Stuart v Goldberg & Ors

A later claim is not abusive merely because it could have been joined to earlier proceedings. Under the Henderson v Henderson principle, the court must make a broad assessment of all the circumstances and ask whether the later proceedings misuse the court’s process or amount to unjust harassment.

Unless the claim is plainly bound to succeed or fail, its substantive merits are irrelevant to that inquiry. Delay, while the claim remains in time, is also irrelevant unless events during the delay matter. There is no general duty to investigate possible claims with reasonable diligence. A party should disclose a contemplated related claim so that the court can manage it, but failure to do so is not automatically abusive.

The claimant had succeeded in earlier proceedings to enforce an oral solicitor’s undertaking given by Mr Linde. In later proceedings he advanced claims against Mr Linde for inducement of breach of contract and misrepresentation, arising from related dealings but involving additional issues of causation, loss and damages.

Master Fontaine struck out the later claims as an abuse of process under the Henderson v Henderson principle. Judge Seymour Q.C. dismissed the claimant’s appeal in the High Court: [2007] EWHC 878 (QB). The claimant appealed to the Court of Appeal.

The central issue was whether the later claims were abusive because they could, in whole or part, have been raised during the earlier undertaking action.

1. Appeal allowed. The later action against Mr Linde was not an abuse of process. The strike-out was therefore set aside and the claims could proceed.

2. Applying Johnson v Gore Wood [2002] 2 AC 1, the question was whether, in all the circumstances, the claimant was misusing the court’s process by bringing a claim which could have been raised earlier. The defendant bore that burden. The inquiry was not governed by a rule that every available claim had to be joined in the first proceedings.

3. Per Lloyd LJ, with Sedley LJ agreeing, the Master had wrongly treated the uncertain substantive merits of the new claims as relevant. Unless a claim is plainly bound to succeed or fail, its strength does not bear on whether bringing it separately abuses the process. Delay alone is likewise irrelevant where no limitation, laches, or consequential change of circumstances is relied upon.

4. There is no general obligation on a potential claimant to investigate with reasonable diligence whether a further claim exists. Any alleged lack of diligence must be considered in its particular factual context. Diligence in protecting one’s interests during the underlying transaction was irrelevant to the abuse inquiry unless it supplied a complete and inevitable substantive defence.

5. The claimant should prudently have disclosed the possible inducement claim to the defendant and the court. As Sir Anthony Clarke MR and Sedley LJ stressed, parties should put their cards on the table so that the court can manage related claims fairly. But the omission was not decisive here. The new claims were substantially more complex than the undertaking claim; the inducement material emerged shortly before trial from the defendant’s own evidence; and relevant facts supporting misrepresentation were not discovered until later.

6. The court accepted that the abuse question is not discretionary. Nevertheless, following Aldi Stores Ltd v WSP Group plc [2007] EWCA Civ 1260, an appellate court should be slow to disturb a multi-factor assessment unless irrelevant matters were taken into account, material matters omitted, an error of principle occurred, the conclusion was not open, or it was plainly wrong.

• Court of Appeal (Civil Division): allowed the claimant’s appeal and held that the later action was not an abuse of process: [2008] EWCA Civ 2.

• High Court (Queen’s Bench Division): Judge Seymour Q.C. dismissed the claimant’s appeal from the Master: [2007] EWHC 878 (QB).

• Master: Master Fontaine struck out the inducement and misrepresentation claims as an abuse of process.