TAG Capital Ventures Ltd v Potter [2012] EWHC 3323 (Ch)

Case No HC11C02537[2012] EWHC 3323 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 23/11/2012
Before
MR JUSTICE WARREN
Between
TAG CAPITAL VENTURES LIMITEDClaimantGARY POTTERDefendant
Clive Wolman (instructed by Gallant Maxwell) for Claimant and for Mr and Mrs WorkmanSteven Thompson (instructed by Bivonas Solicitors) for DefendantHearing Hearing date: 21 November 2012
JudgmentMr Justice Warren :Introduction
[1]I have before me an application by the Defendant (“Mr Potter”), for orders(i) striking out the action effectively on the basis that its continuance would amount to an abuse of the process of the court and(ii) discharging the freezing order made against him made at the outset of this action.[2]Mr Steven Thompson appears for Mr Potter. Mr Clive Wolman appears for the Claimant, TAG Capital Ltd (in liquidation) (“the Company”). He also appears for Mr and Mrs Workman. Although they are not parties to this action, they were the petitioners in the petition which eventually led to the winding-up order made against the Company.

History

[3]On 25 July 2011, the Workmans petitioned for the winding up of the Company. On the same day, Mr Edward Bartley-Jones QC, sitting as a Deputy Judge of this Division, made an order on a without notice application appointing Mr Finbarr O’Connell and Mr Nimish Patel (both then of Re10 (UK) plc) as provisional liquidators of the Company (“the PLs”).[4]Immediately following their appointment, the PLs applied without notice to Mr Bartley-Jones for a freezing order against Mr Potter. He was the leading light in the Company and a director of it. The PLs undertook to commence an appropriate action which they duly did, namely this action. The claim is for breach of statutory and/or fiduciary duties to the Company and for a remedial constructive trust and/or equitable compensation in respect of money paid by the Workmans to the Company. On the return date, 29 July 2011, both of the orders made by Mr Bartley-Jones were continued by Sales J. In relation to the appointment of the PLs, the Workmans gave the usual cross-undertaking and provided security in the form of the sum of £50,000 lodged in the client account of their solicitors, Gallant Maxwell, which is still held by them. That sum is also held as security for the cross-undertaking given by the Company itself in relation to the freezing order.[5]Particulars of Claim were filed on 15 August 2011 and a Defence was filed on 23 August 2011. Directions were made by Master Price on 4 October 2011. Those directions included ordersa. that the trial take place between 1 October 2012 and 31 December 2012;b. that a listing appointment should be made;c. that standard disclosure be given by 15 December 2011 with inspection by 11 January 2012;d. that witness statements should be exchanged by 29 February 2012.[6]Shortly after that, the matter was listed for hearing in the week commencing 19 November 2012.[7]The petition was opposed by Mr Potter on the grounds that the Workmans’ claim that they were creditors of the company was disputed so that they had no standing to present a petition. If that contention was made good, there would be no winding-up on the basis of the petition and the action by the Company against Mr Potter (who would once again be in control of the Company) would fall away.[8]Sensibly, therefore the parties made an agreement about the trial timetable superseding the order of Master Price. This was not reduced to a formal order but is to be found in correspondence. Mr Potter’s solicitors, Bivonas, wrote to Mr O’Connell on 7 March 2012 as follows:
“In view of the fact that the petition will not be heard until April 2012, we suggest that in order to avoid any wasted costs by the parties, we agree the following provisional timetable subject to the outcome of the April hearing:- 1. Disclosure by 15th May 2012. 2. Inspection by 22nd May 2012. 3. Exchange of witness statements by 30th June 2012. This revised timetable is not likely to interfere with the proposed trial date.”
This revised timetable is not likely to interfere with the proposed trial date.”[9]The hearing of the disputed petition came before me on 19 April 2012. What the PLs did not know until it was pointed out to them just before the hearing was that, on 27 March 2012, the Company was struck off by the Registrar of Companies. I decided to hear the petition, nonetheless, on the footing that the Company was likely to be restored to the register.[10]On 8 May 2012, I handed down judgment. I rejected Mr Potter’s opposition to the petition on the basis that there was no bona fide dispute on substantial grounds to the Workman’s claim to be creditors of the Company. My decision was not based on the proposition that Mr Potter had been fraudulent and I avoided suggesting that he might have been.[11]I declined to allow the Workmans permission to seek the appointment of the PLs as liquidators of the Company. I considered that the identity of the eventual liquidators should be dealt with in the ordinary way through a creditors’ meeting or possibly by the Secretary of State. I did permit them to amend the petition to seek an order that the Company be restored to the Register.[12]Quite how the Company had been allowed to be struck off was not clear at the hearing before me. Mr O’Connell, in an email dated 24 April 2012, subsequently told Mr Bechelet of Bivonas that the PLs’ file indicated that Companies House had been notified of the appointment of PLs but that Mr Patel was investigating why the Company had been struck off. Mr O’Connell now acknowledges that the fault lay with the PLs who had failed to notify Companies House at the time.[13]On 25 June 2012, Registrar Derrett made orders restoring the Company to the register and winding it up. The Official Receiver (“the OR”) became the liquidator of the Company in the usual way.[14]On 28 June 2012, Mr Bechelet wrote to the OR. He stated that he acted for Mr Potter and drew attention to the claim against Mr Potter by the Company. He enclosed by way of information (realistically recognising, I imagine, that the OR would be unlikely to know much about the Company by that stage) a copy of Master Price’s order. He stated that the case had been set down for trial in the autumn adding “however none of the directions have been complied with by the parties to the action”. That was true since neither party had complied with disclosure. Mr Bechelet did not refer to the agreed variation of Master Price’s order although it is true to say that the agreed dates in the revised timetable for disclosure and inspection had passed. Then, rather than putting forward a revised timetable, he wrote somewhat peremptorily as follows:
“4. We require that you indicate by return your intentions in relation to the above proceedings. 5. Of most serious concern is that the company has the benefit of a Freezing 6. [sic] Order against our client, Mr Potter…. If you are not going to pursue the action, our client will be seeking his costs of the proceedings and of the Freezing Order on an indemnity basis and be wishing to have recourse to the security held [a reference to the £50,000 provided by the Workmans]. 7. It is obviously a most unsatisfactory state of affairs that the Provisional Liquidators allowed the company to be struck off and apparently completely abdicated their responsibility in relation to these proceedings.”
[15]As to that last paragraph, I do not think that it was right to categorise the PLs’ failure to prevent the Company being struck off in the way that Mr Bechelet does. It seems to me that it was at worst negligent of the PLs to have done so and, as soon as the mistake was realised, it was rectified at a cost, I would add, which I ordered the PLs to bear personally. Further, the request to inform Mr Bechelet “by return” of the Company’s intentions is surprising given the short period of time during which the OR had been in office liquidator. Moreover, the letter told the OR nothing about the nature or extent of the dispute: of course, neither Mr Bechelet nor his client, Mr Potter, was obliged to give that sort of assistance to the human face of the opposing corporate party to the litigation, but it does make it harder for Mr Potter subsequently to complain when statements are made or actions are taken by the OR without it being clear that the OR had a complete picture.[16]The letter, it is to be noted, was not copied to the PLs or to the Workmans or to their lawyers. Again, there was no obligation on Mr Bechelet or Mr Potter to do so. But it is surprising to my mind that this was not done since(i) the Workmans were directly interested in the relief which Mr Bechelet said he would seek, namely recourse to the security which belonged to them and(ii) Mr Bechelet and Mr Potter knew that the Workmans had funded the application for the appointment of the PLs and the subsequent obtaining of the freezing order and were obviously more closely concerned in the progress of the liquidation than a creditor might usually be expected to be in claims by a company against a former director.[17]Mr Potter subsequently attended before the OR for the usual interviews. In his second witness statement, Mr Bechelet says that Mr Potter gained the impression that there was no prospect of the action being advanced following the winding-up. Mr Potter has not given evidence to that effect himself but for present purposes I am prepared to accept as a fact that that was the impression which Mr Potter gained. However, I attach no weight to that fact. There is no hint of what was actually said to Mr Potter to give him that impression and no transcript of the interview has been made available to me. I do not know if it was reasonable for Mr Potter to gain the impression which he did from the words actually used or whether it was wishful thinking on his part. More importantly, perhaps, even if he was right to gain that impression, it is not suggested by Mr Bechelet that there was some sort of commitment on behalf of the OR that the action would not be prosecuted further. I cannot possibly conclude that, at that stage, the action was being maintained (in the sense that it had not been discontinued) with no intention on the part of the Company that it should be carried to trial.[18]So far as Mr Potter was concerned, matters rested there until, on 3 October 2012, Mr Bechelet made enquiry of the OR’s office to see whether the matter was likely to be pursued by the Company. He did so in the light of the imminent need to file a pre-trial questionnaire. He recorded that he had made a number of requests but received no substantive response. He warned the OR that, unless a reply was received by the end of the week, an application would be made to discharge the freezing order and to strike out the claim, seeking the costs of such application. What, if anything, had been passing between the OR and the PLs since 25 June 2012 is something I will come to in a moment.[19]On the same day, 3 October 2012, Mr Middleburgh of Gallant Maxwell, the Workmans’ solicitors, wrote to Mr Bechelet about the proceedings. The letter referred to the costs order which I had made on the petition, including an order for an interim payment by Mr Potter to the Workmans of £58,800 and to the £50,000 held as security for the cross-undertakings which I have mentioned. He put forward a case for the release of the security to Mr and Mrs Workman. Later in the letter, he noted that the OR had “just sent us a report to creditors which says that he does not intend to summons a meeting of creditors to appoint a liquidator other than the Official Receiver. The Official Receiver did not however consult us or our clients (as the largest creditors) on this decision.”[20]Mr Middleburgh later noted that the directions made by Master Price on 4 October 2011 had not been complied with following the agreed stay. He had identified that stay as having been agreed in October 2011 but that, I think, is a mistake for the April 2012 agreement. Nothing turns on that. He stated that the directions could be dealt with from the Company’s side only if the OR agreed to progress matters or if a private liquidator were appointed following a creditors’ meeting or a Secretary of State appointment. After noting that his firm did not act for the OR he went on:
“At this stage, our instructions are limited to seeking your client’s consent to the removal of the trial from the list so that we can then clarify TAG’s position via the Official Receiver…. We would ask you to confirm that your client will consent to this and we would then suggest that we write jointly to the court to explain the position and to request that the trial be removed from the list.”
[21]Mr Bechelet responded on the same day refusing to accept that the Workmans had any standing in the proceedings and rejecting any entitlement for them to have recourse to the security. He stated that the proceedings remained live and that the freezing order remained in place; the trial date was still effective and he was in correspondence with the OR about the matter.[22]No doubt Mr Bechelet was entitled to take that stand on the part of his client Mr Potter. The litigation was between the Company and Mr Potter, litigation to which the Workmans were not parties. He was entitled to deal with those responsible for the affairs of the Company, namely the OR. I am bound to say, however, that the reply was at best unhelpful and seems to me to be somewhat disingenuous. Whilst telling Mr Middleburgh that the proceedings were live (strictly accurate of course), he failed to disclose that he had in fact suggested to the OR that they should be withdrawn.[23]Further, Mr Bechelet would have well understood that the Workmans certainly did not regard the proceedings as dead or that they should not be pursued. Whether the Workmans had made a final decision that they wanted the proceedings to continue may not be clear; but what is clear beyond argument from Mr Middleburgh’s letter of 3 October is that they had not made a decision that they wished the proceedings to come to an end. Whilst the Workmans had no formal part in the proceedings, they were major creditors of the Company. Mr Potter and Mr Bechelet knew that. And Mr Potter, at least, must have known that they were the only significant creditors. He, after all, had been the leading light of the Company and intimately concerned with its affairs. The statement of affairs produced by the PLs before the winding-up order had been made disclosed no significant creditors other than the Workmans and nothing that the JLs had been told by Mr Potter in the interviews held with him caused them to doubt the accuracy of that statement of affairs.[24]Even if that is being unduly critical of Mr Bechelet, what he did, or rather failed to do, following the events which I now relate is even more surprising to my mind. The relevance of this is something I will come to later in this judgment.[25]On 4 October 2012, the person in the OR’s department dealing with this matter, Ms Uddin, replied to Mr Bechelet’s email of 3 October on 4 October. She wrote as follows:
“Based on the information we have, and the fact that the provisional liquidators have not provided the records to date, the Official Receiver is not in a position to continue this action. I will be writing to the Court accordingly, and will send you a copy of my letter.”
[26]The date for filing the pre-trial questionnaire was 8 October 2012. On that date, Mr Bechelet sent an email to Ms Uddin:
“Today is the deadline for the claimant returning the pre-trial questionnaire to the court. If the Official Receiver is not intending to proceed with the action we consider he should discontinue the proceedings pursuant to Part 38 of the CPR. Can you please ensure this is done within the next 14 days? Failing which, our client will make his own application to the court making the Official Receiver the respondent.”
[27]There was no response to that email. Mr Bechelet accordingly issued the application with which I am now dealing on 23 October 2012 which was listed for hearing in the applications list on Monday 5 November 2012. The matter was clearly going to take longer than was available in the applications court. I adjourned the matter until 21 November and gave permission for the Workmans to make representations notwithstanding that they are not parties.[28]In the meanwhile, no doubt spurred on by the report just received from the OR, Mr Middleburgh took steps to move matters forward. Although this is not in evidence, Mr Wolman (who appears before me for both Mr O’Connell – now the liquidator as I explain in a moment – and for the Workmans) tells me on instructions, that Mr Middleburgh contacted Ms Uddin on 5 October (thus after she had sent her email of 4 October to Mr Bechelet). He explained the background to Ms Uddin which was the first time that she was properly informed about the Workmans’ position. The process was then put in train by Mr Middleburgh to obtain an appointment by the Secretary of State. The upshot was that Mr O’Connell alone was appointed as liquidator on 23 October 2012. I do not think that this adds anything to the merits, one way or the other, of the application although it does help to fill in the picture. I am able readily to infer, without having been told of the phone call on 5 October, that the appointment of Mr O’Connell took place when it did because of the contents of the report referred to in Mr Middleton’s letter of 3 October. In other words, as soon as the Workmans realised that the OR was not going to call a creditors’ meeting, steps were taken to ensure that a liquidator would be in place to consider the further conduct of the action.[29]I should add that it is entirely coincidental that the appointment of Mr O’Connell as liquidator took place on the same day as the issue of the application on behalf of Mr Potter to strike out the proceedings.[30]To complete my review of the evidence, such as it is, I should mention a clip of emails which were handed up during the hearing by Mr Wolman. It was in fact Mr Thompson who first took me through them, inviting me to look at them de bene esse. But he went a great deal further than inviting me to look at them and made detailed submissions in relation to them. Although Mr Thompson submits that I should not do so, I have decided to admit them in evidence even though they could, and should, have been produced earlier. Their genuineness is not in issue and it cannot sensibly be suggested that Mr Potter is prejudiced by their late admission.[31]The emails were sent by Mr O’Connell to Mr Middleburgh as attachments to an email sent on 20 November 2012. The attachments were a few emails passing between himself and the OR:a. 29 June 2012: Ms Uddin to Mr Patel. Ms Uddin referred to the claim which she understood had been brought against Mr Potter and asked for some background to those matters.b. 19 July 2012: Mr O’Connell (who presumably had been asked to deal with this by Mr Patel) to Ms Uddin. He asked her to phone him to discuss the matter. It is not clear what happened about that. In his covering email, Mr O’Connell says that he recalls putting in a call (perhaps in response to a call made by Ms Uddin following the email) but he cannot recall whether he actual ever spoke to anyone at the OR’s office. I have no evidence from Ms Uddin herself. There is then a gap until:c. 26 September 2012: Ms Uddin to Mr O’Connell. In this email, Ms Uddin asked Mr O’Connell to let her know the quantity of records he was holding for the Company and whether he was able to deliver them to his office. It is perhaps surprising that she had not asked for this information or sought these documents before. It is perhaps a reflection of the enormous pressure on resources, both financial and human, under which the OR is working.d. 27 September 2012: Ms Uddin to Mr O’Connell. On the next day, Ms Uddin emailed again observing that the action was due to be heard in November and seeking records as soon as possible “in order to determine the Official Receiver’s stance”. It is reasonable to infer that Ms Uddin’s sudden interest in obtaining the documents reflected in the emails of 26 and 27 September came about as a result of Mr Bechelet’s communications with her. Although the first request which appears in the evidence is his email to her dated 3 October 2012, that email itself, as I have set out, refers to a number of requests so that one can be sure that Ms Uddin was on notice of Mr Bechelet’s position well before 3 October.e. 10 October 2012: Mr O’Connell to Ms Uddin. He acknowledged the email of 26 September and, although he does not mention it, he would also have had the email of 27 September. The email included this:
“I have been speaking to Mr Middleburgh who acts for the petitioning creditors….. in order to consider whether the intention of the petitioning creditors, now that the winding up order has been made, is for me to be appointed as Official Liquidator of the Company. David Middleburgh is considering this with his clients, Mr and Mrs Workman, and has indicated that he will revert to us all on this as soon as possible. Mr O’Connell then referred to a report which he had previously provided to the Court as provisional liquidator stating that this report “covers the scarcity of books and records of the Company”
. Mr Middleburgh was to provide a copy of the report. f. As to that email, Mr Thompson says that the first passage which I have just quoted shows that the Workmans were undecided about whether to pursue the action. If they were undecided, how, he asks, can it now be suggested Mr Potter knew they wished to proceed with the action and that they should therefore have been told about Mr Bechelet’s communications with the OR? The answer to that rhetorical question is provided when it is remembered that Mr Potter and Mr Bechelet did not themselves know of this email. All they had was Mr Middleburgh’s letter dated 3 October 2012 from which they would have known the concerns of the Workmans and that they had certainly not made a decision that the claim should be abandoned. As to that, Mr Potter was entitled, of course, to take whatever proper steps he thought appropriate in order to defeat the claim against him. He was not under a legal obligation to keep the Workmans informed of what was going on. But, so it seems to me, his decision to do so is highly relevant to his application to strike out the claim either because it supports the argument that there was no abuse of any sort or because, even if there was technically an abuse, it would not be appropriate to visit it with the sanction of strike-out. g. In relation to the provision of books and records, Mr Thompson criticises Mr O’Connell for not dealing with Ms Uddin’s actual request. He did not tell her what the documents were, only that they were sparse, still less did he provide her with those documents. It is true that he did not list the documents or explain what they were, assuming that he could remember. The fact that he did not provide them is explained by the covering email. The documents had been sent to store off-site by his previous firm, RE10. He phoned Mr Patel to get them back for him. By the time they arrived, he had already been appointed liquidator and there was no need to send them to the OR. He might, it is true, have told Ms Uddin that he did not have the documents and was attempting to retrieve them. The fact that he did not do so, whether he can be criticised or not, does not seem to me to make the slightest difference to the merits of Mr Potter’s application. h. 10 October 2012: Mr O’Connell to Ms Uddin. This is the final email in the clip. He asked her to apply to have the forthcoming hearing adjourned to a later date to “give all of the interested parties time to consider the proceedings and how they should best be dealt with for the benefit of the creditors of the Company”. There is no record of any reply to that. It is unfortunate that Ms Uddin does not appear to have informed Mr Bechelet about it since, if she had done, he would have appreciated that the action was not a dead letter. It is worth noting that Mr Bechelet himself, by using the phrase “If the Official Receiver is not intending to proceed with the action”, did not appear to think it was a dead letter by that date, or at least by two days earlier when he sent his email dated 8 October 2012.

Abuse of process - the Law

[32]Mr Thompson puts Mr Potter’s case on the basis that to allow the action to continue would amount to an abuse of process. He does not contend that there has been delay of the sort which, under the old RSC, would have been sufficient to bring the case, potentially, within the rubric “want of prosecution”. What he says is that the facts establish that the Company has shown an intention not to proceed with the action and that it would be an abuse to allow it to continue. This intention was communicated by the OR when he was in control of the Company and the Company cannot change its mind now that Mr O’Connell is in control of the Company.[33]He bases his submission on the decision of the House of Lords in Grovit v Doctor [1997] 1 WLR 640. The principle which is to be extracted from the speech of Lord Woolf. After a discussion of the old approach found in Birkett v James [1978] AC 297 and after considering the judgments below, Lord Woolf turned to the appeal under the heading “The outcome of the appeal”. At p 647G he said this:
“The courts exist to enable the parties to have their disputes resolved. To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceedings is brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action. The evidence which was relied upon to establish the abuse of process may be the plaintiff’s inactivity…. In this case, once the conclusion was reached that the reason for the delay was one which involved abusing the process of the court in maintaining the proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings.”
[34]Although decided under the old RSC, the principle established applies following the introduction of the CPR. That, I think, is clear from the decision of the Court of Appeal in Habib Bank Ltd v Jaffer (decided on 29 March 2000, briefly reported in The Times on 5 April 2000). In that case, Nourse LJ quoted at [10] from his own judgment in Choria v Sethia [1998] CLC 625, 630. It is worth setting the passage out again:
“Although inordinate and inexcusable delay alone, however great, does not amount to an abuse of process, delay which involves complete, total or wholesale disregard, put it how you will, of the rules of court with full awareness of the consequences is capable of amounting to such an abuse, so that, if it is fair to do so, the action will be struck out or dismissed on that ground.”
[35]That, of course, was said in the context of wholesale disregard of the rules and it is not suggested that there is anything of that sort in the present case. There is no doubt in my mind, however, that the principle of Grovit v Doctor continues to apply under the CPR and that Nourse LJ saw it as one of the cases which go to establishing the principles under which abuse is identified. Mr Michael Furness QC, sitting as a deputy judge of this Division, clearly saw the principle as falling within the CPR in his decision in Jeffrey v Flanders [2005] EWHC 1697 (Ch) in which he cited the passages (all bar a few words) which I have cited above from Grovit v Doctor and Habib Bank Ltd v Jaffer.

Discussion

[36]In my judgment, this is not a case where there is an abuse of process at all, let alone one justifying the striking out of the proceedings. Although there has been some delay in the prosecution of the proceedings, the period of the delay from the commencement of proceedings until at earliest the date of my judgment in May 2012 and, more realistically, until 25 June 2012, is accounted for by Mr Potter’s own opposition to the petition and to the agreement to modify the directions given by Master Price. Even if the delay from 25 June to the issue of this application on 23 October 2012 is properly a matter of criticism of the OR, that delay on its own is not an abuse. Some other factor needs to be demonstrated to establish abuse. The longer the delay, the more the ready court may be to hold that a particular factor tips the case into abuse. But on any view of the present case, a 4 month delay is not a substantial delay, so that Mr Potter has to demonstrate a factor of real weight in order satisfy me that there has been an abuse of process.[37]In that context, the critical aspect is Ms Uddin’s email of 4 October 2012 where she said that the OR was “not in a position to continue this action”. Without that, Mr Potter’s application would be hopeless. The failure of the OR to respond to Mr Bechelet’s letter of 28 June 2012 is nowhere near enough to indicate an intention not to pursue the action. Nor do I consider that it carries any but the slightest weight when it comes to deciding whether the Company has ever indicated an intention not to pursue the action so as to bring the case within the principle of Grovit v Doctor. If the email of 4 October is not enough by itself, in the context of a 4 month delay, to establish the relevant intention, I do not consider that the absence of a response to the 28 June letter tips the balance. I have already explained why I consider that no weight can be attached to the impression which Mr Potter had gained that there was no prospect of the action being advanced.[38]Mr Thompson says that the email of 4 October 2012 establishes that the Company had no intention of pursuing the case and that that is enough, in the context of the actual delay, to establish abuse. By the time Mr O’Connell was appointed liquidator and sought to oppose Mr Potter’s application, the Company had already acted in a way which would make it abusive for the action to continue. Mr Thompson submits that Mr O’Connell’s enthusiasm now to proceed with the action cannot undo history; otherwise, the enthusiasm of any litigant, if he changed his mind, would enable an action to continue and, in particular, Mr Grovit ought to have been allowed to continue with the action which the House of Lords in fact said should be struck out.[39]I do not agree with that last proposition. In Grovit v Doctor, the action had been on foot for a long period of delay during which the plaintiff had had no intention of bringing the matter to trial. It was almost certainly the defendant’s application to strike out which ignited the plaintiff’s suggested interest in getting on with the action after all (a matter about which Lord Woolf expressed the greatest scepticism at p647C-E). In the present case, the position is very different. There is no evidence at all (save the impression gained by Mr Potter to which I attach no weight) prior to the email of 4 October to suggest that the Company (through the OR) did not intend to pursue the proceedings. Indeed, such evidence as there is (namely the emails of 26 and 27 September) suggest that up until then the OR had made no decision at all, a fact consistent with the suggestion made by Mr Wolman that there are endemic, and he would say notorious, delays within the OR’s office. Accordingly, this is not a case where, prior to 4 October 2012, the action was being kept on foot with no intention of continuing it to trial.[40]It could not, in my judgment, have been suggested very soon after that email, say on 6 October 2012, that the proceedings had, by that date, become abusive. If the OR had sent another email saying that he had reconsidered his position in the light of information which had come to light, it would, in my judgment, be an absurd conclusion to say that there had been any abuse at all. Nor would it be right to conclude that there had been abuse, for 2 days, but that the abuse was so slight and inconsequential that it should not be visited with the sanction of strike out.[41]In fact what happened was that steps were taken to have Mr O’Connell appointed as liquidator. Matters appear to have moved reasonably speedily once the report referred to in Mr Middleburgh’s letter dated 3 October had been received, with Mr O’Connell’s appointment taking place on 23 October. It may well have been the OR’s position on 4 October that he “was not in a position” to proceed with the action and it may, indeed even have been his position thereafter that he could not do so, but once the appointment of Mr O’Connell was in train, the OR’s position did not mean that the Company would not, once Mr O’Connell was appointed, want to continue with the action. The position, it seems to me, is far closer to the example which I have just given in the preceding paragraph than to a case such as Grovit v Doctor.[42]Accordingly, in my judgment, the facts do not establish any abuse by the Company in seeking at any stage to maintain these proceedings so as to bring the case within the principle established by Grovit v Doctor.[43]I have reached that conclusion on the footing that the email of 4 October 2012 does, as Mr Thompson submits it does, indicate an intention by the Company that it did not intend to pursue the action to trial. I have to say that I am very doubtful that it does have that effect and, even if it does, I am even more doubtful that Mr Bechelet and Mr Potter could rely on it as having that effect for the purposes of an application to strike out on the basis of abuse.[44]I am doubtful that it does have that effect because it speaks only of the OR not being in a position to proceed with the action. Even a reader of that email not familiar with the background might appreciate that someone else in control of the Company might be in a position to continue with it. The result would then be that the action should be struck out only if it could not be suggested that anyone else (that is to say, a liquidator other than the OR) would take over control of the Company. I am even more doubtful that Mr Bechelet and Mr Potter could rely on the email as having that effect because they knew from Mr Middleburgh’s letter dated 3 October 2012 that the Workmans were keenly interested in the action and that a private liquidator was a possibility. Mr Bechelet chose to keep Mr Middleburgh in the dark. It does not, it seems to me, lie in the mouth of him or his client to say the proceedings had become abusive in those circumstances.[45]If I am wrong in my conclusions, so that abuse is established, it is abuse at the very low end of the scale. It would be quite wrong, in my view, to visit it with the sanction of strike-out. That would be, in my view, an entirely disproportionate response. As Nourse LJ made clear at [28] of his judgment in Habib Bank Ltd v Jaffer, it is not always just and appropriate to strike out an action in cases of abuse. I would not do so in the present case.

Conclusion on strike-out

[46]Accordingly, I dismiss the application to strike out.

Discharge of the freezing order

[47]I do not think that the relevant principle is in dispute. A person who obtains a freezing order is under a duty to get on with his action with due expedition and he is not entitled to retain the relief unless he prosecutes the proceedings promptly without unnecessary delay. As Dillon LJ put in Lloyds Bowmaker Ltd v Brittania Arrow plc [1988] 1 WLR 1337at 1349H-1350A “….where a party has obtained a Mareva injunction, that party is bound to get on with the trial of the action – not to rest content with the injunction”. I note that in cases where an injunction has been granted but has been discharged (for instance for material non-disclosure) it is open to the party to re-apply for injunctive relief which he might obtain if the evidence then available is sufficient; but in the present case, there is, at least as yet, no application for renewal of the injunction if I discharge it as I am asked to do by Mr Thompson.[48]The question for me is whether the delay in prosecution of the action is such as to disentitle the Company from holding the injunction. In that context, I consider that the relevant delay to consider is the delay caused by the Company. If the delay has not been caused by the Company, it cannot be said that it has failed to prosecute the action so as to be punished for a failure. Accordingly, I take no account of any delay prior to the appointment of the OR. Further, the OR must, on any footing, have been given a reasonable time after his appointment in which to consider his position in relation to the proceedings. I do not say that in all cases involving an insolvent company as claimant that a defendant simply has to accept the delays caused by the insolvency process. But in the present case, Mr Potter was the controlling mind and owner of the Company and ultimately responsible in practical terms for its demise (whether or he can be held legally liable as the Company now asserts or not). It would be wrong, I think, for Mr Potter to be able to rely on delay resulting from the orderly implementation of an insolvency process in order to obtain the discharge of the freezing order.[49]To that reasonable time must be added the time to obtain the appointment of a private liquidator once the OR had decided he was not going to continue with the proceedings himself. In saying that, I make the assumption that, had he addressed the litigation fully in, say, July 2012, he would have decided not to continue with it himself and instead offer to hand it over to a private liquidator, something which I think I can properly assume. It seems to me that, building into the process proper time for those matters, the delay for which the Company could be said to be responsible is at most two months. I do not consider that that delay should be visited with the loss of the injunction. Accordingly, for this reason alone, I dismiss the discharge application.[50]However, I question whether there is delay at all in the sense of putting back a trial date. The trial date was fixed long ago, before it was known that the opposition to the petition would not be resolved until May 2012. By then, the dates fixed by Master Price for disclosure and exchange of witness statements was long past and the agreed extended dates for those matters had become unrealistic. A reasonable period from my judgment to the appointment of a liquidator in place of the OR would, at shortest, run until late July; and to expect disclosure and witness statements then to have been dealt with in time for a trial starting on 19 November 2012 would have been optimistic. The failure to get on with disclosure and witness statements will not, in the event, have caused any additional delay in arriving at a trial date. I do not suggest that the fact that delay in getting on with all the matters which have to be carried out before a trial has no impact on the actual trial date will inevitably mean that the delay will never justify discharge of a freezing order. I do, however, consider that it is, in the present case, a factor which I am entitled to take into account. I do not need to rely on it but it does, in my view, support the conclusion which I have reached.

Conclusion on discharge of freezing order

[51]Accordingly, I dismiss the application to discharge the freezing order.