Gaydamak v Leviev

Where a party seeks to advance in later proceedings a point that was essential to an earlier cause of action, the proper starting point is the second category of cause of action estoppel. The court asks whether the point could, with reasonable diligence, have been raised and whether it should have been raised in all the circumstances. The principles in Henderson v Henderson inform that inquiry but do not replace it with a general abuse-of-process test. A point which was clearly part of the subject matter of the earlier proceedings will ordinarily be barred, absent special circumstances. A party cannot obtain a second trial by repackaging an earlier claim or by relying on fresh evidence that could have been obtained before judgment.

The claimant had previously sued the defendant concerning a 2001 agreement relating to diamond interests. In the earlier proceedings, Vos J upheld the agreement but held that a 2011 settlement agreement released the defendant from liability. The claimant’s allegation that the settlement had resulted from fraudulent misrepresentations failed. Permission to appeal was refused by the Court of Appeal.

The claimant then commenced fresh proceedings alleging breach of trust, conspiracy and related wrongdoing. The central issue was whether the new trust-based challenge to the 2011 settlement agreement was barred by cause of action estoppel or constituted an abuse of process. The defendant also challenged the conspiracy claim.

1. The application succeeded and the action was struck out as against the defendant.

2. The second category of cause of action estoppel applied. The claimant’s proposed challenge to the 2011 settlement agreement was essential to the claims previously advanced, could plainly have been raised in the earlier proceedings, and should have been raised there. The point concerned the same trust relationship and settlement issues that had been litigated previously.

3. The correct starting point was the formulation in Virgin Atlantic v Zodiac. The principles in Henderson v Henderson explained the policy of finality and the circumstances in which a point should have been brought forward, but they did not constitute an overriding substitute for cause of action estoppel. Negligence, inadvertence or accident did not amount to special circumstances justifying a second action.

4. The proposed reliance on Thomson v Eastwood was, for present purposes, arguable but far from obvious. Its applicability depended on matters including the governing law of the trust and the character of the modern commercial relationship. Those issues themselves illustrated why the point should have been raised at the first trial.

5. Even if analysed as abuse of process, the result was the same. The later proceedings raised a point clearly forming part of the earlier subject matter, and no factor displaced the prima facie conclusion that pursuing it was abusive. Fresh expert evidence concerning the authenticity of documents did not justify a second action. It related principally to credibility, was weak, concerned an issue on which the claimant had succeeded, and could have been pursued before judgment.

6. The conspiracy claim could not proceed while the settlement agreement stood. The claimant accepted that position. Since the settlement could not be impeached on the proposed trust-based ground, the conspiracy and related claims failed without the need to determine their separate pleading objections.

• High Court (Chancery Division): the present proceedings were struck out as against the defendant under principles of cause of action estoppel and abuse of process.
• Earlier proceedings: Vos J gave judgment in [2012] EWHC 1740 (Ch), upholding the 2001 agreement but holding that the 2011 settlement released the defendant from liability. Permission to appeal was refused by the Court of Appeal.