Practice and procedure – Abuse of process – Strike-out – Guidelines in Aldi Stores Ltd v WSP London Ltd – Appellants bringing proceedings alleging existence of joint venture agreements relating to property development – Claim struck out as abuse of process in light of dismissal of earlier action against a different defendant relating to same alleged agreements – Whether claim an abuse of process where appellants failing to seek directions of the court in the earlier proceedings pursuant to Aldi Stores guidelines as to whether the two claims should be heard together – Appeal dismissed
The appellants were property developers of residential properties in central London. They alleged that the deceased, a Scottish businessman, had entered into three joint venture agreements (JVAs) with them for the acquisition and development of six London properties and that he had acted in breach of those agreements, causing loss to the appellants in excess of £40m. They brought proceedings against the deceased’s estate to recover that alleged loss.
The respondent, who had been appointed as judicial factor of the deceased’s estate by the Scottish courts, denied the existence of any JVAs and applied to the court for the claim to be struck out under CPR 3.4(2)(b) as an abuse of process. He relied on the fact that an earlier claim by the appellants against another defendant, alleging that she had been a party to the same JVAs, had been dismissed in its entirety party: see Clutterbuck v Al Amoudi [2014] EWHC 383 (Ch). He contended that, under the principles laid down in Aldi Stores Ltd v WSP London Ltd [2007] EWCA Civ 1260; [2007] PLSCS 244, concerning case management rules for complex commercial multi-party litigation, the appellants should have sought directions in the earlier litigation as to whether their claim against the deceased’s estate, which arose out of the same matters as that litigation, should be combined with it in a single trial. He argued that the appellants’ current claim should be struck out owing to their failure to adhere to the Aldi Stores guidelines by seeking such directions.
Allowing the application and striking out the claim, the judge held that the Aldi Stores guidelines were mandatory, that the appellants had inexcusably failed to comply with them and that, applying a broad, merits-based judgment, the proceedings against the respondent were an abuse of process. In relation to two of the JVAs, he also accepted the respondent’s contention that the claim amounted to an abusive collateral attack on the decision of the judge in the earlier proceedings: see [2015] EWHC 2558 (Ch); [2015] PLSCS 265.
The appellants appealed against the judge’s application of the Aldi guidelines to the case, although they did not challenge his findings on collateral attack.
Held: The appeal was allowed in part.
(1) Litigants were not, without scrupulous examination of all the circumstances, to be denied the right to bring a genuine subject of litigation before the court. However, that right was not unlimited and the court had an inherent power to protect its process from abuse. When deciding whether to strike out a claim as an abuse of process, on the ground that it could and should have been brought in earlier proceedings, the court had to apply a broad, merits-based approach that took account of the public and private interests involved and also took close account of the facts of the case: Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581, Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1, Taylor Walton (a firm) v Laing [2007] EWCA Civ 1146; [2008] PNLR 11 and Dexter Ltd v Vlieland-Boddy [2003] EWCA Civ 14 applied.
(2) Both of the grounds on which the respondent alleged an abuse of process, namely failure to comply with the Aldi Stores guidelines and collateral attack on the decision in the earlier proceedings, were founded on the same procedural rule that the court would intervene where necessary to protect the interests of justice and to prevent its procedure from being used in a way that would be manifestly unfair to a party to litigation before it or would bring the administration of justice into disrepute.
The question of whether an action was an abuse of process was one to which there was only one answer and did not involve the exercise of discretion. Nevertheless, the question called for an evaluation of various factors and, accordingly, an appeal court would be reluctant to interfere with the decision of the judge.
(3) The purpose of the Aldi Stores guidelines was to ensure that a party to commercial litigation who wished to pursue a claim at a later date against the same or other parties, in relation to the same commercial matter, should put his cards on the table in the first claim, so as to give the court an opportunity to consider whether and, if so how, by appropriate case management directions, the resources of the court could be utilised in the most cost effective and efficient way. The guidelines were mandatory and an inexcusable failure to comply with them was a relevant factor to be taken into account in assessing whether, having regard to the relevant private and public rights and in light of all of the facts of the case, a party was abusing the process of the court by seeking to raise before the court an issue that it could have raised in prior proceedings: Stuart v Goldberg Linde (a firm) [2008] EWCA Civ 2; [2008] 1 WLR 823 and Gladman Commercial Properties v Fisher Hargreaves Proctor [2013] EWCA Civ 1466; [2014] PNLR 11; [213] PLSCS 274 applied.
(4) The Aldi Stores guidelines were applicable to the present proceedings since they related to complex dealings by the appellants with various parties over a number of years, all of which arose in relation to the appellants’ property development business and were interrelated to some degree. It would have made obvious good sense for the claims arising from them to be case-managed by a judge in the earlier proceedings.
(5) The judge had not regarded the failure to comply with the Aldi Stores guidelines as dispositive, but had properly treated it as a factor in the broad merits-based approach. In relation to two of the alleged JVAs, permitting the current proceedings to continue would result in the same issues being litigated again in two successive trials, involving a great deal of court time and huge expense in terms of both management time and litigation cost. The appellants were effectively seeking a reversal of the adverse findings of the judge in the earlier proceedings and, to that extent, the claim amounted to a collateral attack on the earlier judgment. While the claimants did not intend to gain any unfair advantage by splitting their claims, given the strong overlap of issues and evidence it was hard to resist the conclusion that the claimants used the earlier litigation as an opportunity to conduct a trial run of their claims against the deceased. Moreover, the way the appellants had chosen to conduct the proceeding had been prejudicial to the deceased’s estate. Had the appellants applied for directions pursuant to the Aldi Stores guidelines, that would have given the court a proper opportunity to consider how to manage the two claims in a proportionate and effective way. In relation to those two JVAs, the present proceedings were an abuse of process.
(6) However, the judge had erred in finding an abuse of process in relation to the third JVA. The appellants had not asserted in the earlier proceedings that the defendant was liable under that JVA, and the present claim was therefore a claim against a different party in respect of different subject matter. There was no question, in relation to the third JVA, of the same issues falling to be litigated at two successive trials. The judge in the earlier proceedings had been aware that any claim based on the third JVA was not in issue before her and that she was not required to make any finding about the possible merits of any such claim, although it was part of the factual background to the matters that she had to decide. There was never any doubt that the appellants wished in due course to pursue their claim in relation to the third JVA since that had been clearly intimated in the correspondence; accordingly, there was no question of the appellants trying to keep anything up their sleeves. All those matters were highly material to the required broad merits-based judgment. Overall, while the Aldi Stores guidelines were engaged in relation to the third JVA, the conduct of the claimants had not been such that they should be denied the right to bring their claim on the third JVA before the court. The pursuit of that claim would not, in all the circumstances, be manifestly unfair to the deceased’s estate or otherwise bring the administration of justice into disrepute.
The appellants appeared in person; Jonathan Seitler QC and Emer Murphy (instructed by Squire Patton Boggs (UK) LLP) appeared for the respondent.
Sally Dobson, barrister
Click here to read a transcript of Clutterbuck and another v Cleghorn
