Sarwar v The Royal Bank of Scotland Plc (Rev 1)

Cause of action estoppel does not prevent a later claim concerning further breaches or later-charged sums merely because an earlier judgment included an account of the parties’ dealings. Issue estoppel requires that the relevant issue was actually determined. Even where that requirement is met, newly available material which could not reasonably have been adduced earlier may constitute a special circumstance. Henderson v Henderson abuse of process requires a broad, merits-based assessment of all the circumstances, balancing finality and efficiency against access to justice. A party is not abusing process by raising an issue later where the other party’s inaccurate information caused the issue to be left aside in the earlier proceedings.

The claimant appealed against an order of Master Moncaster dated 21 December 2009. The underlying proceedings concerned the claimant’s banking relationship with the defendant bank, including interest charged and the appointment of receivers. At the earlier trial, the bank’s leading counsel informed Blackburne J that default interest had never exceeded 4 per cent above base rate. It was later accepted that interest at 25 per cent had in fact been charged during part of the relevant period.

The Master held that the starting balance in the earlier judgment could not be reopened because of res judicata, and rejected the claimant’s estoppel argument. Permission to appeal was limited to cause of action estoppel, issue estoppel and Henderson abuse of process.

Appeal allowed. The claimant was not barred from challenging the bank’s entitlement to charge interest at 25 per cent.

1. Cause of action estoppel. The earlier proceedings concerned excessive interest charged during an earlier period. The present account challenged later interest charges and therefore concerned further alleged breaches or later claims to entitlement. An account was a remedy, not the cause of action, and the later issue was not within the earlier claim’s necessary scope.
2. Issue estoppel. Blackburne J had not determined whether the bank was entitled to charge 25 per cent interest. He had proceeded on the bank’s incorrect information that such interest had not been charged. The precise balance stated in his judgment was unnecessary to the issues decided, including the validity of the receivers’ appointment. In any event, the later material fell within the special-circumstances exception recognised in Arnold and Others v National Westminster Bank plc [1991] 2 AC 93: it could not reasonably have been produced earlier because the bank had supplied the court and claimant with wrong information.
3. Abuse of process. Applying the broad, merits-based approach in Johnson v Gore-Wood & Co (a firm) [2002] AC 1, the claimant’s conduct was not abusive. The bank’s inaccurate response to the judge’s question had caused the issue to be left aside. The public interest in finality and efficient litigation did not justify preventing examination of the issue, particularly where access to justice was engaged.
4. The bank was not itself estopped from asserting its entitlement to charge the interest. The appeal concerned whether the claimant was barred from raising the issue, and no reciprocal estoppel was established.

The issue of the bank’s entitlement to charge interest at 25 per cent remained live.

• High Court (Chancery Division): Master Moncaster’s order dated 21 December 2009 held that the starting balance could not be reopened and rejected the claimant’s estoppel argument.
• High Court (Chancery Division): permission to appeal was granted by Henderson J. The appeal was allowed.