Stephen David Margulies v Marcus Jonathan Margulies

A later claim is barred where it relies on substantially the same factual situation as an earlier failed claim, even if it is given a different legal label or framed more narrowly. Cause of action estoppel is an absolute bar to matters which had to be decided to establish the earlier cause of action. Issue estoppel ordinarily bars a common issue previously decided, subject only to a narrow exception for special circumstances causing injustice. A claim may also be an abuse of process where matters could and should have been raised earlier. At summary judgment stage, a claimant cannot rely on the possibility that disclosure or a trial may produce supporting evidence. The court must assess the pleaded case and material presently available.

The claimant sought to pursue a further claim against his brother concerning funds allegedly held in Swiss bank accounts. He alleged that their late father had intended the funds to benefit him through a trust or fiduciary arrangement.

Earlier proceedings alleging that the claimant was entitled to benefit from the father’s estate through a secret trust had been struck out by Carnwath J and dismissed by the Court of Appeal. The claimant contended that the present claim was different because the funds had allegedly been transferred before the father’s death and because further evidence had emerged.

The defendant applied to strike out the claim under CPR 3.4(2)(a)-(c), alternatively for summary judgment under CPR 24.2. The issues were whether the claim was barred by cause of action estoppel, issue estoppel or abuse of process, and whether it had a realistic prospect of success.

1. Application allowed; claim struck out. The present claim relied on essentially the same set of facts as the earlier proceedings. The difference between an alleged transfer before death and a transfer on death was merely a timing point. Describing the alleged arrangement as an inter vivos trust rather than a secret trust was only a difference of legal label. The narrower focus on Swiss funds did not avoid the earlier decision because the present cause of action was subsumed within the wider earlier claim.

2. Cause of action estoppel therefore applied. The earlier proceedings had failed and the claimant was estopped from raising the same cause of action again.

3. Issue estoppel provided an independent bar. The critical issue in both proceedings was whether the father had manifested an intention during his lifetime to create a trust over assets for the claimant’s benefit. That issue had been decided against the claimant in the earlier proceedings. The matters relied upon as new evidence, including conversations, diary entries, material concerning a BVI company and a disciplinary decision concerning a solicitor, were immaterial, speculative, hearsay or already substantially available. They did not establish special circumstances making application of the estoppel unjust.

4. The proceedings were also an abuse of process under Henderson v Henderson. The private interest in avoiding repeated litigation and the public interest in finality were both engaged. The claimant could and should have advanced the present case in the earlier proceedings.

5. The allegations that the earlier judgment had been obtained by fraud were unsupported. No application had been made to set aside that judgment, and the strict test identified in Royal Bank of Scotland plc v Highland Financial Partners LP was not satisfied.

6. Alternatively, summary judgment was appropriate. The claim had no realistic prospect of success on the material before the court. The claimant could not resist summary judgment by asserting that disclosure or a trial might reveal evidence supporting the claim. That was the impermissible approach rejected in Lunggowe v Vedanta Resources plc, and the decision in Okpabi v Royal Dutch Shell plc did not alter it.

The earlier 1997 proceedings were struck out by Carnwath J in 1998. The Court of Appeal unanimously upheld that decision in March 2000. In the present proceedings, the High Court allowed the defendant’s application and struck out the claim.