Factual and Procedural Background
The claimants initiated proceedings against the defendant solicitors' firm on 19th June 1995, alleging breach of contract, negligence, and negligent misrepresentation related to legal advice given in connection with the purchase of approximately 7.87 acres of land from a local council in 1992. The land was subject to a prior Compulsory Purchase Order (CPO) by the Department of Transport, which had granted a licence to contractors for access during road improvement works. The claimants intended to develop the site into a cultural and television centre but discovered post-purchase that contractors retained rights of access, rendering development impracticable at reasonable cost.
The claimants assert that the defendants failed to advise them adequately regarding the implications of the access rights referenced in a letter of comfort from the Department of Transport before contract exchange. This alleged failure caused the claimants to enter contracts they otherwise would not have, resulting in losses estimated at approximately £6.4 million, including purchase price, costs related to a secondary purchase of an exhibition pavilion, professional fees, and other expenditures.
Procedurally, the defendants' firm no longer exists. The case saw multiple procedural steps, including amendments to pleadings, expert evidence exchange, and attempts at mediation. The claimants failed to set the action down for trial by the court-ordered deadline in January 1999, leading to an application by the defendants to strike out the claim based on delay and prejudice grounds under the Civil Procedure Rules (CPR).
The Master struck out the claim on 1st June 2000, a decision upheld by Steel J on 14th December 2000. The claimants appealed with permission granted by Laws LJ. The appeal concerns whether the strike-out was a proper exercise of discretion, particularly given the delay and alleged prejudice to the defendants.
Legal Issues Presented
- Whether the Master and the judge below correctly exercised their discretion in striking out the claim for failure to comply with court orders and for delay prejudicing a fair trial under CPR Rule 3.4.
- Whether the delay and failure to set the action down for trial justified striking out the claim or whether alternative case management orders could adequately address the issues.
- The appropriate standard and approach to appeals from Masters under CPR Rule 52.11, including the distinction between a review and a rehearing.
- Whether the claimants' conduct amounted to an abuse of process justifying strike-out where a fair trial was still possible.
Arguments of the Parties
Appellant's Arguments
- The Master was wrong to strike out the claim as the order was disproportionate and unjust.
- The claimants had taken reasonable steps to advance the case, including paying security for costs and engaging experts, and intended to proceed with the action.
- The delay was largely due to complex issues of quantum requiring extensive advice and was not culpable or indicative of a lack of bona fide intention to proceed.
- The failure to respond to the defendants' payment into court and mediation proposals must be understood in light of a without prejudice telephone conversation showing genuine attempts to negotiate and the claimants' position on damages.
- The appeal court should exercise its discretion to allow the appeal, set aside the strike-out, and impose case management orders to ensure just and proportionate progress.
Respondent's Arguments
- The claimants were in breach of a court order to set the action down for trial by 15th January 1999, and the delay was inordinate and inexcusable.
- The delay caused prejudice to the defendants, including the risk that a fair trial would no longer be possible.
- The claimants' conduct of the litigation, including failure to particularise quantum and engage meaningfully in mediation, justified the strike-out.
- The Master and the judge properly exercised their discretion in dismissing the claim to uphold the administration of justice and court timetabling.
- The appeal should be limited to review rather than rehearing, and the lower courts' decisions were within the generous ambit of reasonable disagreement.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926 |
Establishes the flexible and overriding objective-based approach under the CPR to delay and strike-out applications, emphasizing case management and proportionality. |
Used to frame the court's analysis of delay, breach of court orders, and proportionality in deciding whether striking out was appropriate. |
| UCB Corporate Services Ltd v Halifax SW Ltd (CAT, 6 Dec 1999) |
Confirms that striking out remains appropriate in serious delay cases but courts have broader powers under CPR for less serious cases. |
Supported the court's view that striking out is a last resort and other powers should be considered. |
| Purdy v Cambran [2000] CP Rep 67 |
Reinforces the CPR's overriding objective to deal with cases justly, including ensuring expeditious and fair handling, and that striking out requires broad judgment. |
Guided the court's assessment of justice and proportionality in relation to the strike-out and alternatives. |
| Walsh v Misseldine (CAT, 29 Feb 2000) |
Emphasizes the court's inherent jurisdiction and the CPR's flexible powers to manage delay and abuse of process. |
Highlighted the importance of using CPR tools to address delay short of strike-out and the long-stop nature of abuse of process strike-out. |
| Tanfern Ltd v Cameron-MacDonald [2000] 1 WLR 1311 |
Clarifies the distinction between appeal by review and appeal by rehearing under CPR Rule 52.11. |
Informed the court's approach to whether the appeal should be a review or rehearing, concluding review was appropriate here. |
| G v G (Minors: Custody Appeal) [1985] 1 WLR 647 |
Defines the standard for appellate interference with discretion: only where the decision is wrong in substance, not merely a different but reasonable view. |
Applied to assess whether the Master’s discretion was wrongly exercised. |
| Arrow Nominees Inc v Blackledge [2000] 2 BCLC 187 |
Illustrates strike-out for flagrant abuse of process as a last resort. |
Referenced to emphasize that strike-out for abuse is rare unless a fair trial is impossible. |
| Allen v McAlpine (Sir Alfred) & Sons [1968] 2 QB 229 |
Establishes that defendants cannot delay taking action and then rely on the claimant's delay to justify prejudice. |
Supported the court’s criticism of the defendants’ delay in making their strike-out application. |
| Grundy v Naqvi (CAT, 1 Feb 2001) |
Stresses the importance of considering proportionality before striking out. |
Used to underline the need for the court to consider alternatives to strike-out and give reasons for proportionality. |
| Axa Insurance Co Ltd v Swire Fraser Ltd (CAT, 9 Dec 1999) |
Supports the flexible approach under CPR to delay and case management. |
Reinforced the court’s approach to managing delay with flexibility rather than rigid strike-out. |
Court's Reasoning and Analysis
The court undertook a detailed review of the procedural history and the conduct of the parties, focusing on the claimants' failure to set the action down for trial by the court-ordered deadline and the subsequent delay in advancing the case. The Master had struck out the claim primarily due to this delay and perceived prejudice to the defendants, concluding that the claimants’ conduct was irresponsible and amounted to abuse of process.
However, the appellate court found that the Master had not had before him critical evidence, including a without prejudice telephone conversation that shed a different light on the claimants’ intentions and willingness to negotiate. The court noted that the claimants had paid security for costs, engaged experts, and taken steps to avoid an automatic stay, all evidencing an intention to proceed.
Importantly, the court emphasized the flexible and overriding objective-based approach under the CPR to delay and case management, as articulated in key precedents such as Biguzzi and Purdy. The court held that striking out is a draconian remedy to be used only where no other measures suffice to ensure justice.
The court found that the delay, while regrettable and partly attributable to the claimants’ repeated requests for advice on quantum, was not so culpable as to justify strike-out. Further, the defendants had delayed in seeking relief for over a year after the breach of the order, undermining their position. The court also found no specific or identified prejudice that would prevent a fair trial, and that liability and causation issues could be fairly tried.
On the appeal procedure, the court reaffirmed that appeals from Masters are generally by review rather than rehearing unless the interests of justice require otherwise. The court concluded that no such exceptional circumstances existed here.
Overall, the court held that the Master’s and judge’s exercise of discretion was flawed, particularly due to the absence of key evidence before the Master and the failure to consider alternatives to strike-out. The court would exercise its discretion in favour of allowing the appeal and managing the case to ensure just and proportionate progress.
Holding and Implications
The Court of Appeal ALLOWED the appeal.
The strike-out order made by the Master and upheld by Steel J was set aside as disproportionate and unjust in all the circumstances. The court struck out specific paragraphs of the amended statement of claim and allowed the claimants to amend their schedule of loss. Directions were given for case management, including a case management conference and document inspection.
The claimants were ordered to pay the defendants’ costs before the Master, but the defendants were ordered to pay the claimants’ costs of the appeal. The defendants were required to pay monies held in court with interest, and the claimants were deprived of interest for a specified period due to delay.
The decision emphasizes the CPR’s flexible approach to delay and case management, discouraging premature strike-out where alternative case management measures can secure justice. It clarifies the proper approach to appeals from Masters under CPR Rule 52.11 and reinforces the courts’ duty to actively manage cases justly and proportionately.