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Abuse of process to issue protective proceedings prior to assignment of the cause of action

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The case of Pickthall v Hill Dickinson (1) and Martindale (2) [2009] EWCA Civ 543 was appealed by the appellant, Hill Dickinson Solicitors, on the question of whether a claim commenced against them by the respondent, Pickthall, should not be struck out as an abuse of process.

Background

Hill Dickinson had acted for Pickthall in the sale of his shares in a company. After completion of the transaction had taken place, an administration order was granted to the purchaser of the company and an injunction was granted against Pickthall preventing him from dealing with the completion monies. Various claims against Pickthall were upheld and he was ordered to pay a sum to the administrators.

Shortly before the expiry of the limitation period as set out under the Limitation Act 1980, Pickthall issued negligence proceedings against Hill Dickinson for the advice given to him in relation to the terms of the share agreement. However, at the time the claim form was issued, the cause of action was vested in the Official Receiver (as Pickthall had been made bankrupt) and it was only at a later stage that the claim was subsequently assigned to Pickthall.

Preliminary Issues

The judge determined that (i) at the date of assignment, the claim was statute barred; (ii) the claim should not be struck out as an abuse of process; (iii) it was, however, necessary to amend the claim form to plead the assignment; and (iv) the Court would exercise its discretion to allow the amendment. Pickthall accepted the limitation point and the necessity to amend to plead the assignment.

The issues which remained to be determined concerned the extent to which it was an abuse of process for a claimant to commence proceedings without having the relevant cause of action vested in him i.e. because at the time the claim form was issued, the cause of action was vested in the Official Receiver, and whether it would be right to allow him to amend his pleadings to plead a subsequent assignment of that cause of action when that assignment took place outside the relevant limitation period.

Result of Appeal

The Judge allowed the appeal on the grounds that Pickthall had started the proceedings at a time when he had no cause of action and had known that he had no cause of action. The Judge further ruled that where proceedings were started in the knowledge that the cause of action was vested in someone else, it was hard to see why those proceedings were not an abuse. Such a person had started proceedings in which, even if he proved all the facts he wanted to prove and established all the law he wanted to establish, he would still lose because he did not have a legal right to sue.

Only people who owned causes of action, or who had an appropriate interest in proceedings had any business asserting the cause of action or starting proceedings. Any other use of the Court's proceedings was improper. It made no difference that Pickthall had intended to get in the cause of action or had a prospect of doing so. He had still started someone else's cause of action in circumstances where that other person had not started it himself: his action was still technically flawed. Pickthall's claim was therefore an abuse and ought to be struck out as such.

This case effectively shows the importance of ensuring that, as a claimant, you have the legal right to sue a party. Without effective and accurate legal advice from the outset of a claim, a claimant may fall foul of a technicality and be prevented from bringing or pursuing what may otherwise be a legitimate claim.

If you are considering starting a claim or have already commenced proceedings and require further information or legal advice please contact one of the solicitors in the Commercial Dispute Resolution Department who will be more than happy to assist you with all aspects of your claim.

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