Case No: IHC 374/05
Neutral Citation Number: [2006] EWHC 3697 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL

Wednesday, 15 February 2006

BEFORE:

MR JUSTICE WARREN
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BETWEEN:

	MARINE RESCUE TECHNOLOGIES LIMITED & ORS	CLAIMANT	
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	BURCHILL & ANR	DEFENDANT	
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Tape Transcript of Wordwave International, a Merrill Communications Company
PO Box 1336, Kingston-Upon-Thames KT1 1QT
Tel No: 020 8974 7300  Fax No: 020 8974 7301
Email Address: Tape@merrillcorp.com
(Official Shorthand Writers to the Court)
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MR EDWARDS (instructed by Mishcon de Reya) appeared on behalf of the Claimant

MR BURCHILL appeared in person
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Judgment

1.	MR JUSTICE WARREN:  I have an application before me by Mr Burchill, the first defendant in this action, who appears for himself and his company.  No distinction has been made between the two of them for the purposes of this application, and nobody (least of all me) has taken any point about him representing a company as well.

2.	It is an application to strike out the claim pursuant to a mixture of jurisdictions, as I perceive it: first of all, the court’s inherent jurisdiction; secondly, under CPR 3.1(2); and thirdly, under CPR 3.4(2).  The essence of the defendant’s application is that there has been such delay on the part of the claimants that it is no longer possible to have a fair trial.  Even if a fair trial is possible, I think it is probably said that the delay is an abuse of process, and there has been a failure to comply with court orders.

3.	Mr Edwards, who appears for the claimants, accepts that there have been stages at which things have not moved along as fast as they might have done, and which his clients could have moved faster, but having said that, he has taken me through a detailed chronology to show me why, in his submission, the delay is not in any sense inordinate, and I must myself go through the same exercise.

4.	Mr Burchill, in his helpful evidence, has identified four periods in which he contends that the delay is down to the claimants and cumulatively has the result which he contends.  By way of background, I should note that the claim form was issued on 6 September 2001, and the claims relate to alleged design right patent and trademark infringement, passing off and conversion, the trademark and patent claims being added by amendment in 2003.  The defence challenges the subsistence of design rights, the validity of the patent and trademarks and denies the passing off and conversion claims.

5.	It is quite clear that Mr Burchill and the leading light for the claimant, Mr Marshall, are on the worst possible terms, and their falling out has resulted in this litigation.  It is not remotely possible for me to form any assessment on the evidence before me of the relative merits of their positions and their accusations against each other, and I do not propose to say anything more about them.  Equally, I cannot say, on the merits of the action between the corporate entities, whether there is a very strong or a strong or weak case in relation to the intellectual property infringements alleged.  What is quite clear, though, is that there is (at the very least) an arguable case.

6.	The claimants derive their title (if they have a title) through a United States company called Sea Marshall Rescue Systems Limited (“SMRS USA”).  It was only in July 2001 that that title, if it is a good title, was completed, and prior to that time, the claimants would have had no cause of action against the defendants.

7.	The defendants claim that they acquired their rights in the products from the administrator of an English company of the same name, (“SMRS UK”), and for them to succeed, they must show that SMRS UK rather than SMRS USA had the relevant rights.  That is subject to possible arguments that there are no rights at all because matters are already in the public domain.

8.	Mr Burchill, as I have said, has identified four periods of delay.  I will deal with each of them in turn, but for the record, they are first, early 2002 to early 2003; secondly, April 2003 to September 2003; thirdly, April 2004 to November 2004; and fourthly, February 2005 to September 2005.  The proceedings started off in the Chancery Division, but they were transferred with consent to the Patents County Court on 22 January 2002.  At that stage, no directions were in place.  There was some correspondence on related matters in January and February 2002, arising out of attempts to discredit Mr Marshall by reporting him for alleged offences under section 216 of the Companies Act.  This is one of the areas of dispute which I am not going to get into between Mr Marshall and Mr Burchill.

9.	The claimants, for their part, accept that the litigation did not make progress during the period from March to the end of 2002 as it ideally should have done.  They explain that by saying that it was essential (which is clearly correct) that crucial evidence of their claim would be admissible in court.  As to that, there was a problem in relation to stamp duty.  That, of course, is not a matter which can be laid at the door of the defendants at all, but it is perhaps an explanation for why things were not happening on the ground.  That period of delay came to an end with a letter from Mishcon de Reya, who act for the claimants, to Pinsent Curtis, who were then acting for the defendants.  They start their letter not with an apology, quite:

“We are aware that it has been some time since we last wrote.  Our respective clients continue to be at odds and there are complaints made about infringement and passing off.”
(Quote unchecked)

10.	Things were becoming active again at the beginning of January 2003.  On 16 January that letter was acknowledged, so that took nearly two weeks just to produce a response that said, “We are taking our clients’ instructions”.  There was a chasing letter also that, again from Mishcon de Reya on 27 January.  Pinsent Curtis Biddle never replied substantively, because by 17 March, the defendants had dispensed with their services and they sent a letter enclosing a copy of the Court Order confirming that the firm had come off the record in respect of the defendants.

11.	On 22 April 2003, so that is some weeks after they knew that Pinsent Curtis were off the record, Mishcon de Reya served draft amended Particulars of Claim.  There had been, at this stage, no permission to amend them.  That is the first period of delay.

12.	The second period of delay alleged is from April 2003 to September 2003.  It was on 28 April that Mr Burchill, on behalf of the second defendant, wrote to Mishcon de Reya referring to the letter which had served the draft amended Particulars of Claim, and wrote:

“I refer to your letter and advise you that a new firm of solicitors has been appointed to advise on the claim.  I have today put in funds to assist in the matter and have forwarded your correspondence to them by overnight delivery.  I would therefore be grateful if you would extend the time period given in your letter to enable them to read the documentation and reply to you accordingly.  I estimate that a period of seven days will be sufficient.”
(Quote unchecked)

13.	Having heard nothing, Mishcon de Reya then wrote again to Mr Burchill thanking him for that letter and saying:

“We have not heard from your solicitors, and an application [that is the application for leave to amend the Particulars of Claim] will be issued.”
(Quote unchecked)

14.	On the 12 May, Mr Burchill wrote again saying that he had been advised by Mr Lucas of Cobbetts, who are the solicitors in Leeds, that he would reply stating that the defendants consented to the amendments (with the revelation that he did not agree with the contents of the amendment) and so gave his formal consent.  The impression one is left with from that letter is that Mr Burchill and the other defendants were expecting to receive representation in this litigation from that firm of solicitors.

15.	On 3 June, Mishcon de Reya wrote to Mr Burchill.  They supplied the re-amended Particulars of Claim and asked for confirmation that Mr Bayton(?) of Cobbetts had been instructed.  Mr Burchill wrote on 19 June acknowledging receipt of the amended pleading and stated that he looked forward to hearing from the claimants in respect of an amicable settlement, but the letter made no further reference to the instruction of new solicitors.

16.	On 1 July an application was issued in the Central London County in the Patents County Court for formal permission to amend the Particulars of Claim.  In part (c), where one has to set out the evidence relied on, it was stated that the Amended Particulars were sent to the defendants in order that they might consent to permission being given and copies of the correspondence were attached noting the consent.  Between 1 July and 25 July, the matter was with the Patents County Court.  On 25 July, HH Judge Fysh QC responded, refusing permission to amend due to a formal defect (as I understand it) in the pleading, reference being made to CPR 63.5 and the patent practice direction, paragraph 2F-12.

17.	There then was a period of delay, which is one that Mr Edwards accepts can be put down to his clients, between 25 July and 10 September, when Mishcon de Reya served a renewed application for permission to amend the Particulars of Claim, to be heard on 23 September 2003.  Whilst matters might have been progressed more speedily, it will not have escaped observation that the period was during August and the beginning of September when, perhaps notoriously, things do not happen as fast as they might in lawyers’ offices.  Be that as it may, in the context of these proceedings overall, that particular delay is not one which, taken by itself, is of particular significance, but I will need to look at the cumulative effect of all these periods in due course.

18.	On 17 September 2003, the defendants wrote to the court reporting the seizure of their computers by the police on 12 May, and explaining the difficulties this event was likely to cause the defendants in preparing their amended defence and counterclaim.  May, of course, was some months before this letter to the court.  There is a dispute in relation to the seizure of the computer.  Mr Branton(?), who was at time working alongside Mr Burchill, but who had fallen out with him, is the person who seems to have put the police up to raiding Mr Burchill’s premises.  There is a dispute about whether he was put up to it by Mr Marshall or not.  Judge Fysh (quite reasonably, I think) decided that the hearing (which had been fixed for 23 September) of the claimants’ application to amend should be stood over and he adjourned it.  He actually wrote to the parties on 9 September.  

19.	As I have said, the claimants accept that the progress was slow during this period, but they do not accept that they are to be blamed for this.  They say that between 28 April and 1 July, the slow progress is explained by the fact that the defendants were saying that they had instructed new solicitors, and Mishcon de Reya were clearly waiting for them to come on the record.  Even so, Mishcon de Reya were not inactive, and they continued to progress the matter, but once it became apparent there were no new solicitors, the claimants acted properly by seeking the court’s approval for the amendments.  They reacted reasonably quickly to the court’s approval to allow the amendments in late July.  That decision was announced only shortly before the end of term, and was acted on very early in September.

20.	These periods of delay in the second period, April 2003 to September 2003, do not (to my mind) indicate a claimant who is not seriously pursuing his litigation.  Matters could have moved faster, but this is not anything approaching a wilful delay which would give rise to any sort of allegations of abuse of process.  The defendants make no complaint about the claimants’ conduct of the action between September 2003 and April 2004, but during that period, a number of things happened which show quite clearly that the claimants were seriously pursuing the litigation, and colour, in my judgment, first of all what had happened before, and also (to some extent) colour what happened thereafter.

21.	There was a case management conference on 3 December 2003.  There had been an application for a variety of relief arising from an alleged contempt of court.  There was a restored case management conference on 27 January 2004 and that included a direction for service of the defendants’ amended defence and counterclaim by 17 February.  This was an Order of Judge Fysh in the Patent County Court and, since it is quite short, I shall read all of it:

“The claimants have permission to amend the Particulars of Claim in the form submitted to the court under a cover of a letter dated 26 August 2003. (2) The defendants have permission to amend their defence and counterclaim as so advised by 17 February 2004. (3) Each party gives standard disclosure by list by 4.00pm on 6 April 2004; that any request for inspection or copies of disclosed documents shall be made by 4.00pm on 13 April; [importantly] that each party serve on every other party the witness statements of the oral evidence which the parties serve in the statements, intends to rely on at the trial; those statements and any notices of intention to rely on hearsay evidence to be exchanged by 4.00pm on 13 May 2004 and without prejudice to the following foregoing direction that the claim and counterclaim be transferred to the Chancery Division Patents Court with immediate effect, and all further applications to be made.”
(Quote unchecked)

22.	I do not need to read the rest of that Order.  As it happened, on 10 February 2004, the defendants requested an extension of time of 42 days for service of the amended defence and counterclaim and that was agreed to by Mishcon de Reya.  A firm of solicitors, Briffa, went on the record for the defendants on 29 March 2004, and the defendants served their amended defence and counterclaim on 13 April 2004.  No complaint was made at that stage by the defendants about delay.  They themselves had requested an extension of time of 42 days, and what one sees happening is a piece of litigation that is happening at not the speediest of speeds, but on the other hand, one cannot say that there is any sort of serious, let alone contumelious, delay on the part of either party.  It is worth noting at that stage (but I will come back to it) that neither side complied with the witness statement exchange Order.

23.	I now turn to the period April 2004 to November 2004.  Following the service of amended defence and counterclaim on 13 April, there was a further lapse of time until 24 June, when Mishcon de Reya wrote to Briffa seeking their agreement to a revised timetable.  This again is a period during which Mishcon de Reya or the claimant (I do not apportion any blame, if blame is the right word) could have moved faster than they did, but there can be no suggestion that they had in any sense intended to abandon the litigation.

24.	On 24 June, they wrote to Briffa suggesting a timetable, which was that each party give standard disclosure by 14 July 2004, with a direction for inspection of copies of disclosed documents by 21 July, and that each party serve on every other party the witness statements by 14 August 2004, so that was an attempt to obtain an agreed variation of Judge Fysh’s Order, which had in any event been breached by both parties.

25.	After a chasing letter on 7 July, Briffa replied on 15 July with a proposal for a settlement, and in this letter, they also made some derogatory (possibly true) statements about Mr Branton, but the substance of the letter was a settlement proposal.  They made no response to the request in the previous letter from Mishcon de Reya seeking agreement to a timetable.  Mishcon de Reya replied to that on 26 August, putting a counter proposal, and at the end of their letter, they say:

“You have refused to deal with the proposed directions set out in our letter of 24 June 2004, and we now ask you to confirm whether or not you are prepared to agree directions, and would be grateful if you would write to us by return to confirm this letter can go back to the court for a further CMC.”
(Quote unchecked)

26.	No reply was received to that letter, and things went quiet (at least, there is nothing on the file) until 18 November, when Mishcon de Reya wrote again saying:

“We have not heard from you since our letter of 26 August.  You are aware that our client wishes to reinstate this matter for a CMC and you have ignored such a request.  It is our clients’ intention to list an appointment for a CMC, and to that end, we would be grateful to hear from you by return, and as a matter of urgency, with any dates your counsel may wish to avoid.”
(Quote unchecked)

27.	That produced a fairly speedy response on 19 November:

“Thank you for your fax of yesterday, which has just come to the writer’s notice.  We did try and return your calls in September 2004, but without success.”
(Quote unchecked)

28.	September, of course, being most generous was six weeks prior to it, so one does not see any sort of urgency on the part of Briffa.  Indeed, the next sentence is:

“We do not understand the sudden urgency.  There seems to be no problem being suffered by the defendants that this matter, by being conducted in a leisurely fashion, was likely to cause their client any sort of prejudice.”
(Quote unchecked)

29.	On 24 November, in the file before me there is a letter from Briffa to Mishcon de Reya.  It is in response to a letter dated 22 November which is not in the file, but they write to confirm the dates referred to in the earlier conversation:

“Owing to both our clients’ and our own prior commitments in the Christmas period, our clients would seek and are prepared to agree the following directions: standard disclosure by 17 January; inspection by 24 January; witness statements by 28 February.”
(Quote unchecked)

30.	Again, here was no suggestion that there was any problem with these dates from their client.  On 7 December 2004, the matter having found its way to this court, there was an application in front of Patten J and he made an Order that the defendant had permission to amend its defence and counterclaim by 21 December; standard disclosure by 31 January; and inspection within seven days of service of the list.  That is a slightly extended timetable over the one that had been agreed in correspondence.  There is nothing in Patten J’s Order about exchange of witness statements, and nothing to discharge the Order of Fysh J.

31.	Again, the claimants realistically accept that there was a longer than necessary delay between the service of the defence and counterclaim and their letter of 24 June 2004, and similarly, there was a longer than necessary delay between Briffa’s letter of 15 July and Mishcon de Reya’s reply on 26 August, but as Mr Edwards points out, that was followed by three months’ silence on the part of the defendants.  I add that it was followed by letters agreeing timetables and seeking extensions, which made no complaint about the delay and did not suggest that matters had been conducted in a way prejudicial to their client, but seem to me to be designed as much for the defendants’ convenience as for the claimants’.

32.	The claimants invited the defendants to agree directions on 24 June and received no response until late November, and one might say that this was a period, as it is put by Mr Edwards, in which the defendants positively encouraged delay by failing to respond to the claimants’ efforts to get the case back on track.  Even if that is putting it too high, it is certainly, in my judgment, a case where there was no suggestion that the defendants wanted to get on with the action at that stage, rather than discuss a settlement.

33.	Following the December 2004 Directions Order from Patten J, documents were exchanged on 7 February.  There followed an exchange of letters on the subject of disclosure which went on until March 2005.  The defendants’ solicitors complained that Mishcon de Reya and their clients had not fulfilled their disclosure obligations.  There was a debate about that which resulted in a further list being served in May.

34.	There is a problem about the first list that was produced, because the claimants say that they sent to Briffa the documents in the list on 7 March, although Mr Burchill denies that these documents were ever provided.  It is curious that they were never provided, that there was no chaser from the solicitors or from Mr Burchill, and there was not even a request for the documents which were disclosed in the May list.  I cannot resolve the question of whether the original documents were or were not supplied or why, if they were not, what went wrong.  As I said, not having been supplied, it is surprising that they were not chased.  This is all an indication, to my mind, that the defendants were not unduly concerned at the pace at which this litigation was proceeding.

35.	The final period of delay alleged is from February 2005 to September 2005.  As Mr Edwards points out, the true start for this period is really mid‑March, when the witness statements should have been served, but he accepts (and I think this is probably the worst period of delay from his clients’ point of view) that there was a period of six and a half months from mid‑March to 20 September 2005 in which the claim was not progressed as it should have been.  Again, it cannot be said that the claimants had in any sense intended to abandon their action or not to take it seriously.  Up until May, matters were progressing on disclosure, culminating in the service of the supplemental list on 20 May, and although this may not have been known to the defendants, there were attempts to obtain further documents from former administrators of the SMRS UK.

36.	I note that the defendants did not communicate with the claimant over this period, and no sort of chasing correspondence on their part happened, but there was a continued failure by both sides to comply with the obligation to exchange witness statements.  Again, this does not seem to me to be a case where the defendants were unduly concerned, or indeed, they expressed no concern at all that delay might be causing any problem.

37.	Mr Burchill now relies on prejudice that has been suffered by him as a result of what he now says are undue delays.  These boil down, in my judgment, to issues concerning the availability of witnesses.  Before I turn to those, I should mention other matters he complains of, such as the stress that this litigation has caused him and his family, and he complains about the oppressive nature of the proceedings, but in my judgment, he has not begun to make out a case of prejudice in relation to those, and such prejudice as he has suffered turns on the availability of witnesses or not.

38.	There are a number of people who he is concerned about.  The first is Mr Branton.  Mr Branton has died, and he cannot therefore give any evidence, but it is abundantly clear that he was ever only going to be called by the claimant, and at most, Mr Burchill would have had an opportunity to cross‑examine him.  Having seen what Mr Burchill’s previous solicitors had to say about Mr Branton, it is (to my mind) inconceivable that Mr Burchill or the other defendants would themselves have called Mr Branton.  In my judgement, it cannot possibly be sensibly argued that the loss of the opportunity to cross‑examine a witness who may or may not have been called is a prejudice, making the possibility of a fair trial impossible or even difficult, so I reject any argument that there is unfair prejudice in relation to the unavailability of that witness.

39.	One class of the other witnesses is essentially people whom Mr Burchill can no longer trace.  There is a Mr Connor.  He did have a brief statement from Mr Connor, which he obtained early on.  He has completely lost contact now.  There was a Mr Lawrence and a Mr Meyer(?).  Both Mr Lawrence and Mr Meyer he was unable to find when he did look into witnesses at the back end of 2002, beginning of 2003.  If he could not find them then, I cannot see that he has suffered any prejudice whatsoever by being unable to find them now.  Quite apart from that, he must have known at the beginning of these proceedings that evidence of this sort would be necessary, and in my judgement, the fact that he did not himself make enquiries at an early stage to track them down and find them and get evidence from them is a matter to be weighed in the balance.

40.	Another individual concerned is Mr Simon, who I understand is still alive.  Whether he can give evidence or is willing to, I know not, but in my judgment again I do not see why it is any more difficult to get him now than it would have been then, say, two years ago, at the earliest time that a trial could possibly have got on.  Having said that, it is only if there has been a delay of an improper nature that this point can be made at all and, as I have already indicated as I have commented on the delays, I do not see that there is any substantial blame to be placed at all on the claimant.

41.	The other person is Mr Philling (?), but I make the same comment in relation to him.  He died in 2002, Mr Burchill thinks.  I cannot see therefore that the non-availability of him as a witness is a prejudice to Mr Burchill and the other defendants as compared to that position had the matter proceeded to trial more quickly.

42.	That deals with the issues of prejudice arising from the availability of witnesses. 

43.	Mr Burchill made some submissions to me relating to complaints that had allegedly been made by Mr Marshall to the police, the Inland Revenue and the Trading Standards authorities that had caused him expense and resulted in delay to these proceedings, and I think his complaint really is that this was an abuse of process.  So far as I can understand the argument, it seems to me that those aspects, whist they may be a cause for complaint in some way, are not matters that have caused a complaint in relation to the striking out of this action.

44.	The relevant law is helpfully summarised in the decision of Mann J in Hateley v Morris [2004] 1 BCOC at 582, and he conveniently sets out the provisions of the Rules as well.  At 590 under the heading “The principles to be applied” he sets out the relevant rule:  

“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 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).”

45.	He then looked at the authorities and, having mentioned the previous provisions under RSC he says:
“The scope for delay ought to be less now that the court indulges in active case management.”

Quoting from Stuart-Smith LJ in Walsh v Misseldine, he says:
	“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.”

46.	After referring to Purdy v Cambran and Annodeus Entertainment v Gibson he cites a helpful passage from the judgment in the latter case of Neuberger J, who listed nine matters to be taken into account.   He quoted:
“‘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.’”

	The ninth factor was this:
“‘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, 9th December 1999.”

47.	There is one other citation that Mann J provided us with which I will repeat as it is important in the present case.  It comes from the judgment of Clarke LJ in Asiansky Television plc v Bayer-Rosin 19th November 2001 EWCA Civ 1792.   
“It is no longer appropriate for the Defendants to let sleeping dogs lie: cf Allen v 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.”

48.	Whilst it is possible in theory for a case to be struck out when there is no prejudice, prejudice is obviously one of the factors which the court must take into account.  It would, for instance, where there had been a staggering delay.  Suppose someone had done nothing for ten years, it might then be appropriate to strike out an action even though there is no prejudice suffered by the defendant.  But in the present case I certainly regard the presence or absence of prejudice to Mr Burchill or the defendants as a significant factor.  

49.	Applying those principles to the facts of this case, I have absolutely no hesitation in rejecting the application.  It seems to me that such delay as there has been in the context of this litigation, the periods cannot individually and even cumulatively be viewed as in any way disgraceful.  Things have moved more slowly than they might have, but at each stage it had been open to the defendants to suggest that things move along, but they have never done that; they and their solicitors have apparently been quite happy to let things go on as they did.  There is, I think, no prejudice such as that which Mr Burchill now submits he has suffered, but, even if that is wrong, he is largely responsible for it himself.  The interviewing of witnesses could and should have been done certainly much earlier than has happened.  I do not know if it has been done yet, but there was an order for exchange of witness statements that both sides have ignored.  It seems to me that if the evidence of the individuals who Mr Burchill has mentioned was available in 2002, he should have obtained it then.  As I have said, it looks as though he could not have obtained it then anyway.  On either footing, there is no prejudice or at least not such prejudice as would justify in the context of the delays which have happened in this case the draconian remedy of striking this action out.  I therefore dismiss the application.
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