages under the heading Damages identified above.

On Mr Ustimenko’s application, I decline to strike out the Part 20 Claim, but I transfer that, together with Mr Ustimenko’s Disrepair claim, to the County Court. I decline to state that Mr Ustimenko’s application in relation to the Part 20 claim is totally without merit. If the claims I have dismissed had proceeded, the Part 20 claim would not have been suitable for trial at the same time in the High Court.

I adjourn this part of PMCL’s application to await the outcome of Mr Ustimenko’s application to set aside the judgement and orders made on 12^th June in the County Court.