UK: A Second Bite Of The Cherry?

Last Updated: 21 August 2008
Article by Andrew Blair and Zoe Millington-Jones

In Taylor Walton v Laing (2007), covered in the Footnotes section of the last Lawyers' Liability briefing, the Court of Appeal struck out a solicitors' negligence claim on the grounds of abuse of process. The Court reached its conclusion on the basis that the negligence proceedings would be re-litigating the same issue considered by the court in the underlying dispute, and that all the arguments made by the claimant (including allegations of negligence against the solicitor) could have been made during the trial of that dispute or on appeal.

In reaching this conclusion, the Court of Appeal clarified that simply bringing proceedings against a solicitor for negligence which allege matters that are different from those decided in the underlying dispute is not enough to bring the administration of justice into disrepute. For example, allegations of negligence during the course of litigation against solicitors will normally involve an attempt by a claimant to demonstrate that the previous conclusion of the court would have been different, absent negligence.

Aldi Stores Ltd v WSP Group (2008) is another recent decision on abuse of process in the professional liability context, this time involving a complex, multi-party construction dispute. Here, the Court of Appeal refused to strike out an action against engineering and environmental consultants, rejecting the consultants' argument that the claim amounted to an abuse of process because the claimant could and should have claimed against the consultants in an earlier action against a contractor arising out of the same facts.

The claimant had brought proceedings against the contractor in 2001, to which the contractor joined the consultants as Part 20 defendants ("the original construction action"). The claimant did not bring a direct claim against the consultants in the original construction action. Indeed, the claimant's quantum claim was treated separately from the Part 20 claim and a number of claims made by other parties against the contractor and consultants which were all being heard together.

The claimant obtained judgment against the contractor for the whole of its claim, part of which was satisfied by an interim payment. Due to the insolvency of the contractor, the claimant then pursued its excess layer insurers for the remainder (the insurers having in the meantime pulled cover) and settled the action on the basis of refund of premium.

Out of pocket, the claimant then brought the proceedings against the consultants. The consultants argued that the claim should be struck out as an abuse of process on a number of grounds, including that:

  • the allegations in the current proceedings were essentially the same as those made by the contractor against the consultants in the original construction action;

  • there was nothing to prevent the claimant from pursuing the contractors in the original construction action; and

  • the claimant should have realised that the action against the excess layer insurers was bound to fail and should have rejoined the original construction action.

The Court of Appeal upheld the first instance decision and refused to strike out the claim. There was no distinction which could be drawn as a matter of law between cases where the original proceedings concluded by settlement and where they concluded by judgment. The Court said that the proper approach when considering whether to strike out for abuse of process was not one of discretion, but a balancing exercise involving the assessment of a large number of factors. The Court of Appeal took the view that the claimant was entitled to take the decision to pursue the excess layer insurers rather than to rejoin the original construction action. This was on the basis that bringing all possible actions at the same time can be a recipe for complex and unwieldy litigation. The Court of Appeal considered the interests of the consultants, including the potential costs of the subsequent action. However, it found that the claimant had notified the consultants of the claimant's potential claim but the consultants then had failed to put the claimant on notice that the prospect of a second action would cause them oppression or vexation. The Court of Appeal said that it was inappropriate for the consultants to make no response earlier but to assert it was an abuse when the claimant's intentions turned into actions.

In Stuart v Goldberg & Ors (2008), the disputes arose out of dealings between the claimant, a third party, and the third party's solicitor in relation to a possible commercial enterprise in Mongolia. The claimant successfully previously sued the solicitor in 2000 to enforce an undertaking given by the solicitor in relation to the enterprise ("2000 action"). Shortly before the trial of the 2000 action, the claimant became aware that he had a claim for inducement of breach of contract against the solicitor. During the trial, the claimant also became aware that representations made by the solicitor to him in relation to the commercial enterprise were false. In the second action, the claimant brought the inducement and misrepresentation claims against the solicitor.

The Court of Appeal allowed the claimant's appeal against an order preventing him from suing on the basis that the second action was not an abuse of process, despite the fact that the claimant was aware before the trial of the 2000 action of some of the facts relevant to the second action. Although the Court of Appeal considered that the claimant should have put the solicitor on notice about the potential further claims, the failure to do so did not amount to abuse of process in this case. Lloyd LJ took into account that the action for breach of undertaking was relatively straightforward and that the addition of the further claims to the 2000 action would have delayed the trial. The Court accepted that different facts may have led to a different conclusion, in particular if the claimant had received the information about the further claims much earlier.

The Court of Appeal in Aldi Stores and Stuart stressed that parties involved in complex litigation must give careful consideration as to whether other actions might arise out of the same facts. The proper approach, when a party wished to pursue other proceedings whilst reserving a right in the existing proceedings, was to write a warning letter to the other side and refer to the court for directions. This was not only in the interest of the parties, but also in the public interest, especially with regard to the efficient use of court resources.

These decisions signal that lawyers and other professionals will often find it hard to succeed in arguing that a claim against them should be struck out for abuse of process on the ground that it should have been raised in earlier proceedings. The cases are very fact sensitive and success or otherwise on a strike out application will clearly depend on what has gone before - with these decisions providing a helpful guide to the factors the courts will take into account. It does appear, however, that defendants will have more chance of success where the claimant has not put all his cards on the table in the original proceedings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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