Bank of Scotland v Hussain & Anor

Cause of action estoppel does not bar a party from advancing a genuinely new cause of action against a party who was involved in earlier litigation, even where similar relief was sought previously. Issue estoppel requires the issue to have been in controversy between the relevant parties and to have been fundamental to the earlier decision.

The extended doctrine of abuse of process is a broad, merits-based assessment of whether later proceedings misuse the court process. A prior final determination of that question ordinarily prevents its re-litigation.

Rights protected by section 70(1)(g) of the Land Registration Act 1925 are not enlarged by the provision. A person in actual occupation may nevertheless be bound by a mortgage where her conduct objectively authorised, or induced reasonable reliance on, the mortgage and vacant possession.

The Bank sought possession of a property charged by Mr Hussain after his purchase from Mrs Qutb was set aside in earlier proceedings for undue influence and unconscionable bargain. The property was transferred back to Mrs Qutb subject to the Bank’s charge.

In subsequent possession proceedings, Mrs Qutb relied on section 70(1)(g) of the Land Registration Act 1925, contending that her actual occupation gave her rights overriding the charge. The Bank argued that the claim was barred by res judicata, abuse of process, election, affirmation or estoppel. A previous strike-out decision had rejected the abuse of process argument.

1. Claim succeeded. The Bank was entitled to a possession order.
2. Cause of action estoppel did not apply. Mrs Qutb’s earlier challenge to the charge was based on non est factum, whereas her present case relied on undue influence and unconscionable bargain. Similar remedies did not make the causes of action the same. Henderson v Henderson did not extend cause of action estoppel to a genuinely new cause of action.
3. Issue estoppel did not apply. The earlier findings on undue influence and unconscionable bargain had been made on claims against Mr Hussain, not against the Bank. The relevant issue had not been in controversy between Mrs Qutb and the Bank. The fact that the charge was preserved in the earlier order did not create an estoppel on the present claim.
4. The earlier judgment did not merge or extinguish the present claim. The indemnity granted against Mr Hussain would simply fall away if the charge proved unenforceable, without producing double recovery.
5. The Bank was barred from re-arguing abuse of process. The previous decision had finally determined that issue, and there had been no material change in circumstances. The fact that different arguments were advanced did not justify a second application.
6. Mrs Qutb’s earlier conduct and remedies did not preclude her present challenge. First National Bank plc v Walker was distinguishable because the wife there had abandoned the underlying undue-influence claim, whereas Mrs Qutb had succeeded on her claims against Mr Hussain.
7. Mrs Qutb was in actual occupation when the charge was granted. Physical presence, continuing intention to occupy, and the retention of belongings supported that conclusion. A person may be in actual occupation of more than one property.
8. Despite actual occupation, Mrs Qutb was bound by the charge. Her participation in the mortgage arrangements, representations that the property would be sold with vacant possession and full title guarantee, and the Bank’s reasonable reliance on those representations engaged the principle in Paddington Building Society v Mendelsohn and related authorities. The Bank’s lack of notice of her incapacity was material.
9. Section 70(1)(g) preserved existing rights but did not enlarge them. In any event, Mrs Qutb’s rights under the earlier order were subject to the charge. Her alternative reliance on estoppel by convention also supported the result.
10. The requests to adjourn or suspend possession under the Administration of Justice Act 1970 and the Administration of Justice Act 1973 were unsupported by evidence and were not developed at trial.