Defending Civil Claims Without Merit

1. by an application to strike out the claim (under the Civil Procedure Rules (CPR) 3.4(2)(a)) on the ground that the claimant's statement of case discloses no reasonable grounds for bringing the claim;  or 

 

2. alternatively by an application for summary judgment (pursuant to CPR 24.2)  upon the basis that the claim has no reasonable prospects of success. 

 

The test is however challenging to fulfil and careful considerations must be made prior to making such an application as these type of applications are very costly and where unsuccessful can result in adverse costs (where a party is ordered to pay the costs of the other party).  

 

In Arrowhead Capital Finance v KPMG LLP (2012) EWHC (Comm) the accountancy firm had been instructed to give advice in regard to the issue of whether Dragon Futures Limited had complied with Government legislation (the ability to reclaim VAT when reselling consignments of phones). It was alleged that due to negligent advice, the investors lost money. 

 

The loss was known to the Claimant no later than November 2004, the claim was issued on the 1 November 2011. 

 

In this case as the Court concluded (amongst other things) that as the claim was issued after the expiry of the limitation for these type of claims (6 years from the date of the negligent act  pursuant to the Limitation Act 1980) then the claim was time barred and there was no realistic prospect of the Claimant making their case.  

 

The Defendant accordingly succeeded in an application for strike out of the claim.  

 

This case demonstrates firstly that it is important to issue a claim within the limitation deadline (which can be as little as 3 months in the case of some employment claims).  More importantly it demonstrates that effective use of the Civil Procedure Rules can result in a claimant being prevented from proceeding with a claim whether because there is no real basis for it, or because the facts are such that it is unlikely to succeed.