Kotonou v National Westminster Bank Plc

The question whether later proceedings are an abuse of process requires a broad, merits-based assessment of all the circumstances. The court must focus intensely on the facts and ask whether the later litigation is manifestly unfair to the other party or would bring the administration of justice into disrepute.

The Henderson v Henderson principle does not require a separate special factor, such as a collateral attack or dishonesty. A matter which could and should have been raised earlier does not automatically make later proceedings abusive, but it may do so after a holistic assessment. Mutuality is not a requirement of abuse of process.

The claimant appealed against Morgan J’s decision, [2010] EWHC 1659 (Ch), which upheld the striking out of his claim against the Bank, refused permission to amend, granted summary judgment to the Bank and dismissed the claim.

The claim alleged that the Bank owed duties to Olympic Resources & Services plc and to the claimant personally concerning a standby letter of credit. Similar factual allegations had been raised and extensively investigated in earlier guarantee proceedings between the parties. The deputy judge had set aside the claimant’s guarantee for misrepresentation, but his findings concerning the letter of credit were not necessary to that result.

The central issue was whether the new claim was nevertheless an abuse of process, including under the Henderson v Henderson principle.

1. Appeal dismissed unanimously. Lady Justice Gloster, with whom Lord Justice Kitchin and Lord Justice Aikens agreed, held that the claim was properly struck out as an abuse of process.

2. The court rejected a rigid inquiry into whether a separate “special factor” was needed before later proceedings based on non-essential earlier findings could be abusive. Applying the broad approach in Hunter, Johnson and Laing, the court had to make an intense, fact-specific and merits-based assessment. It had to consider both unfairness to the Bank and the risk that re-litigation would bring the administration of justice into disrepute.

3. The Henderson v Henderson principle was engaged. The claimant could have advanced, in the guarantee proceedings, defences based on alleged duties owed by the Bank to ORS and to him personally. A defence based on ORS’s alleged set-off did not require reliance on the disputed assignment. The claimant also could have renewed his amendment application or appealed its refusal.

4. The claimant had requested findings about the Bank’s role in the letter of credit. The deputy judge then conducted a detailed evidential inquiry over a twelve-day trial and rejected material factual allegations. The later claim repeated substantially the same allegations. The claimant’s conscious decision not to seek an adjournment to pursue the assignment claim, and his awareness of the res judicata risk, did not justify renewed litigation.

5. Mutuality, although relevant to issue estoppel, was not a condition of abuse of process. It would in any event have been abusive for either party to seek in later proceedings to contradict the relevant findings after the earlier detailed inquiry.

6. It would be unfair to require the Bank to defend the same factual case again, and a second court’s examination of the same factual substratum would bring the administration of justice into disrepute. The court therefore maintained the strike-out under Civil Procedure Rules 1998, refused the proposed amendment, and upheld summary judgment and the consequential dismissal of the claim.

• Court of Appeal (Civil Division): Appeal dismissed. The court upheld the strike-out for abuse of process, refusal of permission to amend, summary judgment and the dismissal of the claim.
• High Court, Chancery Division: Morgan J, in [2010] EWHC 1659 (Ch), dismissed the claimant’s appeal from the master’s strike-out order, refused permission to amend, granted the Bank summary judgment and dismissed the claim.
• Master: The master struck out the particulars of claim under Civil Procedure Rules 1998, CPR Part 3.4(2)(b), as a collateral attack on findings made in the earlier guarantee proceedings.