ALDI Stores Ltd v WSP Group plc and others
Longmore, Thomas and Wall LJJ
Judgement
As Approved by the Court
1. This appeal concerns the application of the principles set out in Johnson v Gore Wood [2000] UKHL 65 [2002] AC 1 to an attempt to strike out a claim for abuse of process on the basis that the claim could and should have been brought in previous litigation. It arises in the context of complex commercial litigation relating to the damage sustained to a retail store site near Luton.
2. The undisputed facts are very fully set out at paragraphs 2-45 of the judgment of Jackson J [2007] EWHC 55 (TCC). It is therefore only necessary to summarise them:
Judgement As Approved by the Court Lord Justice Thomas: 1. This appeal concerns the application of the principles set out in Johnson v Gore Wood [2000] UKHL 65 [2002] AC 1 to an attempt to strike out a claim for abuse of process on the basis that the claim could and should have been brought in previous litigation. It arises in the context of complex commercial litigation relating to the damage sustained to a retail store site near Luton. 2. The undisputed facts are very fully set out at paragraphs 2-45 of the judgment of Jackson J [2007] EWHC 55 (TCC). It is therefore only necessary to summarise them: i) In 1993 and 1994, Laporte Industries Ltd (Laporte) entered into agreements for a lease with the appellants (Aldi) and B&Q plc (B&Q) under which it agreed to construct stores at a site at Dallow Road, Luton; the site had previously been used by Laporte to deposit chemical waste from its nearby plant. ii) In 1994, Laporte entered into a building contract with Holmes plc (Holmes) for the design and construction of the buildings and into agreements with the First and Second Respondents (to whom I shall refer together as WSP) and the Third Respondents (Aspinwall) for specialist consultancy services for engineering and environmental services respectively. Holmes employed Norwest Holst Soil Engineering Ltd (Norwest Holst) as the ground improvement contractor. Under the terms of complex contractual arrangements, Aldi and B&Q became entitled to warranties from Holmes, WSP and Aspinwall to the effect that they had properly performed their obligations; in the case of WSP and Aspinwall this related to their respective professional duties of skill and care; the warranties were supported by professional indemnity insurance for £5m. These warranties were executed under seal by these companies in 1994 and 1995. iii) The buildings were completed in 1995. Laporte entered into a 25 year lease with Aldi and a lease for a similar term with B&Q. The freehold reversions were subsequently transferred to Grantchester Properties (Luton) Ltd and to Grantchester Retail Parks plc (Grantchester). iv) Aldi and B&Q commenced trading from their stores in 1995. In 1997 and 1998, differential settlement to the buildings leased by Aldi and B&Q began to occur and caused damage to the buildings. Aldi were advised that the settlement had been caused by the vibro-compaction of the site; they were also advised that vibro-compaction was an unsuitable method of ground improvement and had not achieved its objective. There appears now to be little dispute that the differential settlement was caused by the unsuitability of the site and the method of compaction. v) On 22 June 2001 Aldi commenced an action in the Technology and Construction Court (TCC) against Holmes claiming damages for breach of warranty and negligence; its claim was for £3.01m. Holmes joined the Second Respondents (one of the WSP companies) and Norwest Holst as Part 20 defendants in August 2001. In the Part 20 claim Holmes alleged that there had been breaches of the various warranties given to Aldi and B&Q. vi) B&Q commenced an action against Holmes in May 2002 in the TCC; its store was considerably bigger and its claim was for £26m. Holmes issued Part 20 claims in that action against one of the WSP companies and Norwest Holst in July 2002. Grantchester commenced actions against WSP and Norwest Holst in September 2002. vii) It was only in November 2002 that Aspinwall were joined by WSP into the action commenced by Aldi and B&Q. Between then and early 2003, Aspinwall and WSP were made parties by B&Q and Grantchester to their actions and to some of the Part 20 proceedings in the B&Q and Grantchester actions. Aspinwall were made, along with the First Respondents (the other WSP company), Part 20 defendants to the Aldi action by Holmes in January 2003. Subsequently another company, Keller Limited, who had acted as ground improvement specialists, became party to the actions. viii) Holmes had gone into administration on 5 February 2002. Nonetheless it had the required professional indemnity insurance under a cost inclusive primary layer for £2m and for a second layer of £3m excess of £2m. The primary layer agreed to indemnify Holmes and instructed solicitors to act on behalf of Holmes; the Aldi claim attached to one year and the B&Q claim to a different year. However, the position of the excess layer underwriters was different; by July 2002, they had reserved their position and Aldi were informed of this. ix) Aldi pursued its claim vigorously against Holmes who continued to be represented by solicitors instructed by the primary layer underwriters until 11 April 2003; it claimed only against Holmes and never made WSP or Aspinwall defendants to its claim. It is clear that Aldi’s quantum claim against Holmes was, from an early stage, treated separately from the remainder of the Aldi action and the other actions. Thus: a) On 16 March 2002, Aldi obtained judgment against Holmes on certain liability issues. b) On 26 July 2002, Aldi obtained judgment on further liability issues. Directions were given at a pre-trial review before Judge Bowsher QC for a preliminary issue on quantum to be tried on 1 October 2002 with the remaining issues for trial in March 2003; the Part 20 defendants to that action were to be bound by the result and were given permission to attend the trial. A case management conference (CMC) was heard on the same date in the B&Q action and a trial of the quantum issues between B&Q and Holmes was fixed for March 2003. c) On 1 October 2002, Aldi obtained judgment by consent on the preliminary issue on quantum; in essence Holmes accepted Aldi’s contention that it was bound under the terms of the lease to keep the store in substantial repair. d) On 29 November 2002, there was a further CMC before Judge Bowsher QC in all the actions; the trial of the quantum of Aldi’s claim was adjourned to 3 June 2003. It was ordered that Holmes’ Part 20 claim in the Aldi action, the B&Q action and the Grantchester actions were to be tried together on a date to be fixed; the CMC was adjourned to 17 January 2003. e) At the adjourned CMC in all the actions on 17 January 2003 Judge Bowsher QC made directions for the trial of the remaining issues of quantum in Aldi’s claim against Holmes. The order provided that the other parties were not to be bound by or required to attend the quantum hearing. This was because WSP and Aspinwall contended that the measure of damages was different and therefore different issues would arise. The date for the trial of the Part 20 proceedings in the Aldi action and the other actions was fixed for 12 January 2004, with an estimated length of just over 6 weeks; mediation was recommended for early June 2003. f) On 24 January 2003, Holmes were ordered by consent to make a further interim payment to Aldi in the sum of £1.3m; this was agreed on the basis that it was likely to be the sum that would exhaust the primary layer of Holmes’ cover; in fact the sum was too low and a further payment of £0.131m was made to Aldi in August 2004. g) Aldi served its case on quantum on 3 February 2003 putting forward a claim that totalled £3.5m. h) On 11 April 2003, the solicitors instructed by the primary layer underwriters on behalf of Holmes who no longer had an effective interest in the action after the agreement made on 24 January 2003, came off the record for Holmes; solicitors instructed by the administrator then came on the record for Holmes. i) On 1 May 2003, there was a summary assessment of Aldi’s quantum claim by Judge Bowsher QC; Aldi obtained a further judgment for £2.054m and that was made enforceable as to £0.526m after giving credit for the sums already paid. Certain issues were left over. j) On 22 May 2003, there was a final hearing of the quantum claim before Judge Bowsher QC when the remaining issues were resolved by consent. Judgment was entered for Aldi for £3.331m; after giving credit for the payments made, the judgment was made enforceable for a further £1.266m, making a total of about £1.792m. x) As Aldi had obtained judgment against Holmes for the whole of its claim, it set about trying to recover the sum of £1.792m from the excess layer underwriters. On 12 May 2003, Aldi’s solicitors wrote to the solicitors for the excess layer underwriters making it clear that the Third Party (Rights Against Insurers) Act 1930 would be used if necessary. “In particular, our client has an understandable reason to wish to pursue to a conclusion the issue of enforcement under the 1930 Act which is that our client currently retains the benefit of various other potential causes of action against other parties. Claims against those other parties are subject to concerns in relation to limitation law. Further, those other parties are Defendants to various other claims (Part 20 claims) before the [TCC] which are due to come to trial in January of next year. It is our client’s view that the court would expect our client to seek to bring any claims against such parties at the same time so as to avoid duplication and wastage of court time. We are therefore instructed to advance, if necessary, proceedings under the 1930 Act as a matter of urgency in order to conclude whether our client needs to pursue others.” The response of the underwriters’ solicitors was that investigations were continuing. xi) Aldi’s solicitors wrote again to the solicitors for the excess layer underwriters on 27 May 2003 after obtaining the final judgment against Holmes. They asked for a decision as to whether underwriters would pay; they stated that, in the absence of a favourable decision they would issue proceedings. “You will be aware that there is extensive ongoing litigation in the [TCC] between various different parties, all due to go to trial early in the New Year. Our client has other causes of action which it may wish to take up in the event that indemnity is not provided by your client pursuant to our client’s rights under the 1930 Act. Given the extent of the litigation and the number of parties, our client’s Queen’s Counsel has advised that the court would expect to hear Aldi in relation to allegations against any other party (such as the engineer and environmental consultant) at the same time as all of the other parties early in the new year. It is therefore a matter of urgency that the issue in relation to your client is resolved and we intend to make these observations to the court when seeking, if necessary, an early hearing in this matter.” The solicitors for the excess layer underwriters responded to say that they were still investigating xii) On 11 June 2003 Aldi’s solicitors wrote to the solicitors for all the parties in the B&Q and Grantchester actions and the Part 20 proceedings in the Aldi action pointing out that Aldi’s present intention was to enforce the judgment obtained against Holmes against the excess layer underwriters. They added: “If satisfaction of the two judgment sums is not obtained, then it may be that our client will wish to call upon other causes of action available to it and we will keep other parties apprised in that regard.” xiii) On the same day the solicitors wrote to the clerk to Judge Bowsher QC, the judge managing the litigation, about a hearing due to take place on 13 June 2003 in the B&Q and Grantchester actions and the Part 20 proceedings; they made a suggestion as to how orders in the actions should be drafted so that it was clear whether any order impacted on Aldi. They made clear Aldi’s interest in the following terms: “We continue to receive correspondence from all of the parties involved in [the Part 20 proceedings and the other actions]. We have no objection to being copied in on that correspondence especially as our client currently maintains an interest in relation to this matter dependent on the outcome of its attempts to enforce the judgment.” xiv) Aldi commenced proceedings against the excess layer underwriters in the Commercial Court; on 6 August 2003, the solicitors for the excess layer underwriters wrote to the solicitors for Aldi setting out detailed reasons why underwriters were avoiding the policy for non disclosure in relation to the Dallow Road site and other matters; the letter set out detailed allegations about Holmes’ knowledge of those matters. A defence reflecting that position was served on 1 September 2003. xv) On 4 September 2003, Aldi’s solicitors sent an e-mail to the solicitors for the parties in the B&Q and Grantchester actions and the Part 20 proceedings stating: “We are evidently not exchanging statements because of the state of the proceedings between Aldi and Holmes. But given that our client may wish to commence proceedings in the future depending on success or otherwise in prosecuting its claim against Insurers under the 1930 Act, we would be grateful for sight of a copy of the witness statements exchanged in due course.” xvi) Despite Aldi’s request for early disclosure from the excess layer underwriters, the excess layer underwriters did not provide disclosure until 2 December 2003. Aldi carried out inspection of the documents on 12 December 2003. xvii) In the meantime, the parties in the B&Q and Grantchester actions and the Part 20 proceedings in the Aldi action were preparing for the trial in January 2004, the estimate for which had been increased to 12 weeks. On 8 December 2003, Norwest Holst amended its pleadings to allege that three named employees of WSP were aware in 1994 of, and deliberately concealed, (or ought to have been aware of) the significant risk that vibro-compaction might not be sufficient to prevent the buildings being damaged as a result of differential settlement. Aldi have made it clear that it will not take this point against WSP and Aspinwall. xviii) The trial of the B&Q and Grantchester actions and the Part 20 proceedings in the Aldi action commenced on 12 January 2004 at the largest available court in London with 8 separately represented parties, each with leading counsel. There were to be 38 witnesses of fact, 14 experts on liability and 16 on quantum; the trial bundle comprised 81 volumes. A settlement was, however, agreed in the second week of the trial; the actions were in consequence stayed by an Order of 22 January 2004. Aldi were not invited to participate in the settlement discussions and were not a party to the settlement agreement. xix) In April 2004, leading counsel advised Aldi that its claim against the excess layer underwriters was likely to fail; Aldi accepted that advice. In December 2004 Aldi formally settled the proceedings with the excess layer underwriters on the basis that underwriters would refund the premium – a sum of just over £8,000. xx) In June 2004, Aldi’s solicitors wrote to WSP and Aspinwall stating that Aldi intended to proceed against them, setting out the basis for the claim and attached a draft pleading. The response of WSP’s solicitors was to make it clear that they would apply to strike out the claim on the basis it was an abuse of process. Aspinwall’s solicitors subsequently adopted the same position. xxi) On 18 October 2005 Aldi issued these proceedings against WSP and Aspinwall in the TCC in Birmingham; the proceedings were served on 17 February 2006. The action was subsequently transferred to the TCC in London. 3. The basis of Aldi’s claim in these proceedings is that WSP and Aspinwall were in breach of the warranties given under seal as they had failed to exercise all reasonable skill and care in relation to the foundations and the vibro-compaction; those breaches had caused the differential settlement. Aspinwall and WSP have not filed defences, but their contention was that the damage was not caused by their breach of warranty; that, if they were liable, the measure of damages was not the same as the measure of damages applicable to the claim against Holmes. 4. An application was made by WSP and Aspinwall to strike out the present claim on 16 March 2006. Jackson J acceded to that application. I refer to his reasons for doing so at paragraphs 13 and 14 below, but it is convenient at this stage to set out further findings he made: i) The costs incurred by the parties in the Aldi, B&Q and Grantchester actions were in excess of £7.5m; the costs up to and including a full trial of the present action would be about £2.5m (paragraph 51). ii) It was obvious by April 2003 that Aldi would face a serious contest with the excess layer underwriters (paragraph 80). Whether it could succeed depended on witnesses and knowledge not within its control. When Aldi received underwriters’ letter of 6 August 2003 (referred to at paragraph 2.xiv) above), it was still possible that Aldi might win that action, but its prospects of success were not better than even (paragraph 81). iii) It would have been perfectly feasible for Aldi to rejoin its action and the B&Q and Grantchester actions at a late stage – September 2003; the judge managing that litigation would have allowed Aldi to do so (paragraphs 75(v) and 77). The involvement of Aldi in the action would not materially have increased its length (paragraph 77). iv) No response by WSP and Aspinwall to the letters of 11 June and e-mail of 4 September 2003 from Aldi’s solicitors was appropriate: “On both of those dates it was still perfectly feasible that Aldi might rejoin the main action. In the event, this did not happen. As January 2004 approached, and still Aldi made no move, the applicants (who were all advised by experienced counsel and solicitors) no doubt took comfort from the rule in Henderson v Henderson.” (paragraph 82) v) There was no impropriety or culpable conduct on the part of Aldi (paragraph 76). The applicable law (1) The general principles 5. The principles applicable to an application to strike out a claim on the basis that it is an abuse of process to bring a claim that could and should have been brought in previous proceedings are set out in the speech of Lord Bingham of Cornhill in Johnson v Gore-Wood [2000] UKHL [2002] 2 AC 1. It is, in my view, generally neither necessary nor helpful to refer to the accretion of authority before that decision, as the decision clearly sets out the principles the courts are to apply. At page 31, Lord Bingham summarised the main principles in these terms: “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. This 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 abuse may be found, to identify any additional element such as a collateral attack on 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 proceeding 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 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. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.” 6. It is, however, helpful to refer to the judgment of Clarke LJ in Dexter v Vlieland-Boddy [2003] EWCA Civ 14, where he summarised the principles to be derived from Johnson v Gore-Wood at paragraphs 49-53. “49…: i) Where A has brought an action against B, a later action against B or C may be struck out where the second action is an abuse of process. ii) A later action against B is much more likely to be held to be an abuse of process than a later action against C. iii) The burden of establishing abuse of process is on B or C or as the case may be. iv) It is 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. v) The question in every case is whether, applying a broad merits based approach, A’s conduct is in all the circumstances an abuse of process. vi) The court will rarely find that the later action is an abuse of process unless the later action involves unjust harassment or oppression of B or C. 50. Proposition ii) above seems to me to be of importance because it is one thing to say that A should bring all his claims against B in one action, whereas it is quite another thing to say that he should bring all his claims against B and C (let alone against B, C, D, E, F and G) in one action. There may be many entirely legitimate reasons for a claimant deciding to bring an action against B first and, only later (and if necessary) against others. 51. Those reasons include, for example, the cost of proceeding against more than one defendant, especially where B is apparently solvent and the case against B seems stronger than against others. More defendants mean more lawyers, more time and more expense. This is especially so in large commercial disputes. It by no means follows that either the public interest in efficiency and economy in litigation or the interests of the parties, including in particular the interests of C, D and E, is or are best served by one action against them all. 52. It seems to me that the courts should be astute to ensure that it is only in a case where C can establish oppression or an abuse of process that a later action against C should be struck out. I could not help wondering whether the defendants in this case would have given their lawyers the same instructions on the question whether they should have been sued in the first action if they had been asked before that action began as they have given now that a later action has been begun. 53. It is clear from the speeches of both Lord Bingham and Lord Millett that all depends upon the circumstances of the particular case and that the court should adopt a broad merits based approach, but it is likely that the most important question in any case will be whether C, D, E or any other new defendant in a later action can persuade the court that the action against him is oppressive. It seems to me to be likely to be a rare case in which he will succeed in doing so.” (2) A requirement for identity between the defendants? 7. Although Mr Thomas QC on behalf of Aldi accepted that the approach was to be a broad merits-based judgment, he contended that there was an essential or threshold requirement before that broad merits-based judgment could be applied. The threshold requirement was that there had to be a sufficient degree of identity between the defendants to the original action and the defendants to the new action which the defendants were seeking to strike out; without such a degree of identity, the abuse application was bound to fail and the court would never reach the stage of making the broads merits-based judgment. It followed that as Aldi had only brought its action in 2001 against Holmes and had not made any claim against WSP and Aspinwall, the present proceedings brought in 2005 were against different parties; there was no identity at all between either of them and Holmes. 8. The submission was founded on a passage in the speech of Lord Bingham in Johnson v Gore-Wood. Counsel for Mr Johnson had argued that his client could bring the claim as he had not been the plaintiff in the first action against the defendants; this argument was rejected on the basis that a formulaic application of the rule would be mistaken. The plaintiff in the first action had been the corporate embodiment of Mr Johnson who had made the decisions and given the instructions on its behalf; he could have brought his claim at the same time. Lord Bingham observed that the correct approach was that formulated by Sir Robert Megarry V-C in Gleeson v Wippell [1977] 1 WLR 510 at 515: “Second, it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase ‘privity of interest ..” 9. Mr Thomas QC contended that, as the passage in the judgment of Sir Robert Megarry had been expressly approved by the House of Lords, then, as it had been made clear by Sir Robert Megarry that there had to be a sufficient identity between the defendants if an abuse of process application was to succeed, it could not succeed in this case as there was no identity between the defendants to the original claim and the present claim. Aldi had brought proceedings only against Holmes; WSP and Aspinwall were entirely different companies. 10. I cannot accept this argument. Lord Bingham made clear in his speech that the approach should be a “broad merits-based judgment” and not formulaic. It is clear he was approving the passage in the judgment of Sir Robert Megarry as the “correct approach” and not as a statement of rigid application. The fact that the defendants to the original action and to this action are different is a powerful factor in the application of the broad-merits based judgment; it does not operate as a bar to the application of the principle. This was plainly the view of Clarke LJ in Dexter in the passage I have set out with which I agree. (3) A distinction between cases resolved by judgment and those resolved by settlement? 11. Mr Thomas QC also contended that as a matter of law, a distinction had to be drawn between previous litigation where the case was settled and previous litigation where the case proceeded to judgment. The submission was based on a passage in the speech of Lord Millett in Johnson v Gore-Wood at page 59. However, Lord Bingham made clear at page 32-33: “An important purpose of the rule is to protect a defendant against the harassment necessarily involved in repeated actions concerning the same subject matter. A second action is not the less harassing because the defendant has been driven or thought it prudent to settle the first; often, indeed, that outcome would make a second action the more harassing.” It seems to me clear that no distinction should be drawn as a matter of law between cases where the original action concludes by settlement and where it concludes by judgment. The course of the original action and whether it resulted in a settlement or a trial are but part of the facts to be considered alongside all the other facts. The argument of WSP and Aspinwall 12. Although separately represented before Jackson J and in this court, there was no material difference in the argument presented as to why these proceedings were an abuse of process. It can be summarised: i) The allegations made by Aldi in these proceedings were essentially the same as those made by Holmes against them in the original actions. ii) By bringing the actions against Holmes, it was almost inevitable that Holmes would bring Part 20 claims against WSP and Aspinwall. iii) There had been nothing to prevent Aldi pursuing those claims in its original action; it had brought that action and it was in that action that the claims should have been pursued. iv) Aldi was well aware of the principle that the claims should all have been brought in one action, as was apparent from the letters from its solicitors to the solicitors for the excess layer underwriters set out at paragraphs 2.x) and 2.xi). v) There was no factor, such as impecuniosity, that excused or justified Aldi from failing to bring the claim in the original action. Aldi had not done so, because it had deliberately decided to take no further part in the action; instead it had pursued its own interests and proceeded against the excess layer insurers. That provided no excuse or justification. Although it was claimed that the decision made by Aldi to bring a claim against excess layer underwriters might have produced a potential benefit to WSP and Aspinwall in that it would relieve them of having to meet the claim, the benefit was illusory as the underwriters would be subrogated to the claims. In any event WSP and Aspinwall should not have to bear the risk of Aldi’s decision to act in this way by not bringing the claim in the original action. vi) Aldi should have realised that the proceedings against excess layer underwriters faced clear difficulties by the summer of 2003; Aldi should not have assumed that, if it was unsuccessful in that action, it would be entitled to exercise its rights against WSP and Aspinwall. vii) Aldi could and should therefore have rejoined the action in the autumn of 2003. viii) If the present claim was allowed to proceed, Norwest Holst would be joined and thus the three named employees of WSP who faced the serious allegations (to which I have referred at paragraph 2.xvii)) would face them again. ix) The trial of these proceedings would re-litigate at a cost in excess of £2.5m the issues which had been the subject of the original actions which had cost in excess of £7.5m. x) Aldi had delayed for almost 2 years between April 2004 when it accepted advice that the claim against excess underwriters was unlikely to succeed and February 2006 when it served the claim form in the new action. In consequence the trial of the new action would not take place until 2008 or 2009 – some 15-16 years after the alleged professional negligence had occurred. 13. Jackson J in essence accepted the contentions of WSP and Aspinwall as correctly addressing the material considerations. He identified at paragraph 75 of his judgment seven factors, including the fact that the resources of the TCC would be devoted, for a second time, to trying the same allegations. He concluded that, applying the approach set out in Johnson v Gore-Wood, the balance came down firmly in favour of WSP and Aspinwall. It would be unjust and oppressive for them to be subjected for a second time to a very expensive and time consuming action. It would also be an abuse and misuse of the process of the TCC to bring a second and substantial action which alleged the same breaches of professional duty by the same firms. He observed: “It is the policy, and indeed the duty, of this court to achieve, so far as possible, the efficient, just and cost effective disposal of all litigation which is brought. This policy serves the interests of the business community, in particular the construction industry and building owners, who are the principal users of this court. Re-litigation on the scale which Aldi now proposes flies in the face of that policy.” 14. He accepted that Aldi’s strategy of proceeding against the excess layer underwriters might have succeeded and that this might have enured to the benefit of WSP and Aspinwall as well as Aldi. But it was for Aldi to take the risk on this; it was not right for them to reap the potential benefits of a chosen strategy, but inflict upon WSP and Aspinwall the risk of a second action. 15. In their argument before us WSP and Aspinwall made substantially the same submissions on the facts as they had made before Jackson J. In addition WSP submitted that the decision made by the judge was a decision based on the exercise of judgment akin to the exercise of a discretion; an appellate court should only therefore reverse on the limited grounds applicable in such a case. Aspinwall, although accepting that the decision to be made by the judge was not strictly the exercise of a discretion, submitted that the test in Johnson v Gore-Wood was not amenable to a simple right or wrong approach. The judge had approached the matter by the application of the correct principles, gave weight to the relevant factors and reached a decision well within the ambit of the balancing exercise. This court should not therefore interfere with the exercise of that balance. WSP and Aspinwall relied on Browne v Associated Newspapers [2007] EWCA 289 ([2007] 3 WLR 289 where this court had observed in relation to the grant of an interlocutory injunction that the balancing exercise which a judge had to carry out was similar to the exercise of a discretion upon which judges could properly reach different conclusions; that therefore an appellate court should not interfere unless the judge had erred in principle, taken into account immaterial facts or reached a conclusion which was plainly wrong (see paragraph 45 of the judgment of the court). They also relied upon a passage at page 22 in the speech of Lord Bingham in Johnson v Gore Wood where he referred to the speech of Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 and upon paragraph 37 of the judgment of Peter Gibson LJ in Dexter where he had said: “In these circumstances, where the judge, in whom the discretion to strike out a claim is vested, has correctly directed himself as to the law, this court cannot properly interfere with that exercise of discretion unless the applicant shows that the judge, in making his assessment, omitted to take account of material facts or took account of immaterial facts or was otherwise plainly wrong.” Conclusion 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. Nonetheless 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 Assicurazzoni Generali v Arab Insurance Group [2002] EWCA Civ 1642) [2003]1 WLR 577 and the cases cited in that decision and Mersey Care NHS Trust v Ackroyd [2007] EWCA Civ 101 at paragraph 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. 17. I approach the issue on the basis that the claims Aldi wish now to pursue against WSP and Aspinwall could have been brought by Aldi in the original action it brought against Holmes. However, as was made clear in Johnson v Gore-Wood, 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. 18. First, it is important that Aldi had not behaved in anyway that was culpable, let alone improper, even though neither impropriety nor culpability is a necessary finding before a claim can be struck out. Aldi had made a judgment that it would be in its interests to try and make a recovery against excess layer underwriters on the judgment that it had obtained rather than to continue to participate in the action by bringing claims against WSP and Aspinwall. In my view that was a decision which was open to Aldi as a sensible and cost effective way of proceeding in the light of the fact that (a) the trial of the Aldi Part 20 claims and the B&Q and Grantchester actions would last several weeks; (b) the costs would be considerable, given the fact there were 8 separately represented parties; (c) the issues which WSP and Aspinwall were raising on their liability and on quantum were issues that Aldi had not been concerned with in its claim against Holmes; (d) the interest of Aldi in monetary terms was a fraction of that of B&Q. Aldi had been singularly successful in the strategy it had pursued against Holmes and its success was a factor which the judge failed to take into account in judging Aldi’s decision on its strategy. 19. A criticism of Aldi can be made that it should have reassessed the strategy when the underwriters made their defence clear in August 2003. If it had done so and decided that it should have abandoned its claim against underwriters in September 2003, it would have been in a position on the judge’s finding (which was not challenged) that at that stage it could have rejoined the original action. However at that stage Aldi had not had discovery in the action against the excess layer underwriters and, in my judgment, it would be very difficult for prudent advisers to say in the circumstances of the defence raised by underwriters that the claim should be abandoned until after discovery. I do not consider that it can sensibly be suggested that Aldi should have rejoined the original action and continued to pursue the action against underwriters at the same time. In the circumstances it was, in my view, a judgment sensibly open to Aldi in the autumn of 2003 not to bring claims against WSP and Aspinwall at that stage by seeking to rejoin the original action. The judge did not take this into account. 20. In contrast to these private interests of Aldi, there are the private interests of WSP and Aspinwall – the desire to have finality in the dispute relating to the Dallow Road site, the costs incurred in the original actions, the likely costs of the present action, the delay that has occurred (and which has been exacerbated by Aldi’s action in not commencing these proceedings promptly), the anxiety under which the three named employees are going to be placed (as it is likely that Norwest Holst will be joined) and the general effect on WSP and Aspinwall of facing allegations of professional negligence. 21. However WSP and Aspinwall were made aware by Aldi that Aldi had a claim over against them and that it might be pursued. The judge was, in my view, wrong in considering that the letters of 11 June 2003 and the e-mail of September 2003 did not require a response. If WSP and Aspinwall were concerned that the prospect of a second action might cause them oppression or vexation, they could have responded to that correspondence in terms putting Aldi on notice of their position and applying to the court if necessary – see paragraphs 29-31 below. 22. Nor, in my judgment, were WSP and Aspinwall entitled, as the judge found, to take comfort from the rule in Henderson v Henderson when they entered into the settlement agreement. The principles set out in Johnson v Gore-Wood are clear – the question of whether there is an abuse of process is a broad merits-based judgment. They could and should have made their position to Aldi clear. They decided not to do so, no doubt, on the basis that it was better not to provoke Aldi into action. They settled in full knowledge of the fact that there might be a second claim, as was the case in Toth v Ledger, an unreported decision of this court given on 21 December 2003, a few days after the decision in Johnson v Gore-Wood. The judge was in my view wrong in reaching the contrary conclusion. The way in which this case settled was therefore a highly material consideration. 23. The judge accepted the contention of WSP and Aspinwall that it was important to take into account the fact that it was almost inevitable that as a result of Holmes’ action, WSP and Aspinwall would be brought into the litigation. He was wrong to do so. As I have set out at paragraph 2.vii) the first Respondents (one of the WSP companies) and Aspinwall were not brought into the action until some 18 months after Aldi had commenced proceedings. The claims by Holmes against the First Respondents and Aspinwall were made in circumstances where Holmes had accepted liability to Aldi; furthermore, in the CMC on 17 January 2003, the directions given in respect of the quantum claim in the action between Aldi and Holmes were expressed in terms that any decision would not bind WSP or Aspinwall in the Part 20 proceedings. 24. The factors which I have set out are largely the private interest factors. As was made clear in Johnson v Gore-Wood, the public interest extends not only to finality and preventing a party being vexed twice, but also to economy and efficiency in litigation. The judge considered that the decision of Aldi not to bring its claims against WSP and Aspinwall in the original action was an abuse or misuse of the process of the TCC. I do not see how the mere fact that this action may require a trial and hence take up judicial time (which could have been saved if Aldi had exercised its right to bring an action in a different way) can make the action impermissible. If an action can be properly brought, it is the duty of the state to provide the necessary resources; the litigant cannot be denied the right to bring a claim (for which he in any event pays under the system which operates in England and Wales) on the basis that he could have acted differently and so made more efficient use of the court’s resources. Although the judge was self evidently right in saying that it was the duty of the TCC to achieve the just and cost effective disposal of litigation and that this served the interests of the business community, he was wrong to find that the action brought by Aldi flew in the face of that policy. As I seek to explain at paragraphs 29-31 below, the problems that have arisen in this case should have been dealt with through case management. 25. Furthermore, there is a real public interest in allowing parties a measure of freedom to chose whom they sue in a complex commercial matter and not to give encouragement to bringing a single set of proceedings against a wide range of defendants or to complicate proceedings by cross-claims against parties to the proceedings. That freedom can and should be restricted by appropriate case management. 26. Although, as I have set out at paragraph 8 above, I consider that there is no rule of law that there cannot be abuse of process unless the defendants who are sued in the further action have a sufficient identity with the defendants in the original action, it is nonetheless a factor that the original action was brought by the claimant against one party and the second is being brought against completely different parties. I do not think that it helps the analysis to examine the summary of the principles put forward by Clarke LJ that in the circumstances of this case the position is closer to that of B rather than C. The fact was that Aldi was not vexing or harassing these defendants a second time. 27. In circumstances such as these where Aldi had not brought a claim against WSP and Aspinwall and there are good reasons why Aldi acted as it did, I have come to the conclusion, weighing all the factors I have set out, that bringing this action was not a misuse or abuse of the process of the court. The burden was on WSP and Aspinwall to prove that it was and they failed to do so. 28. As I have set out above, the judge failed to take into account a number of factors which he should have taken into account and was wrong as to some he took into account. Each of these led him to the impermissible conclusion that Aldi were abusing the process of the court. For these reasons, I would therefore allow this appeal and dismiss the application made by WSP and Aspinwall. I would hope that when the first CMC takes place, the court will carefully examine why it is estimated that this litigation will cost in excess of £2.75m when the sum in issue is considerably less. The requirements of the CPR and the principles of proportionality would suggest that a much more economic way should be found to litigate the issues in this action. 29. I also wish to add a word as to the approach that should be adopted if a similar problem arises in the future. In circumstances such as those that arose in this case, the proper course is to raise the issue with the court. Aldi did write to the court, as I have set out at paragraph 2.xiii), but not in terms that made it clear what the court was being invited to do. WSP and Aspinwall knew of Aldi’s position and were before the court on numerous occasions; they did nothing to raise it. 30. Parties are sometimes faced with the issue of wishing to pursue other proceedings whilst reserving a right in existing proceedings. Often, no problem arises; in this case, Aldi, WSP and Aspinwall each in truth knew at one time or another between August 2003 and the settlement of the original action in January 2004 that there was a potential problem, but it was never raised with the court. I have already expressed the view that it should have been. The court would, at the very least, have been able to express its view as to the proper use of its resources and on the efficient and economical conduct of the litigation. It may have seen if a way could have been found to determine the issues applicable to Aldi in a manner proportionate to the size of Aldi’s claim and without the very large expenditure that would have been necessary if Aldi had to participate in the trial of the actions. It may be that the court would have said that it was for Aldi to elect whether it wished to pursue its claim in the proceedings, but if it did not, that would be the end of the matter. It might have enquired whether the action against excess underwriters could have been expedited. Whatever might have happened in this case is a matter of speculation. 31. However, for the future, if a similar issue arises in complex commercial multi-party litigation, it must be referred to the court seized of the proceedings. It is plainly not only in the interest of the parties, but also in the public interest and in the interest of the efficient use of court resources that this is done. There can be no excuse for failure to do so in the future. Lord Justice Wall: 32. I have had the advantage of reading in draft the judgments prepared by Longmore and Thomas LJJ. I agree with both, and like them, I would allow this appeal. 33. The only two comments which I wish to add are that, firstly and self-evidently, my experience of this category of litigation is limited to cases which have reached this court. Accordingly, I readily acknowledge both the judge’s “unrivalled experience” identified by Longmore LJ in paragraph 37 below, and his conspicuous success in managing the TCC to which Thomas LJ refers in paragraph 16 of his judgment. I am nonetheless wholly satisfied that in this instance the judge was wrong, as a matter of law, to strike out Aldi’s claim on the ground that it was an abuse of process. 34. When I first read the papers in preparation for the argument on this appeal, I was struck by two points in particular. The first was the fact that the judge had found in terms in paragraph 76 of his judgment that there had been “no impropriety or culpable conduct on the part of Aldi”, a phrase which he prefaced by the words “of course”. The second was the fact that, as it seemed to me, the course steered by Aldi throughout this complex litigation was; (a) commercially reasonable; (b) forensically legitimate; and (c) reasonably transparent. In these circumstances, I found it difficult, at first blush, to understand how, within the principles identified by Lord Bingham of Cornhill in Johnson v Gore-Wood [2000] 2 AC 1, Aldi’s conduct in launching the current proceedings could properly be described as an abuse of process. 35. I thus listened to the argument with interest, and at its conclusion found myself in complete agreement with Longmore and Thomas LJJ that the appeal should be allowed. 36. My second comment is that, whilst acknowledging my lack of experience in this category of litigation, I would nonetheless wish particularly to associate myself with everything which Thomas LJ says in relation to case management in paragraphs 29 to 31 of his judgment. Lord Justice Longmore: 37. I agree with Thomas LJ’s reasoning and conclusions. Since we are differing from a very experienced judge who has unrivalled experience in handling heavy litigation, I will shortly say what has compelled me to this conclusion. 38. First, the question of abuse or no is not a matter of the court’s discretion in the normal sense of that word. If Peter Gibson LJ meant to say that it was in paragraph 37 of Dexter v Vlieland-Boddy, it was not part of the ratio in that case which could equally well have been decided by reference to the principles set out at paragraph 16 in Thomas LJ’s judgment. It would be troubling if two different judges could come to different conclusions on whether the same facts constituted an abuse of process and yet both be right. 39. Secondly, however desirable it maybe, from the point of view of the court, that all possible actions arising from the same state of facts, should be brought at the same time, it can be a recipe for complex and unwieldy litigation. The interests of the court are, of course, relevant but the judge in paragraph 76 of his judgment appears to have regarded those interests as almost the most important factor in the equation. This does not seem to me to be right in a case where the parties could have brought the matter before the court at a time between June 2003 and the settlement of the B & Q and Grantchester actions in January 2004 but chose not to do so, no doubt for their own good commercial reasons. This failure is, in my judgment, more attributable to WSP and Aspinwall than to Aldi who had made their intentions clear in their letters of 13th June and 4th September 2003. The judge said (paragraph 82) that no response was appropriate. In one sense that may be right since no one is ever bound to reply to another person’s intimation of intention. But it seems to me to be inappropriate to make no response at that stage but then at a later stage, when intentions turn into action, to assert that that action is an abuse of process. 40. I also agree that the judge did not adequately take into account the facts i) that it could not be said that Aldi had behaved in any way culpably or improperly; ii) that Aldi’s own position was a difficult one, faced as they were with a assertion of non-disclosure by underwriters which could not be satisfactorily assessed before discovery in the underwriting action; iii) that although WSP and Aspinwall had been impleaded in the B & Q and Grantchester actions, they had not been sued by Aldi at all, before June 2004. 41. As Lord Bingham observed in Johnson v Gore-Wood [2002] 2AC 1 at page 31 C:- “… there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party.” It might be fair to say it is harassing for WSP and Aspinwall to have to face a second action; I cannot see that it is unjust when they are facing a claim from Aldi for the first time. 42. I also agree with paragraphs 29-31 of Thomas LJ’s judgment. The parties should have raised the possible difficulties of a further set of proceedings with the court at a stage when the matter could have been sorted out in a proper way at a Case Management Conference and not left it to fester in a way that has now made the difficulties problematic, time-wasting and expensive at a later stage.
