Alibrahim v Asturion Fondation [2020] EWCA Civ 32

Background

The primary issue for the Court of Appeal in this case was what conduct constitutes abuse of process where one party to litigation unilaterally suspends proceedings for a substantial amount of time without the agreement of the other party nor the approval or an Order of the court.

A minor issue also considered whether the procedure for a strike out application on the ground of abuse of process involved three, or only two, stages.

Background and Procedural History

The Respondent and Claimant (“Asturion”) was a Liechtenstein foundation which was formed to manage certain properties on behalf of the late King Fahd of Saudi Arabia.  The Appellant and Defendant (“Ms Alibrahim”) was a widow of King Fahd.  By a claim issued on 10 April 2015, Asturion sought to recover a property worth around £28 million (“the Property”), which a member of Asturion’s board had gratuitously transferred to Ms Alibrahim, allegedly without authority.

The claim form was issued on 10 April 2015, and Asturion immediately applied to register notice of a pending land action against the Property with the Land Registry.  Service was effected on Ms Alibrahim in late June 2015 and, after a series of extensions of time, an application for security for costs, the Defence and then a Reply, an agreed set of directions was lodged at court on 2 February 2016.  Through an oversight of the court, however, no order embodying these directions was made; nor was a CMC listed.

Between April and November 2016, the parties’ solicitors engaged in extensive correspondence regarding amendments to statements of case, as well as security for costs.  Notwithstanding a communication by Asturion that it would make its position clear on these matters by early December 2017, no action was taken by either side between 24 November 2016 and 15 August 2017. Ms Alibrahim’s solicitors therefore wrote to Asturion’s solicitors asserting that it was clear that Asturion had abandoned the claim and so invited it to discontinue.

On 23 August 2017, Asturion’s solicitors replied stating Asturion had not abandoned its claim.  Rather, given that the parties had been involved in separate proceedings in Liechtenstein (where Ms Alibrahim challenged the authority of Asturion’s board to bring proceedings in England), and the English court had not approved directions, nor listed a CMC, there was no immediate need to push ahead with directions for trial in England.

On 8 September 2017, Ms Alibrahim’s solicitors responded alleging this was an admission of ‘warehousing’ and threatened to make an application for a strike out if the claim was not discontinued by 15 September 2017.  Following further correspondence and an application for permission to amend statements of case, on 21 September 2017 the parties agreed a standstill in the proceedings..

On 11 December 2017, Ms Alibrahim issued an application for a strike out of the claim on the ground of abuse of process, or alternatively seeking an order that Asturion provide a cross-undertaking in damages in respect of the notice issued at the Land Register and security for costs.

The application was heard on 16 May 2018 and, by a reserved judgment handed down on 11 September 2018, Asturion’s claim was struck out by Deputy Master Cousins on the ground that Asturion had abused the process of the court by “warehousing” its claim.  This term was used to denote a process of “unilaterally placing the proceedings on hold for a substantial period of time without either the agreement of Ms Alibrahim or an order of the court.”

The Court of Appeal

The Court of Appeal reversed the Master’s decision.

Arnold LJ, who gave the leading judgment and with whom the other members of the Court agreed, began with the “well-established” principle set out in  Icebird Ltd v Winegardner [2009] UKPC 24 at [7] that mere delay in pursuing a claim, however inordinate and inexcusable, does not without more constitute an abuse of process.

Arnold LJ then considered the authorities, and distilled from them the following statement of principle at [61]:

In my judgment the decisions in Grovit, Arbuthnot, Realkredit and Braunstein show that a unilateral decision by a claimant not to pursue its claim for a substantial period of time, while maintaining an intention to pursue it at a later juncture, may well constitute an abuse of process, but does not necessarily do so. It depends on the reason why the claimant decided to put the proceedings on hold, and on the strength of that reason, objectively considered, having regard to the length of the period in question. A claimant who wishes to obtain a stay of proceedings for a period of time should seek the defendant’s consent or, failing that, apply to the court; but it is not the law that a failure to obtain the consent of the other party or the approval of the court to putting the claim on hold automatically renders the claimant’s conduct abusive no matter how good its reason may be or the length of the delay. 

In the present case, his Lordship considered that Asturion’s reasons for not pursuing the claim for 10 months was objectively reasonable: the proceedings in Liechtenstein concerned a dispute as to the authority of the board of Asturion to pursue proceedings in England.  There was, therefore, no abuse of process.

Arnold LJ concluded by addressing a more minor dispute between the parties, namely, whether an application for a strike out on the ground of abuse of process fell to be analysed in three stages or two.  Arnold LJ preferred the following two-stage approach as better supported by both the authorities and CPR r 3.4(2)(b):

• First, the court should determine whether the claimant’s conduct was an abuse of process; and if so,
• second, the court should exercise its discretion as to whether to strike out the claim.

Commentary

This case is a rare example of a finding that there was no abuse of process, notwithstanding that one of the parties to litigation had not taken the proper course by proceeding unilaterally.

Practitioners should note however, that, notwithstanding that the Court of Appeal considered that strike out would have been a disproportionate response if there had been a finding of abuse, Asturion should have sought Ms Alibrahim’s consent to a stay and, where such consent was not forthcoming, should have applied to the court.  In the circumstances, it would have been “very likely” to have been granted a stay.  It is also worth noting the lesser sanctions the Court of Appeal considered might have been more proportionate in the present case: tight directions to trial, including unless orders against Asturion, or  costs.