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Court of Appeal clarifies the abuse of process doctrine concerning anterior civil proceedings

02 February 2021
Terry Allsop v Banner Jones Ltd t/a Banner Jones Solicitors, Rae Cohen, [2021] EWCA Civ 7.

The Court of Appeal's recent decision in Terry Allsop v Banner Jones Ltd, Rae Cohen [2021] established that it was not an abuse of process for a Claimant to bring proceedings concerning the professional negligence of his legal representatives in litigation in which the Court's decision in the underlying proceedings was attacked, where the parties to the second set of proceedings were not the same as the parties to the earlier matrimonial proceedings.  Jovana Vasiljevic and Harriet Quiney consider this important decision in which the Court of Appeal found the judge had erred in applying the test in Phosphate Sewage Co Ltd v Molleson (Res Judicata) [1879] 4 App. Cas. 801, [1879] 7 WLUK 36. Re-litigation of an anterior civil decision is not, prima facie, abusive and each case must be considered on its facts.   

Facts

Mr Terry Allsop and Mrs Aileen Allsop were married for 44 years.  In March 2013 they separated and, unable to resolve an impasse in the negotiations, obtained a Financial Remedies Judgment and Consequential Order (the "Financial Remedies Order"). 

Unhappy with the outcome, Mr Allsop sought to appeal the Financial Remedies Order.  Permission to appeal was refused both by the first instance judge and by a Circuit Judge, Her Honour Judge Carr QC. 
Mr Allsop subsequently brought proceedings against his former solicitors, Banner Jones Limited ("Banner Jones"), and counsel, Mr Rae Cohen, alleging professional negligence, and/or breach of contract. 

Both Banner Jones and Mr Cohen denied the allegations.  They brought separate applications to strike out Mr Allsop's statement of case on the basis that it was an abuse of the court's process under CPR 3.4(2)(b) as it constituted a collateral attack on the Financial Remedies Order, it disclosed no reasonable grounds to bring a claim under CPR 3.4(2)(a) and, under CPR 24.2, that it has no real prospects of success.

First Instance Decision

At First Instance, His Honour Judge Pearce struck out a number of allegations made by Mr Allsop on the basis that they were an impermissible collateral attack on a final decision made by another court of competent jurisdiction, namely the Financial Remedies Order, amounting to an abuse of the court's process, and/or that the allegations were without merit under CPR 3.4(2)(a) or CPR 24.2.  

In finding the allegations were abusive, the Judge applied the test in Phosphate Sewage v. Molleson, (1879) ("the Phosphate Sewage test"), which allows the re-litigation of a point only where there is new evidence which fundamentally changes an aspect of the case. As no new evidence had been adduced, the Judge concluded the exception described in Phosphate Sewage did not apply.  

Some allegations survived, subject to a successful application to amend the Particulars of Claim. 

Mr Allsop appealed. 

Court of Appeal

The Court of Appeal considered the test to be applied under CPR 3.4(2)(b) for a claim to be struck out as an abuse of process, and how that test differed from the test to be applied when considering the merits of the claim under CPR 3.4(2)(a) and CPR 24.2.

The law regarding "collateral challenge" and the Phosphate Sewage Test
Amongst other findings on what was a convoluted appeal, the Court of Appeal held the Judge had erred in applying the Phosphate Sewage test because no question of issue estoppel or res judicata arose.  

Phosphate Sewage states that a final judgment will generally give rise to res judicata estoppel and prohibit re-litigation where the parties and issues in dispute are the same in the earlier and later proceedings.  It considers the exception that arises where fresh evidence is adduced that fundamentally changes the complexion of the case, justifying the cost and potential unfairness of re-litigation.  

The Court found the present case differed to Phosphate Sewage, because:

  1. The parties to the matrimonial dispute were not the same as the parties to the professional negligence dispute so res judicata estoppel could not arise, and
  2. The conduct of the legal representatives in the later dispute was independent of the factual conclusions reached in the earlier dispute.

Where the parties and issues are different, an attempt to demonstrate abuse of process is thus best framed as an impermissible collateral attack on earlier civil proceedings.  Applying the principle in Hunter v Chief Constable of the West Midlands Police, [1982] AC 529 and the decision of Sir Andrew Morritt VC in Secretary of State for Trade and Industry v Bairstow, [2003] EWCA Civ 321, the Court articulated the following test:

If the parties to earlier proceedings were different to later proceedings, the later proceedings would only be an abuse of process where:

(a) It would be manifestly unfair to a party to the earlier proceeding to have the same issues re-litigated, or 
(b) To permit such re-litigation would bring the administration of justice into disrepute.

In addition, the Court would need to consider the particular allegations by "an intense focus on the facts of the particular case" (Buxton LJ in Laing v. Taylor Walton (a firm) at [12] applied). 

The Court acknowledged the situation would be different where a case concerned a collateral attack on an earlier criminal decision.  It is in the public interest that criminal convictions are only challenged by way of appeal, therefore it would ordinarily be an abuse of process for a civil court to decide that an earlier criminal conviction was wrong.

Comment

The Court of Appeal reminds us that the jurisdiction to strike out proceedings as an abuse of process is exceptional, enabling a court to protect its procedures from misuse.  While re-litigation involving the same parties will give rise to res judicata estoppel, if the parties are different, arguing the same point may be an abuse of process, but each case must be considered in light of all the circumstances and a merits-based analysis of the facts.

The court cited a helpful example provided by Lord Hoffman in Arthur JS Hall & Co v Simons [2002] 1AC 615 of a collateral attack which might be abusive.  In Hall, Lord Hoffman suggested that a defendant who had libelled a claimant should not be able to sue his or her solicitors on the basis that had they conducted the case differently, the statements that the defendant had made about the claimant would have been held to be true.  This was felt to be an abusive collateral attack as it would be unfair to the claimant, whose name had successfully been cleared in the libel action, to have his or her reputation tarnished once more by the professional negligence action.

As Allsop v Banner Jones shows, the line separating the litigation of a fresh claim and an abusive re-litigation of previously decided issues can be fine, especially where pleadings in the later action have not closed and the claim may be amended to try to avoid a collateral attack and prolong its life.  This was one of the reasons why Banner Jones tried (unsuccessfully) to argue that questions of finality of process arose.  

As Lord Hatherly said (obiter) in Phosphate Sewage:

"I was very much struck by the length to which it was supposed that the doctrine could be pushed of amending a case by introducing a matter which was in the knowledge of the parties making the claim, provided only that that new matter would give them a new and additional cause for advancing their suit, and a new and additional right to have that suit decided in their favour." 


The lesson of Allsop v Banner Jones is that if a collateral attack is made on a prior civil decision, the claim cannot necessarily be struck out as abusive.  Considering whether to make such a strike out application will be a strategic decision for any defendant with timing being a critical factor to minimise cost while ensuring that the claimant cannot subsequently repair his or her statement of case.    

For further information please contact Jovana Vasiljevic and Harriet Quiney 

Further Reading