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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ashton & Another v Securum Finance Ltd [2000] EWCA Civ 197 (21 June 2000)
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Cite as: [2001] Ch 291, [2000] EWCA Civ 197, [2000] 3 WLR 1400

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Case No: 99/0878/3

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(MR IAN HUNTER QC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 21 June 2000

B e f o r e :
LORD JUSTICE CHADWICK
and
MR JUSTICE RATTEE
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ASHTON & ANOTHER

Appellant


- and -



SECURUM FINANCE LTD

Respondent


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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
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Mr James Guthrie QC and Mr P Knox (instructed by Messrs Coldham Shield & Mace for the Appellants)
Mr Anthony Mann QC and Mr A de Garr Robinson (instructed by Messrs Sheridans for the Respondents)
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Judgment
As Approved by the Court
Crown Copyright ©



LORD JUSTICE CHADWICK:

1. This is an appeal in proceedings brought by Securum Finance Limited against Mr Peter Ashton and his wife, Mrs Pauline Ashton, in relation to monies advanced more than ten years ago by Arbuthnot Latham Bank Limited to Trafalgar Holdings Limited, a company incorporated in the Turks and Caicos Islands. The appeal is against so much of an order made on 10 June 1999 by Mr Ian Hunter QC, sitting as a deputy judge of the High Court in the Chancery Division, as dismissed an application by Mr and Mrs Ashton that the proceedings be struck on the grounds that they are an abuse of the process of the court. The present proceedings can fairly be regarded as the sequel to the decision of this Court (Lord Woolf, Master of the Rolls, Lord Justice Waller and Lord Justice Robert Walker) on 16 December 1997 in Arbuthnot Latham Bank Ltd and others v Trafalgar Holdings Ltd and others [1998] 1 WLR 1426.
The claims in the present action
2. On 28 January 1987 Mr and Mrs Ashton signed a guarantee of the obligations of Trafalgar Holdings Limited to Arbuthnot Latham Bank Limited. In August 1989 the bank commenced proceedings against them to enforce their obligations under that guarantee. It was those proceedings which were struck out by this Court in December 1997. The present proceedings were commenced in September 1998. These proceedings are brought to enforce the rights of the bank under a legal charge dated 7 March 1989 given by Mr and Mrs Ashton to secure their obligations under the guarantee. The property charged - a dwelling house known as "St Just", at Buckhurst Hill in Essex - was and is the Ashtons' home. The claimant, Securum Finance Limited is the successor in title to the rights of the bank under the guarantee and the legal charge. In the present proceedings the claimant seeks payment under the covenant in the legal charge; and, further, seeks to enforce the security by orders for possession and sale of the mortgaged property.
3. The legal charge is dated 7 March 1989. It is made between Mr and Mrs Ashton (together described as "the Mortgagor") and Arbuthnot Latham Bank Limited ("the Bank"). Clause 1 contains both an all monies covenant and the charge to secure performance of that covenant. It is in these terms:
"The Mortgagor covenants to discharge on demand the Mortgagor's Obligations together with interest to the date of discharge and Expenses and as a continuing security for such discharge and as beneficial owner charges the Property to the Bank (to the full extent of the Mortgagor's interest in the Property or its proceeds of sale) by way of legal mortgage of all legal interests and otherwise by way of specific equitable charge"
In that context "the Property" means the property known as "St Just", Buckhurst Hill; "Expenses" means all expenses (on a full indemnity basis) incurred by the Bank or any receiver at any time in connection with the Property or the Mortgagor's Obligations or in enforcing any power under the mortgage (with interest thereon from the date on which they are incurred); and "the Mortgagor's Obligations" means:
"All the Mortgagor's liabilities to the Bank of any kind (whether present or future actual or contingent and whether incurred alone or jointly with another) including banking charges and commission"
4. Securum Finance Limited claims as successor in title to Arbuthnot Latham Bank Limited under (i) an assignment dated 2 May 1991 and made between the bank and Nordbanken London Branch, and (ii) an assignment dated 21 December 1992 and made between Nordbanken London Branch and Securum Finance Limited. For convenience (save where the context requires a distinction to be made) I will refer to Arbuthnot Latham Bank Limited and its assignees as "the Bank".
5. It is common ground that, in the context of the Mortgagor's Obligations in the legal charge, the only relevant liabilities (if any) that Mr and Mrs Ashton have, or have had, to the Bank are their liabilities as guarantors under the guarantee dated 28 January 1987. Clause 1 of the guarantee is in these terms, so far as material:
"In consideration of the Bank at the request of the Guarantor granting or continuing to make available banking facilities or other accommodation for so long as it may think fit to . . . the Customer, the Guarantor hereby guarantees on demand to pay to the Bank all monies and to discharge all obligations and liabilities whether actual or contingent now or at any time hereafter due owing or incurred to the Bank by the Customer . . . in any manner whatsoever . . ."
In that context "the Guarantor" means Mr Ashton and Mrs Ashton, and "the Customer" means Trafalgar Holdings Limited.
6. The Bank made demand on Mr and Mrs Ashton under the guarantee, in the sum of £737,928.40, by letters dated on 31 July 1989. It made a further demand under the guarantee, in the sum of £1,527,205.23, by letters dated 15 January 1998. The difference between the two sums represents accrued interest. The letters dated 15 January 1998 included a demand under clause 1 of the charge; but to meet any argument that a separate demand under the charge was required after a demand had been made under the guarantee, a separate demand under the legal charge was made by letters dated 16 January 1998.

7. In my view the Bank is plainly correct to assert, as it does, that its cause of action in the present proceedings is distinct from the cause of action which it was pursuing in the earlier proceedings. The elements which comprised the cause of action in the earlier proceedings may be summarised as (i) the debt owed by Trafalgar Holdings Limited to the Bank, (ii) the agreement to guarantee that debt, contained in clause 1 of the guarantee, and (iii) the demand made under the guarantee by letter dated 31 July 1989. The elements which comprise the cause of action in the present proceedings may be summarised as (i) the debt owed by Trafalgar Holdings Limited to the Bank, (ii) the agreement to guarantee that debt, contained in clause 1 of the guarantee, (iii) the demand made under the guarantee by letter dated 31 July 1989, alternatively by letter dated 15 January 1998, (iv) the covenant, contained in clause 1 of the legal charge, to discharge the obligations under the guarantee, and (v) the demand made under the covenant by letter dated 15 January 1998, alternatively by letter dated 16 January 1998. But it is important to appreciate that, although it is true to say that the cause of action in the present proceedings is not the same as that upon which the earlier proceedings were based, there are two common elements - (i) the debt owed by Trafalgar Holdings Limited to the Bank and (ii) the agreement to guarantee that debt, contained in clause 1 of the guarantee. In order to succeed in the earlier proceedings the Bank had to establish those two elements; the same is true in the present proceedings.
8. Each of those elements is in issue in the present proceedings - see paragraphs 12 and 13 of the amended defence and counterclaim. That was the position, also, in the earlier proceedings - see paragraph 4 of the amended defence and counterclaim:

The Defendants by their defence in the first proceedings served on 21st December 1989:
(1) Denied that Trafalgar owed any sum at all to Arbuthnot;
(2) Denied in any event the Guarantee was enforceable at all against them by virtue of various contractual warranties; and, also, in the case of the Second Defendant, by virtue of undue influence exercised over her by Arbuthnot.


The Ashton's counterclaim
9. By counterclaim in the present proceedings, as originally served, Mr and Mrs Ashton sought redemption of the legal charge. By amendment to their counterclaim, they seek an declaration that they are entitled to have their property discharged from the legal charge; and an order that the legal charge be delivered up for cancellation. The basis upon which that claim to relief is founded is that there is no Mortgagor's Obligation capable of being the subject of the covenant in clause 1 of the legal charge and so no obligation capable of being secured by the charge over the property. To put the point another way, if either (i) there was no debt owed by Trafalgar Holdings Limited to the Bank or (ii) the guarantee was unenforceable, there is nothing for which the legal charge can stand security and the Ashtons, as owners of the property, are entitled to have it discharged.
The Limitation Act 1980
10. The present action was commenced on 29 September 1998, some three years or more after the expiry of the six year limitation period applicable to a claim based on a simple contract debt under the guarantee. A claim to payment under the guarantee in the present action would be met by an insuperable defence of limitation. But a claim to payment under the covenant in the legal charge is made in an action upon a specialty to which the twelve year limitation period, prescribed by section 8(1) of the Limitation Act 1980, applies. Further, it is a claim brought in an action to recover money secured by a mortgage or charge, to which, also, a twelve year period of limitation applies - see section 20(1) of that Act. It is now common ground - at least for the purposes of this appeal - that a claim to payment under the covenant in the legal charge is not barred by limitation.
11. Further, the claims in the present action are not limited to a claim for payment. They include a claim, as mortgagee, for possession of the property charged; for the appointment of a receiver of that property; and for orders for foreclosure or sale. Those, also, are claims to which the twelve year limitation period applies - see sections 15 and 20 of the Act of 1980.
The relief claimed on the application to strike out
12. Mr and Mrs Ashton, having obtained an order striking out the earlier proceedings, applied (as it was to be anticipated that they would) for an order striking out the present proceedings. They did so on the grounds that it was an abuse of the process of the court for the claimant to seek to pursue, in these proceedings, what they see (understandably) as, in essence, the same claim as that which the court has already struck out in the earlier proceedings.
13. The application to strike out was made by summons dated 10 March 1999. The substantive relief sought by that summons was set out under five heads:
(1) An order that the claim be struck out on the grounds that it was an abuse of process; in that it sought to relitigate the same issues as were litigated, or could have been litigated, between the claimant and the defendant in the earlier proceedings.
(2) An order that the claim be struck out on the grounds that it disclosed no reasonable cause of action; in that (a) the claimant's cause of action was founded on a simple contract and, accordingly, was barred by section 5 of the Limitation Act 1980 or (b) that on a proper construction of the legal charge there were no liabilities secured by it, because the only liability which could be the subject of the covenant in clause 1 was the liability under the guarantee which was, itself, statute barred.
(3) An order that so much of the claim as was in respect of interest accruing before 29 September 1992 be struck out on the grounds that it disclosed no reasonable cause of action; in that a claim for interest accruing more that six years before the commencement of the action was barred by section 20(5) of the Limitation Act 1980.
(4) Determination under what was then Order 14A of the Rules of the Supreme Court 1965 of the two issues raised under head (2).
(5) Summary judgment on the counterclaim; which, as it then stood, was a claim for redemption of the legal charge.
14. The judge, in a thorough and careful judgment, held (i) that the claimant's cause of action was not founded on a simple contract - and so was not barred by section 5 of the Limitation Act 1980 - and (ii) that, on a proper construction of the legal charge, the liabilities (if they existed under the guarantee) were liabilities secured by the legal charge. He determined those issues under CPR 24.2, and made declarations accordingly. It followed that he refused relief under head (2) of the summons. He refused permission to appeal against that part of his order. As to head (3), the claimant conceded that the claim to interest accrued before 29 September 1992 could not be pursued; and has amended its claim accordingly. That left heads (1) and (5). The judge decided those matters against the applicants; but he gave leave to appeal against his decision.
Issue estoppel
15. I have pointed out that two of the issues which (on the face of the pleadings) would arise at a trial of the present action - that is to say, (i) whether there was a debt owed by Trafalgar Holdings Limited to the Bank and (ii) whether the guarantee was enforceable - were issues in the earlier action. The judge held, correctly in my view, that no question of res judicata or estoppel arose in relation to those issues. The reason was that there had been no adjudication upon those issues. Whether it is an abuse of process to seek to litigate, in subsequent proceedings, issues which have been raised (but not adjudicated upon) in earlier proceedings which have themselves been struck out (whether on grounds of delay or on other grounds) is a question which I shall have to address later in this judgment; but that is a different question from the question whether a party should be allowed to raise, in subsequent proceedings, issues which have already been determined or "laid to rest" (whether by adjudication, or by concession, or as the result of a decision to withdraw) in earlier proceedings. The judge was right to hold that the Ashton's could gain no support from cases such as Kahn v Kolechha International Limited [1980] 1 WLR 1482, SCF Finance Co Ltd v Masri (No.3) [1987] QB 1028 and Barber v Staffordshire County Council [1996] 2 All ER 748.
Henderson v Henderson
16. It was argued before the judge that "the issues raised in the second action based on the covenant for repayment and the property rights of the mortgagee could and should have been raised in the first action"; and that, accordingly, the claimant was precluded by the principle in Henderson v Henderson (1843) 3 Hare 100 from raising them in the present proceedings. The judge rejected that contention. In my view he was right to do. For my part, I find it difficult to see how the principle in Henderson v Henderson, as explained by Sir Thomas Bingham, when Master of the Rolls, in Barrow v Bankside Agency Ltd [1996] 1 WLR 257, at page 260A-C, has any application to issues arising from a claim on the covenant for repayment. The question whether a liability under the guarantee which was statute barred could be a Mortgagor's Obligation for the purposes of the covenant in the legal charge could not have arisen in the earlier action. At the time when that action was commenced the liability under the guarantee was not statute barred. Nor could the question whether the relevant period of limitation for the purposes of an action on the covenant was six years (rather than twelve years) have arisen in the earlier action. And it is, to my mind, bizarre to suggest that, in the earlier proceedings, it would have been appropriate to rely both on the cause of action founded on the guarantee alone and on a cause of action (theoretically distinct, but in the circumstances as they then were indistinguishable from) founded on the covenant in the legal charge. For the reasons explained by Lord Justice Schiemann in National Westminster Bank Plc v Kitch [1996] 1 WLR 1316 there are good reasons for choosing not to sue on the covenant in a mortgage when it is unnecessary to do so.
17. Nor, as it seems to me, can it be argued that a secured creditor who chooses, in the first place, to sue for payment alone, is thereafter precluded from seeking to enforce his security in a separate action on the grounds that that was a claim that could have been advanced in the first action. As the judge put it, in a passage at page 24 of his written judgment:
"Indeed, it does not seem to me that it is in the interests either of the bank or of the bank's customers that the bank should be obliged to rely on all of its rights under the mortgage when proceedings are first issued if it would prefer to limit itself to a claim under the guarantee. Having decided to confine itself in the first action to a claim under the guarantee, that seems to me to be a perfectly proper course of action for the bank to take and I do not regard it as an abuse of the process of the court for the claimant to rely subsequently on its rights under the mortgage. No one could sensibly suppose that by suing on the guarantee the bank is to be taken to be waiving its right to rely, if need be, on the security which it enjoys."
I agree.
Some other abuse of process
18. The real question under head (1) of the summons of 10 March 1999, as the judge appreciated, is whether it is an abuse of process to seek to litigate, in subsequent proceedings, issues which have been raised (but not adjudicated upon) in earlier proceedings which have themselves been struck out. The question arises because, in order to succeed on its claim for payment under the covenant in the legal charge, the claimant must establish the two points which I have already identified - namely (i) whether there was a debt owed by Trafalgar to the bank and (ii) whether the guarantee was enforceable - which were in issue in the earlier proceedings but which were not adjudicated upon in those proceedings because those proceedings were struck out.
Birkett v James
19. The judge held that, in the circumstances of the present case, the reasoning of the House of Lords in Birkett v James [1978] AC 297 required that that question receive a negative answer. He reminded himself of the well known passage in the speech of Lord Diplock, at page 318F-G:
"The power [to strike out for want of prosecution] should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or (2) (a) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party."
20. The judge continued, at page 15 of his written judgment:
"[Lord Diplock] then went on to consider whether an action ought to be dismissed for want of prosecution before the expiration of the limitation period and he observed that crucial to that question is whether the plaintiff whose action has been so dismissed may issue a fresh writ for the same cause of action. He then answered that question by concluding that, exceptional cases apart, where all that a claimant has done is to let the previous action go to sleep the Court would have no power to prevent him starting a fresh action within the limitation period and proceeding with it with all proper diligence, notwithstanding that his previous action had been dismissed for want of prosecution.
Lord Diplock acknowledged that it was an attractive argument that if the Court has power to dismiss an action already started because it considers that the time which the claimant has allowed to elapse since his cause of action first accrued has resulted in a substantial risk that justice may not be done to the defendant at trial, the Court by parity of reasoning should also have the power to prevent a fresh action being started. But he declined to accede to the contention, despite its admitted attractiveness, because to do so would be to assume that the Court has the power to treat as amounting to inordinate delay in proceeding with the action, a period shorter than that which the legislature has prescribed in the Limitation Act that a claimant should have as a matter of right in order to commence proceedings."
21. The reason why the question whether a plaintiff whose action has been dismissed for want of prosecution can commence within the limitation period and thereafter pursue fresh proceedings founded on the same cause of action is crucial to the question whether an action ought to be dismissed for want of prosecution before the relevant limitation period has expired was explained by Lord Diplock in Birkett v James[1978] AC 297, at page 320A-C:
"Crucial to the question whether an action ought to be dismissed for want of prosecution before the expiry of the limitation period is the answer to a question which lies beyond it, viz. whether a plaintiff whose action has been so dismissed may issue a fresh writ for the same cause of action. If he does so within the limitation period, the effect of dismissing the previous action can only be to prolong the time which must elapse before the trial can take place beyond the date when it could have been held if the previous action had remained on foot. Upon issuing his new writ the plaintiff would have the benefit of additional time for repeating such procedural steps as he had already completed before the action was dismissed. This can only aggravate; it can never mitigate the prejudice to the defendant from delay."
22. It was the fact that, as it appeared to him in 1978, the dismissal of the first action for want of prosecution (in a case which fell under head (2) of his classification - conduct not amounting to an abuse of process) would lead to additional delay and aggravation of prejudice (because the plaintiff could commence and pursue a fresh action), that led Lord Diplock to observe, at page 322D-E:
"For my part, for reasons that I have already stated, I am of opinion that the fact the limitation period has not yet expired must always be a matter of great weight in determining whether to exercise the discretion to dismiss an action for want of prosecution where no question of contumelious default on the part of the plaintiff is involved; and in cases where it is likely that if the action were dismissed the plaintiff would avail himself of his legal right to issue a fresh writ the non-expiry of the limitation period is generally a conclusive reason for not dismissing the action that is already pending."
23. It is important to keep in mind why Lord Diplock rejected the contention that a court which had dismissed an action under head (2) of his classification - "because it considers that the time which the plaintiff has allowed to elapse since his cause of action first accrued has resulted in a substantial risk that justice may not be done to the defendant at the trial" - should have power to dismiss a fresh action. The reason is found in the double condition that is imposed under head (2): (a) inordinate and inexcusable delay and (b) a substantial risk that it will be impossible to have a fair trial of the issues or likelihood of serious prejudice. Where an action had been dismissed under head (2), it could be assumed that the court which dismissed it had been satisfied that both conditions had been met. But, on an application to strike out a fresh action commenced within the limitation period, it was necessary to re-examine the position. The question whether there had been inexcusable and inordinate delay had to be determined in the context of the fresh action. Delay which had taken place before the commencement of the fresh action could not be regarded as inordinate delay; because it was permitted by the statute - see the observations of Lord Diplock in Birkett v James at page 320E, and at page 322F-G:
". . . time elapsed before the issue of a writ within the limitation period cannot of itself constitute inordinate delay however much the defendant may already have been prejudiced by the consequent lack of early notice of the claim against him, the fading recollections of his potential witnesses, their death or their untraceability. To justify dismissal of an action for want of prosecution the delay relied upon must relate to time which the plaintiff allows to lapse unnecessarily after the writ has been issued."
There are observations to the same effect in the speech of Lord Salmon, at pages 328H-329A:
". . . the second action could not be dismissed as an abuse of the process of the court whatever inexcusable delay there may have been in the conduct of the first action."
and in the speech of Lord Edmund-Davies, at page 334A-B:
". . . a plaintiff is free to issue within the limitation period a further writ claiming the same relief and based on the same grounds as an earlier writ dismissed for want of prosecution, and it is irrelevant to the competency of the second action that by the time it comes on the defendant may well be even more prejudiced than he would have been had the first action been permitted to proceed to trial."

24. If delay which had taken place (in the conduct of the first action) before the issue of the writ in the second action could not be regarded as inordinate in the context of an application to strike out the second action (because it was permitted by the statute), then the application could not succeed under head (2). First, because sub-condition (a) would not be satisfied; and, secondly, because if sub-condition (a) were not satisfied then sub-condition (b) could not be satisfied. However substantial the risk to a fair trial, or however serious the prejudice to the defendant, that risk or that prejudice could not be said to be the result of inordinate delay in the prosecution of the second action.
25. If the approach set out in those passages continues to be applicable, notwithstanding the introduction of the Civil Procedure Rules 1998, the judge was plainly correct to reach the conclusion which he did.
The Civil Procedure Rules 1998
26. The principles laid down in Birkett v James were described by Lord Justice Kerr in Westminster City Council v Clifford Culpin & Partners (unreported, 18 June 1987; C.A. Transcript 592 of 1987) - in a passage set out by Lord Griffiths in Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197, at page 1204C-1205B - as "unsatisfactory and inadequate". The House of Lords was invited, in the Chris Smaller case, to reconsider those principles. But the invitation was declined. Lord Griffiths, with whose speech the other members of the House agreed, expressly endorsed the proposition that "the plaintiff cannot be penalised for any delay that occurs between the accrual of the cause of action and the issue of the writ provided it is issued within the limitation period" - see [1989] AC 1197, 1207B. In relation to cases where the limitation period had expired he said this, at page 1207F-G:
"To extend the principle [to cases in which it was not shown that there was a substantial risk that a fair trial was impossible, nor that the defendant had suffered serious prejudice] purely to punish the plaintiff in the illusory hope of transforming the habits of other plaintiff solicitors would, in my view, be an unjustified way of tackling a very intractable problem. I believe that a far more radical approach is required to tackle the problems of delay in the litigation process than driving an individual plaintiff away from the courts when his culpable delay has caused no injustice to his opponent. I, for my part, recommend a radical overhaul of the whole civil procedural process and the introduction of court controlled techniques designed to ensure that once a litigant has entered the litigation process his case proceeds in accordance with a time table as prescribed by Rules of Court or as modified by a judge: see the Civil Justice Review, Report of the Review Body on Civil Justice (1988) (Cmnd. 394)."
27. The criticism of the Birkett v James principles was considered, again, by the House of Lords in Grovit v Doctor [1997] 1 WLR 640. Lord Woolf, with whom the other members of the House agreed, referred, at page 643B, to the fact that the requirement laid down by the second limb under head (2) prevented the court taking into account the adverse effect which delay can have on the reputation and efficiency of the civil justice system as a whole. He referred to the passage in the speech of Lord Griffiths in the Chris Smaller case which I have just set out. He went on, at page 644D-F:
"The period which has elapsed since Lord Griffiths' speech has not seen any improvement in the problems caused by delay in the conduct of civil proceedings. In the county court a response to the corrosive effect of delay has been to introduce the automatic strike out (County Court Rules, Ord. 17, r. 11(9)). However this has proved to be crude remedy the effects of which have not been wholly beneficial. It has founded an industry of satellite litigation. Furthermore there is now on the horizon the introduction of the sort of process of reform to the rules of procedure which Lord Griffiths thought was required. In this situation it is at least open to question whether it is not preferable to await the outcome of the implementation of the new rules before making a substantial inroad on the principles endorsed by Lord Diplock in Birkett v James [1978] AC 297. They should by case management prevent the delay happening. If delays do happen they provide the court with wider powers to mitigate the consequences."
28. The decision in Grovit v Doctor was handed down by the House of Lords in April 1997. Some nine months later this Court had to consider the appeal in Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426. The Court reminded itself, at page 1431G-H, of the principles in Birkett v James [1978] AC 297 to which I have already referred. It pointed out that the reason why the question whether the limitation period had expired was of such significance was that, in the absence of some conduct which means the a second action could be stayed, it would not benefit the defendant to have the first action struck out since this would only result in further proceedings which would inevitably cause more expense and delay - see [1998] 1 WLR 1426, at page 1432C-D. It observed that the fact that the limitation period had not expired was of less significance in a case where the proceedings which were being struck out constitute an abuse of process. "In such circumstances, the plaintiff may well find that if he brings fresh proceedings after the original proceedings are struck out they are stayed because of his conduct." - see [1998] 1 WLR 1426, at page 1432G-H. In a section of the judgment headed "the future" the Court said this:
"In his speech in the Chris Smaller case [1989] AC 1197, Lord Griffiths identified the advantages which would accrue from a civil procedural process which was subject to "court controlled case management techniques". This process is now being introduced. The new unified rules are intended to come into force in April 1999. However, many aspects of the process can be introduced while the existing Supreme Court and County Court Rules are in force. Most of the powers which the court requires for the purpose of case management are already contained in the existing rules.
The gradual change to a managed system which is taking place does impose additional burdens on the courts, involving the need for training and the introduction of the necessary technological infrastructure. It is therefore in the interests of litigants as a whole, that the court's time is not unnecessarily absorbed in dealing with the satellite litigation which non-compliance with the timetables laid down in the rules creates. . . . In Birkett v James [1978] AC 297 the consequence to other litigants and to the courts of inordinate delay was not a consideration which was in issue. From now on it is going to be a consideration of increasing significance. Litigants and their legal advisers, must therefore recognise that any delay which occurs from now on will be assessed not only from the point of view of the prejudice caused to the particular litigants whose case it is, but also in relation to the effect it can have on other litigants who are wishing to have their cases heard and the prejudice which is caused to the due administration of civil justice. The existing rules contain time limits which are designed to achieve the disposal of litigation within a reasonable time scale. Those rules should be observed.
It is already recognised in Grovit v Doctor [1997] 1 WLR 640 that to continue litigation with no intention to bring it to a conclusion can amount to an abuse of process. We think that the change in culture which is already taking place will enable the courts to recognise for the future, more readily than heretofore, that a wholesale disregard of the rules is an abuse of process as suggested by Parker L.J. in Culbert v Stephen G Westwell & Co Ltd [1993] P.I.Q.R. P54.
While an abuse of process can be within the first category identified in Birkett v James [1978] AC 297 it is also a separate ground for striking out or staying an action (see Grovit v Doctor at pp. 642-643) which does not depend on the need to show prejudice to the defendant or that a fair trial is no longer possible. The more ready recognition that wholesale failure, as such, to comply with the rules justifies an action being struck out, as long as it is just to do so, will avoid much time and expense being incurred in investigation [of] questions of prejudice, and allow the striking out of actions whether or not the limitation period has expired."
29. The new rules - to which anticipatory reference was made in Grovit v Doctor and in the Arbuthnot Latham case - are the Civil Procedure Rules 1998, made under section 84(1) of the Supreme Court Act 1981. They came into force on 26 April 1999. They were applicable to the application to strike out the present proceedings - which was heard after that date - by virtue of the Practice Direction (PD 51) made under CPR Part 51. In particular, PD 51 paragraph 12 required that CPR Part 1 (the overriding objective) applied to all existing proceedings from 26 April 1999 onwards; and PD 51 paragraph 15(3) incorporated the general presumption that, where an application had been issued before 26 April 1999 for a hearing date after 26 April 1999 (as in the present case), the application will be decided in accordance with the CPR.

30. The power to strike out a statement of case is contained in CPR Rule 3.4. In particular, Rule 3.4(2)(b) empowers the court to strike out a statement of case (which includes part of a statement of case - see Rule 3.4(1)) if it appears to the court that the statement of case is an abuse of the court's process; but that does not limit any other power of the court to strike out - see Rule 3.4(5). In exercising that power the court must seek to give effect to the overriding objective set out in CPR Rule 1.1 - see Rule 1.2(a). The overriding objective of the procedural code embodied in the new rules is to enable the court "to deal with cases justly" - see Rule 1.1(1). Dealing with a case justly includes "allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases".
31. In the Arbuthnot Latham case this court pointed out, in a passage at page 1436E which I have already set out, that:
"In Birkett v James [1978] AC 297 the consequence to other litigants and to the courts of inordinate delay was not a consideration which was in issue. From now on it is going to be a consideration of increasing significance."
The effect on other litigants of delay in the proceedings in which that delay has occurred is, now, a factor to which the court must have regard when considering whether to strike out those proceedings. But, equally, the fact that earlier proceedings have been struck out on the grounds of delay is a factor to which the court must have regard when considering whether to strike out fresh proceedings brought to enforce the same claim. The reason, as it seems to me, is that, when considering whether to allow the fresh proceedings to continue, the court must address the question whether that is an appropriate use of the court's resources having regard (i) to the fact that the claimant has already had a share of those resources in the first action and (ii) that his claim to a further share must be balanced against the demands of other litigants.


32. The House of Lords recognised, in Birkett v James [1978] AC 297, that the power to strike out a first action could be exercised where the plaintiff's conduct amounted to an abuse of process - see at page 318F - and, further, recognised that the court would have power, in an appropriate case, to strike out a second action (founded on the same claim) notwithstanding that it was commenced within the limitation period "on the grounds that, taken as a whole, the plaintiff's conduct amounts to an abuse of the process of the court" - see at page 320H-321A. But the House did not accept that the necessary ingredient of abuse would be present where "all that the plaintiff had done has been to let the previous action go to sleep". In the Arbuthnot Latham case [1998] 1 WLR 1426, at page 1436G, this Court spoke of "the change in culture which is already taking place will enable the courts to recognise for the future, more readily than heretofore, that a wholesale disregard of the rules is an abuse of process"; and, at page 1436H, of "the more ready recognition that wholesale failure, as such, to comply with the rules justifies an action being struck out, so long as it is just to do so". Following the Arbuthnot Latham case there have been numerous observations in this court which are to the same effect - see Lord Justice Nourse and Lord Justice Thorpe in Choraria v Sethia (unreported, 15 January 1998; CA Transcript 7 of 1998), Lord Justice Auld (with whom Lord Justice Robert Walker agreed) in Miles v McGregor (unreported, 23 January 1998; CA Transcript 51 of 1998), Lord Justice Hirst and Lord Justice Peter Gibson in Lace Co-ordinates Ltd v Nem Insurance Company Limited (unreported, 19 November 1998; CA Transcript 1717 of 1998), Lord Justice Henry (with whom Lord Justice Pill agreed) in Shikari v Malik (unreported, 5 May 1999; CA Transcript 922 of 1999), Lord Justice May (with whom Lord Justice Waller agreed) in Co-operative Retail Services Ltd v Guardian Assurance Plc (unreported, 28 July 1999; CA Transcript 1319 of 1999), and Lord Justice Ward and Lord Lloyd of Berwick in UCB Corporate Services Limited v Halifax (SW) Limited (unreported, 6 December 1999).


33. The judge was alive to the need to revisit the principles in Birkett v James [1978] AC 297. At page 13 in the transcript of his judgment he said this:
"The fact that the legislature has determined that a claimant is entitled to a particular period of time within which to commence proceedings does not seem to me necessarily to mean that if he chooses to commence an action well within that period and then conducts the action in such a dilatory fashion that the claim is ultimately struck out for want of prosecution he should be able to conduct himself in that way safe in the knowledge that, provided he issues fresh proceedings within the limitation period, those proceedings cannot be struck out as an abuse of process. Court time is precious and there is an important public interest in its proper use."
But the judge did not think it right to pursue those thoughts, having regard to the way in which the application had been argued before him. Understandably, perhaps, he took the view that the task of revisiting Birkett v James in the light of the developments in this area of the law since Grovit v Doctor [1997] 1 WLR 640 was best left to an appellate court.
34. For my part, I think that the time has come for this Court to hold that the "change of culture" which has taken place in the last three years - and, in particular, the advent of the Civil Procedure Rules - has led to a position in which it is no longer open to a litigant whose action has been struck out on the grounds of inordinate and inexcusable delay to rely on the principle that a second action commenced within the limitation period will not be struck out save in exceptional cases. The position, now, is that the court must address the application to strike out the second action with the overriding objective of the CPR in mind - and must consider whether the claimant's wish to have "second bite at 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 - in a passage at page 1436H-1437B:

"The question whether a fresh action can be commenced will then be a matter for the discretion of the court when considering any application to strike out that action, and any excuse given for the misconduct of the previous action: see Janov v Morris [1981] 1 WLR 1389. The position is the same as it is under the first limb of Birkett v James. In exercising its discretion as to whether to strike out the second action, that court should start with the assumption that if a party has had one action struck out for abuse of process some special reason has to be identified to justify a second action being allowed to proceed."
35. It follows from the preceding paragraphs of this judgment that I am satisfied that the judge adopted the wrong approach to the question whether the claim in the present action (or any part of it) should be struck out on the grounds of abuse. Although he recognised (correctly) the important public interest in the use of court time, he failed to give any weight to that interest in reaching the conclusion which he did. In those circumstances it is for this Court to exercise its own discretion.
The course of events in the first action
36. In deciding how that discretion should be exercised it is necessary to examine the events which led to the striking out of the first action; at least in so far as they appear from the judgments delivered by Sir Ronald Waterhouse on the application to the High Court and by this Court on appeal from his decision.
37. The following statement of the course of events is set out, at pages 1429E-1430B in the judgment of this Court in the Arbuthnot Latham case:

"By letter dated 8 June 1989, the bank demanded from Trafalgar payment of the money then due amounting to over £720,000 plus interest. When that sum was not paid, on 31 July 1989, the bank demanded from the Ashtons the somewhat larger sum which by that time was allegedly due. Nothing was paid and on 23 August 1989 the bank issued a writ endorsed with a statement of claim against Trafalgar and the Ashtons. Trafalgar did not serve a defence but the Ashtons did so. In the defence they contended that (i) no debt was due from Trafalgar, (ii) the guarantee was subject to collateral warranties which made it unenforceable in the circumstances, and (iii) in the case of Mrs Ashton the guarantee was obtained by undue influence.
Trafalgar took no further part in the proceedings but in relation to the Ashtons' pleading closed on 29 May 1990 and discovery was completed on 6 June 1991. On 7 June 1991, an order was made substituting Nordbanken London Branch as the plaintiff. Thereafter no step was taken until Securum Finance Ltd wrote to the Ashtons on 20 March 1996. This was followed by the Ashtons on 3 May 1996 issuing a summons to strike out the claim against them on the grounds of delay.
Sir Ronald Waterhouse dismissed the summons to strike out, gave the plaintiffs leave to join Securum Finance Ltd as the third plaintiffs, gave the plaintiffs leave to issue a summons before the master seeking leave to amend the statement of claim and refused the Ashtons leave to appeal.
On 9 October 1996 Master Trench gave the plaintiffs leave to amend their statement of claim so as to include a claim based on the covenant in the mortgage."
38. The explanation for what Sir Ronald Waterhouse was to conclude was inordinate and inexcusable delay is described in the judgment of this Court at page 1430C-E:
"In their evidence, the plaintiffs explained the delay by stating that the debt was assigned to the company now known as Securum U.K. Ltd on 21 December 1992. After that assignment, that company became "in essence an asset recovery and debt collection company". It had inherited a large portfolio of bad debts some of which ran into seven figures. It was therefore decided that the plaintiffs would deal only with those loans within their portfolio which required urgent action and, as in this case they had security, it was not regarded as an urgent situation and so it was not initially actively pursued. In addition Mr and Mrs Ashton were not only defending but also counter-claiming against the plaintiffs and they appeared not anxious to pursue their counterclaim."
39. Leave to appeal in the first action was granted by this Court (Lord Justice Potter) on 12 January 1997. The appeal was heard at the end of November and the judgment of the Court was handed down on 16 December 1997. Before examining that judgment, and the judgment of Sir Ronald Waterhouse which it reversed, it is pertinent to have in mind the basis upon which claims were made against Mr and Mrs Ashton in the first action. That appears from the statement of claim endorsed on the writ, a copy of which was made available to us during the course of the hearing.
40. Paragraph 2 of the statement of claim in the first action sets out the terms of clause 1 in the guarantee of 28 January 1987. Paragraph 3 contains the assertion that, as at 23 January 1987, the amount owing to the Bank by Trafalgar was £705,000. Paragraph 4 sets out the terms of a letter dated 21 May 1987 under which, it is said, the parties agreed that the Bank would allow Trafalgar to make use of certain US Dollar deposits as margin cover for foreign exchange and futures trading for a period of five years; and contains the allegation that it was in consideration of that arrangement that Mr and Mrs Ashton agreed that the guarantee of 28 January 1987 should be supported by an undated legal charge executed by them over their joint property at Buckhurst Hill. Paragraph 6 refers to a demand made on 8 June 1989 by the Bank on Trafalgar; and paragraph 7 refers to letters of demand, for payment within 14 days of the sum of £737,928.40 then said to be due from Trafalgar, dated 31 July 1989 and served on Mr and Mrs Ashton. It is clear that, although reference is made to the legal charge (in paragraph 4(iv) of the statement of claim), the claims are claims under the guarantee alone.
41. Sir Ronald Waterhouse approached the application before him with the principles identified by Lord Diplock in Birkett v James [1978] AC 297 well in mind. At the hearing before him each party sought to rely on Lord Diplock's observation that, in a case not involving contumelious default, the expiry (or non-expiry) of the relevant period of limitation was likely to be determinative of an application to strike out. The primary submission for the Ashtons was that the six year limitation period had expired. Counsel for the plaintiff sought to meet that submission with an argument that the applicable period was twelve years. As the judge put it, at page 10F-G in the transcript of his judgment:
"[Counsel] has sought to persuade me that essentially the action is on the covenant contained in the mortgage deed, being a covenant by way of specialty for which the limitation period is 12 years by virtue of the provisions of Section 8(1) of the Act of 1980 . . . [Counsel] argues, that having regard to the express reference in the Statement of Claim to the legal charge, this is essentially a claim based on a promise made in a deed, and that the basic submission on behalf of the second and third defendants that it is a simple contract debt is misconceived."
42. Sir Ronald Waterhouse rejected that contention - see page 11C-D in the transcript of his judgment. But he then had to deal with the converse argument, advanced by counsel for Mr and Mrs Ashton, that the limitation period applicable would continue to be six years even if an amendment to plead reliance on the covenant in the mortgage were allowed - or a new action based on that covenant were commenced. He explained the argument at page 12C-F of his judgment:
"The nature of the argument may be briefly summarised in this way: the second and third defendants submit that, although there was a covenant in general terms in the mortgage deed whereby the second and third defendants undertook to meet all liabilities, the reality of the matter is that the plaintiff's claim is founded upon a debt arising from a simple contract. It is suggested, therefore, that, however the plaintiff chooses to present its claim, whether on the present basis or on an amended basis, or indeed in a new action, the same limitation period of six years will apply because the plaintiff cannot rely on the promise contained in the legal charge as giving rise to a debt under specialty."
43. Sir Ronald Waterhouse rejected that contention, also - see page 15C-D of his judgment. That led him to the conclusion, which he described as "fundamental to the question that I have to decide", that:
". . . if the second and third defendants were to succeed in their present application, it would be open to plaintiff to issue a writ forthwith claiming the amount now claimed in the proceedings before me as a debt due under the promise contained in the legal charge. The plaintiff would also be entitled to enforce the mortgage, to obtain an order for sale of the second and third defendants' home and, in accounting in those proceedings, to allot all the amounts claimed, including interest, to itself before paying any balance over to the second and third defendants.
Equally, it would be open to the plaintiff, if the application by the second and third defendants failed, to make immediate application to amend the statement of claim to include an alternative basis for repayment of the amount set out in the writ and statement of claim, namely the promise contained in the legal charge, the plaintiff's alternative claim therefore being a claim under specialty."
It was on the basis of that conclusion that he went on to hold that there was no purpose in striking out the existing action; Mr and Mrs Ashton would gain no advantage from that course because the plaintiff would immediately commence a new action to enforce its security which would be within the relevant limitation period; whatever prejudice the Ashtons might have suffered from the delay in prosecuting the first action would not be significantly allayed or mitigated, but would remain largely as before.
44. I have set out those passages from the judgment of Sir Ronald Waterhouse in the first action because they are part of the background against which the judgment of this Court in that action must be read and understood. As a further preliminary to an examination of that judgment, it is relevant to note that, by the time that appeal came before this Court, the plaintiff had obtained leave to amend its statement of claim so as to include a claim based on the covenant in the mortgage - see [1998] 1 WLR 1426, at page 1430B.
The judgment of this Court in the first action
45. It was common ground in this Court that the plaintiff's original claim on the guarantee was a claim to which the six year limitation period applied; and that the plaintiff's amended claim, based on the covenant in the mortgage, was a claim to which the twelve year limitation period applied - see [1998] 1 WLR 1426, at page 1430B-C. There had been no appeal against the decision of Sir Ronald Waterhouse on those points.
46. The Court reminded itself, at pages 1432H-1433B, that delay alone does not amount to abuse of process - see Barclays Bank Plc v Maling (unreported, 23 April 1997; CA transcript 849 of 1997). It reminded itself, also, at page 1432D-E, that the reasoning which had led the House of Lords, in Birkett v James [1978] AC 297, to the conclusion that the fact that the limitation period had not expired would (save in exceptional circumstances) be determinative against striking out in a case in which there was no allegation of contumelious conduct was inapplicable - or, at least, of much less weight - where there was a serious question whether the cause of action to be asserted in any new action would be statute-barred if new proceedings were commenced. "In such a case the interests of justice might be best served by dismissing the action and leaving the party whose action has been struck out to bring fresh proceedings if he chooses to do so", and the reference to another decision of this Court, Barclays Bank plc v Miller [1990] 1 WLR 343. Further, the fact that the limitation period had not expired was of less (if any) significance in a case where the proceedings were being struck out on the basis of abuse of process.
47. In applying the authorities to the facts before them in the first action, the Court said this, at [1998] 1 WLR 1426, 1433H-1434B:
"The previous authority which is closest to the bank case is the decision of this court in Barclays Bank Plc v Miller [1990] 1 WLR 343. Sir Ronald Waterhouse distinguished Miller's case because if fresh proceedings were commenced, he took the view that the bank would succeed. There was not the same uncertainty as to the outcome of the fresh proceedings as there was said to be in Barclays Bank Plc v Miller.
Was the judge right in adopting this approach? We do not think so, for reasons advanced by Mr Strachan on behalf of Mr and Mrs Ashton."
The Court set out those reasons at pages 1434B-1435D. It is, I think, sufficient to summarise them:
(1) There was no dispute that, in relation to the only cause of action pleaded by the bank, any fresh proceedings would be statute barred. When considering whether or not to apply to strike out a claim on the basis of delay, the defendant is entitled to assume that, normally, the court will determine that question on the basis of the cause of action which has been pleaded.
(2) In seeking to enforce their rights in a mortgage action (by sale or foreclosure) the bank would be taking a wholly different course from that which it had chosen to take thus far and it was inappropriate to take into account possibilities of this sort in determining what should be the outcome of the very different action which the bank had relied on so far.
(3) If the existing action were dismissed, Mr and Mrs Ashton would have a number of defences to an action based on the covenant contained in the mortgage: (a) that the statute-barred claim under the guarantee would not be a "liability" within the covenant in the mortgage; (b) that it would not be open to the bank to rely on a cause of action in the second action which it chose not to advance in the first action - "a plaintiff should bring forward at the outset his whole case"; (c) that the bank would not be able to recover in the second action any interest in relation to which six years had expired from the date upon which it became due prior to the commencement of the action - see section 20(5) of the Limitation Act 1980 and (d) that the Ashtons would be entitled to their costs of the first action which the bank would have to pay before it could bring a second action. These were defences which could not be dismissed out of hand; and the court should not, in deciding whether to strike out the first action be required to explore issues which needed careful examination.
48. Those reasons attracted this Court in the first action; and led it to the view that Sir Ronald Waterhouse had been wrong to dismiss the application to strike out on the basis that the Ashtons could obtain no benefit from the order which they sought. In the events which have happened, the point under section 20(5) of the Limitation Act 1980 has been conceded by the Bank; and the Ashtons' costs of the first action have been paid. The defences identified under (a) and (b) of head (3) have been determined against the Ashtons by the judge in the present action.
49. It is, perhaps, easier to see why this Court held that Sir Ronald Waterhouse had been wrong to dismiss the application to strike out the first action, for the reason that he gave, than it is to see why (if he were wrong on the "no benefit" point) it was an application which should succeed. Sir Ronald Waterhouse had approached the application on the basis that it was for the applicant to establish the two elements under head (2) of Lord Diplock's formulation - that is to say (a) inordinate and inexcusable delay and (b) a substantial risk to a fair trial or serious prejudice. The first of those elements was not really in issue - as the judge pointed out at page 7G-H in the transcript of his judgment. The judge summarised the applicants' arguments on element (b) at pages 4E-7F. But he reached no conclusion on the question whether the risks to a fair trial that the applicants had identified were substantial, or on the question whether the prejudice which they alleged was serious. The reason why he did not find it necessary to do so was that he was persuaded, even if element (b) were otherwise satisfied, striking out would serve no purpose. The applicants had suffered no prejudice by the delay because the Bank was still within the twelve year period applicable to its claims under the legal charge. The real prejudice was caused by the existence of the legal charge - which fettered their ability to fund other business ventures or to move house - not by the Bank's delay in prosecuting the action.
50. Nevertheless, this Court took the view that element (b) had been established before the judge. The Court said this, at [1998] 1 WLR 1426, 1430E-G:
"Mr and Mrs Ashton's defence turned substantially on oral evidence and the judge records that it is conceded by the plaintiff that the passage of time may have affected their recollection of events and this would impinge upon their oral evidence. But he drew attention to the fact that many important matters were recorded in correspondence and it is part of the Ashtons' case that the proceedings against them should have been deferred until 1994 because of an undertaking they have been given. It was however, on the basis that a fresh action could be brought by the plaintiffs based on the mortgage which could not be statute barred that the judge dismissed the defendants' application. By inference it appears that the judge would have come to a different decision, because of the anxiety to which the Ashtons have been subjected and their dimming recollection, if a fresh action could not have been brought."
51. In my view it is correct to say, as counsel for the Bank has contended before us, that this Court took the view that the application in the first action should be allowed on the ground that it fell within head (2) of Lord Diplock's formulation in Birkett v James; and not on the basis that the Bank's conduct should be treated (in the context of the application before them) as an abuse of process. Nevertheless, it is clear enough that the Court did regard the practice of issuing proceedings which there was no immediate intention to pursue - which had occurred in the present case - as unacceptable. The Court said this, at page 1437B-D:
"It has been the unofficial practice of banks and others who are faced with a multitude of debtors from whom they are seeking to recover moneys to initiate a great many actions and then select which of those proceedings to pursue at any particular time. This practice should cease in so far as it is taking place without the consent of the court or other parties. If there is good reason for doing so the court can make the appropriate directions. Whereas hitherto it may have been arguable that for a party on its own initiative to, in effect, "warehouse" proceedings until it is convenient to pursue them does not constitute an abuse of process, when hereafter this happens this will no longer be the practice. It leads to stale proceedings which bring the litigation process into disrespect."
Should the present action be struck out
52. In my view, for the reasons which I have sought to give, it is open to this Court to strike out the claim for payment made in the present action. That is a claim which, in substance, is indistinguishable from the claim for payment made in the first action. If that claim stood alone it could be said with force that to seek to pursue it in a second action when it could and should have been pursued, properly and in compliance with the Rules of Court, in the first action is an abuse of process. It is an abuse because it is a misuse of the court's limited resources. Resources which could be used for the resolution of disputes between other parties will (if the second action proceeds) have to be used to allow the Bank a "second bite at the cherry". That is an unnecessary and wasteful use of those resources. The Bank ought to have made proper use of the opportunity provided by the first action to resolve its dispute in relation to the claim for payment.
53. But the claim for payment does not stand alone. It is conjoined with claims to enforce the security under the legal charge. It is important to keep in mind that, by striking out the claim for payment, the court does not extinguish the underlying debt. Nor, of course, is the underlying debt extinguished by the expiry of a limitation period. The debt (if it exists) remains secured on the mortgaged property. I can see no basis on which the claims to enforce the security under the legal charge can be struck out on the grounds of abuse of process. Those claims were not made in the first action; and, for the reasons which I have already given, there was no reason why they should have been.
54. The Bank does not need to establish its claim for payment in order to obtain an order for possession. It is entitled to possession by virtue of its legal estate; subject to the court's powers under section 36 of the Administration of Justice Act 1970 - in a case to which that section applies. The defence to the claim for possession - and to the claims for the appointment of a receiver, for sale and foreclosure - is that the mortgage ought to be discharged on the basis that there is no debt. That, also, is the basis of the Ashtons' counterclaim. The effect, as it seems to me, is that the issue whether or not there is a debt secured by the legal charge will have to be resolved whether or not the claim for payment under the covenant is struck out. That issue will have to be fought on the claim for possession; it will have to be fought on the counterclaim if Mr and Mrs Ashton are to achieve their objective of freeing their property from the fetter of the mortgage. That, of course, is an objective which they could have pursued at any time by pursuing their counterclaim, either in the first action or in the present action. If they are prejudiced by delay, the delay in pursuing the counterclaim to obtain the discharge of the mortgage is delay for which they must bear responsibility.
55. If the issue whether or not there is a debt secured by the legal charge will have to be resolved in litigation in any event, then the need to have regard to the appropriate allocation of resources as between the litigation between these parties and litigation between other parties has little weight. Whether or not the claim for payment is struck out makes little or no difference to the resources which will be needed in relation to the litigation between these parties.
56. I have considered whether the claim for payment should be struck out, nevertheless, in order mark the court's disapproval of the delay that occurred in the prosecution of the first action. There would, or might, be some benefit to the Ashtons in that course; in that the Bank would not then obtain a money judgment on which to found a petition for bankruptcy. It would be unable to recover more than the value of its security. But I am satisfied that to strike out the claim for payment on that basis would be a wrong exercise of discretion in the present case. It would, I think, be seen as a further punishment inflicted on the Bank for a course of conduct which, although the subject of disapproval by this Court in the first action, was not then stigmatised as an abuse; in circumstances in which it was said by this Court that the new approach would not be applied retrospectively to delays which had already occurred.
Article 6(1) of the European Convention on Human Rights
57. It was submitted that to refuse to strike out the these proceedings would be to infringe the Ashton's rights under Article 6(1) of the European Convention on Human Rights, soon to become of direct application as part of domestic law under the Human Rights Act 1998. Article 6(1) confers a right, in the determination of civil rights and obligations, to a fair hearing within a reasonable time. In my view, the Article provides the appellants with no assistance in the present case. I have explained that there has been no impediment in the way of a trial, at any time since the commencement of the first action, of the Ashtons' claim to have the legal charge discharged. The reason why that claim has not been tried is because the Ashtons have chosen not to pursue it. They have chosen, no doubt for reasons which have seemed sound, to leave that claim until after the question whether or not the Bank's claim for payment should be struck out has been determined. But, as I have pointed out, striking out of the payment claim would not have the effect of extinguishing the debt. There was, as it seems to me, never any realistic possibility that, even if the Ashtons were successful in having the payment claim struck out, they would not have to pursue their own claim for the discharge of the legal charge to trial. The court has placed no impediment in their way in that respect. The reason why the payment claim in the present proceedings should not be struck out is that the question whether there is a debt secured by the legal charge will have to be decided in any event. I am not persuaded that that course involves any infringement of the Ashtons' rights under Article 6(1). Indeed, as it seems to me, they would have more solid grounds for complaint if the court had declined to allow their own claim to proceed, leaving the question whether or not their home is encumbered by the legal charge unresolved.
Conclusion
58. For those reasons I would dismiss this appeal.
MR JUSTICE RATTEE:
58. I agree.

Order: Appeal Dismissed with costs subject to detailed assessment; permission to appeal to House of Lords refused.
(Order does not form part of the approved judgment)


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