England and Wales Court of Appeal (Civil Division) Decisions

QBENF 98/0834/1

Royal Courts of Justice

Tuesday, 3rd November 1998

Before:

LORD JUSTICE HIRST

LORD JUSTICE MAY

SIR JOHN KNOX

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FINIAN PAUL LOUIS MANSON

Appellant

-v-

(1) NIGEL JOHN VOOGHT

(2) COOPERS & LYBRAND INTERNATIONAL

(3) COOPERS & LYBRAND INTERNATIONAL

trading as CORK GULLY

(4) BARCLAYS BANK PLC

Respondents

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(Transcript of the Handed Down Judgment of

Smith Bernal Reporting Limited, 180 Fleet Street,

London, EC4A 2HD. Telephone No: 0171-421 4040

Fax: 0171 831 8838)

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MR. N. KITCHENER (instructed by Messrs Tunstill & Co., London, SW3) apeared on behalf of the Appellant.

MR. E. MCQUATER (instructed by Messrs Lovell White Durrant, London, EC1) appeared on behalf of the Respondents.

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J U D G M E N T

(As approved by the Court)

Crown Copyright

Lord Justice May:

The plaintiff, Mr Manson, appeals by leave of the Full Court against an order made on 14.1.98 by Sir Peter Webster, sitting as a Judge of the High Court. By that order, the judge dismissed Mr Manson's appeal from an order of Master Leslie of 3.11.97, by which the master struck out Mr Manson's claims against the first, second and third defendants and dismissed his application to amend his statement of claim. The judge upheld the master's decision that it was an abuse of process for Mr Manson to make the claims which he wishes to pursue in this action when he could and should have made them in an earlier action which was tried to conclusion and which he lost.

Mr Manson was Managing Director and principal shareholder of a company called Thomas Christy Limited, whose business was manufacturing products sold in chemists' shops. By 1988, the company was in financial difficulties. On 9.12.88, the first defendant and John Martin Iredale, two partners in Coopers & Lybrand, were appointed administrative receivers of the company at the instigation of Barclays Bank, the fourth defendants in these proceedings. [For most present purposes, the first, second and third defendants may be taken as one. When I refer to the first defendant, that will in an appropriate context also encompass the second and third defendants.] The receivers sold the company's business as a going concern on 10.1.89. The company itself was insolvent and in March 1989 went into liquidation.

On 14.3.90, Mr Manson issued proceedings against the receivers making a number of claims against them arising out of their conduct of the receivership. In summary, his claims in this 1990 action were that the receivers had failed to pay him:

(a) his full entitlement to holiday pay;

(b) salary which he said was due to him for periods before and during the receivership;

(c) expenses which he said he had incurred; and

(d) a daily fee of £250 for work done for them after his employment came to an end.

The 1990 action was tried over 5 days in the Mayor's and City of London County Court by His Honour Judge Paul Baker Q.C., who gave judgment on 18.10.93. He dismissed all Mr Manson's claims. He upheld the receivers contention that Mr Manson's whole claim was misconceived as it should have been brought, if at all, against the company. The receivers were acting only as agents for the company and had not accepted personal liability. On the contrary, they had made it explicitly clear that Mr Manson would continue to be employed by the company and that the receivers themselves were not adopting his contract of employment. The judge found this to be a valid objection to the whole action and held that he could just dismiss it on that short ground. But he had heard full evidence and he proceeded, in a careful judgment covering many pages, to consider each of Mr Manson's claims on their merits. He dismissed all of them.

There are two particular passages in Judge Baker's judgment which are material to the present appeal. In his introductory narrative the judge said:

"Initially, late in 1988, the bank being unwilling to continue to support, Cork Gully were brought in to assist in negotiations with the bank with a view to getting an administration order under the Insolvency Act. That failed on the ground that there was insufficient working capital and hence the receivership came about." [This was a reference to the first defendant. Cork Gully were at the time an insolvency division of Coopers & Lybrand.]

Then in dealing with Mr Manson's claim for a daily fee, the judge said:

"One of the outstanding matters was certain furnishings and antiques in the offices of the company which Mr Manson claimed belonged to him. The receivers were saying that it appeared on the evidence that they had in their possession that the goods claimed were the company's property. So there was a dispute there as to the ownership of these goods. The receiver suggested that Mr Manson should make a statutory declaration as to his title to the goods which they and their solicitors would consider.

In his evidence to me in cross examination, Mr Manson told me that on the 12th and 16th January ...:

"I was there putting forward my claims for the antiques and the company cars. ...""

So that was evidence about Mr Manson's claim to be the owner of certain furnishings and antiques.

Mr Manson appears to have issued a notice of appeal against Judge Baker's order dated 10.12.93. He applied for legal aid for that appeal which was refused. The receivers applied for security for costs of the appeal which the Registrar ordered on 13.9.94. Mr Manson applied for leave to move for judicial review of the Legal Aid Board's refusal to grant him legal aid. Leave was eventually granted in June 1995, the Legal Aid Board not opposing the application. In March 1996, the application for judicial review was adjourned by consent. It appears never to have been brought on for hearing. Mr Manson was granted legal aid on 10.6.96 to obtain counsel's opinion on the merits of an appeal against Judge Baker's order. That certificate has now been revoked. In the result, Judge Baker's order, made nearly 5 years ago, stands unappealled.

In 1990, the Secretary of State for Trade and Industry took proceedings against Mr Manson under section 6 of the Company Directors Disqualification Act 1986 for an order disqualifying him from being a director or otherwise being concerned in the affairs of a company without leave of the court. These proceedings were heard in the Companies Court by Mr David Neuberger Q.C. sitting as a Deputy Judge of the High Court, who gave judgment on 6.7.93. In his introductory findings, he described how, from 1983 to late 1988, the company's annual turnover was in the region of £2.5m. a year. Its audited accounts showed its last net profit was made in the year ending 30.6.84, following which it went into loss at an increasing rate. There were net losses for each of the accounting periods up to 31.12.87. The deputy judge then referred to the fact that, in December 1988, the company's bankers decided not to continue further support for the company and that administrative receivers were appointed on 9.12.88.

The first of two conditions under Section 6 of the 1986 Act for the making of a disqualification order is that the respondent is or has been a director of a company which has become insolvent. The deputy judge found that there was no doubt that this condition was satisfied for Mr Manson and Thomas Christy Limited. He then considered twelve allegations of misconduct said to make Mr Manson unfit to be concerned in the management of a company. He found that some of these were not established, but that most of them were. For a number of these, he found that Mr Manson had been dishonest and in some instances he found that Mr Manson had not been telling the truth in his evidence. The deputy judge's general conclusion was as follows:

"Taking into account the various allegations which I have found to be established against the respondent, I have no doubt that he is unfit to be concerned in the management of a company and that accordingly I should make a Disqualification Order under section 6(1) of the 1986 Act. Virtually all the allegations I have found to be established show a want of honesty, and, taken together, they cannot be described as isolated incidents. In addition my conclusion that there was no agreement reached in 1987, as he stated in his evidence, to the effect that his salary would be increased annually by £25,000 per annum, and that the suggestion that such an agreement was reached was merely to enable him to mount a very substantial claim in the liquidation, must count against him. Furthermore, this is not a case where a respondent comes before the court seeking to apologise for any wrong doing. On the contrary, on some of the allegations which I have found to be established against him, the respondent put forward a case which he cannot and did not, in my judgment, believe. On the second and seventh allegations, he was only too ready to put blame on others, when, it seems to me to be quite clear, the fault lay entirely with him."

The second of the allegations which the deputy judge considered was that Mr Manson had claimed ownership of certain antiques which had, on his instructions and to his knowledge, been purchased with the company's money. The deputy judge said that it was clear that some £45,000 of the company's money was used to purchase antiques between the end of June 1987 and the end of March 1988. Mr Manson's initial affidavit evidence was to the effect that, once he was accorded sight of the company's records, he would be able to identify the transactions pursuant to which he purchased the antiques from the company. Having had sight of the records, his evidence became that the antiques were intended to have been purchased by him through the company, the monies being debited to his loan account, but that, in error, the monies were debited to the company's capital and fixed assets account. The deputy judge said that there was no doubt that the monies were not debited to Mr Manson's loan account on the evidence which he heard. He did not accept Mr Manson's evidence relating to this allegation. His conclusion was:

"In connection with this allegation, I reach the conclusion that the respondent either dishonestly used the company's money to purchase antiques with the intention of keeping them himself, or that he purchased the antiques with the company's money for the company, and later, when the company got into difficulties, dishonestly claimed that the antiques were his property. On balance, I consider that the second alternative is the correct one because it seems inherently the more likely of the two possibilities."

On 8.3.89, the company went into creditors' liquidation. On 6.12.93, Jacob J. gave judgment on two summonses, one brought by Mr Manson and one by the liquidator. By his summons, Mr Manson claimed the sum of £3,120,377 as due to him from the company. He had sought to prove for this sum in the liquidation. The liquidator had rejected that proof, and Mr Manson sought an order that it should be admitted in full. The second summons was a misfeasance summons brought by the liquidator. He claimed under section 212 of the Insolvency Act 1986 a declaration that Mr Manson was guilty of misfeasance and breach of fiduciary duty in relation to the company as a director in converting the assets and misapplying its money to his own use. The liquidator also claimed under Section 234 of the 1986 Act an order that Mr Manson return company property, consisting of a number of antiques and some pictures valued at about £55,000.

Mr Manson's main claim was based upon an allegation of wrongful dismissal. Jacob J. referred in his judgment to the directors disqualification proceedings heard by Mr David Neuberger Q.C. Jacob J. said that there was there a massive overlap with the matters which arose before him. He referred in particular to five matters which Mr Neuberger had found. These included (a) the finding about the antiques, to which I have referred, which Jacob J. said in effect was a finding that Mr Manson stole the antiques, and (b) a finding that Mr Manson gave false evidence to the effect that there was an agreement whereby he was to receive an automatic £25,000 p.a. increase in salary each year. Jacob J. held that the five findings both individually and collectively would give rise to a right of summary dismissal of a managing director. It was contended on behalf of the liquidator that the judge ought not in these circumstances to go into the question whether Mr Manson was rightly dismissed because it would be an abuse of the court's process for the same matters to be litigated again. The judge carefully considered a number of authorities relating to abuse of process. Applying principles to be derived from those cases, he said this:

"There is no doubt that were I to proceed to hear Mr Manson's claim for proof in respect of his alleged wrongful dismissal, and the liquidator's rebuttal thereof, I would be hearing five specific issues which have been found against Mr Manson by the deputy judge. Moreover I would be doing so on substantially the same evidence and documents ..."

He concluded that to allow re-litigation of the service contract issue would be an abuse of process. He then dealt with other matters which went beyond that issue.

On 8.3.91, Mr Manson made a formal complaint to the Institute of Chartered Accountants ("ICA") in relation to the conduct of the receivership by the receivers. His complaint was contained in a 19 page letter which attached over 90 pages of supporting documents. The complaint included a number of matters which reappear in the action with which the present appeal is concerned. The ICA found that there was no evidence to support Mr Manson's complaint. He appealed this decision to the Independent Reviewer of Complaints who dismissed his appeal. These proceedings were not of course before a court, but they do constitute yet further decisions in which Mr Manson's contentions relating to the receivership have been rejected.

Mr Manson began the present proceedings by writ issued on 8.12.94. This was one day less than six years after the appointment of the receivers and, as will appear, was towards the very end of a six year limitation period for the matters which the statement of claim contained. The statement of claim was composed by Mr Manson himself. It contains a fairly clear narrative but its legal structure is at best muddled. Much of the narrative makes complaint against Barclays Bank, the fourth defendants, which it is not necessary to consider for the purposes of this appeal. Paragraph 2 asserts that:

"At all material times the First Defendant was a partner in the Second and Third Defendants employed to advise on the conduct of the Fourth Defendant and how to deal with what they described as a "warring banker"."

Paragraph 5 contains an unparticularised blanket claim for a large number of causes of action or remedies. Paragraph 17 asserts that the appointment of the receivers was invalid. Paragraph 18 complains that the receivers

"... wrongfully trespassed on Christy premises, and wrongfully interfered with and/or converted Christy property, goods and/or chattels belonging to the Directors, shareholders and Christy."

Paragraph 20 complains that the company was sold as a going concern at an undervalue. Paragraphs 21 and 22 seem to complain that Mr Manson was unsure which firm the first defendant was a partner of. Paragraph 23 claims that in early December 1988 the first defendant began working for Barclays Bank and that thus there was a conflict of interest. Paragraph 25 claims that the first defendant's appointment as receiver was a clear breach of statutory and other guidelines. Paragraph 26 claims that in procuring their appointment as receivers "whilst purporting to advise us, the first, second and third defendants acted in bad faith and deceived and misled us, made negligent mis-statements and misrepresentations, whether negligent, fraudulent or otherwise, had a serious prima facie conflict of interest and were in breach of contract and/or duty and/or statutory duty and/or trust and were negligent and self serving in the advice they gave us." On the basis of these muddled allegations, Mr Manson claimed damages, which he particularised as (1) loss of a valuable investment in the shares of the company estimated to be in excess of £10m., (2) loss of future earnings and dividends, (3) loss of his homes and (4) loss of pension, life and other policies. Thus, although the narrative made some reference to the first, second and third defendants converting property or chattels, the statement of claim made no claim in relation to them. At the hearing of this appeal, Mr Kitchener on behalf of Mr Manson explained that Mr Manson no longer pursued any allegation that the company had been sold at an undervalue.

The writ and statement of claim was served on the first defendant on 5.4.95. A fairly prompt defence was served on 19.5.95. This admitted that at about the beginning of December 1988, the first defendant was orally instructed by Mr Manson on behalf of the company to prepare some cash flow forecasts to enable the company to determine whether it could continue to trade within its banking facilities.

The summons to strike out the writ and statement of claim as an abuse was issued on 25.2.97. It was not until 15.8.97 that Mr Manson by summons applied to be allowed to amend his statement of claim. He produced an amended statement of claim under his own name but there was also a draft in very much the same terms by counsel. Counsel's draft was proffered "in complete substitution" for the statement of claim endorsed on the writ. This was no doubt in itself sensible, rather than counsel attempting to recast the original pleading by a whole series of deletions and insertions. In substance, this new statement of claim alleged that:

(a) on about 1.12.88, Mr Manson acting on behalf of himself and the company entered into an oral agreement with the first defendant acting for himself and/or the second defendant and/or the third defendant under which it was agreed that the first defendant would provide advice to Mr Manson and to the company in connection with its negotiations with the bank.

(b) alternatively, the first defendant assumed responsibility to Mr Manson to protect his interest as a 100% shareholder in the company and to exercise reasonable care in giving advice to the company and to Mr Manson; and that Mr Manson relied on the first defendant's assumption of responsibility.

(c) pursuant to the oral agreement the first defendant negotiated with the bank on behalf of Mr Manson and the company.

(d) on 9.12.88, the first defendant advised Mr Manson that the company should request the bank to appoint a receiver. In reliance on this advice Mr Manson decided not to sell his shares in the company to a third party.

(e) the advice given was not impartial nor given in the best interests of the company or Mr Manson and was given negligently.

(f) if the first defendant had not advised the company and Mr Manson to apply for the appointment of a receiver, a receiver would not have been appointed and the company would not have gone into liquidation but would have continued to trade.

(g) the company's business was sold as a going concern at an undervalue.

It is then said that because of these facts Mr Manson has suffered loss. It is said that there were other courses of action open to the company to enable it to continue to trade and that in all the circumstances the defendants failed to act with reasonable care and skill in advising the company. The loss claimed is particularised as diminution in the value of Mr Manson's shareholding, loss of dividends and loss of future earnings and benefits as managing director. [Since the contention that the business was sold at an undervalue has been withdrawn, and since, as was found judicially long ago, the company was insolvent, it is difficult to see how this edifice could ever stand factually. But these matters were not explored at the hearing of the appeal and I put them aside.]

The proposed amended statement of claim then alleges that the first, second and third defendants on the instructions of the bank converted items of furniture and furnishings said to belong to the plaintiff. Fifteen such items are briefly listed (but not particularised) and round lump sums amounting to £104,500 are given as their value. The amounts attributed to a table and some chairs is £45,000 and to a book case £20,000: so it looks as if these items at least were not just ordinary office furniture.

The summonses were heard by Master Leslie who gave judgment on 3.11.97. He held that the issues in the proposed amended statement of claim could and should have been litigated in the 1990 action, that there were no special circumstances explaining why this had not been done and that what Mr Manson was trying to do amounted to an abuse of process. He held that the claim based upon the alleged oral agreement and that based upon a breach of duty of care deriving from an assumption of responsibility were new claims not encompassed within Mr Manson's original statement of claim and that they were statute barred. He refused Mr Manson leave to amend. The master does not seem to have dealt explicitly with the claim relating to the furniture and furnishings, but that too did not appear as a claim in Mr Manson's original statement of claim and was at the time of Master Leslie's hearing (and at the time when the summons for leave to amend was issued) statute barred.

Mr Manson appealed Master Leslie's orders. Sir Peter Webster heard the appeal on 14.1.98. The submissions before him and his judgment concentrated on what he referred to as

"... the meaning and application of the doctrine of the abuse of process which occurs when a matter is raised which could and should have been litigated in earlier proceedings, that is to say res judicata in the wider sense of its meaning".

He considered the main English authorities, to which I shall refer later in this judgment. His conclusion was:

"Here, although the claims in the first action were claims for liquidated sums and those in the second action were claims for damages, all those claims arose within the same factual context, that is to say the appointment and conduct of the receivers of the company. I agree with Master Leslie that those claims made in this action, even if the proposed amendment (which for the purpose of the appeal I consider) were to be allowed, would have to be struck out because of the application of this doctrine. I am quite satisfied that to make these claims in this action constitutes an abuse of process."

Sir Peter Webster concluded that there were no special circumstances sufficient to relieve Mr Manson from these consequences.

Most of Mr Kitchener's submissions before this court tacitly assumed that leave to amend would be granted. His main submission was that to strike out the amended claim would be an unwarranted extension of the line of authority which starts with the well-known passage from the judgment of Sir James Wigram V.-C. in Henderson v. Henderson (1843) 3 Hare 100 at 115, where he said:

"...I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter[s] which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time .... It is plain that litigation would be interminable if such a rule did not prevail ...."

Mr Kitchener referred to phrases in that passage in support of his submission that it only applied where claims in a second action would require claims made in a first action to be relitigated: and that it did not apply to prevent a person from making in a second action claims which are factually and legally different from those made in the first action. So here, he submits that Mr Manson's claims in the 1990 action were against the receivers for remuneration and expenses as Managing Director of the company: but his intended claims in the amended 1994 action were for alleged breach of contract or duty by the First Defendant in a personal capacity before he was appointed receiver and for conversion of the furniture and furnishings as receiver. He submitted that there was no case where the court had struck out a subsequent claim on this ground where the claims in the two actions were legally and factually different. In his written submission to this court, Mr Kitchener appeared to be suggesting that recent Court of Appeal decisions - in particular Talbot v. Berkshire County Council [1994] Q.B. 290 - might be regarded as overstating the court's powers in this area. In his oral submissions, he disclaimed any such suggestion but submitted rather that Talbot and other cases should be seen as limiting the circumstances in which the court would strike out succeeding claims.

As I say later in this judgment, I consider that, quite apart from Henderson considerations, Mr Mason faces insuperable difficulties in persuading the court that he should be granted leave to amend his statement of claim. But since it is no doubt relevant to the application for leave to amend to consider whether the proposed amended claim would be struck out and since the application to strike out applies also to the unamended claim, I will consider Mr Kitchener's main submissions first.

The judgements of this court in Barrow v. Bankside [1996] 1 W.L.R. 257, contain a full discussion of the development of the law which derives from Henderson. The case was part of the Lloyd's litigation managed in the Commercial Court. Mr Barrow was a member of an action group of over 3000 plaintiffs who brought proceedings against 71 defendants claiming damages for breach of contract and negligence in the conduct of underwriting business. The action was selected for early trial to determine that issue on a global basis without reference to the individual circumstances of each claimant. The plaintiffs succeeded, except as to the extent of the damages they might recover. Mr Barrow immediately began a fresh action against two defendants, one of whom had been a defendant to the group action making a generically different claim for breach of duty in relation to portfolio selection. This required consideration of the individual circumstances of the case. The defendants applied to strike out the fresh action on the grounds of estoppel, alternatively that the fresh proceedings were an abuse of process. Phillips J. dismissed the application. In doing so, he said (quoted by Sir Thomas Bingham M.R. at 264A):

"The principal justification for the rule in Henderson's case is the desirability of avoiding multiplicity of proceedings and of bringing a certain end to litigation. Had Mr Barrow been the sole plaintiff in the Gooda Walker action I would, without hesitation, have held that he should have combined the allegation of negligent underwriting made in that action with the allegations of negligent advice that he makes against his members' agent in this action. That is not the position however."

Phillips J. went on to explain that the proper and efficient management by the court of the action group claims and of the Lloyd's litigation generally meant that it was not appropriate to join the portfolio selection claims with the negligent underwriting claims and that it was not an abuse for Mr Barrow to bring his portfolio selection claim in a fresh action. Sir Thomas Bingham M.R. agreed with this passage which I have in part quoted and in part summarised. Significantly therefore he was agreeing that, in uncomplicated procedural circumstances, a second claim which was legally and factually different (to use Mr Kitchener's phrase) would have been struck out.

The following passages in the judgment in the Court of Appeal are relevant to the present appeal. At p. 260A, Sir Thomas Bingham M.R. said:

"The rule in Henderson v. Henderson (1843) 3 Hare 100 is very well known. It requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided (subject, of course, to any appeal) once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed."

At p. 263A, he said:

"The rule in Henderson v. Henderson is, as Stuart-Smith L.J. observed in Talbot v. Berkshire County Council [1994] Q.B. 290, 297F, a salutary rule, and its application should not in my view be circumscribed by unnecessarily restrictive rules. It is important to focus on the purpose of the rule. As the Judicial Committee of the Privy Council said in Brisbane City Council v. Attorney-General for Queensland [1979] AC 411, 425:

"This reference to ´abuse of process' had previously been made in Greenhalgh v. Mallard [1947] 2 All E.R. 255 per Somervell L.J. and their Lordships endorse it. This is the true basis of the doctrine and it ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation."

So it seems right to begin by asking whether the procedure adopted by Mr Barrow is an abuse of the process of the court. I do not think it is. Since his portfolio selection claim would not have been decided before now anyway, he is not causing there to be two trials where there would have been one. He is not exposing the defendant to an unnecessary series of trials. ...

I do not therefore think that this unusual case falls within the mischief at which Henderson v. Henderson was directed. But if that conclusion is wrong, ... one must consider whether Mr Barrow can plead special circumstances excusing him from compliance with the duty to bring forward his whole case at the outset. An exception based on special circumstances was recognised by Sir James Wigram V.-C. in Henderson v. Henderson and was recently recognised as necessary in the Yat Tung case [1975] AC 581, 590, "in case justice should be found to require the non-application of the rule." It is plain from both cases that negligence, inadvertence and even accident will not excuse non-compliance with the rule, but it is plainly unwise to attempt to define what may amount to a special circumstance."

Saville L.J. said at p. 266A:

"As Stuart-Smith L.J. pointed out in Talbot v. Berkshire County Council [1994] Q.B. 290, 296, the rule is in two parts. The first relates to those points which were actually decided by the court, the second to those which might have been brought forward at the time but were not. The present case is concerned with the second part.

The object of the rule of res judicata was said by Lord Blackburn in Lockyer v. Ferryman (1877) 2 App.Cas. 519, 530 to be put on two grounds - the one public policy, that it is in the interest of the state that there should be an end to litigation, and the other, the hardship on the individual, that he should be vexed twice for the same cause. Thus, as Somervell L.J. stated in Greenhalgh v. Mallard [1947] 2 All E.R. 255,257, the principle covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them. In Brisbane City Council v. Attorney-General for Queensland [1979] AC 411, 425 Lord Wilberforce described "abuse of process" as the true basis of the doctrine, a description approved by Lord Keith of Kinkel in the House of Lords in Arnold v. National Westminster Bank Plc. [1991] 2 A.C. 93,107. What this and other cases have emphasised, of course, is that the rule does not apply to all circumstances. As Lord Keith observed in the Arnold case, at p. 109, one of the purposes of estoppel being to work justice between the parties, it is open to the courts to recognise that in special circumstances inflexible application of it may have the opposite result. The existence of special circumstances excluding the application of the rule was of course recognised by Sir James Wigram V.-C. himself in the passage I have quoted."

And at p. 269E, Saville L.J. said:

"The rule remains that where a matter could and should have been litigated first time round, then in the absence of special circumstances a party will not be allowed to start subsequent proceedings raising that matter, because that would be an abuse of the process of the court."

In Talbot at p. 297E, Stuart-Smith L.J. said of the rule in Henderson:

"It is a salutary rule. It avoids unnecessary proceedings involving expense to the parties and waste of court time which could be available to others: it prevents stale claims being brought long after the event, which is the bane of this type of litigation; it enables the defendant to know the extent of his potential liability in respect of any one event: that is important for insurance companies who have to make provision for claims and it may also affect their conduct of negotiations, their defence and any question of appeal."

Mann L.J. said at p. 301B:

"Wigram V.C.'s observations are an expression in our vernacular of the maxim "interest reipublicae ut sit finis litium." It is contrary to public policy and abusive of process that matters which could have been litigated in earlier proceedings should thereafter be allowed to proceed. This is the true basis of the doctrine: see per Lord Wilberforce in Brisbane City Council v. Attorney-General for Queensland [1979] AC 411,425G. The rule is a salutary one. It prevents prolixity in litigation and encourages the earliest resolution of disputes. A party who is embarrassed by the speed of his opponent can apply for a pause in his own process."

In my view, the use in this context of the phrase "res judicata" is perhaps unhelpful, and this not only because it is Latin. We are not concerned with cases where a court has decided the matter; but rather cases where the court has not decided the matter, but where in a (usually late) succeeding action someone wants to bring a claim which should have been brought, if at all, in earlier concluded proceedings. If in all the circumstances the bringing of the claim in the succeeding action is an abuse, the court will strike it out unless there are special circumstances. To find that there are special circumstance may, for practical purposes, be the same thing as deciding that there is no abuse, as Sir Thomas Bingham M.R. came close to holding on the facts in Barrow. The bringing of a claim which could have been brought in earlier proceedings may not be an abuse. It may in particular cases be sensible to advance cases separately. It depends on all the circumstances of each case. Once the court's consideration is directed clearly towards the question of abuse, it will be seen that the passage from Sir James Wigram V.-C.'s judgment in Henderson is a full modern statement of the law so long as it is not picked over semantically as if it were a tax statute.

The extent of any coincidence of causes of action, facts or even the capacities in which parties are sued, though relevant, will not necessarily determine the outcome. In Hunter v. Chief Constable of West Midlands [1982] AC 529, Lord Diplock said at p. 536B:

"My Lords, this is a case about abuse of the process of the High Court. It concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power."

In Ashmore v. British Coal Corporation [1990] 2 Q.B. 338, Stuart-Smith L.J. said at p. 352:

"... it is dangerous to try and define fully the circumstances which can be regarded as an abuse of the process, though these would undoubtedly include a sham or dishonest attempt to relitigate a matter. Each case must depend upon all the relevant circumstances."

Mr Kitchener submits that the kind of abuse of process relied on by the first defendant in this appeal is to be narrowly confined and precisely defined so that legitimate claims are not stifled and so that potential litigants know where they stand. Otherwise they may be driven to include in one proceedings related but distinct claims which might sensibly be left for later consideration. The law should not thus encourage premature litigation which may prove unnecessary. He further submits that delay is the subject of the law of limitation and should not feature additionally as an element of abuse.

It is of course axiomatic that the court will only strike out a claim as an abuse after most careful consideration. But the court has to balance a plaintiff's right to bring before the court genuine and legitimate claims with a defendant's right to be protected from being harassed by multiple proceedings where one should have sufficed. Abuse of process is a concept which defies precise definition in the abstract. In particular cases, the court has to decide whether there is abuse sufficiently serious to justify preventing the offending litigant from proceeding. In cases such as the present, the abuse is sufficiently defined in Henderson which itself is encapsulated in the proposition that the litigant could and should have raised the matter in question in earlier concluded proceedings. Special circumstances may negative or excuse what would otherwise be an abuse. But there may in particular cases be elements of abuse additional to the mere fact that the matter could and should have been raised in the earlier proceedings.

In the present appeal, I have no doubt but that the master and the judge were right to conclude that the claims which Mr Manson wants to bring by the proposed amended Statement of Claim could and should have been raised in the 1990 action. That action concerned a short period in December 1988 and January 1989. It was brought against the receivers and its subject matter included the circumstances of their appointment and the financial consequences for Mr Manson resulting from their appointment. The circumstances in which Cork Gully and the first defendant came on the scene in early December 1988 before they were appointed receivers are specifically described in Judge Baker's judgment. So is Mr Manson's claim to be the owner of furnishings and antiques. Granted both that Judge Baker held that the 1990 claims should have been against the company and that the first defendant was sued in those proceedings as receiver and not in a personal capacity, it is nevertheless in my judgment quite clear that Mr Manson should have advanced his present claims against the first defendant, if at all, in the 1990 proceedings. It would in my view be unjust harassment of the first defendant, if he had to face further claims concerning the part which he played in the demise of Thomas Christy Limited in a second action started after the first action had been tried to conclusion.

Mr Manson relies on special circumstances to negative or excuse the abuse. He says that the scope of the 1990 action was limited because he had legal expenses insurance for that action which only covered some of his claims and that the insurers were not prepared to support the claims which he now wants to bring. Although this may be an explanation, in my view it does not excuse the abuse nor does it amount to special circumstances. It is commonplace for litigants to have difficulties in affording the cost of litigation. But lack of means cannot stand as an excuse for abuse of process.

That is sufficient to dispose of the main point in the appeal. But there are other features of this case which either add to the abuse or are additional reasons for dismissing this appeal. Firstly, the master was in my view entirely correct (quite apart from the question of abuse) to refuse Mr Manson leave to amend. Neither the alleged oral agreement, nor a properly formulated basis for assumption of responsibility by the first defendant, nor any claim for the furniture and furnishings sufficiently appear in the original statement of claim. The application to amend was hopelessly late in 1997 and well after the expiry of limitation periods. There was no proper basis for exercising a discretion under Order 20 rule 5 to permit the amendment. Secondly, the unamended statement of claim should also in my view be struck out as an abuse for reasons equivalent to those which I have given but for the additional reason also that it contains no coherent legal structure. This was of course recognised by the application to scrap it and to substitute for it the proposed amended pleading. Thirdly, Mr Manson's claims for furniture and antiques was decided finally against him by Mr Neuberger in the Directors' Disqualification proceedings. The particularity of the proposed amended statement of claim simply does not support the submission that the present claim does not relate to the same articles as those with which the earlier proceedings were concerned. Furnishings and antiques also featured in the proceedings before Jacob J. Fourthly, Jacob J. held that the facts found by Mr Neuberger gave rise to a right of summary dismissal of Mr Manson as managing director. Mr Neuberger found that the company was insolvent. These are final determinations by competent courts which Mr Manson cannot gainsay and which completely undermine his main claim in these proceedings. Fifthly, Mr Manson made extensive complaints against the receivers which overlap those in the present proceedings to the ICA and these were rejected. The ICA is not a court, but it is a duly constituted body charged with investigating complaints against accountants and the complaints and their rejection are, in my view, facts which add to Mr Manson's unjust harassment of the first defendant.

For these reasons, I would dismiss this appeal. There was a Respondents' Notice upon which it was not necessary to hear submissions.

Sir John Knox:

I agree that this appeal should be dismissed.

The relevant facts have been fully set out in the judgment of May L.J and I need not repeat them. Those facts in my view make it clear that this appeal is doomed to failure quite apart from any rule such as that in Henderson v. Henderson (1843) 3 Hare 100 which prevents a plaintiff from advancing a claim by reference to previous litigation to which such plaintiff was a party. In my view there is no claim against the First, Second or Third Defendants in relation to the affairs of Thomas Christy Ltd. which Mr Manson should now be permitted to bring to trial. In the present action the original statement of claim was clearly defective, as was acknowledged by the belated application on 15th August 1997 to amend by deleting it entirely. As May L.J has said it lacked coherent legal structure. Of the three claims identified by Mr Kitchener as the subject matter of the proposed amended Statement of Claim, one, the claim in relation to the sale of the Company's business at an undervalue, was expressly abandoned, no doubt wisely, by Mr Kitchener, and the others were new claims not included in the original Statement of Claim. Leave to make those amendments was rightly refused by Master Leslie since they would have been statute barred in August 1987 and there are no grounds for allowing them to be made pursuant to RSCO.20 r.5. I observe in passing that this would be so whether or not the antiques referred to in the proposed amended Statement of Claim were, as Mr Kitchener submitted, different chattels from those that were the subject matter of Mr Neuburger Q.C.'s decision in the director's disqualification proceedings.

Theoretically some new amendment might be put forward but there is no reason to suppose that any such amendment would be any more likely to be allowed than those rightly refused by Master Leslie. Whichever way one looks therefore, whether to the past, present or future Mr Manson has no case against the First, Second and Third Defendants which the Court should entertain and it would plainly be an abuse of its process for the Court to allow the action to continue. That suffices to dispose of this appeal.

Lord Justice Hirst: I agree with both judgments.

Order: Appeal dismissed with costs; application for leave to appeal to House of Lords refused.

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