Stuart v Goldberg & Ors

Whether successive proceedings constitute an abuse of process requires a broad assessment of all the circumstances. The defendant must establish that the later claim should have been advanced earlier. The possibility of doing so is insufficient. Uncertain prospects of success and delay alone within the applicable limitation period are irrelevant to that assessment. There is no general duty to investigate facts to discover possible additional claims.

The differences between claims, the claimant’s knowledge and the practical consequences of combining them require consideration. Failure to disclose a contemplated claim does not automatically make later proceedings abusive. Parties should nevertheless disclose related prospective claims to the defendant and the court so that their management can be considered. Appellate intervention is warranted for material errors in the assessment or a plainly wrong conclusion.

Jeffrey Stuart arranged potential commercial ventures in Mongolia with Pavlos Vardinoyannis. Carl Linde, a solicitor practising with Stephen Goldberg as Goldberg Linde, acted for Vardinoyannis. Stuart successfully brought proceedings in 2000 to enforce Linde’s oral solicitor’s undertaking to pay $350,000, subject to credit for a payment already received. Judgment was given in January 2001, and Linde’s appeal was dismissed by consent.

In 2005 Stuart brought further proceedings against the solicitors, alleging misrepresentation and inducement of Vardinoyannis’s breach of contract. He also sued Vardinoyannis for breach of contract. Stuart had learned the facts supporting the inducement claim from Linde’s witness statement shortly before the earlier trial. He discovered the falsity of some alleged representations only afterwards. Master Fontaine struck out both claims against the solicitors as an abuse of process. Judge Seymour QC dismissed Stuart’s appeal in [2007] EWHC 878 (QB). The further appeal concerned whether the claims should have been advanced earlier and whether their later pursuit was abusive.

The appeal was allowed unanimously. The defendants had not established that the later proceedings were an abuse of process. The inducement and misrepresentation claims were permitted to proceed.

1. The principles in Johnson v Gore Wood required a broad assessment of the public and private interests and all the circumstances. A claim which could have been advanced earlier was not necessarily one which should have been advanced earlier. The burden remained on the defendant to establish abuse, ordinarily involving unjust harassment.

2. A decision whether proceedings were abusive involved an evaluative judgment rather than the exercise of a discretion. Sedley LJ adopted Sir Anthony Clarke MR’s qualification of Lloyd LJ’s approach to appellate review. An appellate court should respect the assessment below and generally intervene where material factors were wrongly included or excluded, an error of principle occurred, or the conclusion was impermissible or plainly wrong. A different assessment by the appellate court did not itself establish error.

3. The uncertain substantive merits of claims unsuitable for summary determination were irrelevant to whether they should have been pursued in earlier proceedings. The merits-based assessment described in Johnson v Gore Wood concerned the propriety of successive litigation. Possible relevance of extreme cases was left open. Delay alone, within the applicable limitation period and absent an equitable defence, was also irrelevant. Events occurring during the delay could nevertheless matter.

4. There was no general duty to investigate whether a possible additional claim existed. Any relevance of a failure to investigate depended on the claimant’s knowledge and circumstances. Failure to protect one’s interests during the original transaction was irrelevant unless it constituted a complete and inevitable defence.

5. Lloyd LJ, whose essential reasons Sedley LJ accepted, considered that adding the inducement claim shortly before trial would have transformed and delayed the relatively confined undertaking proceedings. The later claims raised substantial additional issues of causation and damages. Some facts supporting misrepresentation were discovered only after trial. Neither the overlap in evidence nor the failure to give advance notice established abuse in these circumstances.

6. Sedley LJ also adopted Sir Anthony Clarke MR’s guidance that disclosure should enable the court to manage related issues fairly. Parties contemplating further claims should put their position before both the defendant and the court. Tactical concealment carried a substantial risk of a finding of abuse.

7. Sir Anthony Clarke MR attached greater weight to the tactical withholding of the inducement claim and the risk of inconsistent credibility findings. He nevertheless concurred because abuse had to be assessed when the later action was brought, taking account of important newly discovered facts supporting the misrepresentation claim. He might have reached a different conclusion had the inducement claim stood alone.

• Court of Appeal: In [2008] EWCA Civ 2 , allowed Stuart’s appeal unanimously and permitted the inducement and misrepresentation claims to proceed.
• High Court, Queen’s Bench Division: Judge Seymour QC dismissed the appeal from Master Fontaine on 15 February 2007, in [2007] EWHC 878 (QB). Burton J had granted permission to appeal and directed that it be heard by a High Court judge.
• High Court, Master Fontaine: On 27 July 2006, struck out the inducement and misrepresentation claims as an abuse of process. A separate contractual claim was struck out on other grounds, which were not challenged on this appeal.
• Earlier undertaking proceedings: A Deputy Judge of the Queen’s Bench Division gave judgment for Stuart on 22 January 2001. Linde obtained permission to appeal to the Court of Appeal, but that appeal was dismissed by consent.