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England and Wales High Court (King's Bench Division) Decisions
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CCP Graduate School Ltd v Secretary of State for Education [2025] EWHC 779 (KB) (01 April 2025)
URL: http://www.bailii.org/ew/cases/EWHC/KB/2025/779.html
Cite as:
[2025] EWHC 779 (KB)
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Neutral Citation Number: [2025] EWHC 779 (KB) |
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Case Number: KA-2024-000029 |
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ROYAL COURTS OF JUSTICE
B e f o r e :
MR JUSTICE RITCHIE
____________________
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CCP GRADUATE SCHOOL LIMITED
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Appellant/Claimant
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- and -
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THE SECRETARY OF STATE FOR EDUCATION
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Respondent/Defendant
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____________________
Barry Coulter of counsel (instructed by Messrs Saracens LLP) for the Appellant/Claimant
Azeem Suterwalla KC of counsel (instructed by the Government Legal Department) for the Respondent/Defendant
Hearing date: 25.3.2025
____________________
HTML VERSION OF APPROVED JUDGMENT
____________________
Crown Copyright ©
This judgment was handed down remotely at 14.00pm on Friday 1st April 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Mr Justice Ritchie:
The appeal
- The Appellant/Claimant was a private company providing college education, inter alia, leading to students gaining diplomas. It has ceased to trade. The Respondent was the regulatory body for the Appellant and granted student loans to impecunious students to take courses, inter alia, at the college.
- This is an appeal from a decision of Master Dagnall (the Master), which was reflected in an order dated 29.1.2024, striking out the Claimant's claim on the Defendant's application dated 9.3.2023, and refusing to permit the amendments to the Particulars of Claim sought by the Claimant, in an application dated 7.10.2023.
- By notice of appeal dated 19.2.2024 the Appellant seeks, in 5 grounds, to overturn the striking out and refusal of permission to amend.
- Permission to appeal was considered on the papers by Kerr J on 8.10.2024 and a rolled-up hearing to consider permission and the full appeal was directed. This is the result of that hearing
Bundles and evidence
- The Court was provided with the following appeal bundles: A, B1-3, a supplementary appeal bundle, an authorities bundle and two skeleton arguments: one from the Respondent dated March 2025 with a later note (26.3.2025) and one from the Appellant dated 19.2.2024 alongside a witness statement from Mr Dan Pathirana sworn on 24.3.2024, which Kerr J permitted the Appellant to use an an additional skeleton argument.
The issues
- The issues in this application for permission and this appeal are as follows:
(1) Ground 1: Contract. Did the Appellant have an arguable case that there was a direct or implied contract between the Appellant and the Respondent for the payment by the Respondent to the Appellant of tuition fees for students being taught by the Appellant between August 2013 and December 2014? If so, the Master was wrong to decide that the Appellant did not.
(2) Ground 2: Third Party Rights. Did the Appellant have an arguable case that it could rely on the Contract (Rights of Third Parties) Act 1999 (the 1999 Act) to sue the Respondent for unpaid fees using the students' contracts made with the Respondent as the basis for the claim? If so, the Master was wrong to decide that the Appellant did not.
(3) Ground 3: Limitation. Were the Appellant's claims arguably not statute barred by the Limitation Act 1980? If so, the Master was wrong to rule that they were statute barred.
(4) Ground 4: Abuse of process. Arguably, was the bringing of this action relating to unpaid tuition fees permissible because it was not an abuse of process, despite the 1st action brought by the Respondent against the Appellant in which the Appellant tried to include a counterclaim for these fees but was refused permission to do so by Master Cook on May 2021? If so, the Master was wrong to rule that it was an abuse.
(5) Ground 5: Mini trial. Did the Master fall into error by conducting a mini trial rather than leaving the issues to a full trial?
Appeals - CPR r. 52
Review of the decision
- Under CPR r. 52.21 every appeal is a review of the decision of the lower Court unless the Court decides otherwise (or a Regulation or Act provides that it is a rehearing) and will only be granted if the decision below was wrong or unjust due to a serious procedural or other irregularity.
Fresh Evidence
- This appeal is restricted to the evidence before the lower Court unless this Court grants permission under CPR r. 52.21(2). The decision to grant permission is informed by the three grounds enunciated in Ladd v Marshall [1954] 1 WLR 1489 (CA). New evidence may allowed in when it was: (1) not obtainable with reasonable diligence before the lower Court, (2) would have an important influence on the result and (3) is apparently credible, though not incontrovertible.
Findings of fact and credibility
- I take into account the decisions in Henderson v Foxworth [2014] UKSC 41, per Lord Reed at [67] and Grizzly Business v Stena Drilling [2017] EWCA Civ 94, per Longmore LJ at [39-40] and Deutsche Bank AG v Sebastian Holdings [2023] EWCA Civ 191, by Lord Justice Males at [48] - [55], to the effect that any challenges to findings of fact in the Court below have to pass a high threshold test. The Appellant needs to show the Judge was wrong in the sense that there was no sufficient evidence upon which the decision could have been reached or that no reasonable Judge could have reached that decision, or that the Judge took into account an irrelevant matter or failed to take into account a material and relevant matter. Two deferential principles are applied. Firstly, where the trial judge heard and saw the evidence being given live over the course of the trial he/she was better placed to assess the evidence than the appellate court is having only the transcript and documents. Secondly, there is a generous ambit for disagreement allowed on such findings. The threshold for appeals against findings of fact was summarised by Lord Justice Lewison in Volpi v Volpi [2022] EWCA Civ 464, [2022] 4 WLR 48, at paras. 2-4 and 52:
"2. The appeal is therefore an appeal on a pure question of fact. The approach of an appeal Court to that kind of appeal is a well-trodden path. It is unnecessary to refer in detail to the many cases that have discussed it; but the following principles are well-settled:
(i) An appeal Court should not interfere with the trial Judge's conclusions on primary facts unless it is satisfied that he was plainly wrong.
(ii) The adverb 'plainly' does not refer to the degree of confidence felt by the appeal Court that it would not have reached the same conclusion as the trial Judge. It does not matter, with whatever degree of certainty, that the appeal Court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable Judge could have reached.
(iii) An appeal Court is bound, unless there is compelling reason to the contrary, to assume that the trial Judge has taken the whole of the evidence into his consideration. The mere fact that a Judge does not mention a specific piece of evidence does not mean that he overlooked it.
(iv) The validity of the findings of fact made by a trial Judge is not aptly tested by considering whether the judgment presents a balanced account of the evidence. The trial Judge must of course consider all the material evidence (although it need not all be discussed in his judgment). The weight which he gives to it is however pre-eminently a matter for him.
(v) An appeal Court can therefore set aside a judgment on the basis that the Judge failed to give the evidence a balanced consideration only if the Judge's conclusion was rationally insupportable.
(vi) Reasons for judgment will always be capable of having been better expressed. An appeal Court should not subject a judgment to narrow textual analysis. Nor should it be picked over or construed as though it was a piece of legislation or a contract.
3. …
4. Similar caution applies to appeals against a trial Judge's evaluation of expert evidence: Byers v Saudi National Bank [2022] EWCA Civ 43, [2022] 4 WLR 22. It is also pertinent to recall that where facts are disputed it is for the Judge, not the expert, to decide those facts. Even where expert evidence is uncontroverted, a trial Judge is not bound to accept it: see, most recently, Griffiths v TUI (UK) Ltd [2021] EWCA Civ 1442, [2022] 1 WLR 973 (although the Court was divided over whether it was necessary to cross-examine an expert before challenging their evidence). In a handwriting case, for example, where the issue is whether a party signed a document a Judge may prefer the evidence of a witness to the opinion of a handwriting expert based on stylistic comparisons: Kingley Developments Ltd v Brudenell [2016] EWCA Civ 980."
…
"52 … It need hardly be emphasised that "plainly wrong", "a decision ... that no reasonable Judge could have reached" and "rationally insupportable", different ways of expressing the same idea, set a very high hurdle for an appellant.
54. These considerations apply with particular force when an appeal involves a challenge to the Judge's assessment of the credibility of a witness. Assessment of credibility is quintessentially a matter for the trial Judge, with whose assessment this Court will not interfere unless it is clear that something has gone very seriously wrong. It is not for this Court to attempt to assess the credibility of a witness, even if that were possible, but only to decide, applying the stringent tests to which I have referred, whether the Judge has made so serious an error that her assessment must be set aside."
Appeals against case management decisions
- In Royal & Sun v T & N [2002] EWCA Civ 1964, Chadwick LJ enunciated the first deferential principle thus:
"37. … these are appeals from case management decisions made in the exercise of his discretion by a judge who, because of his involvement in the case over time, had an accumulated knowledge of the background and the issues which this Court would be unable to match. The judge was in the best position to reach conclusions as to the future course of the proceedings. An appellate Court should respect the judge's decisions. It should not yield to the temptation to "second guess" the judge in a matter peculiarly within his province.
38. I accept, without reservation, that this Court should not interfere with case management decisions made by a judge who has applied the correct principles, and who has taken into account the matters which should be taken into account and left out of account matters which are irrelevant, unless satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge."
- Appeals from case management decisions have a high threshold test. In Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, at [52] the Master of the Rolls said:
"We start by reiterating a point that has been made before, namely that this Court will not lightly interfere with a case management decision. In Mannion v Ginty [2012] EWCA Civ 1667 at [18] Lewison LJ said: "it has been said more than once in this Court, it is vital for the Court of Appeal to uphold robust fair case management decisions made by first instance judges."
- In Clearway Drainage Systems Ltd v Miles Smith Ltd [2016] EWCA Civ 1258, the test in considering an appeal against a decision of this nature was neatly encapsulated by Sir Terence Etherton MR at paragraph 68:
" … The fact that different judges might have given different weight to the various factors does not make the decision one which can be overturned. There must be something in the nature of an error of principle or something wholly omitted or wrongly taken into account or a balancing of factors which is obviously untenable."
Chronology
- It is apparent from the Master's judgment, the chronology provided to me and the bundles, that the events occurred in the following order:
- In 2010 the Appellant applied to the Respondent for designation as a provider of teaching to students with a view to obtaining a diploma in teaching (DiT) and this was granted in 2011. Thereafter, students applied to the Appellant and were enrolled, and if they were impecunious they also applied to the Respondent for a student loan inter alia to cover their tuition fees charged by the Appellant. Two contracts were entered. The first, between the Appellant and the student for the tuition at a price (the enrolment contract). The second, between the student and the Respondent for the loan to pay the tuition fees (the student contract). It was a term of the second that the fees were to be paid direct to the Appellant, not via the student. To recover each tranche of payment, the Appellant had to provide to the Respondent (1) proof of the tuition provided to the student, and (2) confirmation of attendance by the student. Payment was made in in 3 tranches per annum for each student depending on which month they started the course. The start date was very flexible.
- All went well until in August 2014 the Respondent created a new diploma course and ceased the old one. The Appellant applied to the Respondent for designation to teach the new diploma course but was refused. That left some "teach out" students still on the old diploma for the 2014/2015 year and, as I understand it, some unpaid fees from August 2013 onwards for the old diploma course. No proper evidence was pointed out to me to chart which students, which terms, which fees and when each fell due.
- Also, in August 2014, some complaints and allegations were made against the Appellant college which the Respondent took seriously and which led to an investigation. During the investigation, from January 2015, the Respondent suspended making payments to the Appellant. The investigation ended in October 2015 and thereafter the Respondent required the Appellant to provide more information, which was provided throughout 2016. Some payments restarted in July 2016 but by December 2016 the Respondent decided to refuse to make any further payments to the Appellant and set the reasons out in a letter dated 21st December 2016.
- The Respondent then sued the Appellant for the return of some fees in an action started in 2019 (QB-2019-002047). This went to trial and the Respondent lost in front of May J. I have read the judgment dated September 2021, as did the Master. None of the issues above were in play. It was assumed that as a generality the Respondent had to pay the Appellant the fees for students with loans who had been taught. The issues related to regulatory breaches by the Appellant for diploma course students and whether those entitled the Respondent to reclaim the sums paid to the Appellant despite the fact that the students had been fully taught. May J found that the Appellant enrolled many students for the academic year 2013/2014 for the old diploma (DiT) course but when the new diploma course was introduced by the Respondent, the Appellant registered those students with the award validation body (Pearson) for the new diploma course. She found that the Appellant did not have designation to teach the new diploma course from the Respondent, so loans to students for that course could not be handed out and the Appellant was not qualified to be paid for teaching that course. May J set out the statutory framework. Loans were to be paid to designated teaching establishments on request by the establishment and on confirmation of attendance for each of the three annual instalments. Reg 117 provided the Respondent with the right to recoup overpayments, which were not defined. The 2013 Guidance on designation was set out. That provided for dealing with the old diploma course and, at page 26, it dealt with existing students already in receipt of loans who were permitted to continue on the old diploma course until completion (the "teach out" provision). On the facts, May J found that in 2011 the Appellant was designated to provide: one year full-time and two-year part time diploma courses. The Appellant enrolled students, then they applied for loans and when the loan was granted the Appellant would register each with Pearson (there was a fee). The start dates for the diploma courses were in any month, not just September to June, so the courses ran in parallel. The Appellant accepted that it had breached Pearson's requirements that registration should only occur within one month of starting the course but pointed out that Pearson never objected. After a review by Lord Lingfield the old diploma course was stopped in September 2014 and the new one was started. The students who had already enrolled and been granted loans would be allowed to complete the old diploma courses. The Appellant did not gain designation to teach the new diploma course from the Respondent but was able to provide the new course for private payers and to register those students with Pearson for a new diploma award. But, May J found that the Appellant was aware of the cut-off date for registering students with Pearson for the old diploma course and that was 1.9.2014. May J found that the Appellant had failed to register its enrolled students for the old diploma before the cut-off date (because they had not yet been granted loans). Instead, the Appellant registered them for the new diploma course thereafter. The Appellant then taught the students the old diploma course and the additional parts necessary to satisfy the new diploma course from September 2014 through into 2015. The Respondent only found out about this in 2016. Whistleblowing allegations against the Appellant were sent to the Respondent in August 2014 alleging fraud. The Respondent suspended paying tuition fees and investigated. The Appellant was cleared of any malpractice. Some discrepancies needed clarification and that was provided in 2016. By 21st December 2016 the Respondent was able to write to the Appellant and state its position. It compared the enrolment lists of the Appellant with the registration lists of Pearson and decided that students on the old diploma course were eligible for payments under their loan agreements only if they did the old diploma course, not if they were given the new diploma course (as registered with Pearson). So, the Respondent sought to recover a balance of fees paid out for those students. May J refused to award repayment because the students had been taught the old diploma course (plus extras) under the terms of the "teach out" provisions set out in the Guidance. May J ruled that the Appellant's mis-registration with Pearson did not deprive the college of the right to retain payment for the teaching provided.
- The defence initially entered by the Appellant in that claim (not drafted by a lawyer) did not include a counterclaim but did allude to unpaid fees. When lawyers were brought onboard in October 2020 an application was made to amend the defence but no mention was made of counterclaiming. The defence was amended and a counterclaim was added in November 2020. Then in April 2021, some 5 months later and 2 months before trial, the Appellant applied for permission to counterclaim. The hearing before Master Cook took place about 6 weeks before the trial. The application was dismissed and the counterclaim was struck out (but not the amended defence). No copy of any transcript of the reasons given by Master Cook was given to Master Dagnall (or me) but he assumed the strike out was simply because the counterclaim (to which the Defendant did object) had been included with the amended defence (to which the Respondent did not object) so was in the pleading already. There is no suggestion that the counterclaim had no reasonable prospect of success, it was just all too late to be determined at trial.
- One month after May J's judgment (2.9.2021), the Appellant issued this claim (QB-2021-003966) seeking to recover the unpaid tuition fees for (I was told) 115 students who received teaching between August 2013 and December 2014 on the old diploma course (plus the new parts for the new diploma course). I can see why the Appellant waited. Once it had won the first action it felt emboldened to claim the unpaid fees for students caught up in the same regulatory breach. The Claim Form stated it was for fees for the old and new diploma courses. The Particulars of Claim raised, at paras. 3 and 14-20, a cause of action in contract based on an "agreement" between the Claimant and the Defendant made in April 2011 that the Defendant would pay the Claimant tuition fees for students with whom the Defendant had, via the student loan company, promised to pay for tuition fees. The Respondent entered an acknowledgment, did not defend and instead issued an application to strike out and for summary judgment on 9.3.2022. Evidence was served and filed by both parties and the hearing was listed for 6.9.2022 before the Master. It ran over to 10.2.2023. That hearing ran over to 19.4.2023. Judgment was handed down on 16.6.2023 and consequentials were dealt with on 19.1.2024. The Order was made on 29.l1.2024. Between day 1 and day 2, the Appellant applied for permission to amend the claim to include an additional claim under the 1999 Act.
The judgment
- The Master gave judgment on the 16.6.2023, after a hearing lasting over 3 days which stretched over 9 months. I shall refer to the paragraphs in the judgment thus, paragraph 1 will be J1 and so on. In summary he ruled that the claims should be struck out because:
(1) The claims were limitation barred (J158, 163, 164).
(2) There was no direct contract between the Appellant and the Respondent (J115-116).
(3) There was no implied contract between the Appellant and the Respondent (J122&124).
(4) The 1999 Act claim had no reasonable prospect of success (J203, 222, 233, 236) and so the amendment application was dismissed.
(5) The action was an abuse of process (J278).
- The Master's reasoning for each decision is summarised below. The statutory framework was set out between J7 and J16. The factual findings were set out between J17 and 24; further factual findings with back-reference to the findings of May J were set out at J25-73. The history of the action was summarised in J74-78. The law in relation to striking out, summary judgment and limitation was summarised between J79 and J97.
The asserted direct or implied contract
- At the hearing in September 2022 (day 1) the Master indicated that the direct contract point was unarguable (J5, J115-116, 122 and 124). The full reasoning was provided between J99 and J124. The Master considered that the Particulars of Claim did not comply with CPR PD17 para. 7.5 because they did not sufficiently plead out the particulars of the conduct relied upon to form an express or implied contract. The Master applied the necessity test formulated in Baird Textile v M&S [2001] EWCA Civ 274, to determine whether an implied contract arose on the facts. He recited paras. 15-21 of the judgment of Sir Andrew Morritt SCJ, and paras. 48, 59-64, 69-70 of the judgment of Judge LJ. The Master described the necessity test as a high one (J113). He decided that there was no necessity for an implied contract between the Appellant and the Respondent because: (1) the two obvious contracts (student–Respondent and college-student) were quite sufficient to determine the business relationships; (2) the two obvious contracts were commercially realistic and workable; (3) the statutory scheme and Guidance did not provide for a direct contract; (4) the designation process did not provide for a direct contract; (5) no further evidence would be provided at trial; (6) the alleged terms and conditions mentioned in the Guidance were not in evidence; (7) the college could sue the student if the Respondent did not pay the tuition fees and the student could then make a Part 20 claim against the Respondent.
The 1999 Act claim
- The Master ruled that the Claimant had no realistic prospect of success in its proposed claim under the 1999 Act, because the Appellant would not arguably be able to satisfy the test in S.1(2), see J203, J233, J236, J333. That test is as follows:
"Subsection 1(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party."
- The reasoning is set out between J176 and J236. The Master ruled that the Appellant could satisfy S.1(1) of the 1999 Act. That Section states:
"1 Right of third party to enforce contractual term.
(1) Subject to the provisions of this Act, a person who is not a party to a contract (a "third party") may in his own right enforce a term of the contract if—
(a) the contract expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him."
- The Master found that the student contract did not include or exclude the 1999 Act. The Master considered the following cases: Dolphin Maritime v Sveriges [2009] 1 CLC 460; per Christopher Clarke J at paras. 66-84; SSHD v Cox [2023] EWCA Civ. 55, per Lewis LJ at paras. 66-68, 76-85, 87 and Stuart-Smith LJ at paras. 100-105; Underhill LJ at paras. 117, 121.
- He provided the following reasons for his ruling: (1) He had the full evidential material before him (J202). (2) Applying the test in Dolphin the Appellant failed (J213) because: the benefit of the loan went to the student (J205 and J209); there was no contract between the Respondent and the Appellant (J206); this was not a gift style of case (J207); the facts were analogous to Dolphin (J208); reimbursement may be needed if the student has paid something to the college (J210); the payment provision direct to the college was to protect the Respondent from the student wasting the money (J211). (3) The Master then, separately, applied the test as he understood it in Cox (which he defined at J215) and concluded (J233) that the parties did not intend that the college could rely on the 1999 Act and sue directly. The Master found that the Appellant was the course provider and a benefit was conferred upon it by the student contract (J217). However, the student contract did not by its terms intend to benefit the college (J219). The further reasons for this ruling were: (4) Cox determined that there was a weak rebuttable presumption in favour of S.1(2) being satisfied; (5) the student contract only provided for direct payment to the college as a mechanism, none of the words showed that it was intended that the college could enforce (J224); (6) the 1999 Act was not expressly excluded (J225); (7) this is not a pure benefit to the college case (like a gift), it was a benefit to the student case (J226); (8) it is commercially unlikely that the Respondent and the student would want the college to be able to enforce so as to "foist that loan liability onto the student" (J227); (9) the scheme existed to enable the student to access state funding, not to enable the college to be paid (J228); (10) the contact was not intended to give the college a damages remedy (J229); (11) the commercial likelihood that students would want the college to be able to enforce based on the evidence at least of one student before the Master, was of some weight (J230); (12) students might object to the college being paid due to disputes over the quality of teaching or registration for the wrong qualification (new diploma / old diploma course) or politics (J231-232); (13) although students would not wish to be sued for unpaid tuition fees and would prefer the college to sue the Respondent, that did not weigh enough to tip the balance (J234); (14) the Respondent had entered direct contracts with other educational establishments in other fields of education, but not in this field (J235).
Limitation
- The Respondent submitted, and the Master accepted that all of the payments claimed had fallen due before May 2015. The Claim Form was issued in October 2021, which is 6 years after October 2015. The limitation period for contract claims is 6 years, so all were out of time (J142). The Appellant submitted that the claims were suspended by the Respondent in October 2014 and this continued until July or December 2016 (J143). The Respondent had the right to suspend pending the investigation. This prevented the causes of action arising or suspended those which had arisen and counsel for the Respondent accepted this in submissions in September 2022 (P397 of the transcript). The Appellant also relied upon estoppel, see: Hillingdon LBC v ARC [2001] CP Rep 33. The Appellant relied on the evidence from the Respondent's witness, Mr Williams, in his statement of 3.5.2021, in which he asserted that the suspension was under its "delegated powers" and this was communicated to the Appellant in September 2014 (J152).
- The Master ruled that the claims were limitation barred (see J157, J163-165). His reasons were as follows. (1) The Master set out paras. 43, 66-71 of the judgment of Arden J from Hillingdon but there was no estoppel (J171-174). (2) The Master noted he had not seen any regulations or statute which would confer the power on the Respondent to suspend during an investigation (J158). He doubted that Respondent had any power in public law to suspend payments (J164). He then found that the Respondent had no right to suspend or to resist payment (J159). (3) Taking into account the case law on implication of terms into the student contract (J156), particularly Cine v BNY Mellon [2022] EWCA Civ 1021, paras. 55, 137-140, there were no grounds to imply a limitation suspension arising from a payment suspension (J159 and J164). (4) Any right to suspend would be unfair for the college and the student and would disrupt the college's business and might lead to the college suing the student (J159). (5) Such an implied term is not necessary because if the investigation showed malpractice the Respondent had a right to refuse to pay, but if it disclosed no malpractice the Respondent had to pay (J159). (6) An implied term suspending limitation would cut across the statutory scheme (J160). (7) If Parliament intended to suspend limitation it would have said so (J161). (8) Mr Williams' evidence related to the power of the Student Loans Company administratively to refuse to pay out but the power was not set out and Mr Williams did not say that it suspended limitation. It only related to 115 students and the investigation "concluded" in 2014 (J162). (9) Whilst counsel for the Respondent did accept that the Respondent had a power to suspend payment during an investigation and that an implied term would arise as a result, he did not accept that this implied term suspension of limitation. Mr McGurk of counsel later resiled from that admission. (10) There was no basis for implying a term into any implied contract between the Appellant and the Respondent (J165-166) or the student contract (J167). (11) The college could have brought a claim for the fees during the investigation and that might have been stayed pending resolution of the investigation.
Abuse of process
- The Master dealt with the abuse of process issue at J244-J279. His decision at J278, was that to bring these claims in a second action was an abuse of process when they should have been raised in the first action brought by the Respondent in 2019. His reasoning is rather long. I shall try to condense it. He summarised the Respondent's submissions and the case law relied upon: Henderson v Henderson [1843] All ER Rep 278; Aldi Stores v WSP [2008] 1 WLR 748, paras. 5-6; Arbuthnot v Trafalgar [1998] 1 WLR 1426, at page 1432G; Securum v Ashton [2001] Ch 291, per Chadwick LJ at paras. 18, 52-56, Davies v Carillion [2017] EWHC 3206, per Morris J at paras. 52-54, 72-73. The Master then decided that it would be an abuse to let the claim be brought. He reasoned that: (1) the Appellant's claim could and should have been decided in the first action and they both concerned the same subject matter and joint issues (J261, J263); (2) there were some matters which were different (J262, J264); (3) it could have been dealt with efficiently in the first action (J265); (4) the Appellant had the money in 2019 to raise the claim and had legal expense insurance (J270, J272); (5) if the claim had been raised in good time in a counterclaim served when it should have been served in the first action it would have been determined in the first action (J270-271); (6) the 2nd action is a waste of Court time and involves duplication (J273-274); (7) these issues might have altered the result in the first action had they been raised (J275); (8) all relevant claims and defences and counterclaims should be brought in one set of proceedings (J277).
Analysis of each Ground
G1: Contract
The Appellant's submissions
- It was submitted that the conduct of the parties evidenced a direct or implied contract. The Respondent designated the Appellant as a college to provide the diploma course and granted loans to impecunious students to be paid directly to the college, not the student. They all then did so but the Respondent stopped paying. Suing a student for unpaid fees during a course would be unworkable and worse after the student had left. Students could not afford lawyers and might not bring the Respondent in as a Part 20 defendant. Such an action would be worthless to the college and commercially unrealistic. Thus, commercial and practical necessity required an implied contract between the college and the Respondent allowing the college to sue the Respondent directly.
The Respondent's submissions
- The Respondent submitted that there was no necessity. The test in Baird at para. 61 of the judgment of Mance LJ was determinant:
"61. An intention to create legal relations is normally presumed in the case of an express or apparent agreement satisfying the first requirement: see Chitty on Contracts (28th edn.) vol. 1, para. 2-146. It is otherwise, when the case is that an implied contract falls to be inferred from parties' conduct: Chitty, para. 2-147. It is then for the party asserting such a contract to show
the necessity for implying it. As Morison J said in his para. 12(1), if the parties would or might have acted as they did without any such contract, there is no necessity to imply any contract. It is merely putting the same point another way to say that no intention to make any such contract will then be inferred."
- The Respondent submitted that the parties might have acted as they did without any implied contract so there was no necessity for an implied contract.
Analysis and decision
- I consider that the Master was right to rule that there was no evidence of a direct contract. There was no written contract between the Appellant and the Respondent and there were no words pleaded which would constitute a verbal contract. The best that could be relied upon by the Appellant was the Respondent's conduct. The Respondent set up a system to designate and regulate diploma providers, alongside a system for granting loans to impecunious students, under which the tuition fees were not paid to the student but were paid to the college. I do not consider that those two pieces of conduct gave rise to a direct agreement in 2011 between the parties of sufficient certainty for the generation of a direct contract. There was no offer and acceptance. I accept that consideration does not need to flow from one party to the other, and as set out in Chitty on Contracts 35th ed at chapter 6 in paras 6-041, consideration may move to a third party, so when the college agreed to provide teaching to the students, that did not go to the Respondent. But it is clear to me that, if the parties had intended to enter a direct contract, they were both capable of doing so in writing or verbally. They did not. The creation of this regulatory system for ensuring the provision of and the adequacy of the provision of privately supplied teaching and for providing student loans to fund that, are crucial factors in determining intention, but did not in themselves, without more, give rise to a direct contract evidenced by conduct. I consider that the Master was right so to decide.
- As to the asserted implied contract, whilst I accept the Appellant's submission that suing students during their studies is deeply unattractive both commercially and educationally, that point does not, in my judgment, determine the test of necessity for an implied contract, There were alternative methods for the college to obtain their tuition fees if the Respondent refused to pay them, despite receiving a demand to pay and evidence of student attendance. Firstly, action against the Respondent under the 1999 Act. Secondly, action against the student. Thirdly, judicial review. I consider that the Master was correct to rule that there was no necessity for an implied contract. Therefore, I refuse permission to appeal.
G2: the 1999 Act
The Appellant's submissions
- The grounds and skeleton were substantially expanded upon in verbal submissions. The Appellant submitted that the Master had applied the wrong test in law, namely that laid out in the Court of Appeal in Cox. The appeal in Cox was decided after the Master's judgment and showed the wrong test had been used. The appeal in Cox was called PCSU [2024] UKSC 41, and the Supreme Court overturned the Cox test applied by the Master. The correct test, where the criteria in section 1(1)(b) and (3) of the 1999 Act are satisfied (so the contractual term purported to confer a benefit on a third party who was expressly identified in the contract by name, class or description), involves a strong statutory presumption in law that the third party had the right to enforce the term in its own right. That presumption can only be rebutted under section 1(2) if it is shown that, on a proper construction of the contract, the parties had a positive common intention that the term should not be enforceable by the third party. In order for the statutory presumption to come into play, it did not have to be shown that the parties to the contract positively intended that the relevant term should be enforceable by the third party. At para. 69 the Supreme Court ruled that the Court of Appeal in Cox fell into error.
- The Appellant submitted that, on this highest authority, the Master's decision stood to be overturned because he had applied the wrong test.
The Respondent's submissions
- There was no dispute that the Master applied the wrong test. In a supplementary note the Respondent sought to submit that, despite applying the wrong test, the decision was correct based on the reasoning.
Analysis and decision
- I shall look at the reasoning of the Master to consider the substance of the Respondent's submission in the light of the strong presumption that the student contract conferred a right under the 1991 Act to the college to sue for unpaid tuition fees. The reasons for this ruling were: (1) Cox determined that there was a weak rebuttable presumption in favour of S.1(2) being satisfied. This reasoning has been overturned by the Supreme Court. (2) The student contract only provided for direct payment to the college as a mechanism and none of the words showed that it was intended that the college could enforce (J224). This reason does not rebut the strong presumption. It is neutral. (3) The 1999 Act was not expressly excluded (J225). This reason has no weight in the light of the strong presumption. (4) The student contract did not provide a pure benefit to the college (like a gift), it was a benefit to the student (J226). In my judgment this reason has no weight. The Act is not constrained to gifts. (5) It is commercially unlikely that the Respondent and the student would want the college to be able to enforce to "foist that loan liability onto the student" (J227). I do not understand this reason. If the student has enrolled and done his first term of tuition and the college submits a claim for payment, there is no foisting of anything. (7) The scheme existed to enable the student to access State funding not to enable the college to be paid (J228). I do not understand this reason. The scheme existed to allow impecunious students to gain necessary education provided by private enterprise. That was not being provided by the State in colleges where the tutors and buildings were paid for by the State. It was provided by private companies. No such private education provision can exist without funding. The funding may also produce a slight profit for the company. Profit is a benefit. The funding may provide an income for the shareholders or directors. That is a benefit. (8) The contract was not intended to give the college a damages remedy (J229). I do not consider that this reason had any weight. The claim for unpaid tuition fees is just that. If due to failure to pay without good reason the Respondent causes the college to go bankrupt, then damages flow. What a student would think of her college going bankrupt because the Respondent wrongfully (or rightfully) refused to pay for tuition fees is pure guesswork. (9) The commercial likelihood that students would want the college to be able to enforce based on the evidence at least of one student before the Master, was of some weight (J230). I consider it was of some weight. I infer that students would not want to be sued by their college when they themselves had done nothing wrong. (10) Students might object to the college being paid due to disputes over the quality of teaching or registration for the wrong qualification (new diploma / old diploma course) or politics (J231-232). I understand this reason, but I do not consider that it provides any weight to take away the presumption that the college should be able to avail itself of the 1999 Act for validly provided teaching to students who validly attend their courses. Politics and complaints can be aired between the college and the student. They may lead to litigation or protest or they may provide a defence to the Respondent on which the Respondent will rely as allowed by S.3 of the 1999 Act, but that is nothing to the point, (11) Although students would not wish to be sued for unpaid tuition fees and would prefer the college to sue the Respondent, that inference did not weigh enough to tip the balance in the Master's judgment (J234). In my judgment it weighed in favour of the strong presumption. (12) the Respondent had entered direct contracts with other educational establishments in other fields of education (J235). This is true but has no effect whatsoever on the 1999 Act which provides a right for the third party to sue in the absence of a direct contract.
- In my judgment the decision of the Master on the 1999 Act claim was based on the application of a test which has been decided by the Supreme Court to be the wrong one. The decision therefore cannot stand. The factors relied upon by the Respondent do not change my view on that ruling.
The application to amend
- The Master refused permission to amend on the basis of his ruling on the lack of any real prospect of success on the 1999 Act claim. For this main reason the dismissal of the application should be set aside, in my judgment. As for the lateness of the application to amend, which was not made until after day one of the strike out application, it was made before the defence was served and long before trial and even before directions in the claim were given.
- By Part 17 of the CPR, amendment applications may be made. Rule 17.1 requires that, after service of the original pleading, amendment may only occur with consent of the other parties or with the permission of the Court. By rule 17.3, if the Court gives permission, it may give directions about service and consequential amendments at the same time. The case law interpreting these rules can be summarised as follows. The power to permit amendment is discretionary. The Court should take into account all of the matters set out in CPR rule 1.1 (2). These include: ensuring the parties are on an equal footing; ensuring the parties can participate fully; ensuring witnesses can give their best evidence; saving expense; proportionality to the money involved; the importance of the case; the complexity of the case; the financial position of the parties; the Court should ensure that cases are dealt with expeditiously and fairly; the Court should allocate appropriate share of the Court's resources and should ensure enforcement of compliance with rules and Orders. There are various other requirements which are involved. The proposed amendment should have clarity and should avoid over complex and prolix text. In relation to timing, if the amendment can reasonably and properly be described as "late" then it may be refused unless good reason for the lateness is provided. For any amendment, but particularly for late amendments, the Court will consider the prospects of success for the amendment and permission is more likely to be granted if the amendment is arguable, coherent and properly particularised. This prospects of success filter is applied more stringently for new claims for which a real prospect of success is required and for which the timing of the amendment may be carefully scrutinised. However, if the amendment is to clarify existing causes of action the filter is considerably looser and the general approach is that the prospects of success are for the trial judge to determine rather than the interlocutory judge. When looking at the prospects of success, the Court does not carry out a mini trial and generally factual assertions should be accepted, unless they are clearly unsupportable. When applying the late amendment filter, one question to be asked is whether the amendment should have been carried out earlier. In addition, the Court should look at whether the balance of unfairness favours the Applicant or the Respondent. So, if the amendment will cause the trial to be vacated or place an excessive burden on the Respondent, in relation to preparation for the trial, then the Applicant needs a good explanation, or in some cases a very good explanation, for the late amendment. This balancing exercise involves considering the balance between the general rule, which is to permit a party to plead out its case as it wishes, and the counterbalance, in relation to the prejudice caused to the Respondent, particularly in late amendment cases. Generally, of course, amendment should be allowed if it is to identify the real dispute between the parties. When considering this amendment application I take into account the guidance given by Coulson J in CIP v Galliford [2015] EWHC 1345 at para. 19 and by Carr J in Quah v Goldman Sachs [2015] EWHC 759 at para. 38, both of which are set out here below:
Coulson J:
"19. In summary, therefore, I consider that the right approach to amendments is as follows:
(a) The lateness by which an amendment is produced is a relative concept (Hague Plant). An amendment is late if it could have been advanced earlier, or involves the duplication of cost and effort, or if it requires the resisting party to revisit any of the significant steps in the litigation (such as disclosure or the provision time of the amendment.
(b) An amendment can be regarded as 'very late' if permission to amend threatens the trial date (Swain-Mason), even if the application is made some months before the trial is due to start. Parties have a legitimate expectation that trial dates will be met and not adjourned without good reason (Brown).
(c) The history of the amendment, together with an explanation for its lateness, is a matter for the amending party and is an important factor in the necessary balancing exercise (Brown; Wani). In essence, there must be a good reason for the delay (Brown).
(d) The particularity and/or clarity of the proposed amendment then has to be considered, because different considerations may well apply to amendments which are not tightly-drawn or focused (Swain Mason; Hague Plant; Wani).
(e) The prejudice to the resisting parties if the amendments are allowed will
incorporate, at one end of the spectrum, the simple fact of being 'mucked around' (Worldwide), to the disruption of and additional pressure on their lawyers in the run-up to trial (Bourke), and the duplication of cost and effort
(Hague Plant) at the other. If allowing the amendments would necessitate the adjournment of the trial, that may be an overwhelming reason to refuse the amendments (Swain Mason).
(f) Prejudice to the amending party if the amendments are not allowed will,
obviously, include its inability to advance its amended case, but that is just one factor to be considered (Swain-Mason). Moreover, if that prejudice has come about by the amending party's own conduct, then it is a much less important element of the balancing exercise (Archlane)."
The citations relevant to this text are as follows:
Worldwide Corporation Ltd v GPT Ltd and another [1998] WL 1120 764;
Swain-Mason and Others v Mills and Reeve LLP [2011] EWCA Civ 14; [2011] 1 WLR 2735;
Archlane Ltd v Johnson Controls Ltd [2012] EWHC B12 (TCC);
Hague Plant Ltd v Hague and Others [2014] EWCA Civ 1609;
Bourke and another v Favre and another [2015] EWHC 277 (Ch);
Wani LLP v Royal Bank of Scotland PLC and another [2015] EWHC 1181 (Ch);
Carr J:
"38. Drawing these authorities together, the relevant principles can be stated simply as follows:
a) whether to allow an amendment is a matter for the discretion of the Court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the Court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted;
b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other Court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission;
c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the Court have a legitimate expectation that trial fixtures will be kept;
d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done;
e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation;
f) it is incumbent on a party seeking the indulgence of the Court to be allowed to raise a late claim to provide a good explanation for the delay;
g) a much stricter view is taken nowadays of non-compliance with the Civil Procedure Rules and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so."
- In my judgment, the application to amend the pleading to add the 1999 Act should have been permitted because it is the Appellant's main case and had arguable prospects of success and went to the root of the issues between the parties. Whether it was outside limitation and so should be refused on other grounds, under CPR r17.3(2)(c) is a matter I shall consider below.
G3: Limitation
The Appellant's submissions
- The Appellant submitted that it was premature to rule that there was no implied term in the student loan contract (I ignore the asserted direct or implied contract because there was none). That should have been left to trial. The Appellant asserted that the Defendant misled the Minister in some way in the witness statement of Dan Pathirana which stood as the skeleton. The Appellant relied on S.32 of the Limitation Act 1980 but this was abandoned at the hearing. Likewise, reliance on S.29 was abandoned so, the whole appeal rested on suspension of limitation and the existence of an implied term in the student contract that limitation would be suspended if the Respondent suspended payment whilst investigating.
- In verbal submissions the Appellant relied on an implied term that limitation was suspended arising from the following: (1) the exercise by the Respondent of the power to suspend, which Mr Williams asserted was a delegated power; (2) the admission made by the Respondent's counsel that there was such a power; (3) and business efficacy, because the college could not sue for unpaid fees after the investigation had commenced if the Respondent had the power to suspend payments, thus limitation could not run.
- The Appellant relied on R (Guildhall) v SS for Business [2013] EWHC 3235 (Admin). In that case the Defendant (through the Student Loans Company) suspended payments to the Claimant for a student who asserted he was not doing a designated course, whilst the Defendant investigated. The Defendant then withdrew designation for two courses. The Secretary of State was satisfied that the College had registered significant numbers of students on the HND Business course when those students in fact intended to study an undesignated course. In a claim for judicial review by the college the decisions to suspend payments and to de-designate were challenged. Sir Ross Cranston ruled the decisions were not ultra vires and stated:
"29. In my view there was no basis for limiting the power to withdraw designation in the manner the College suggests. The power to withdraw cannot be limited either in terms of time (at the end of the academic year) or on the basis of proof of abuse. Student support is only available in accordance with the conditions set out in the statute and Regulations. If the Secretary of State suspects that public funds are leaching away from the statutory purpose then he must have the power to act immediately. Otherwise, the education provider could insist on its right to obtain funding, on one interpretation until the end of the academic year, or on the other interpretation until clear proof of abuse were available. That cannot be correct when limited public monies are available for this important public purpose. That does not mean that in removing the designation for courses the Secretary of State has an unfettered discretion to act. Under ordinary public law principles he cannot act for an improper purpose, taking into account irrelevant considerations, or ignore relevant considerings. Moreover, the exercise of the power cannot be arbitrary or Wednesbury unreasonable."
- Relying on this the Appellant submits that the Master was wrong to rule that the Respondent had no power to suspend payments. That submissions went only half way towards the target of showing and arguable case that limitation had been suspended.
- Although the Appellant ran an estoppel argument before the Master, that was not mentioned in the grounds of appeal or the skeleton and when it was raised in the hearing the Respondent objected and for the reasons given in an extemporary judgment, I did not permit amendment of the grounds to include it. Procedural rigour on appeal is important.
The Respondent's submissions
- The Respondent submitted that the Master was right. The claims were limitation barred. For those claims which arose before suspension of payments, limitation had started to run and there was no statutory suspension provision and no express or implied term suspending limitation. The Respondent referred to the guidance on implication of terms in M&S v BNP [2016] UKSC 72, at paras. 15-18. These classic summaries of the law cover: business efficacy; the officious bystander test; the "it goes without saying" test and the 4 part test in the judgment of Lord Keith of Kinkel from BP Refinery v Shire [1977] 180 CLR 266 at page 283. The Respondent submitted that none of those tests is satisfied in this case. For instance, because an officious bystander who when the student made the contract with the Respondent asked: "would limitation be suspended if the Respondent discovers potential malpractice by the college and investigates and suspends payments whilst it does so?", the answer would be quite unclear.
- For those claims arising after August 2014, the Respondent's submissions were difficult to understand. They appeared to be that there was no power to suspend but also that if there was a power to suspend then that did not prevent the college making a claim and did not prevent limitation running or starting to run.
Analysis and decision
- There is no doubt in my mind that the Master did not have all the necessary facts to be able to make a clear decision on when each cause of action for each student arose. There were apparently 115 relevant students. The Master did not know when each started, when each invoice fell due for payment and so when limitation commenced. However, the pleaded case was that the claims related to students taught between August 2013 and December 2014 (POC at para 4). So, the latest billing date would perhaps be December 2014 or soon thereafter. Thus, the 6 year limitation period would start in say January 2015, at the latest, for the last students. For all those students taught between August 2013 and January 2015 there was no suspension of payment in place and limitation started.
- In my judgment the Master was wrong to rule and there was no evidence upon which the Appellant could rely to assert that the Respondent had the power to suspend payments or temporarily to refuse payments. This was summary judgment, not a full trial. The statement of Mr Williams and the case of Guildhall were quite sufficient to make the point arguable. I take into account also the admission by Mr McGurck, which I infer was made on instructions, that the power existed. So, if the right to claim was suspended legally, intra vires, by the Respondent, then it was arguable that limitation did not start to run until that suspension was lifted.
- The Claimant's pleaded case was that the Respondent's investigation ended in October 2015 and on 2.11.2015 the college sought its fees (POC para 26). The Master found at J51, that the Respondent suspended payment from January 2015 and reinstated them in July 2016. On that basis the claims for payment had all been incurred or had all accrued by the time of suspension of payment so limitation had started to run. Therefore, this ground of appeal can only succeed if the Appellant has an arguable case before the Master that the limitation period was in some way suspended by reason of a term implied into the student loan contract to that effect.
- The real issue in this ground is whether an implied term suspending limitation in the student contract was arguable. In my judgment the answer to the officious bystanders' reasonable question on limitation might have involved a wide range of decisions or questions. One of which might be "I have no idea what would be fair in those circumstances". Another might be: "it depends how bad the allegation against the college was". Another might have been, "well the college has 6 years, that's a long time and long enough, unless the investigation goes on a long time." I do not consider that it is arguable that business efficacy demanded a suspension of limitation either. Nor do I consider it arguable that it was at all obvious that suspension of limitation would arise on suspension of payment, because judicial review and civil claims were available to the college to enforce their right to payment under the 1999 Act.
- For the reasons set out in the Respondent's submissions and provided by the Master in his judgment at J156, J159 J161, J162, J164 and J165, I consider that the Master was right to rule that the claims were unarguably limitation barred. Quite apart from the law, it is odd that the Appellant did not bring proceedings under the 1999 Act between July 2016 and 2021. It may be that the Appellant was unaware of the 1999 Act, for instance it was not pleaded in the Appellant's defence in the first action brought by the Respondent in 2019, but ignorance of the law is no proper reason.
- This disposes of the appeal despite my allowing the other grounds above, but I shall consider the further grounds (G4-5) for completeness.
The application to amend and limitation barred causes of action
- The arguable 1999 Act claim was introduced to this second action by an application dated 7.10.2022 for permission to amend the POC to add it as a new cause of action. If successful it would have triggered backdating the new claim to the date of issue. In my judgment there was little doubt that the new claim arose from the same facts as the contract claim originally pleaded. Therefore, CPR r 17.4(1) and S.35(5)(a) of the Limitation Act 1980 were triggered. Taking into account that the causes of action all arose before May 2015 and that the action was commenced more than 6 years thereafter, in October 2021, the back-dating does not assist the Appellant with the limitation defence.
G4: Abuse of Process
The Appellant's submissions
- The Appellant submitted that the causes of action in this claim were not determined in the first action, they were excluded for procedural default. The appellant relied on the judgment of Coulson LJ in Orji v Nagra [2023] EWCA Civ 1289, at paras. 48 and 53, submitting that this procedural default is not a bar to a second action. The issue in Orji was whether a claim which was in time and arguable should be struck out as an abuse because of what happened in earlier related proceedings. C1 and C2 claimed damages for trespass against D1 and D2. The Cs were later convicted of criminal offences but the convictions were overturned on appeal. The Cs later amended their trespass claim and told the District Judge that this amendment was the final amendment. Later still the Cs issued a second action for malicious prosecution arising from the complaints made by the Ds after the disputed events. This was struck out as an abuse of process but, on appeal, Coulson, Stuart-Smith and Nugee LJJ overturned the striking out. Coulson LJ ruled thus:
"6.1 The Law
44. Henderson v Henderson is, in the words of Sir James Wigram V-C, authority for the proposition 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 that same parties to open the same subject of litigation in respect of matters 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 from 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."
45. The modern statement of this principle can be found in the speech of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1 30H-31F, where he said:
"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. This public interest is reinforced by the public interest in 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. 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 account of all the facts of the case, focusing attention on the crucial question 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."
46. There can be no doubt, therefore, that both Henderson v Henderson and Johnson v Gore-Wood are primarily concerned with a party seeking to raise in subsequent proceedings an issue which had either already been decided in earlier proceedings, or which could and should have been raised in those earlier proceedings. However, it is not necessary for there to be two different sets of proceedings for the rule to apply. …
47. It follows that the rule in Henderson v Henderson can apply, not only to one set of proceedings, but to earlier interlocutory decisions in those proceedings: see Seele, and Koza Ltd v Koza Altin Isletmeri AS [2020] EWCA Civ 1018, [2022] 1170 at [41] – [42] per Popplewell LJ. But it is crucial to remember that, whenever it arises, the rule in Henderson v Henderson requires a previous determination by the court. As Lord Hobhouse put it in In Re Norris [2001] UKHL 34 at paragraph 26: "It will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse of process" (emphasis supplied). More recently, Nugee LJ reiterated in Wilson and Another v McNamara and Others [2022] EWHC 243 (Ch) at [57], by reference to Henderson v Henderson itself, that "the principle does not arise if there has not been a previous adjudication" by the court.
6.2 Analysis
48. I am in no doubt that the rule in Henderson v Henderson has no application to the facts of the present case. That is because there was no relevant determination by DJ Stewart which could legitimately prevent the appellants' subsequent pursuit of the malicious prosecution claim.
49. At the time of the hearing before DDJ Payne, there was a trespass claim which had not got beyond the pleading stage, and a later malicious prosecution claim, arising out of the same incident (but with many different features), which had also not got beyond the pleading stage. There had been no determination by the court of any substantive issue. The appellants could not be accused of trying to go behind some earlier determination of the court, because there had not been one. The only determination that DJ Stewart made was allowing the appellants permission to reamend the trespass claim. On the face of it, that had nothing to do with the existence or otherwise of the separate malicious prosecution claim, which had not even been commenced."
- The Appellant submits that there was no determination of the issues relating to the college's unpaid fees claims in the first action. Although the application to amend in the first action, made by the Appellant, which sought to add the counterclaim for unpaid fees, without pleading either contract or the 1999 Act, was refused by Master Cook just before trial, that does not make any proper foundation for an abuse finding. The Appellant asserted that first action was for recoupment of fees paid due to regulatory breach brought by the Respondent and defended successfully by the Appellant. The second action relates to non-payment of fees for other students brought by the Appellant.
The Respondent's submissions
- The Respondent submitted that the Master was right to strike out the action because it was an abuse. It should have been brought in the first action and because the application was made so late it was dismissed. The Respondent relied on Davies v Carillion [2017] EWHC 3206 (QB) at para. 53 and Aldi v WSP [2007] EWCA Civ 1260, [2008] 1 WLR 748, at para 16.
- In Aldi, Longmore, Thomas LJJ and Wall J overturned a striking out for abuse of process on the basis that the claim could and should have been brought in previous litigation. The Claimants leased commercial buildings which subsequently began to subside due to mal-compaction of the subsoil. Aldi sued Holmes. Multiple other actions were started arising from the construction of the buildings between multiple parties including WSP but Aldi did not sue WSP. These were case managed together. Aldi obtained judgment against Holmes. Aldi obtained judgment against Holmes for £3.3 million. One of the other actions (involving WSP) was settled during trial and Aldi had not joined that action. Aldi then commenced an action against WSP for breaching a warranty given under seal as they had failed to exercise all reasonable skill and care in relation to the foundations and the vibro-compaction which caused the differential settlement. WSP applied to strike it out as an abuse because Aldi had not joined the settled action. Jackson J struck out the claim as an abuse. The Court of Appeal set aside the striking out, ruling that Aldi had done nothing wrong. At para. 16 Thomas LJ ruled thus:
"16 In considering the approach to be taken by this court to the decision of the judge, it was rightly accepted by Aspinwall that the decision to be made is not the exercise of a discretion; WSP were wrong in contending otherwise. It was a decision involving the assessment of a large number of
factors to which there can, in such a case, only be one correct answer to whether there is or is not an abuse of process. None the less an appellate court will be reluctant to interfere with the decision of the judge where the decision rests upon balancing such a number of factors; see the discussion in Assicurazioni Generali SpA v Arab Insurance Group (Practice Note) [2003] 1 WLR 577 and the cases cited in that decision and Mersey Care NHS Trust v Ackroyd (No 2) [2007] HRLR 580, para 35. The types of case where a judge has to balance factors are very varied and the judgments of the courts as to the tests to be applied are expressed in different terms. However, it is sufficient for the purposes of this appeal to state that an appellate court will be reluctant to interfere with the decision of the judge in the judgment he reaches on abuse of process by the balance of the factors; it will generally only interfere where the judge has taken into account immaterial factors, omitted to take account of material factors, erred in principle or come to a conclusion that was impermissible or not open to him. In this case, I consider that the judge, despite the weight that must be accorded his view given his great experience in this type of litigation and the conspicuous success with which he has managed the TCC, reached a decision which was impermissible by taking into account factors which he should not have done and omitting factors which he should have taken into account."
And at para. 17:
"… However, as was made clear in Johnson v Gore Wood & Co [2002] 2 AC 1, the fact that a claim could have been raised in the original action does not mean it is necessarily abusive to raise it in a second action. It is necessary to consider whether in all the circumstances Aldi is abusing the process of the court by seeking to raise the issues it could have raised before."
- I glean form this that Wednesbury factors are the foundation for an appeal against a decision made by a first instance judge on abuse of process and that the fact that a claim could have been raised in an earlier action does not without more lead to a finding of abuse.
- In Davies, a claimant's second claim had been struck out as an abuse of process because he had previously issued the same claim and that had been struck out for breach of an unless order. On appeal Morris J overturned the strike out and allowed the claim to continue. He summarised the two usual abuse categories: (1) where the claim has been struck out for default of some sort and is issued again; and (2) where the claim brought could and should have been brought in an earlier action, but was not. He reviewed cases which fell into the first category: Arbuthnot v Trafalgar [1998] 1 WLR 1426, Securum v Ashton [2001] Ch 291; C (A Child) [2002] CP Rep 6; Cranway Ltd v Playtech [2008] EWHC 550 (Pat), Aktas v Adepta [2011] QB 894 CA and Maritime Transport Ltd v Mills (unreported) 22 June 2017. He reviewed the cases which fell into the second category, Henderson v Henderson, cited above: Aldi Stores; Johnson v Gore Wood [2002] 2 AC 1; Stuart v Goldberg [2008] 1 WLR 823. He noted that such abuse of process decisions were not exercises of discretion but instead involved the balancing of a large number of factors. He sought to summarise the rules relating to striking out for abuse in paras. 52-55. The Respondent relied on the restricted power of the appellate court to interfere with the Master's decision save on Wednesbury grounds and submitted that the Appellants procedural default in the first action was adequate foundation for the Master's decision. The Respondent relied on this ruling of Morris J:
"53 … In such cases:
(1) Whether a second action raising matters which could have been, but were not, raised in the first action is an abuse of process is not a matter of discretion, but is a judgment to be made by the first instance judge, assessing
and balancing all the relevant factors in the case.
(2) On appeal from a first instance judge's decision, the appeal court will interfere only where the judge has taken into account immaterial factors, omitted to take account of material factors, erred in principle or come to a conclusion that was impermissible or not open to him or was wrong: Stuart's case, para 82.
(3) Even if there is a finding of abuse of process, the court still has a remaining discretion not to strike out, but only in very unusual circumstances: Stuart's case, para 24 and Aktas v Adepta, para 53."
Analysis and decision
- I shall now consider the matters which the Master took into account. (1) It is correct that the Appellant's second claim could have been decided in the first action. They both concerned the similar subject matters and there were joint issues. (2) It is also correct that there were some matters which were different between the Respondent's recoupment claim and the Appellant's 1999 Act claim. (3) It is also correct to find that it would have been more efficient for the student fees issues between the parties all to have been dealt with in the first action. (4) There is no challenge to the finding that the Appellant had the money in 2019 to raise the claims and had legal expense insurance. (5) It was undisputed that, had the Appellant's counterclaim been raised in good time and served when it should have been served, with the original defence, it would have been determined in the first action. (6) In my judgment it goes too far to find that the 2nd action was a "waste of Court time". It was correct to find it involved some duplication, but the issues were around the 1999 Act, not just regulatory breach. (7) I do not know whether it is correct to infer that the issues in the counterclaim might have altered the result in the first action had they been raised. This is mere guesswork and so is not a weighty factor. However, it should be recalled that the Respondent objected to them being raised late. (8) It is beyond dispute that all relevant claims, defences and counterclaims between parties arising from the same events should be brought in one set of proceedings, however here, there was a series of events and different students were involved in these two claims.
- Now looking at the matters which the Master did not take into account. The Appellant was a litigant in person when the defence was served in the first action. He only instructed lawyers a year later and the amendment to include the counterclaim was raised then. The amendment did not include a claim under the 1999 Act. Nor was a contract particularised in the counterclaim, it was a mere demand for payment. There was a 5 month delay in making the application to amend. The refusal by Master Cook to allow the amendment was probably due to the lateness and how that would derail the trial, if allowed. This is not a strike out case due to breach of an unless order or due to contumelious default or lack of arguable substance. If anything, the underlying error was naivety, or perhaps over self-confidence by the litigant in person, in defending without legal advice for a year. Thereafter the Appellant can rightly be criticised for further delay.
- In addition, I consider that it is likely that the Master's decision on abuse was made in the light of the rest of his rulings, which I remind myself were all to the effect that there was no arguable contract claim and the 1991 Act did not apply, so the Appellant had no claim at all. In addition, the Master had held that any possible claims were limitation barred. In contrast, I have ruled above that there was an arguable claim under the 1999 Act and that should have been taken into account. I consider that the Master should also have taken into account the 1 year suspension by the Respondent on the basis that it arguably had legal authority to do so. Finally, the Master should have taken into account the Appellant's assertion that the Respondent had bankrupted his business due to the unpaid fees of over £464,000 specifically and £2.6 million over 6 years. Nor did the Master consider the Appellant's Article 6 rights to a fair trial under the ECHR. In this case the Appellant had tried to get a trial of its claim for unpaid fees in the first action and was refused. Now he has issued and has again been refused. In the absence of the transcript of the judgment of Master Cook, it cannot be assumed that he intended to bar the Appellant from ever making a claim for the unpaid fees for teaching which no one disputed was provided to students with loans for that teaching. The correct approach was to infer that Master Cook simply would not let the late amendment derail the trial and so refused the application. On those facts, far from failing to raise the claim, the Appellant did raise the claim late but was refused adjudication thereof in the first action. The claim was not struck out on the traditional basis. It was purely procedural. That is quite different from the facts in those cases where the party has not raised the claim at all.
- In my judgment, when considering, applying and balancing all of the relevant factors, the decision that the Appellant's behaviour constituted an abuse was wrong. It seems to me that the facts of this case are not far from the facts in Orji and are more in favour of the Appellant than those in Orji. I grant permission to appeal on this point and grant the appeal on the ground relating to abuse.
G5: Mini trial
The Appellant's submissions
- The Appellant had submitted evidence from one student and would have submitted evidence from more at trial. The Appellant accused the Master of conducting a mini trial without allowing the Appellant to call all of its evidence. The Appellant also submitted that this case had wider application to other private colleges.
- In verbal submissions this ground was hardly mentioned.
The Respondent's submissions
- The Respondent did not spend much time answering this because of the lack of substance to it.
Analysis and decision
- The Master reminded himself in the judgment not to conduct a mini trial. I do not consider that this ground adds anything of substance to the other substantive grounds. I take the point that more witnesses could have been called at trial but whether the evidence of one or five students would have affected any decision on the existence of an implied contract is very speculative, indeed.
- Whilst I have overturned some of the Master's decisions I have not overturned the decision on limitation. I do not consider that the mini trial point makes any difference to my substantive decisions above.
- I do not grant permission to appeal in this ground because I do not consider it is arguable.
Conclusions
- I refuse permission to appeal on ground 1 because it is not arguable that there was any direct or implied contact between the Appellant college and the Respondent.
- I grant permission to appeal on ground 2 and uphold this ground. I consider that the Appellant had an arguable claim against the Respondent under the 1999 Act. I also grant permission to appeal and uphold ground 4. I do not consider that the Appellant's failure to plead the counterclaim in the first action brought by the Respondent early in the life of the action was a sufficient foundation for a finding that the second action was an abuse of process. I consider that the Article 6 rights to a fair trial, the lack of intentional default in the original failing and the decision of Master Cook to protect the trial date and hence to exclude the new counterclaim are all weighty factors which were not given sufficient weight by the Master.
- However, for the reasons set out above, I consider that the Master was correct to rule that the Appellant's claims were all limitation barred because they were all brought more than 6 years after the accrual of the cause of action. I refuse permission to appeal on ground 3. Despite upholding other grounds, this last ruling disposes of the appeal in favour of the Respondent. The appeal is dismissed.
END