Nesbitt v Holt (of the Citizens Advice Bureau)

Where later civil proceedings challenge findings made in earlier tribunal proceedings, abuse of process is not established merely because the issue could have been raised earlier. If the parties to the later proceedings were not parties or privies to the earlier litigation, the party alleging abuse bears a substantially heavier burden. Abuse arises only where relitigation would be manifestly unfair to a later party or would bring the administration of justice into disrepute. A tribunal’s non-essential view on actual authority, reached without the later defendant as a party and before discovery, may not justify strike-out. Disputed evidence, potentially relevant documents and a claim of modest but non-negligible value may mean that the claim has real prospects.

Mr Nesbitt’s claim under the Disability Disablement Act 1995 was compromised for £9,000 by Mr Holt, who represented him through the Citizens Advice Bureau. An Employment Tribunal Chairman held that Mr Holt had ostensible authority to compromise the claim and additionally expressed the view that he had actual authority, although that issue was unnecessary to the tribunal’s decision.

Mr Nesbitt later brought proceedings against Mr Holt and the CAB, alleging that the settlement had been made without actual authority. Deputy District Judge Watson dismissed the applications to strike out the claim. Patten J allowed the appeal and struck it out as an abuse of process, treating the tribunal’s finding as a determination of actual authority and a collateral attack. The central issues were whether the later proceedings were abusive despite the CAB not having been a party to the tribunal proceedings, and whether the claim had no real prospect of success.

Appeal allowed. The decision of Patten J was set aside, the decision of Deputy District Judge Watson was restored, and the respondent was ordered to pay the appellant’s costs, to be assessed if not agreed.

1. Abuse of process. The Court applied the approach in Secretary of State for Trade and Industry v Bairstow [2004] Ch 1. Where the parties to later civil proceedings were not parties or privies to earlier proceedings, a challenge to earlier factual findings would amount to abuse only if relitigation would be manifestly unfair to a party to the later proceedings or would bring the administration of justice into disrepute. The burden remained on the party alleging abuse and was substantially heavier because the CAB and Mr Nesbitt had not previously litigated against each other. The broad merits-based approach in Johnson v Gore Wood and Co [2002] 2 AC 1 did not justify shifting that burden.
2. Effect of the tribunal finding. The ET’s view that Mr Holt had actual authority was not necessary to its decision on the validity of the compromise. The issue had not been determined on a proper inter partes basis, the CAB had not been a party, and discovery had not taken place in the civil action. It was therefore wrong to assume that any later trial would involve the same issue on precisely the same evidence. The CAB’s involvement in the ET proceedings had also been voluntary rather than compelled by Mr Nesbitt.
3. Strike-out. On the alternative application, the burden was on the CAB to show that the claim had no real prospect of success. Liability depended substantially on whose evidence was accepted. Mr Nesbitt’s explanations were capable of acceptance, and documents obtained through discovery, including attendance notes, might assist him. His disability, Mr Holt’s knowledge of it, the apparent tension between the settlement sum and the alleged value of the employment claim, and the possibility that Mr Holt had been too anxious to settle meant that the claim was not hopeless.
4. The potential claim was modest but not negligible. The absence of evidence from the CAB as to the value of the DDA and possible unfair-dismissal claims therefore did not justify striking it out.

• Court of Appeal (Civil Division): [2007] EWCA Civ 249; appeal allowed, Patten J’s decision set aside and Deputy District Judge Watson’s decision restored.
• High Court (Patten J): allowed the appeal from Deputy District Judge Watson and struck out the claim as an abuse of process.
• Deputy District Judge Watson: dismissed the applications to strike out the claim on abuse-of-process, reasonable-grounds and prospects-of-success grounds.
• Employment Tribunal: held that Mr Holt had ostensible authority to compromise the DDA proceedings and additionally expressed the view that he had actual authority.