Hateley v Morris & Ors [2004] EWHC 252 (Ch) (06 February 2004)

Neutral Citation Number: [2004] EWHC 252 (Ch) Case No: 1246 of 2000 IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION Royal Courts of Justice Strand, London, WC2A 2LL 6th February 2004 B e f o r e : THE HONOURABLE MR JUSTICE MANN ____________________ Between: BRIAN PETER HATELEY Petitioner - and - GEOFFREY VERNON MORRIS SAMIR KUMAR THAKER PAUL IAN TURNER JOHN WEBB LEGAL COSTS NEGOTIATORS LIMITED LEGAL COSTS NEGOTIATORS LIMITED PTY Respondents Respondents/ Part 20 Claimants ____________________ Jane Giret Q. C. (instructed by Lees Lloyd Whitley) for the Petitioner Elizabeth Gloster Q. C. (instructed by Halliwell Landau) for the Respondents Hearing dates : 22 and 23 January 2003 ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © Mr Justice Mann : This is an appeal from a decision of Mr Registrar Jaques given on 23 July 2003 in which, on the application of the Respondents to the petition in this matter other than the Second Respondent, he struck out the petition (which is a Section 459 petition) on the ground that the petition was an abuse of the process of the court. This appeal is brought as a result of an order of Hart J giving permission. The abuse, as the Registrar found it, had essentially two elements. The first was an element of delay, or want of prosecution, and the second was what he found to be the intention of the petitioner, Mr Hateley not to bring the petition to a final hearing. The Factual Background The company, Legal Costs Negotiators Limited, which is at the heart of this matter, was incorporated on 22 September 1995. Its principal business was, as I understand it, negotiating costs on behalf of insurance companies. The shareholders in the company were Mr Hateley and the first three Respondents, namely Mr Morris, Mr Thaker and Mr Turner. They each held 25% of the shares. It is admitted that the company operated as a quasi-partnership. In June 1997 the other three shareholders procured the summary dismissal of Mr Hateley from his employment with the company, and it is alleged that he was forced to resign as a director the next month in the face of a proposal to summon a meeting to remove him. It is said that from 6 June 1997 Mr Hateley has been wrongfully excluded from the management of the company contrary to the arrangement between the shareholders and contrary to the nature of the admitted quasi-partnership. Thereafter the other three shareholders appointed the Fourth Respondent, Mr John Webb, to be a director of the company. The Fifth Respondent to these proceedings is the company itself and the Sixth Respondent is an Australian company in whose favour it is alleged the first four Respondents have wrongfully diverted business opportunities. In September 1997 Messrs Morris, Thaker and Turner presented their own petition seeking relief under Section 459 of the Companies Act 1985 on the grounds that the affairs of the company had been conducted unfairly by Mr Hateley. Eventually that petition was struck out, though the proceedings took until February 1999 and a trip to the Court of Appeal to resolve. Permission to Appeal to the House of Lords was finally refused on 5 July 1999. Thereafter there was, I am told, some attempt to resolve differences by discussion, but no settlement was reached. On 25 February 2000 Mr Hateley presented his own Section 459 petition, which is the petition which found this proceedings. It is necessary for me to describe shortly the complaints made and the relief sought. The petition is based on the sort of matters which have become familiar territory for proceedings of this kind. There is a complaint that he has been deprived of sharing in the company's profits because dividends are not declared and the directors (that is to say the first four Respondents) have paid themselves significant remuneration and large sums by way of pension contributions. Mr Hateley therefore claims that he is excluded both from active participation and from any financial benefit. Two of the Respondents are said to have set up competing businesses (details do not matter), and there is a complaint that the Respondents, or some of them, have set up and promoted the Sixth Respondent (the Australian company). Then it is said that the company's staff have not been properly controlled and that company facilities (and particularly staff services) have been used for the competing businesses; and there are some further allegations of the wrongful dissipation of company funds running into sums well into 6 figures. I have already mentioned the allegations of the wrongful diversion of business into the Australian company. I have not set out all the allegations in detail; it is not necessary for the purposes of this judgment. The relief claimed in the original petition was as follows: i. An order for the appointment of a receiver pending the hearing of the petition. This has not been pursued. ii. An order that the first four Respondents transfer their shares in the Australian Respondent to the company. iii. An account of the profits made by the Australian company and an order that the amount of those profits be paid by the Australian company, or alternatively by the individual Respondents, to the company. iv. An enquiry as to what monies belonging to the company have been used to fund the Australian company. v. A declaration that various loans and distributions referred to were made in breach of duty. vi. An order authorising civil proceedings relating to one or more of the alleged wrong-doings. vii. Relevant adjustments to the company's accounts. viii. An order for the payment of dividends for the years since the removal of Mr Hateley from the company or an enquiry as to what dividends ought to have been declared; and a declaration that Mr Hateley is entitled to receive annual dividends. ix. An order that Mr Hateley be paid a sum equivalent to reasonable director's remuneration for the period since his removal. x. An enquiry as to what losses have been incurred by the company as a result of the activities of the competing businesses and the provision of facilities and services for those businesses. xi. An account of the profits of the competing businesses. xii. An enquiry as to the losses sustained by the company as a result of the alleged act or omissions of the directors. xiii. An order that the individual Respondents wind up the competing businesses, and an order that the individual Respondents cease working for such businesses. xiv. Various pieces of ancillary relief. I have not set out the prayer verbatim. It is long and involved. For present purposes two things should be noted. The first is that, in its original form, it did not contain any provision that Mr Hateley should be entitled to buy out his co-shareholders, or that they should be obliged to buy him out. Second, it contains relief going way beyond that more familiar form of relief. The first of those points was changed when, pursuant to an order of Mr Registrar Buckley dated 24 March 2000, an additional paragraph was added to the petition seeking an order that the First, Second and Third Respondents should buy out Mr Hateley's shareholding. The Respondent's stoutly dispute the allegations made against them and they have filed a very significant defence; that was done on 30 May 2000. It contains its own counterclaim for financial compensation based on various alleged wrongdoing by Mr Hateley such as the retention of a car, various administrative defaults and various sums paid to or received by him which should not have been received. In total those counterclaims run to some tens of thousands of pounds, but they are nothing like as large as the sums which Mr Hateley says the other Respondents should pay. It is now necessary to set out the rest of the Chronology relating to these proceedings. It is as follows: 25th February 2000 Petition presented 24th March 2000 First Directions hearing: leave to amend petition, order for Points of Defence to be served by 19th May 2000 30th May 2000 Points of Defence served, together with Part 20 claim 16th June 2000 Directions hearing: directions given for serving Reply and Defence to Part 20 claim, disclosure, exchange of witness statements 20th July 2000 Time for service of Reply and Defence to Part 20 claim extended to 7th August 2000 7th August 2000 Reply and Defence to Part 20 Claim served 6th October 2000 Directions hearing, further orders regarding disclosure; exchange of witness statements; and direction to parties to apply for case management conference on or after 22nd December 2000 17th July 2001 First application to strike out petition 11th September 2001 "No order" made on strike out application. Further directions given - Disclosure by 26th October 2001; exchange of witness statements 30th November 2001 and parties to apply for CMC to be held after 7th December 2001. If the petitioner did not comply with the diclosure order in time, petition to stand dismissed provided that the respondents complied with their disclosure and witness statement obligations. 26th October 2001 Mr. Hateley served his list of documents: Respondents serve what is identified as a draft list of documents. 14th November 2001 Mr. Hateley's solicitors write confirming parties' agreement that Respondents would serve list by 30th November 2001 December 2001 Mediation attempted 9th April 2002 CMC fixed for 9th April 2002, but vacated by the Court of its own motion after contact from Mr Thaker's new solicitors. 8th January 2003 Respondents' application to strike out The Application to strike out was heard by Registrar Jaques on 22 May 2003 and he delivered Judgment on 23 July 2003. The following additional matters have to be taken into account in understanding the background to this application. i. There was evidence that in August 2002 the clerk to counsel acting for Mr Hateley made enquiries on the Clerk to the junior counsel who had hitherto acted for the other Respondents in order to re-fix the CMC. He was told that the respondents' counsel had no instructions in that respect. No further attempt was made by any party to re-fix the CMC. Mr Hateley accepts that the CMC ought to have been re-fixed, but his legal representatives took no steps towards doing so. His leading counsel's skeleton argument lodged for the purposes of this appeal seems to accept that he had somehow undertaken the responsibility for doing this, but so far as it did that concession was withdrawn. The significance of this will appear below. ii. It is apparent from the above chronology that this is the second application to strike out for want of prosecution. The first came before Mr Registrar James on 11 September 2001. However, although the full circumstances and basis of this application as it was eventually advanced do not appear on the evidence before me, it appears that the decision on that application cannot simply be viewed as one in which the view was taken that Mr Hateley was responsible for the delay that had occurred prior to that hearing, or, on the other hand that he was entirely blameless. I mention this because part of the case made against him in the appeal made before me is that this is the second time that he has faced an application for want of prosecution because of his own delay and that that should weigh heavily in the scales against him. While it appears that the first application, as launched, was an application to strike out the whole of the petition, by the time the matter arrived before Mr Registrar James it had been modified into a claim to strike out all the heads of relief other than the buy-out claim. The order made on that occasion by the Registrar was that there be "no order " save for the directions orders that he made. The provided for the automatic striking out of the whole of the petition unless Mr Hateley complied with the disclosure obligations thereby imposed, provided that the Respondents themselves complied with their obligations for disclosure and the exchange of witness statements. The costs order was that costs be in the Petition. While I do not have a copy of the Judgment of the Registrar on that occasion, I think that I can infer from those orders that, while he obviously thought that the petitioner bore some blame for the delay that had occurred, the Respondents were themselves not wholly blameless since they themselves had not complied with the timetabling hitherto. I therefore do not think that I can treat this first application as being one in which a blameworthy petitioner has been let off the hook in the discretion of the court in a manner which he could expect to serve as a final warning and which would be unlikely to happen again, although obviously the Registrar attributed a considerable amount of blameworthiness to the petitioner. iii. Shortly before the hearing of the present application to strike out before the Registrar it seems that the Respondents got wind of the fact that Mr Hateley had acquired Mr Thaker's 25% shareholding. They knew little or no detail of this, although there had been some correspondence at the beginning of 2003 about a possible discontinuance of the proceedings against Mr Thaker. On 19 May 2003 Mr Ian Austin, a partner in the firm acting for the Respondents (other than Mr Thaker, who by this time had become separately represented) signed a further witness statement dealing, inter alia, with this matter, pointing out that his clients knew little or nothing about the transfer other than that it had apparently occurred and referring to a concurrent witness statement supporting an application for disclosure of all documents relating to that transfer. That application was listed for hearing before the Registrar at the same time as the strike-out application, but it was ordered that it be dealt with second so that (as indeed happened) if the strike out application succeeded it would not need to be dealt with. The witness statement supporting the application for disclosure, dated 14 May 2003, sought to rely on this transfer as being an action which was entirely inconsistent with his petition and suggesting that it demonstrated further that the current petition was an abuse of the process. There was a dispute before me as to whether, on the hearing in front of the Registrar, it was accepted that should it be necessary to do so Mr Hateley should be entitled to put in evidence dealing with this particular point. In the event, the disclosure application was not dealt with. At the opening of this appeal Miss Gloster QC, acting for the Respondents, sought permission to adduce further evidence in the form of another witness statement from Mr Austin (her Instructing Solicitor) exhibiting a claim form with Particulars of Claim annexed, dated 16 December 2003, in which Mr Thaker pleads an agreement on his part to sell his shares to Mr Hateley of January 2002 and claiming that Mr Hateley failed to pay for the shares. Mr Thaker apparently executed a declaration of trust in Mr Hateley's favour. Miss Gloster sought to introduce this evidence, which obviously only came into existence after the hearing before the Registrar in May, as demonstrating first the existence of the transfer, second its date, third its terms and fourth that the allegations contained therein showed that Mr Hateley was indulging in mischief-making on several fronts. I allowed the evidence to be adduced but only so as to demonstrate the date of the arrangement (which was not hitherto known to the Respondents other than Mr Thaker), the general nature of its term (having allowed Miss Giret Q. C, Counsel for Mr Hateley, the opportunity to point out any significant errors or omissions) but nothing more. It seemed to me, and I so held, that it was inconceivable that this sort of evidence could demonstrate any propensity towards mischief making for purposes of an application or an appeal such as this; no Defence had yet been put in, and in any event that sort of material would be quite insufficient to support the sort of findings on this front that Miss Gloster was apparently going to invite me to make. My having so indicated, Miss Gloster did not thereafter rely on this evidence for that particular purpose. The Decision of the Registrar The application in front of the Registrar had, in effect, two limbs. The first was a claim that Mr Hateley was in breach of Mr Registrar James' order as to disclosure so that in effect that petition stood struck out. Mr Registrar Jaques looked at the facts and held that they did not justify this basis of the application and he declined to strike out on that basis. Indeed, he found that the respondents were themselves in breach of their disclosure obligations. There has been no challenge from that decision. The second was the claim to strike out for want of prosecution and for abuse of the process - I think that the argument somewhat ran into each other and I will not, for present purposes, distinguish between them. It is necessary for me to set out the Registrar's findings, which appear in paragraph 16 of his written Judgment. He there held as follows: "In my judgment, on the facts before me, the petition ought to be struck out under CPR 3.4(2) as an abuse of the court's process. In reaching that conclusion I have taken into account the following matters: 1. The fact that the petition relates to events that took place over 6 years ago and that the recollection of the witnesses to those events must by now have become irretrievably dimmed by the passage of time. Miss Giret submitted that there was no evidence that the recollection of the witnesses had become irretrievably dimmed, but, with respect to her, you do not need evidence to prove that which is self-evident. The present case differs from the Taylor case, which was heavily relied on by Miss Giret, in that in that case there were contemporary written statements made to the police by witnesses to the accident, which resulted in the litigation, the dismissal of which was being sought, whereas in the present case there is no suggestion that contemporary written statements exist concerning the events that led to the petition before me; 2. The fact that the petitioner did not present his petition to the court until February 2000, some 2 ½ years after the event to which the petition relates. His explanation for the delay, namely that he was engaged in defending the petition brought against him by the 1 st and 2 nd and 3 rd Respondents, is no excuse at all for his failure to present his own petition in 1997, when he was excluded from the quasi-partnership, which ran the above company. There was absolutely nothing to stop him presenting his own petition, or cross-petitioning, in 1997; 3. The fact that he failed to re-fix the case management conference at any time after April 2002, when the case management conference fixed for that month was cancelled by the court. He agreed, through his solicitors, that he would be responsible for doing so, but to this day he has not done so; 4. The fact that the petitioner, through his solicitors, has given no explanation for his failure to do anything to progress the proceedings in 2002. In his witness statement dated 2 March 2003, in response to Mr Austin's witness statement, Mr Anthony John Marriott, the petitioner's solicitor, says, rather lamely , that both parties were equally to blame for the delay, but that overlooks the fact, already noted, that the petitioner had the carriage of the proceedings; 5. The fact that the petitioner has recently acquired the 2 nd Respondent's 25% shareholding in the above company, which makes a nonsense of his claim in his petition – his principal claim – that the 1 st , 2 nd and 3 rd Respondents be ordered to acquire his own 25% shareholding therein. I have already indicated that the petitioner's case is that this fact is not relevant to the principal relief that he seeks by his petition, but, with respect, it has everything to do with it, in my view. I shall return to this point briefly a little later in this judgment." That, in essence, is the reasoning appealed from the exercise of a discretion, it is common ground that in order for the appeal to succeed I must first find that the Registrar erred in some way so as to entitle me to reconsider the matter afresh. It is only if I do so that it is then possible for me to go on and consider the exercise of the jurisdiction afresh. Did the Registrar Err The first question is whether the Registrar erred in such a way as to enable the point to be re-opened. In my view he did. There are two parts of his reasoning which demonstrate that he took factors into account that he should not have taken into account, one them being perhaps of greater significance than the other. However, separately or cumulatively they entitle me to consider the matter afresh. The more significant matter is that appearing in sub-paragraph (5) of his reasoning. In that paragraph he held that the then recent acquisition of Mr Thaker's shares made a nonsense of what the Registrar took to be the principal claim in the petition. I can quite see why, if it were the case that the buy-out claim was the principal claim, with all other claims being subsidiary to that, it would be hard to see how that claim could stand once Mr Hateley had in effect doubled his shareholding. However, that is not a proper analysis of the petition. I have set out above the other claims made in the petition; indeed they were the only claim in the petition when it was first presented. I do not consider that they are merely subsidiary to the buy-out claim. Even if the buy-out claim were itself struck out they would retain an independent life. They are significant claims. It is in my view not possible to categorise the buy-out claim as the principal claim in the manner suggested by the Registrar. It seems to me that the Registrar gave this point considerable weight, and in doing so he introduced a factor which was erroneous. The other, probably less significant, factor is that referred to in paragraph (3) of his reasoning. In that paragraph he relies on the fact that Mr Hateley's solicitors undertook to refix the CMC after it had been vacated by the court of its own motion in April 2003. The evidence does not indicate any clear, express assumption of this responsibility. In theory, it would be open to any party to have taken steps to restore the CMC, although I accept that one would normally expect a petitioner to do so, and the mere fact that he had not done so would have been a justifiable complaint. However, the Registrar seems to have gone further and to have given additional weight to this factor by relying on an express assumption of responsibility which does not seem to have existed. In this respect he may have been confusing the position in relation to the first appointment of the CMC on 9 April 2003; the evidence does indeed demonstrate that Mr Hateley's solicitors took upon themselves the responsibility of fixing that (a responsibility which they discharged). This may be part of the source of the confusion. Be that as it may, the Registrar gave this point an emphasis which it did not quite deserve. I have wondered whether or not I would have treated that, by itself, as being sufficient to impeach his decision is not clear, but it is in any event an additional factor, though of much less weight than what he said about Mr Hateley's buying Mr Thaker's shareholding. The Principles to be Applied The source of the jurisdiction to grant the relief sought by the Respondents (other than Mr Thaker) is to be found in the following provisions of the CPR: 3.1(2) The Court may … (m) Take any other step or make any other order for the purpose of managing the case and furthering the overriding objective. 3.4 (2) The court may strike out a statement of case if it appears to the court… (b) That the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings … The inherent jurisdiction of the court is also preserved by CPR 3.4 (5). In terms of authority, there are a number of themdealing with the court's attitude to delay. Prior to the introduction of the CPR, a body of case law had built up on the question of the effect of delay and striking out for want of prosecution. The authorities now demonstrate that, by and large, that jurisprudence no longer applies. The scope for delay ought to be less now that the court indulges in active case management, and: "It is clear that the court is now able to adopt a much more flexible approach to the question of striking out for delay or non-compliance with an order than was possible under the somewhat rigid rules of the old law. (Per Stuart-Smith L/J in Walsh –v- Misseldine , CAT, 29 th February 2000." However, that does not mean that the sort of factors that came into play under the old jurisprudence are completely irrelevant. As Stuart-Smith L. J. went on to observe: "But some of the considerations which were relevant before are obviously relevant now. For example the length of, explanation for and responsibility for the delay; whether the Defendant has suffered prejudice as a result and, if so whether it can be compensated for by some order relating to costs or interest or it is so serious that it would be unjust to the Defendant to require the case to be tried. Moreover, the delay may be such that it is no longer possible to have a fair trial." In Purdy -v-Cambran, Court of Appeal, 17 th September 1999, May L. J. said : "The Civil Procedure Rules are a new procedural code with an overriding objective enabling the court to deal with cases justly in accordance with considerations which include those to be found in rule 1.1(2)…. When a court is considering, in a case to be decided under the Civil Procedure Rules, whether or not it is just in accordance with the overriding objective to strike out a claim, it is not necessary or appropriate to analyse that question by reference to the rigid and overloaded structure which a large body of decision under the former rules had constructed." He then went on to say: "The effect of [certain cases that he had referred to] is that under the new procedural code of the Civil Procedure Rules, the court takes into account all relevant circumstances and, in deciding what order to make, makes a broad judgement after considering available possibilities. There are no hard and fast theoretical circumstances in which the court will strike out a claim or decline to do so. The decision depends on the justice in all the circumstances of the individual case." In Annodeus Entertainment Limited –v- Gibson The Times, 3 rd March 2000 (of which Judgment I have seen a transcript), Neuberger J analysed the principles which now govern applications to strike out a claim for want of prosecution. He listed nine matters to be taken into account. Having put on one side the old law, at point 7 he pointed out the more flexible approach which the courts now have available to them, and at point 8 he said: "…In light of general principle and the overriding objective… the sanction, if any, to be invoked by the court to deal with a particular case of delay should be proportionate." And he then went on: "Ninthly, it appears to me that it is normally relevant to consider the following factors. First the length of delay; secondly any excuses put forward for the delay; thirdly, the degree to which the Claimant has failed to observe the rules of court or any court order; fourthly, the prejudice caused to the Defendant by the delay; Fifthly, the effect of the delay on trial; sixthly, the effect of the delay on other litigants and other proceedings; seventhly, the extent, if any to which the Defendant can be said to have contributed to the delay; eighthly, the conduct of the Claimant and the Defendant in relation to the action; ninthly, other special factors of relevance in the particular case." The need for proportionality was also pointed out by the Court of Appeal in Axa Insurance Co Limited –v- Swire Fraser Limited, th December 1999. One additional factor, which in my view, comes into play in the present case is a point made in the Judgment of Clarke L. J. in Asiansky Television Plc –v- Bayer-Rosin th November 2001. In the course of his judgment he said this: "48. It is no longer appropriate for the Defendants to let sleeping dogs lie: cf Allen –ve McAlpine (Sir Alfred) & Sons [1968] 2 QB 229. A Defendant cannot let time go by without taking action and then later rely upon the subsequent delay as amounting to prejudice and say that the prejudice caused by the delay is entirely the fault of the Claimant. Such an approach would in my judgment be contrary to the ethos underlying the CPR, quite apart from being contrary to paragraph 2.7 of the Part 23 Direction. One of the principles underlying the CPR is co-operation between the parties." Other authorities were cited to me in the course of the hearing, but the above are the cases which, in my view, set out the approach that I should adopt in determining this case. However, before leaving the authorities there is one further case that I should mention. In Taylor –v- Anderson (unreported, 7 th December 2002) a two judge Court of Appeal comprising Chadwick L. J. and Sir Dennis Henry had to consider a personal injury case in which there had been a considerable amount of delay over a considerable period of years. In the course of his judgment, Chadwick L. J. said, at paragraph 8: "8. The District Judge directed herself, correctly, that a question which she had to consider was whether – given the delay which had occurred – it was possible to have a fair trial of the action." And he then went on to say: "11. It is accepted on behalf of the Defendants, however, in this court (and, if I may say so, properly accepted) that, on the present state of the authorities, including authorities in this court, these proceedings ought not to be struck out unless an unequivocal affirmative answer can be given to the question: is there a substantial risk that a fair trial is possible. Tested by that criteria, the District Judge's conclusion that there was considerable doubt about whether there could be a fair trial – or that it was unlikely that there could now be a fair trial – does not, in my view, justify a strike-out. What is required is not 'considerable doubt' or recognition that 'it was unlikely'; but a substantial risk of the impossibility of a fair trial. It is that risk which the other parties should not be required to accept; in circumstances where the risk has been created by the conduct or inactivity of the Claimant." That passage was cited by the Registrar in this case in his judgment although he did not positively indicate what reliance he placed upon it. Without, I think, expressly relying on this passage herself (though she would doubtless wish to pray it in aid) Miss Giret Q. C. submitted to me, save in a flagrant abuse sort of case, the principle apparently expressed by Chadwick L. J. ought to apply, so that if there was no substantial risk that a fair trial was impossible then the petition ought to survive. Miss Gloster's principal submission on this point was that Chadwick L. J's remark ought to be treated as per incuriam because his judgment does not contain any reference to the other authorities which I have referred to above, all or nearly all of which were decided before the Taylor case. In my view, Chadwick L. J's remarks, taken by themselves, would be inconsistent with the earlier pronouncements and the greater flexibility afforded to the court since the introduction of the CPR's. A number of these cases have come before Chadwick L. J. in the Court of Appeal, and it is inconceivable that he should be taken as introducing as restrictive a factor as his remarks, taken by themselves, suggest. I think that what he was probably doing was focusing on the difference between the various points on the scale at which the risk of an unfair trial might be placed. The application of those principles to the facts Miss Gloster urged the following matters upon me, in support of the Registrar's decision and as factors which she said required the striking out of the petition: (a) The delay that occurred in launching a petition in the first place. There was some 2½ years between the exclusion of Mr Hateley and his petition. During that time Mr Hateley could have brought proceedings. Mr Hateley's efforts at the time were devoted to striking out the petition presented by the now respondents, and if he had a good claim he should have cross-petitioned at the time. There was, she said, an opportunistic holding of his hand to see what came out of the first petition. (b) The first period of delay in this petition, leading up to the first striking out application (which I have identified above). That period started with an attempt to negotiate which failed, but thereafter there was delay for which she says the petitioner was responsible. The order made by the Registrar on the subsequent application was one which demonstrated his disapproval of the conduct of the petitioner because there was an "automatic" striking out provision in default of compliance with his timetable. (c) The second period of delay in the petition, which followed from the failure of the mediation and the vacation of the CMC in April 2002. There was no explanation for this (and she is right about that); merely an apology. (d) The purchase of Mr Thaker's shares. Mr Hateley has been extremely unforthcoming (she said) about the details of this, and such details as have been obtained have come from other sources, such as the statement of case that I admitted in evidence at the opening of this appeal. This purchase is still said to demonstrate that Mr Hateley is not serious about his whole claim, and to make the petition an abuse of the process. (e) There is prejudice to the respondents in having this claim hanging over them for so long, and in raking over the coals of the management of this company since mid-1997. The passage of time will have adversely affected memories and the quality of the evidence. She did not, however, go so far as to suggest that there could not be a fair trial, though she did say that the ability of witnesses to give evidence would be affected. Miss Giret, in submission and through her evidence, submitted that neither those factors, nor any other matter, justified striking out in this case, and relies on the absence of a finding on the part of the Registrar that it would be a proportionate response to do so. It would, in fact, be disproportionate to do so. She accepted the recent period of delay had occurred, and no explanation was volunteered, but an apology was. While her client was blameworthy, so were the respondents, because they could have taken their own steps to restore the CMC vacated on 9 th April. It was, after all, not vacated pursuant to any action of the parties – it was vacated of the court's own motion. According to Mr Marriott (the solicitor with conduct of the matter on behalf of the petitioner) the respondents were farther away from finalisation of witness statements as at the date of that CMC than the petitioner was, and the petitioner had not sat on his hands for the entire period after the date on which it was vacated because attempts had been made to re-fix through counsel's clerk and it was because counsel for the respondents had not instructions that it was not fixed (at least in the first phase of the post-CMC period). If I were otherwise minded to strike out, then Miss Giret had a point arising out of Article 6 of the European Convention on Human Rights. I have not found this an easy decision, but in the end I have concluded that it would not be the right course to strike out this petition. In the light of the history and the conduct of both sides, it would be disproportionate. Among the factors I have in mind are the following: (a) The petitioner has clearly been responsible for delays, and the vigour with which he has pursued the matter has not been impressive. However, the delays, while very significant, have not been huge, particularly when one cuts down the most recent period by the amount of time between 9 th April and the date when an attempt was made to refix and came to nought for want of instructions to counsel. It is not clear precisely how long that period was, but it clearly takes a bite out of that 9 month period. (b) The respondents themselves are not entirely without fault in this matter. The order of Mr Registrar James clearly connotes some sort of default on the part of the respondents for the period up to that date, even if the responsibility of the petitioner might have been greater. (c) I have in mind the passage from Asiansky , set out above, which points out that it is not always appropriate for defendants to let sleeping dogs lie. This was not a case where the next step in the action was something which it was the sole province of the petitioner to carry out. Nor is it a case in which there has been some express order with which the petitioner has failed to comply. The next step required in this petition after 9 th April 2002 was a further CMC. The respondents could themselves have applied to re-fix the date, even though it might be said that the responsibility lay more naturally with the petitioner because it was his petition. They did not do so, and did not indicate which counsel was to be instructed in place of the counsel who had been acting up to that time. The picture would have been very different if the Registrar had been correct in his finding that the petitioner had expressly assumed responsibility for re-fixing, but there is no evidence to support it. The Registrar may have been confusing the pre-9 th April position – in relation to that period the petitioner had indeed said he would fix the date, and he had discharged that responsibility. But he said nothing express once the court had vacated the date. Once it had become apparent to the respondents that the petitioner was not getting on with re-fixing it would have been appropriate for them to have co-operated by reminding the petitioner, or getting on with it themselves (having determined which counsel they were then going to instruct). I do not think that, in the circumstances, it was entirely justifiable for them to adopt the old tactics of waiting to see what happened. (d) While the passage of time will have dimmed recollections, and while some detailed recollection will be appropriate to the issues raised in this petition (including those raised on the Counterclaim), I doubt if any additional damage has been done by the 9 months or so since the abortive CMC. Of course, we are now well beyond that date, but that is because a year has been lost in the striking out procedure. (e) I do not consider that purchase of Mr Thaker's shares by Mr Hateley demonstrates that he does not intend to pursue the petition. I have already pointed out that the petition contains a great number of claims which are capable of operating entirely independently of the share buy-out claim. It may well affect the viability of that buy-out claim, but that is only one paragraph of the extensive prayer. Nor do I not accept Miss Gloster's case that the share purchase is inconsistent with the claims in the petition, for the same reason. For example, some of the prayers in the petition seek monetary relief in relation to activities in the period since Mr Hateley's exclusion (acts in the nature of misfeasance, and failures such as declining to declare dividends). Those heads are not rendered obviously inappropriate by virtue of his recent share purchase. It still remains arguable for Mr Hateley to say "I know I have acquired a greater shareholding in this company, but I still maintain that while I was a minority shareholder the business of the company was carried out in a manner prejudicial to me". That is neither illogical nor improper. (f) Miss Gloster's case is based at least in part on the fact that overall there has been an abuse of the process of the court. In that context I was troubled by the fact that Mr Hateley did not disclose his purchase, or agreement to purchase, the Thaker shares. As will be clear from what I have said above, it seems clear to me that that transaction is obviously relevant to the buy-out provision, and the failure to disclose its existence is perhaps a little surprising. However, the reasons for this have not been gone into in argument and I do not consider that this failure to disclose adds anything, or anything of weight, to the abuse argument. (g) There is a counterclaim in this matter, which will apparently remain live even if I strike out the petition. Striking out the petition will not dispose of the disputes between the parties, since the counterclaim will presumably remain live. While that raises discrete issues, some of the factual background relevant to the petition would have to be litigated on that counterclaim anyway, though the interaction is perhaps limited. (h) I bear in mind the initial period of 2½ years during which Mr Hateley did not petition, and the fact that it is to some extent oppressive for a company and individual respondents to have this sort of petition hanging over them. I accept that those factors (and particularly the former) make it more appropriate for him to progress the present but I do not consider the delay and oppression in this case, even taken with other factors, to be such as to make it fair or proportionate the strike out the petition. In the circumstances, and taking into account all that was said to and read by me in the course of the hearing, I am not prepared to exercise my discretion to strike out. Mr Hateley should take no great comfort from this. He has been guilty of delays, and I think his failure to disclose his share purchase is surprising (though I make it clear that I do not seek to pre-judge the disclosure application which is outstanding in respect of that transaction). I can see why his enthusiasm for the fray might begin to be questioned, and from now on he is going to have to get on with this action if he remains serious about it. To that end I am prepared to make appropriate directions for the speedy restoration of the CMC, the burden of which will be on Mr Hateley, and for such other matters (if any) as counsel wish me to address, and I shall invite counsel to make submissions in this respect. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII