Nesbitt v Holt

On a second appeal, permission requires a realistic prospect of success together with an important point of principle or practice, or another compelling reason. An abuse-of-process application must be assessed broadly and on its merits in all the circumstances, with the burden on the party alleging abuse. The court should not first presume a prima facie abuse and then require the claimant to justify continuing. It was arguable that the authorities had not resolved whether abuse could bar a claim against a defendant sued for the first time, where that defendant had only been a witness in earlier proceedings involving another party. Permission was therefore granted, without any final determination of the merits.

Mr Nesbitt had brought disability discrimination proceedings against his employer, Dunlop. A representative of the Gateshead Citizens Advice Bureau, Mr Holt, agreed a settlement with Dunlop, recorded in a COT 3 form. The Employment Tribunal later found that Mr Holt had actual and ostensible authority to settle the claim.

Mr Nesbitt subsequently sued the Bureau in negligence, alleging that the settlement was unauthorised. Deputy District Judge Watson dismissed applications to strike out the claim for abuse of process and for having no realistic prospect of success. Patten J allowed the Bureau’s appeal on the abuse-of-process issue only, holding that the claim was a collateral attack on the Tribunal’s finding. Mr Nesbitt sought permission for a second appeal. The central questions concerned the burden and approach in abuse-of-process applications and whether the jurisdiction could apply where the later defendant had only been a witness in earlier proceedings against another party.

Application granted. Lord Justice Rix granted permission to bring a second appeal. The proposed appeal had a realistic prospect of success and raised an important question of principle, or alternatively provided another compelling reason for permission.

1. On the abuse-of-process issue, Patten J had treated the claim as prima facie abusive and placed on Mr Nesbitt the burden of justifying its continuation. That approach might be difficult to reconcile with the leading judgment of Lord Bingham in Johnson v Gore Wood & Co. [2002] 2 App Cases 1 at paragraph 31. The burden lies on the party alleging abuse, and the court must make a broad, merits-based assessment of whether the conduct is abusive in all the circumstances.
2. The abuse-of-process jurisdiction may arise without formal res judicata or issue estoppel between the same parties. However, the court was not aware of a decision applying Johnson v Gore Wood or the Henderson v Henderson jurisdiction where the first proceedings were against one party and the defendant in the later proceedings had participated only as a witness.
3. Bragg v Oceanus Mutual Underwriting Association (Bermuda) Limited [1982] 2 Lloyd’s Reports 132 and Ashmore v British Coal Corporation [1990] 2 QB 338 recognised the abuse-of-process jurisdiction, but involved a second action against the same defendant. They did not resolve the materially different situation raised by this case.
4. Lord Justice Rix expressed doubts about the ultimate merits of the negligence claim, having regard to the Tribunal’s findings and Mr Nesbitt’s retention and expenditure of the settlement cheque. Those doubts did not justify refusing permission on the abuse-of-process ground. Mr Nesbitt’s disability and possible disadvantage in presenting his case were relevant considerations, and representation on the appeal was desirable. The final order was that the application be granted, with a warning about the risks of costs.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 1542, Lord Justice Rix granted permission for a second appeal on the abuse-of-process issue.
• High Court: On 14 July 2006, Patten J allowed the Bureau’s appeal against the refusal to strike out the claim for abuse of process. He treated the claim as a collateral attack on the Employment Tribunal’s finding of actual authority. He did not allow the appeal on the alternative ground that the claim had no realistic prospect of success.
• Deputy District Judge Watson: On 27 January 2006, he dismissed both applications to strike out the negligence claim, finding no abuse of process and no absence of a realistic prospect of success.