Bradford & Bingley Building Society v Seddon (Hancock, Third Party)

Abuse of process falling short of cause of action or issue estoppel is a flexible doctrine, distinct from res judicata. It may apply although the later proceedings involve different parties or issues.

Mere repetition, omission from an earlier claim, or inconsistency with an earlier case does not by itself establish abuse. The party alleging abuse must show why the later proceedings are abusive in all the circumstances. Relevant additional features may include a collateral attack, dishonesty, unjust harassment, or a binding election.

A court must exercise particular caution before striking out a genuine claim without a trial. Arguably equivocal earlier pleadings and material new evidence may make summary disposal inappropriate.

The defendant had obtained judgment in an earlier action against an accountant upon the accountant’s admission of liability under a personal indemnity. The judgment remained unsatisfied. When a building society later sought possession and recovery of the mortgage debt, the defendant brought third-party proceedings against the accountant and two former partners. He alleged partnership liability for an indemnity, negligence and misrepresentation.

His Honour Judge Kershaw QC struck out the third-party claim as an abuse of process. He considered it inconsistent with the earlier claim and judgment, which he construed as alleging that the accountant alone was personally liable.

The defendant appealed. The central issue was whether inconsistency, or the pursuit of claims which could have been brought earlier, was sufficient to constitute abuse where the parties and issues were not identical.

1. Appeal allowed unanimously. Lord Justice Auld delivered the judgment, with which Lord Justice Ward and Lord Justice Nourse agreed. The order striking out the third-party proceedings was discharged and the applications to strike them out were dismissed.

2. Res judicata and abuse of process falling short of res judicata are distinct. Cause of action estoppel is an absolute bar. Issue estoppel is also a bar, subject to recognised special circumstances. The broader abuse jurisdiction instead requires the court to balance a claimant’s interest in presenting a genuine case against the opposing party’s interest in avoiding unjust oppression through successive litigation.

3. The principle in Henderson v Henderson (1843) 3 Hare 100 may apply where the parties or issues in the later proceedings differ from those in the earlier proceedings. Where reasonably practicable, claims against all relevant persons should ordinarily be advanced together. Failure to do so may constitute abuse in an appropriate case, but it does not automatically have that consequence.

4. Mere re-litigation, a claim which could have been included in an earlier action, or inconsistency with an earlier case is insufficient by itself. The person alleging abuse bears the burden of showing what makes the later litigation abusive. An additional feature may consist of a collateral attack on an earlier decision, dishonesty, unjust harassment by successive actions, or an effective election.

5. An election can contribute to abuse where the claims are legally or logically mutually exclusive, or where there has been a formal or positive step such as abandonment, release, or failure to pursue an already pleaded claim. Treating every deliberate difference in the parties sued or causes of action advanced as an election would impose an unjustifiably rigid rule.

6. The earlier pleading and judgment were arguably equivocal about whether the accountant’s personal liability excluded concurrent partnership liability. The later claim also introduced new parties and a misrepresentation claim, while negligence and misrepresentation had not previously been adjudicated. The judge therefore erred by treating inconsistency as sufficient without deciding whether the respondents had established abuse in all the circumstances.

7. New documents suggesting that the partnership had recognised a liability to the defendant militated against summary disposal. Proper caution required fuller examination, potentially including oral evidence, rather than striking out the claim.

1. Court of Appeal: Allowed the defendant’s appeal unanimously, discharged the strike-out order and dismissed the second and third third parties’ applications to strike out the proceedings.

2. High Court at Manchester: His Honour Judge Kershaw QC, sitting as a judge of the High Court, struck out the third-party proceedings as an abuse of process because he considered them inconsistent with the earlier claim and judgment.

3. Preston action: A District Judge entered judgment for the defendant against the first third party for the admitted balance of the indemnity and granted unconditional leave to defend the remainder. No citation is stated.