Outotec (USA) Inc & Anor v MW High Tech Projects UK Limited

A failure to notify the court of a connected claim in accordance with the Aldi guidelines is a serious and material factor, but it does not automatically make later proceedings abusive. The court must make a broad, merits-based assessment of all the circumstances. The defendant bears the burden of establishing abuse and, ordinarily, must demonstrate unjust vexation, oppression or harassment.

The assessment includes the overlap between the proceedings, the likely case-management outcome had notification occurred, the causal consequences of the breach, and the public and private interests at stake. A genuine claim should not lightly be struck out where it raises substantially new issues, causes negligible additional oppression, and produces no material waste of court resources.

MW engaged Outotec to supply plant for a waste-to-energy project. After extensive litigation concerning the project, MW commenced new proceedings alleging that fraudulent or negligent misrepresentations had induced the subcontract. Outotec and its parent company, Metso, sought to strike out those proceedings under the Civil Procedure Rules 1998 as an abuse of process.

The Technology and Construction Court held in [2023] EWHC 2885 (TCC) that MW could and should have raised the misrepresentation claim during the earlier litigation and had breached the Aldi guidelines by failing to notify the court. Nevertheless, it refused to strike out the claim.

The sole issue on appeal was whether that refusal was wrong, particularly because the judge had relied on the continuing claim against Metso and similar misrepresentation litigation concerning other projects.

1. Appeal dismissed. A breach of the Aldi guidelines is only one facet of the broad, merits-based assessment required by Johnson v Gore Wood. Even a serious and unexplained breach does not automatically make later proceedings abusive. The applicant must establish abuse and, ordinarily, unjust vexation, oppression or harassment: paras [73], [99]–[103].

2. MW could and should have raised the possible misrepresentation claim with the court during the Main Action. The Aldi guidelines initially required notification of the potential connected claim, rather than the immediate pleading of every allegation. MW had offered no excuse for its failure, so the breach was serious: paras [64]–[71].

3. The new claim concerned pre-contractual representations made between 2011 and 2015. Those matters had not arisen in the Main Action, which concerned construction, commissioning, delay, defects and termination. Although the claimed loss was connected with the outcome of the earlier litigation, its assessment would not re-litigate issues already decided. The claim was genuine, and its pursuit caused no obvious oppression or detriment to the public interest: paras [74]–[80].

4. The likely case-management response to timely notification was relevant to causation. Coulson LJ considered that the misrepresentation claim would probably have been separated for later trial. Arnold LJ preferred not to disturb the first-instance assessment that it probably would have been tried with the Main Action. Both agreed that the range of possible outcomes supported the refusal to strike out: paras [81]–[87], [104]–[105].

5. The existence of closely connected misrepresentation proceedings concerning the Surrey project was highly relevant. Outotec would always have faced a later trial concerning substantially similar representations, and the Hull and Surrey claims could efficiently be heard together. Any additional vexation caused by the breach was therefore negligible: paras [88]–[93], [97].

6. The majority held that the separate claim against Metso was not a proper reason to reject Outotec’s application because Metso was a distinct legal entity. Stuart-Smith LJ considered that the burden on the same witnesses remained relevant despite separate corporate personality. The difference did not affect the result: paras [94]–[96], [104], [106]–[107].

7. The judge’s evaluation was not plainly wrong. The factors against strike-out outweighed the serious non-compliance by a small but meaningful margin: paras [99]–[103].

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 844, dismissed the appeal and upheld the refusal to strike out the Hull misrepresentation claim as an abuse of process.
2. High Court, Technology and Construction Court: In [2023] EWHC 2885 (TCC), HHJ Stephen Davies held that MW could and should have raised the claim during the earlier litigation and had breached the Aldi guidelines, but refused to strike it out as an abuse of process.