Dexter Ltd v Vlieland-Boddy

A later civil action is not an abuse of process merely because its claim could have been raised in earlier proceedings. The party alleging abuse bears the burden of establishing it. The court must make a broad, merits-based assessment of all the circumstances, balancing finality and efficient litigation against access to the court.

A later claim against a new and non-privy defendant is less likely to be abusive than a repeat claim against the same defendant. It will rarely be struck out unless it amounts to unjust harassment or oppression. A claimant may have legitimate reasons to proceed first against the apparently primary or stronger defendant, particularly where adding defendants would increase cost and complexity.

Dexter alleged that its former director and others had procured a bank advance through a fictitious aircraft-engine transaction and had dishonestly misapplied the proceeds. It had obtained judgment in an earlier action against the former director alone. It later brought the present action against, among others, the first appellant for dishonest assistance and the fourth appellant for knowing receipt and dishonest assistance.

The fourth appellant had previously been sued alone, but that claim had been set aside for want of jurisdiction. The present claim joined other defendants and relied on Brussels Convention jurisdiction. Lloyd J dismissed both appellants’ applications to strike out the claims as an abuse of process. The central issue was whether the later proceedings, although some claims could have been brought earlier, were abusive.

1. The appeals were dismissed unanimously. Peter Gibson LJ’s reasoning was agreed by Clarke LJ and Scott Baker LJ.

2. Applying Johnson v Gore Wood & Co [2002] 2 AC 1, the relevant question was not simply whether the matters could have been raised earlier. The court had to decide, through a broad merits-based assessment of all the circumstances, whether Dexter’s conduct misused the court’s process. The appellants bore the burden of proving abuse. Finality and litigation economy were important, but a later claim would rarely be abusive without unjust harassment or oppression.

3. The first appellant could have been joined to the earlier action, but he had not previously been sued or made liable. The judge was entitled to find that the later claim was not oppressive. Dexter had reasonably pursued the former director as the obvious primary target, and the asserted prejudice from delay, including the death of a witness, did not show that the judge’s assessment was wrong.

4. The fact that the later claims concerned different defendants who were not privies was materially against abuse. A claimant may legitimately sue an apparently primary or solvent defendant first, especially where proceedings against additional defendants would increase costs and complexity. Claims against parties alleged to be only vicariously or secondarily liable did not become abusive because they had not been joined to the first action.

5. The fourth appellant had not shown abuse through the delay following the earlier jurisdictional ruling. The appeal in that action had been genuinely pursued, the freezing order remained within jurisdiction while it was pending, and the later reliance on Article 6(1) of the Brussels Convention did not show that the joined claims were a device or an abuse.

The orders dismissing the strike-out applications therefore stood. The freezing order against the fourth appellant was continued, subject to variation, until judgment or further order.

• Court of Appeal (Civil Division): dismissed the first and fourth appellants’ appeals from Lloyd J’s refusal to strike out the present claims as an abuse of process: [2003] EWCA Civ 14.
• High Court, Chancery Division (Lloyd J): on 25 July 2002 dismissed the appellants’ applications to strike out Dexter’s claims.
• Earlier proceedings concerning the fourth appellant: Lloyd J set aside the claim form in a separate action for want of jurisdiction on 8 March 2001. Dexter later agreed to dismissal of its appeal from that order with costs.