ALDI Stores Ltd v WSP Group plc and others

Abuse of process – Proceedings involving several parties – Appellant proceedings against only one party – Defendant in administration and insurer disputing liability to cover judgment sum – Meanwhile remaining claims settled – Appellant bringing new proceedings against different defendants – Claim struck out as abuse of process – Whether claim could and should have been made in original proceedings – Appeal allowedThe appellant held a 25-year lease of a retail store constructed for it under the terms of an agreement for lease with the owner of the land. Another retailer, B&Q, had also acquired a store on the site in the same manner. The appellant and B&Q had the benefit of warranties, supported by professional indemnity insurance, from the building contractor (H), which was responsible for the design and construction of the buildings, and from each of the respondents, which had provided specialist consultancy.In 1997 and 1998, the buildings suffered damage that was attributable to settlement. The appellant brought a claim against H in the sum of £3.01m for breach of warranty and negligence, while B&Q brought a similar claim for £26m. H joined the respondents as Part 20 defendants. Certain of the respondents were also sued by the freeholder.Following the determination of issues of liability and quantum in the appellant’s claim, H, which by then was in administration, was ordered to make certain interim payments to the appellant. These were funded by H’s professional indemnity insurance, exhausting the primary layer of cover. Judgment was later given for the appellant against H in the total sum of £3.331m. The appellant sought to recover the outstanding balance from the underwriters of the excess layer of the insurance. However, they disputed their obligation to pay. The appellant began proceedings against the underwriters. Meanwhile, the remainder of the claims between B&Q, the freeholder and the respondents were settled in early 2004.The appellant subsequently brought fresh proceedings against the respondents for breach of warranty. The respondents made an application to strike out the claim as an abuse of process on the ground that it could and should have been made in the previous proceedings. The application was allowed. On appeal, the appellant accepted that the decision whether to strike out required a broad, merits-based judgment. However, it submitted that there was a prior threshold requirement for a sufficient degree of identity between the defendants to the original action and the defendants to the new action, which had not been met in the instant case since they were completely different companies.Held: The appeal was allowed. In making a broad, merits-based judgment as to whether a claim could and should have been brought in previous proceedings, the fact that the defendants were different from those to the original action was a powerful factor but did not impose a threshold or operate as a bar to the application of the principle: Johnson v Gore Wood & Co (No 1) [2002] 2 AC 1 and Dexter Ltd (in administrative receivership) v Vlieland-Boddy [2003] EWCA Civ 14 applied. Although the judge’s task in an application such as the present did not involve the exercise of a discretion, the appeal court would be reluctant to interfere with the judge’s decision where it rested upon an assessment of such a large number of factors. It would generally interfere only if the judge had taken into account immaterial factors, omitted relevant ones, erred in principle or come to a conclusion that had not been open to him.However, the judge had made such an error in the instant case. The fact that a claim could have been raised in the original action did not mean that it was necessarily abusive to raise it in a second action. The appellant had not behaved in any culpable manner and had made a judgment that it would be best to seek to recover against the underwriters rather than continue to participate in the other proceedings. It had been entitled to regard that as a sensible and cost-efficient course, given that the other proceedings would: (i) last several weeks; (ii) give rise to considerable costs; and (ii) raise issues with which the appellant had not been concerned in its claim against H. Moreover, the appellant’s interest in monetary terms was a fraction of that of B&Q. Although, weighed against that, were the private interests of the respondents in respect of costs, delay and achieving finality with regard to the site, they had been made aware that the appellant had a claim against them and had entered into the settlement agreement in full knowledge that there might be a second claim. Further, there was a public interest in allowing parties a measure of freedom to choose who to sue in a complex commercial matter, rather than encouraging the bringing of a single set of proceedings against a wide range of defendants. In circumstances where the appellant had not, for good reason, previously brought a claim against the respondents, the action was not an abuse of the process of the court.David Thomas QC (instructed by Cobbetts) appeared for the appellant; Michael Soole QC (instructed by Reynold Porter Chamberlain) appeared for the first and second respondents; Michael Douglas QC (instructed by Simmons & Simmons) appeared for the third respondent.Sally Dobson, barrister