Goldman & Ors v Zurich Insurance Plc & Anor

A later claim is not necessarily an abuse merely because it could have been brought in earlier proceedings. The court must ask whether it should have been brought, applying a broad, merits-based assessment of all the circumstances and balancing public and private interests. In fraud cases, reasonable diligence may be relevant, but it is unlikely to carry substantial weight where the other factors favour allowing the claim to proceed. The merits of the later claim are generally irrelevant, except in extreme cases or where the court considers whether the claim could properly have been pleaded. The substance of the claims, rather than their pleaded form alone, determines the degree of overlap.

The claimants had previously sued Zurich Insurance plc and Zurich Building Control Services Ltd in connection with defects at a residential development. They succeeded in their policy claims against Zurich Insurance plc but failed in deceit claims concerning Building Regulations final certificates issued by Zurich Building Control Services Ltd.

They then brought a fresh action alleging deceit and unlawful means conspiracy concerning insurance cover notes. The defendants applied to strike out the new claims as a Henderson abuse of process, arguing that they could and should have been advanced in the original action. The central issues were whether the claimants could have pleaded the new claims earlier and, if so, whether they should have done so.

1. Application dismissed. The current proceedings were not an abuse of process and could proceed against both defendants.
2. The governing approach was that stated in Johnson v Gore Wood & Co [2002] 2 AC 1. The essential question was whether the later claim should have been raised earlier, not merely whether it could have been. The answer required a broad, merits-based judgment addressing all relevant public and private interests.
3. Reasonable diligence could be relevant to the assessment. It was not a general rule that a claimant must investigate every possible claim. In fraud cases, the factor would usually carry limited weight where other circumstances pointed against abuse. The observations in Takhar v Gracefield Developments Ltd [2019] 2 WLR 984 did not establish an absolute rule excluding reasonable diligence from Henderson cases.
4. The claimants had sufficient information in 2017 to have pleaded a viable cover-note deceit claim if they had identified and investigated it. However, they could not reasonably be expected to make the necessary conceptual leap from the separate Building Regulations deceit claim to the cover-note claim. The claim was therefore not one which they could, even with reasonable diligence, have pleaded in the original action in the circumstances.
5. Even if the claimants could have brought the claims earlier, the “should” question favoured them. The earlier policy claims against Zurich Insurance plc and the deceit claims against Zurich Building Control Services Ltd were legally and factually distinct. The claimants had not consciously withheld an alternative fraud claim, and the allegations were serious. A second action would impose additional work, but did not amount to unjust harassment, particularly given the existing familiarity of the court and parties with the underlying evidence.
6. The conspiracy claim did not materially alter the analysis. If the deceit claim had been identified, the additional facts supporting conspiracy could also have been pleaded. The defendants’ strike-out application was dismissed.

The judgment records earlier proceedings concerning the same development:

• High Court (TCC): Zagora Management Ltd & others v Zurich Insurance plc & others [2019] EWHC 140 (TCC). The policy claims succeeded, subject to a decision that liability was capped at the purchase price. The deceit claims concerning Building Regulations final certificates failed for lack of reliance.
• Court of Appeal: Manchikalapati & others v Zurich Insurance plc [2019] EWCA Civ 2163. The policy decision was upheld, but the cap at the purchase price was overturned. Permission to appeal to the Supreme Court was outstanding.

The present court dismissed the defendants’ application to strike out the new claims.