Ikea Ltd & Ors v Brown & Ors

A counterclaim must identify a coherent cause of action and plead the facts necessary to establish it. English law recognises no general tort of malicious prosecution of civil proceedings. The failure of related criminal proceedings does not, by itself, make subsequent civil recovery proceedings tortious. A claim for malicious falsehood must identify the allegedly false matter and explain why the claimant lacked reasonable and proper cause for asserting it. Where a defendant merely supplied evidence to a prosecutor, malicious prosecution of criminal proceedings requires, among other matters, proof that the defendant’s evidence effectively deprived the prosecuting authority of independent judgment and made prosecution virtually inevitable. A pleading that fails to address those requirements may be struck out under Civil Procedure Rules 1998.

The claimants sued the sixth to eighth defendants concerning alleged fraudulent supply transactions involving English and Guernsey companies. The sixth defendant had previously served a counterclaim alleging malicious prosecution, malicious falsehood, maliciously procuring his arrest and malicious prosecution of the civil proceedings. Beatson J had struck out an earlier counterclaim but allowed a further counterclaim if it could properly be pleaded.

The sixth defendant served a new counterclaim relying on alleged discrepancies in the claimants’ case, their decision to prosecute or sue him rather than others, the failure of the criminal proceedings, and requests for disclosure. The claimants applied to strike it out. The central issues were whether the pleading disclosed a reasonable cause of action in malicious falsehood or malicious prosecution, and whether English law should recognise a general tort of malicious prosecution of civil proceedings.

The court struck out the counterclaim in its entirety.

1. Malicious prosecution of civil proceedings. There is no general tort of malicious prosecution of civil proceedings: Gregory v Portsmouth City Council [2001] 1 AC 419. No realistic prospect was shown of extending English law to recognise such a tort, particularly in relation to allegations made in a Reply.
2. Malicious falsehood. The allegations concerning the alleged control of funds were incoherent because they did not identify which part of the claimants’ limited allegation was false. The allegations concerning the purpose of the corporate structure failed to engage with the matters relied upon by the claimants as reasonable and proper grounds for their allegations. Similar deficiencies affected the allegations concerning Mr Bennett, the claimants’ control systems and their claimed losses. Complaints about a trust allegation concerning commission could not amount to a tort, and maintaining civil proceedings after failed criminal proceedings was not, without more, tortious. Requests for disclosure were not a properly pleaded counterclaim.
3. Malicious prosecution of criminal proceedings. Where the defendant is not the prosecutor but has supplied evidence, it is necessary to plead that the defendant falsely and maliciously gave evidence intending that a prosecution be brought, that the relevant facts were exclusively within the defendant’s knowledge so that the prosecuting authorities could not exercise independent judgment, and that prosecution was virtually inevitable. The pleading did not adequately particularise those matters. Complaints that the prosecuting authority chose to prosecute the sixth defendant rather than others, and a statement of belief that prosecution was malicious, were insufficient.
4. The counterclaim therefore failed to disclose a reasonable cause of action and was struck out under Civil Procedure Rules 1998, Part 3.4(2)(a), and the associated Practice Direction.