England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM PRESTON COUNTY COURT
(HIS HONOUR JUDGE APPLETON)

		Royal Courts of Justice Strand London WC2 Wednesday, 6th March 2002

Wednesday, 6th March 2002

1. LORD JUSTICE SCHIEMANN: Lord Justice Sedley will deliver the first judgment.
2. LORD JUSTICE SEDLEY: This is a second-tier appeal brought by permission of Mantell LJ from a decision of His Honour Judge Appleton, sitting at Preston Crown Court, on 6th March 2001. The circuit judge upheld the decision of Deputy District Judge Flanagan that the appellant's Part 20 claim against the respondent in the respondent's action for damages ought to be struck out. I will come in a moment to the basis upon which those two decisions were arrived at.
3. The respondent, Mrs Murray, was the claimant in a road traffic accident case. In September 1996 she had been turning right in her car, in which her small daughter was a passenger, when the appellant overtook her. The cars did not collide, but both of them suffered damage. In addition, the respondent suffered some injury and the child suffered minor shock. The first set of proceedings was issued by the child acting through her father in October 1998. In them the appellant, by way of defence, blamed the mother for the accident, but it was not until May 1999 very shortly before the date set for trial, that he issued an application to join the mother in Part 20 proceedings. His application was made returnable on the trial date. It would, if successful, have resulted in an adjournment, no doubt at the appellant's expense, and that may have played some part in what happened. At the door of the court on 10th June 1999 the action was compromised and a consent order was made providing for a payment of £1,500 in final settlement of the child's claim, together with costs, and together with dismissal of the appellant's application to issue a Part 20 claim (a third-party claim in the old parlance) against the mother.
4. By that date the mother had not issued proceedings of her own, but it was known to the appellant's advisors that she was likely to do so. Both sides had had her medically examined and a letter before action had already been sent. It was not, however, until 31st August 1999 after the settlement of the child's claim that the mother issued her own claim.
5. In his defence to the claim the appellant denied negligence and pleaded a Part 20 claim for two things. One was the damage which his own car had suffered: the other was the cost to him of settling the child's claim. He sought either a complete indemnity or, in the alternative, a contribution to each. In response to this the present respondent pleaded a somewhat ambitious estoppel against the appellant's denial of negligence and - rather more cogently - an estoppel against the Part 20 claim for the damage to the appellant's car and the cost of settling the child's action. The respondent relied for this purpose on the consensual dismissal in the first action (the child's action) of the appellant's application to bring a Part 20 claim against her. In this court Mr Mulholland has continued to make that fact the chief anchor of his resistance to the appeal.
6. The mother's action too was all but settled. On 5th September 2000 Deputy District Judge Flanagan entered by consent a money judgment in her favour and made provision, again by consent, for the dispensing of money in court, together with an order for costs apportioned by reference to time. All that remained were the two Part 20 claims. The respondent sought their dismissal by way of estoppel, as she put it, but abuse, as it turned out to be. This application the appellant resisted, and the deputy district judge heard it out.
7. Deputy District Judge Flanagan concluded that the appellant was now estopped from pursuing his Part 20 claim. It is accepted on all hands that his reasoning, while certainly tenable, was properly directed not to estoppel but to abuse of process. It is on this basis, sensibly, and without resort to technicality, that the case has proceeded.
8. Against the deputy district judge's order dismissing the Part 20 claim for abuse, the appellant appealed to His Honour Judge Appleton, who adopted the deputy district judge's reasoning but added to it reasons of his own related to the presence in court of a Part 36 payment. It is common ground (which I would for my part endorse) that this should have played no part in the circuit judge's reasoning. The circuit judge, however, had pretty much the same task as we have; namely, to ask himself whether there was an error of law in the approach of the deputy district judge, and our focus, like his, is therefore on the deputy district judge's reasons.
9. As to those, Mantell LJ gave permission to appeal, despite it being a second-tier appeal, because the question seemed to him to raise an important point of principle or practice "insofar as the Part 20 claim was being advanced in a separate proceeding commenced by the Part 20 defendant."
10. As to this - and before I come to the deputy district judge's own reasons - the submission made to us turns now upon what Lord Bingham has more recently said in Johnson v Gore-Wood [2001] 2 WLR 72. At page 90 Lord Bingham said this:

"But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. The public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before an abuse may be found, to identify any additional element such as a collateral attack of a previous decision or some dishonesty but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceedings involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes into account all the facts of the case, focusing attention on the crucial question of whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before."

11. This was shown to the learned circuit judge. It is perhaps a misfortune that he gave it an interpretation which is almost, in my judgment, the diametric opposite of what Lord Bingham was saying. He said:

"In fact, as the later speech of Lord Bingham and the decision of the House of Lords in Johnson v Gore Wood shows, it is perfectly legitimate and contemplated in law that the raising of a defence in later proceedings may, without more, amount to abuse if the Court is satisfied that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all."

12. One turns, nevertheless, to what the deputy district judge said, because it is this which is at the centre of our present concerns. What he materially said about the issue before us is this:

"I am wholly satisfied that this is a case in which estoppel does apply. The basis of my decision in that regard is short and quite simple. It is correct to say that in the infant plaintiff's claim, not before this court but already settled, the defendant pleaded to that claim and put in issue liability effectively blaming the infant's mother, Heather Murray, who is the claimant today, for the accident. It is clear that he raised that issue and was in no uncertain terms seeking to place blame for the accident on the mother. He did not pursue that. The infant's claim was settled.

In [that] claim, he sought some time ago to issue third party proceedings. In those third party proceedings, if it had been pursued, then he would undoubtedly have raised the same point. That has been abandoned. He now seeks effectively seeks a third bite of the cherry by saying, 'Although I am settling the claim of the claimant, I still wish to pursue my own counter-claim.' That cannot be right when one looks at the overall history of this matter. I must apply the overriding objective and all of its constituent parts with regard to fairness, costing, and all parts set out in Section 1 of the Civil Procedure Rules.

It seems to me that to allow this litigation to proceed under the guise of the defendant's counter-claim, when he has had numerous opportunities of pursuing it previously, and indeed has raised previously the same issues upon which he wishes to rely today but has chosen to abandon them, would be inappropriate. I do not ignore the argument advanced on behalf of the defendant, and I take that argument into account. That argument has been put before me, very properly; namely, that there has been no judgment entered against the defendant by either the claimant or by the infant plaintiff in those proceedings. It has been put before me that the decisions to put forward terms of settlement were put forward on a commercial basis and without any other admissions being made. And whether or not the claimant accepts is a matter for the claimant. I am urged to say that the defendant should be allowed to pursue.

I have heard that argument. I have considered it, but it seems to me that this is an abundantly clear case where Talbot v Berkshire County Council and the Henderson case does apply, and that there would be unnecessary and inappropriate duplicity of proceedings to proceed down that road. I am, therefore, satisfied and so order that the defendant is estopped from pursuing any counter-claim which may on the face of it have been reflected in his pleadings."

13. I have not referred to the two cases mentioned by the deputy district judge because it seems to me that for present purposes everything that needs to be said is said in the passage that I have quoted from Lord Bingham.
14. In the skeleton argument Mr Poole, for the appellant, lists a series of negative features which he contends lifts the case out of the abuse category. I will not recite them, but he argues that they leave only the bare point of two bites at one cherry, which Lord Bingham expressly says is by itself not enough.
15. Mr Mulholland, in his skeleton argument, submits that all of this misses the point. The point, he says, was not that the Part 20 claim could have been pursued in the earlier proceedings; it was because, having been raised twice in the earlier proceedings and then resiled from, it was inappropriate to allow it to be run again in the mother's action.
16. There is, it seems to me, great force in what Mr Mulholland says. The objection, in essence, is that the appellant sought to raise in the mother's proceedings not merely the defence that she had been wholly or partly to blame for her own injury and loss, and for the appellant's loss, but that she had been wholly or partly to blame for the injury to the child, which the appellant had separately compromised, abandoning in the process his intended claim against the mother for contribution.
17. It may be right that there would have been no marked complication or prolongation of the case on that score, and that the same findings would have done service on both issues. It is true also that the Civil Liability (Contribution) Act 1978 assumes that contribution proceedings may legitimately post-date the quantification of damage. But the mischief which both the deputy district judge and the circuit judge found was that the appellant had first pleaded against the child that it was the respondent's fault, not his; then, logically enough, applied to issue a Part 20 claim to make good that allegation against the mother; then abandoned both by settling for a sum which, since it was an infant's claim, necessarily reflected the child's full interest in the case; and then sought to run the whole thing again, not simply by way of defence but in addition to a claim which the respondent had compromised when brought by the mother. Facts like these, as ever, do not sit four-square with those postulated in Johnson or any other case; and, as ever, it is the principle that matters.
18. The deputy district judge's stance on the facts known to him seems to me to have been most certainly a defensible one and very arguably a correct one. What, however, happened on appeal, was this. It was drawn to the circuit judge's attention by Mr Poole that for a reason that was unexplained (and has to be regarded as sheer inadvertence) the deputy district judge had not been told a fact which, in my judgment, would have been highly material to his decision. It was that the parties who were before him and were arguing about whether it was an abuse of process to proceed with the Part 20 claim in the mother's action had already reached agreement as to the figure which was to be entered by consent in resolution of the Part 20 claim if it were not struck out for abuse.
19. The importance of it is, in my judgment, that it would have dispelled the one really serious prospect which the survival of the Part 20 claim would otherwise have brought with it; namely, that the respective responsibilities of the appellant and the respondent for this accident, which had first been compromised by abandonment in the child's action and had now been compromised again by judgment for the claimant in the mother's action, was going to go ahead to a full trial solely for the purpose of deciding whether, and to what extent, the mother must contribute to what the appellant had agreed to pay the child in order to compromise the child's action. That, if it had been the case, would have been in my view ample justification for saying that persistence in the issue was an abuse. But by the same token once that element had gone it seems to me that the circuit judge ought to have taken it into account, as the parties before us agree he was fully empowered to do, albeit he was hearing an appeal; and, having taken it into account, he should in my view have revisited the deputy district judge's reasoning, asking himself: had the deputy district judge known this, would his decision have been the same?
20. Unfortunately, although the record shows that the circuit judge was told that the fact had been omitted from those before the deputy district judge, nowhere in his judgment did he refer to it, and when at the end Mr Poole rose and said to the judge, "Can I just elucidate whether your Honour takes into account the information in reaching this decision, the information that the parties had come to terms, save for the estoppel?" The judge replied, "I have given my judgment and I am saying no more." That is a perfectly proper response, but it does leave staring us in the face the fact that the judgment was barren of reference to this issue.
21. Doing for myself what it seems to me the circuit judge should have done, and asking whether had this fact been known to the deputy district judge, as it should have been, his decision would have been the same, the answer I come up with is: No, it would not. The real mischief of persistence in the Part 20 claim would no longer have been present. Finality was within reach, with all elements agreed subject to the now barren abuse argument, at the hearing before the deputy district judge.
22. Accordingly, it seems to me that the circuit judge should have allowed the appeal and that we should therefore do so now.
23. MR JUSTICE CHARLES: I agree that this appeal should be allowed. To my mind the additional fact pointed out by my Lord, Sedley LJ, is clearly a relevant factor, but not a crucial factor. I would test the matter by asking myself what the answer would have been if at the time the first action was settled a point had been raised as to what issues the appellant would be able to raise in the second action if it was brought. It seems to me that the fly on the wall and the reasonably informed and fair minded observer would have said that if the mother pursued the second action the appellant would be able to raise in his second action the points he had raised by way of defence in the first action and had sought to raise by third-party notice or Part 20 claim in that action.
24. That being the answer it seems to me that the raising of the issues in the second action was not an abuse.
25. LORD JUSTICE SCHIEMANN: I also agree that this appeal ought to be allowed. Four factors have weighed with me. First, I am reluctant to deprive a defendant of his right of action unless what he has done amounts to an abuse of the process of the court. Of course that is common ground, and of course it is a matter of impression whether what has happened is an abuse of the process of the court, as opposed to doing something arguably less efficiently than it might have been done.
26. Second, this present claim by the infant was in financial terms a pretty small one and so was the defendant's. It makes perfectly good sense to settle a small claim and let a possible cross-claim lie for the moment. I would be reluctant to do anything which would have the effect of encouraging insurers to bring process earlier against all parties who might in due course start proceedings against their insured. There is a lot to be said for letting small matters take their own course and seeing what happens. But I have some sympathy with the position of insurers when one small matter is joined by another small matter and then possibly yet further ones, that they then say: "If all those claims are going to be laid at our door then we will advance cross-claims", which is what they used to be known as.
27. Third, the defendant's actions in the first action have not resulted in any increase in the costs of the mother.
28. Fourth, the mother herself could have issued proceedings earlier, and any double vexation is as much her fault as the fault of the defendant.
29. I myself, like Charles J, would not give the same importance as Sedley LJ does to the fact that the parties had compromised the Part 20 claim subject only to the judge's ruling on the abuse of process point. Nonetheless, of course, I accept that it makes the appellant's case stronger.
30. This appeal will be allowed.

(Appeal allowed; judgment for the appellant on Part 20 claims in the agreed sum of £4,387.68, inclusive of interest; the Respondents do pay the Appellant's costs of the Part 20 claim; the Respondent do pay the Appellant's costs of the appeal save for the costs thrown away by the adjournment of 17th January 2002; such costs to be subject to detailed assessment if not agreed; Appellant do pay the Respondent's costs thrown away by the adjournment on 17th January 2002 agreed in the sum of £2,248.95 inclusive of VAT).