“Warehoused” case against law firm struck out

High Court: Claimant had no intention of pursuing claim

The High Court has struck out a professional negligence claim against a London law firm that it decided had been “warehoused”.

His Honour Judge Pearce, sitting as a High Court judge, said the claimant had failed to explain why he had done “little more than the minimum necessary to keep the claim alive” since issuing it against Quastell Midgen (which operates as Quastells) more than three years ago.

Saudi Arabian businessman Ali Fozan Alfozan accused a Mr Al-Gaith, whom he employed, and Husmaldean Alrasheed, to whom he was introduced, of conspiring to defraud him in the course of a series of London property transactions between 2013 to 2015.

Quastells acted for Mr Alfozan; the firm said he authorised Mr Al-Gaith to give it instructions on his behalf.

In December 2018, Mr Alfozan issued a conspiracy claim against Mr Alrasheed and a claim against the law firm for negligence and/or breach of trust in facilitating the fraud and/or failing to prevent it. “The claim is hotly contested on the merits,” the judge said.

In May 2021, Miss Julia Dias QC, sitting as a deputy High Court judge, struck out the claim against Mr Alrasheed for abuse of process due Mr Alfozan’s inaction. Before HHJ Pearce, Quastells sought the same.

The judge observed that the claimant had “throughout done little more than the minimum necessary to keep the claim alive”.

This included issuing the claim close to the expiry of the limitation period; no pre-action correspondence; serving the claim at the very end of the period of the validity of the claim form; taking 17 months to supply draft amended particulars of claim after admitting they needed amending; and failing to respond with evidence to the strike-out application until very shortly before it was heard.

This all “cries out for some explanation”, HHJ Pearce said – but none was forthcoming.

“In my judgment, the chronology of this litigation strongly points to the conclusion that the claimant is guilty of warehousing in that this claim was issued at a time when the claimant had no current intention of pursuing it.

“This is demonstrated by the fact that it was issued belatedly, that the claimant then agreed to a stay during which time he took no meaningful steps to progress the claim and has thereafter only taken steps to do so when pressed by [Quastells] or (latterly) when threatened with the claim being struck out.

“It is now more than three years since the claim was issued and the second defendant is still not in receipt of particulars of claim which adequately set out the case against it.”

HHJ Pearce added that, while Miss Dias’s ruling did not help him decide the application, as “each case must turn on its own facts”, it was relevant to the exercise of the discretion.

“A party who shows a pattern of abusing the process of the court is more likely to be one against whom the ultimate power of strike out is exercised because of their tendency to waste the time and resources of others on litigation which is not being properly conducted,” he observed.

Further, with the claim against “the greater alleged wrongdoer” struck out, it left the law firm facing the prospect of defending itself “without the necessary involvement of the first defendant, who might have a strong defence that he was not guilty of wrongdoing at all”.

Though professional advisors might often find themselves accused of failing to protect a client against the wrongful acts of a third party without that third party joined in the action, here the absence of the third party was caused by Mr Alfozan’s abuse of the process.

Even now, HHJ Pearce stressed, the claim was not in an adequate state to proceed.

“In those circumstances, to permit the second defendant to continue to be exposed to a liability that requires it to commit time and cost to defending itself is not consistent with the overriding objective.”

Mr Alfozan’s neglect of the case “leads to the conclusion that he has forfeited the usual right to have the court determine his case on the merits”.

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