Spicer & Anor v Tuli & Anor

A dismissal by consent does not invariably create a cause of action or issue estoppel. The court may examine the surrounding circumstances to determine whether the withdrawing or consenting party intended to abandon the claim. If there was no such intention, a later claim is not barred unless pursuing it would be an abuse of process.

Estoppel and abuse of process serve the finality of litigation and protection from unjust harassment. They must be applied to achieve justice. In assessing abuse, the court takes a broad, merits-based approach which includes the parties’ conduct when ending the earlier proceedings.

Receivers commenced possession proceedings against an occupier as a trespasser. After she produced tenancy agreements, the parties agreed that the proceedings would be withdrawn while the receivers investigated their authenticity. A consent order instead stated that the proceedings were dismissed.

The receivers subsequently brought a wider possession claim alleging, among other matters, that the tenancies were fraudulent, ineffective against the mortgagee or not intended to have legal effect. The occupier applied to strike out that claim on the grounds of cause of action estoppel and abuse of process. District Judge Avent and, on appeal, HHJ Diana Faber refused the application.

The central questions were whether the consent dismissal barred the later proceedings and, if not, whether those proceedings were an abuse of process.

1. The appeal was dismissed unanimously. The consent dismissal did not create a cause of action estoppel, and the receivers’ later possession proceedings were not an abuse of process.

2. A withdrawal or consent judgment does not invariably give rise to a cause of action or issue estoppel. The surrounding circumstances may be examined to decide whether the party intended to abandon the claim. The wider reasoning of Dyson LJ in Ako v Rothschild Asset Management Limited [2002] EWCA Civ 236 was an alternative ratio decidendi, and the court adopted it.

3. The receivers had plainly intended to continue investigating and pursuing their possession claim. The occupier’s solicitors knew this. The substitution of “dismissed” for “withdrawn”, where the proper procedural term was “discontinued”, was a technical error and did not transform the parties’ underlying agreement into an abandonment of the claim.

4. Cause of action estoppel, issue estoppel and abuse of process protect the public interest in finality and prevent unjust harassment. They are judge-made principles which must work justice rather than injustice. Special circumstances may therefore prevent an inflexible application of estoppel.

5. The court applied the broad, merits-based approach to abuse of process established in Johnson v Gore Wood & Co [2002] 2 AC 1. The conduct and shared understanding of the parties when terminating the first action were material. It would have been unconscionable to permit the occupier to take advantage of the erroneous wording of the consent order.

6. Article 6 of the European Convention on Human Rights reinforced the need to examine the circumstances. Although the right to a fair hearing may be waived, an alleged waiver through a friendly settlement requires thorough analysis. There had been no settlement of that kind because the receivers had expressly reserved their intention to pursue possession.

1. Court of Appeal (Civil Division): The occupier’s appeal was dismissed. The court upheld the refusal to strike out the receivers’ later possession proceedings.

2. Central London County Court: HHJ Diana Faber dismissed the appeal from District Judge Avent, holding that the later proceedings were not an abuse of process and refusing to strike them out.

3. Central London County Court: District Judge Avent refused the occupier’s application to strike out the later proceedings.