Thomas Ward & Anor v Secretary of State for Business, Energy & Industrial Strategy

The Court of Appeal refused permission to appeal against the trial judge's ruling that the appellants could not re-litigate factual findings made by the Upper Tribunal. The court reviewed the proper scope of the terms "res judicata" and "issue estoppel" and distinguished those doctrines from the broader principle that a collateral attack on prior findings may amount to an abuse of process.

The court noted that the Upper Tribunal proceedings had been brought by the Financial Conduct Authority and that the Secretary of State, a Crown minister, was not a party to those proceedings; it was therefore arguable that strict res judicata did not apply. However, having considered the management of the parallel Directors Disqualification proceedings, the specialist nature of the Upper Tribunal findings, the risk of inconsistent findings and the likely prejudice and delay from re-litigation, the court concluded that a respondent’s notice raising abuse of process would have no realistic prospect of failing. For those reasons permission to appeal was refused.

Background and parties. The Upper Tribunal upheld findings of regulatory breaches by Mr Ward and imposed a substantial financial penalty. The Financial Conduct Authority brought the Upper Tribunal proceedings. The Secretary of State later brought Directors Disqualification proceedings against Mr Ward and Mr Page. The disqualification claim was managed to await the outcome of the Upper Tribunal so that its findings could inform the disqualification trial.

Procedural posture. The appellants sought to challenge the Upper Tribunal's factual findings in the disqualification proceedings before His Honour Judge Rawlings. The trial judge held that the defendants were estopped by reason of res judicata/issue estoppel and recorded a declaration that they were bound by the Upper Tribunal findings. The appellants sought permission to appeal that ruling; that application came before the Court of Appeal (Lewison LJ).

Issues framed. (i) Whether the Upper Tribunal decision amounted to res judicata or issue estoppel as between the FCA and the Secretary of State and their privies; (ii) whether allowing the appellants to challenge the UT findings in the disqualification proceedings would amount to an abuse of process (a collateral attack); and (iii) whether, on the facts and the management of the related proceedings, there was a realistic prospect of success on appeal.

Court's reasoning and outcome. The court observed the distinction between narrow res judicata/issue estoppel and the wider, "portmanteau" use of the term including abuse of process. It noted that strict res judicata would require privy status, which was doubtful given the FCA is not acting on behalf of the Crown (section 1A and paragraph 16 of Schedule 1 FSMA were noted) and the Secretary of State was not a party to the UT proceedings. However, the court accepted that a broader abuse of process argument could be advanced by the Secretary of State and that such an argument must be assessed evaluatively on the particular facts. Given the specialist nature of the UT findings, the case management that deferred the disqualification proceedings to rely on those findings, and the risk of inconsistent outcomes and disproportionate delay, the court concluded that a respondent’s notice on abuse of process would have been inevitable and that there was no real prospect of the appellants successfully resisting it. Accordingly the Court of Appeal refused permission to appeal.

Wider context. The court emphasised that the question of abuse of process is fact-sensitive and that previous authorities show that in some cases re-litigation may be permitted; but on the facts of this case the factors pointed strongly against allowing re-litigation.

The application for permission to appeal was refused. The Court of Appeal accepted that while strict res judicata/issue estoppel would not necessarily bind the Secretary of State because he was not a party to the Upper Tribunal proceedings, a wider abuse of process objection would have been available and, on the facts (specialist UT findings, case management to await the UT, risk of inconsistent findings and prejudice from re-litigation), there was no realistic prospect of the appellants overcoming that objection.