Arbuthnot Latham Bank Ltd & Anor v Trafalgar Holdings Ltd & Ors

Factual and Procedural Background

This judgment concerns two separate cases heard by the Court of Appeal, both raising the identical issue of whether a court should strike out an action due to considerable delay when the plaintiff's original cause of action would be statute barred but another cause of action with a longer limitation period remains available. The first case ("The Bank Case") involves an appeal against a High Court decision refusing to strike out a claim against two defendants who had signed a guarantee and mortgage in favour of a bank. The original claim based on the guarantee was statute barred, but the plaintiffs sought to amend their claim to rely on the mortgage covenant, which had a longer limitation period. The defendants had delayed proceedings and applied to strike out the claim on grounds of delay.

The second case ("The Accountant's Case") involves a firm of accountants claiming unpaid fees in proceedings that had been ongoing for over eleven years, with a history of being struck out and reinstated. The defendant alleged prejudice due to delay and poor recollection of events. The Master struck out the actions due to inexcusable delay, and the defendant’s appeal was dismissed by a Deputy High Court Judge. The plaintiff sought leave to appeal on the costs order.

Legal Issues Presented

1. Whether a court should strike out an action for inordinate and inexcusable delay where the plaintiff's original cause of action would be statute barred if struck out, but another cause of action with a longer limitation period remains available.
2. The principles governing striking out for want of prosecution, including the relevance of the limitation period and the possibility of fresh proceedings.
3. The extent to which delay and failure to comply with court rules can amount to abuse of process justifying striking out proceedings.
4. The appropriate consequences and court management approach to delay in litigation under evolving procedural rules and case management reforms.

Arguments of the Parties

Appellants' Arguments (Defendants in The Bank Case)

• The claim based on the guarantee was statute barred, and dismissal should follow due to inordinate and inexcusable delay.
• The court should decide the strike out application on the cause of action pleaded, not on the possibility of other causes of action not yet pleaded.
• Defences would be available to the plaintiffs if fresh proceedings were brought on the mortgage covenant, including that the statute barred claim is not a liability under the mortgage.
• Relying on a different cause of action after delay is inappropriate and should not influence the strike out decision.
• The plaintiffs’ delay caused prejudice and anxiety, and the court should not condone such delay by allowing the claim to proceed.

Respondents' Arguments (Plaintiffs in The Bank Case)

• The plaintiffs could recover the principal sum and interest by relying on remedies under the mortgage, including appointing a receiver or foreclosure.
• Although some interest might be lost due to limitation, the principal debt remains recoverable.
• The causes of action based on the guarantee and mortgage are distinct, and the plaintiffs are entitled to pursue the mortgage claim despite delay in the guarantee claim.
• The delay was explained as due to prioritisation of urgent debts and was neither intentional nor contumelious.
• Striking out the claim on delay grounds when a fresh action could be brought would be perceived as a "lawyers game" and undermine public confidence in the law.

Defendant's Arguments in The Accountant's Case

• There was serious prejudice due to nearly eleven years of delay, including poor recollection and health issues.
• The delay amounted to an abuse of process and total disregard of court rules.
• The defendant suffered tension and pressure due to the unresolved claims over many years.

Plaintiff's Arguments in The Accountant's Case

• The delay was inexcusable but neither intentional nor contumelious.
• The plaintiff had changed solicitors and was legally aided, which should mitigate the consequences of delay.
• The plaintiff sought leave to appeal the costs order but accepted the striking out of the actions.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by acknowledging the established principles from Birkett v James that actions should only be struck out for want of prosecution where delay is intentional and contumelious or inordinate and inexcusable causing serious prejudice or risk to a fair trial. It emphasised that if the limitation period for the pleaded cause of action has not expired, striking out is generally inappropriate if fresh proceedings could be brought.

In The Bank Case, the court found that the judge below erred in dismissing the appeal because the original cause of action (guarantee) was statute barred, but another cause of action (mortgage covenant) with a longer limitation period existed and had not been pleaded. The court accepted the appellants' argument that the defendant is entitled to have the strike out application determined on the pleaded cause of action before the court, and not on hypothetical claims. The court also found that the plaintiffs’ defences to a fresh mortgage claim were not obviously unfounded and that it was inappropriate to speculate on their merits at this stage.

In The Accountant's Case, the court held that the delay was even more egregious, amounting to an abuse of process and total disregard of the court rules. The history of prior striking out and reinstatement, combined with the parties’ failure to comply with directions, justified dismissal. The court noted that abuse of process is a separate ground for striking out, not dependent on prejudice or fairness of trial, and that the duty to comply with rules is heightened after restoration of struck out proceedings.

The court also addressed the broader context of litigation delay, endorsing the need for court-controlled case management reforms to prevent stale proceedings and "warehousing" of claims. It warned that future delays would be viewed more severely, considering prejudice to other litigants and the administration of justice. The court stressed that proceedings should not be brought or maintained without intention to pursue them diligently.

Holding and Implications

The court allowed the appeal in The Bank Case, set aside the order below, and dismissed the plaintiffs' claim and counterclaim on the basis that the original claim was statute barred and the fresh cause of action had not been pleaded or pursued in this action.

The court refused leave to appeal in The Accountant's Case, thereby affirming the striking out of the actions due to abuse of process and inexcusable delay.

The implications are that courts will apply established principles strictly regarding delay, particularly where limitation periods have expired on pleaded causes of action. Where alternative causes of action with longer limitation periods exist but are not pleaded, courts will generally strike out delayed claims rather than speculate on hypothetical fresh claims. The judgment signals a shift towards more rigorous case management and intolerance of unexplained or prolonged delays, emphasizing the need for litigants to conduct proceedings with reasonable expedition to protect the interests of all parties and the administration of justice. No new precedent was created; rather, existing principles were clarified and reinforced in the context of evolving procedural reforms.