A second bite of the cherry: Can a claimant bring a fresh claim having failed to obtain relief from sanctions?

In the brave new world created by the Court of Appeal decision in Mitchell v Newsgroup Newspapers Ltd [2013] EWCA Civ 1537, claimants whose claims have been struck out for failure to comply with a rule, practice direction or order are honing in on second actions as a way of bringing their litigation back to life. The threatened slew of professional negligence suits post-Mitchell could be avoided if lawyers subject to a Mitchell strike-out are able to placate their clients by simply re-issuing proceedings against the defendant.

The reason is this: The test for striking out a re-issued claim as an abuse of process is different and more favourable to claimants than the Mitchell criteria concerning relief from the sanction of strike out. In other words, circumvent Mitchell by just suing again. But is it really that simple? And how likely is it that any loophole allowing litigants to escape the full force of the Jackson reform juggernaut is going to remain open?

The Jackson 5 and Mitchell

Five Court of Appeal judges dubbed "The Jackson 5" and led by Jackson LJ himself have been tasked with ensuring the courts fully implement the Jackson reforms. Any Jackson-related appeal will be heard by at least one of them to produce consistency. The new litigation landscape they patrol is envisaged as one where the need for efficient use of the courts’ sparse resources has greater prominence. The Jackson report stated this clearly at paragraph 6.5:

“… courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed.”

Two key changes to the CPR were put in place to found this tougher terrain: (i) the overriding objective was amended to include dealing with cases at proportionate cost and “enforcing compliance with rules, practice directions and orders”; and (ii) the previously lengthy checklist of factors in CPR 3.9 determining whether relief from sanctions should be granted was stripped back to just two concerns – again that litigation be cost efficient and proportionate, and that parties do as they are told. In the rules at least, the earlier micro-level focus on justice between the parties at the expense of just use of the court system as a whole was gone.

The Court of Appeal emphasised as much at the first opportunity it had: Mitchell. The facts of the case are sufficiently well known by now that they are not necessary to rehearse. But in summary the key points to come out of it were as follows:

• The Lord Justices held that the new pared down CPR 3.9 represented “a shift away from exclusively focusing on doing justice in the individual case”.
• Accordingly, the Court of Appeal set out a tough two-stage test for granting relief from sanctions for non-compliance with a rule, practice direction or court order.
• First, “if [the breach] can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly”.
• The second stage is only necessary if the trivial and prompt criteria are not met. Then the onus is on the defaulting party to persuade the court that there was “good reason” for the non-compliance.
• “Good reasons are likely to arise from circumstances outside the control of the party in default” and it would be unusual for “well-intentioned incompetence” or “overwork”to come into that category.

The courts have so far generally applied a strict reading of the tests of "triviality" and "good reason" set out in Mitchell. Where the express or implied sanction for the particular non-compliance is strike out, the danger posed by a procedural slip is therefore high.

Second actions and abuse of process

When a party brings a second action on similar facts as a previous claim that has been struck out under the Mitchell criteria, the test is different. A defendant applicant must establish, on the balance of probabilities, that the new claim is not an "abuse of the court’s process" and thereby liable for strike out under CPR 3.4(2)(b).

The line of authorities on abuse of process and second claims goes back to the Court of Appeal case of Janov v Morris [1981] 1 W.L.R. 1389. Dunn LJ stated that the power to strike out:

“should be exercised only where the court is either satisfied that there has been an intentional and contumelious default – for example, disobedience of a peremptory order of the court – or that there has been inordinate and inexcusable delay.” [emphasis added].

On the eve of the introduction of the CPR, the Court of Appeal in Arbuthnot Latham Bank Ltd v Trafalgar Holdings [1998] 1 WLR 1426 reiterated the two phrases underlined in the Janov quote above. It further added that if the first action was itself struck out for abuse of process, the second action would not automatically be struck out as well. However, there would need to be “some special reason” why the second claim should be allowed to proceed.

In Securum Finance Ltd v Ashton [2001] Ch 291, a decision reached after the introduction of the CPR, the Court of Appeal again endorsed the Arbuthnot Latham Bank position. This time it injected a third consideration relating to the best use of the courts’ resources:

“… the court … must consider whether the claimant’s wish to have a ‘second bite of the cherry’ outweighs the need to allot its own limited resources to other cases. The courts should now follow the guidance given by this court in the Arbuthnot Latham case.”(per Chadwick LJ)

The Court of Appeal reviewed the law relatively recently in Aktas v Adepta [2010] EWCA Civ 1770 and again endorsed the Janov phrases. This time it added the further insight that those phrases implied that “something more than a single negligent oversight in timely service is required … at least wholesale disregard of the rules”. The Court acknowledged the proper concern for efficient use of its limited resources. However, it warned that using abuse of process in a context where the claimant had not wasted court time since the action had never got going would lead to “a disciplinarian view of the law of civil procedure which risks overlooking the overriding need to do justice”.

Post-Mitchell decisions

In Michael v Middleton [2013] 6 Costs L.R. 899, HHJ Cooke (sitting as a Deputy High Court Judge) expressly stated that his reasoning for refusing relief from the sanction of strike out under an unless order to serve witness statements was that the claimants were likely to be able tobegin their claim again. The judge suggested (obiter) that any abuse of process application for a second claim in the matter would have low prospects of success, and therefore the claimants’ disadvantage by the strike out would be limited to the costs of the first proceedings. Arguably, this reasoning undermines a core driving force behind Mitchell, namely the greater weight now given to the importance of court resources being used efficiently.

To date, only one reported case has tackled the issue directly since Mitchell. In Hall v Ministry of Defence [2013] EWHC 4092 the claimant failed to serve proceedings in time and then, some time later, issued again, that time serving the Claim Form and Particulars of Claim in accordance with the rules. Philips J overturned the decision that the second action was an abuse of process. He held that the Deputy Master who had made it asked himself whether the claimant had failed to act promptly and fairly towards the defendant when the authorities showed the proper test for abuse of process was actually far higher: whether the claimant was guilty of “inordinate and inexcusable delay”.

Mind the gap

As such, the current law appears helpful for struck out claimants. The tests for strike out of second claims and granting relief from sanctions are markedly different, and post-Mitchell there has not been a successful attempt to the narrow the gap between them. The case law relating to second claims recognises that negligent mistakes, such as a failure to serve a claim form properly, do not necessarily constitute an abuse of process.

However, if a case reaches the Court of Appeal it is uncertain and perhaps doubtful that the gap will remain unchanged. In Mitchel lit was held that “well intentioned incompetence” is usually a bar to obtaining relief from sanctions. The Mitchell test is stringent, and it does not necessarily follow that a party who cannot obtain relief from sanction is guilty of “inordinate and inexcusable delay, intentional and contumelious default, or at least wholesale disregard for the rules”. Nevertheless, the authorities on second claims and abuse of process – in particular the Securum Finance case – raise concerns about use of the courts’ overall resources. This reasoning may now carry greater weight in light of the Jackson reforms and Mitchell. It is also notable that Aktas makes clear that concerns relating to abuse of process should not displace the imperative to do justice between the parties – a distinctly non-Mitchell approach.

As it stands, it appears that the current law on abuse of process and the reasoning in Mitchell is aligned where a first claim is struck out for a procedural default and where substantial court resources have been used. The difference is most apparent where the first claim barely got off the ground before it was struck out. Nonetheless, in these cases, second bites of the cherry are probably going to become harder to come by.

Update: Charles Bagot and Jasmine Murphy managed to strike out a second action as an abuse of process