The modern law of abuse of process was set out by the House of Lords in Johnson v Gore Wood & Co. For present purposes, the “underlying public interest” that “there should be finality in litigation and that a party should not be twice vexed in the same matter” (per Lord Bingham at 31) gives rise to two separate types of abuse. The first is res judicata in the form of cause of action estoppel or issue estoppel, where a cause of action or issue has already been raised in earlier proceedings and decided by the court. The second is traditionally known as Henderson v Henderson abuse, where a claim or defence is raised which should have been raised in earlier proceedings but was not.
The Aldi requirement
The “Aldi requirement” (Aldi Stores v WSP Group plc) is essentially a procedural obligation arising in complex multi-party litigation. It concerns the second type of potential abuse. The Aldi requirement will generally arise in heavy commercial litigation where the same (or closely connected) facts give rise to multiple potential claims against multiple potential defendants. It is especially likely to come into play where there is an insolvency situation and parties are taking strategic decisions about which counterparties are most worth suing. A party which is contemplating proceedings against non-parties to the litigation “must” refer the matter to the court seised of the proceedings. This allows the court to issue any guidance or orders it considers appropriate.
The requirement is apparently mandatory: “there can be no excuse for failure” (Aldi Stores v WSP Group at paragraph 31). However, the recent approach of the court suggests a slightly more nuanced reality.
Clutterbuck and Otkritie
The Aldi requirement has featured in two recent decisions of the High Court: Clutterbuck v Cleghorn and Otkritie Capital International Ltd v Threadneedle Asset Management Limited.
In Otkritie, the claimants, having obtained judgment against 19 defendants at trial, subsequently sought to bring a second set of proceedings (arising from the same facts and issues) against two further defendants. In Clutterbuck, the claimants sued a defendant who had not been party to earlier litigation (Clutterbuck v Sarah Mohammed Saleh Al Amoudi) in relation to materially similar facts and circumstances.
In Otkritie, the defendants’ strike-out application was dismissed; in Clutterbuck, the application succeeded.
The following points stand out from the two cases:
- An inexcusable breach of the Aldi requirement will not be automatically dispositive of abuse of process, despite the apparently mandatory nature of the rule. Instead, it will be (merely) a “heavyweight factor” in the overall broad, merits-based judgment which the Court will make if a strike-out application is made (Clutterbuck, paragraph 69). Indeed, in Otkritie Knowles J found that there was a breach of the Aldi requirement but not an abuse of process (see Otkritie at paragraphs 32 and 33).
- In determining whether there has been an abuse of process, the court will form a view of the probable outcome had the Aldi requirement been followed and case management undertaken. It will not be sufficient to justify striking out the second claim if compliance with the Aldi rule might or could have led to a different, more appropriate case management of the claims.
- The court may consider not just whether the case management question should have been raised (per the Aldi requirement), but also the underlying question of whether the second claim should actually have been raised in the first proceedings. This brings the test closer to the fundamental principle outlined in Johnson v Gore-Wood (see Otkritie at paragraph 44).
On its face, decoupling the Aldi requirement from the test for abuse of process seems like a soft touch on the part of the courts. After all, what is the point of a mandatory requirement if parties can breach it and carry on nonetheless? Knowles J appeared to recognise this issue in Otkritie:
“Asking myself whether in all the circumstances the Claimants’ conduct is an abuse, my answer is no. It was in breach of a clear requirement, but that is not the same…What is to be done instead? Thomas LJ [in Aldi] could not have made the requirement more plain and yet it was not met.”
There have been three types of judicial response to the threat of crafty litigants keeping a second claim against the same defendant, or the same claim against another defendant, up their sleeves:
- The courts have repeatedly pointed out the risk of such an approach leading to the claim being struck out (see Otkritie at paragraph 50 and Stuart v Goldberg Linde (a firm)). This rather begs the question of whether it is a risk worth taking.
- If there has been a breach of the Aldi requirement but ultimately no abuse of process, the court may record publicly (as it did in Otkritie) that “the course taken on behalf of the Claimants fell well below the standards that the courts expect.” Again, being realistic, there are many hardened litigators for whom this kind of slap on the wrist may be worthwhile for the strategic advantage of circumventing the Aldi requirement. Judicial approbation may not be enough of a deterrent for this type of practitioner.
- More seriously, there may be adverse costs consequences for the defaulting party, in terms of the application itself and the wider litigation (see Otkritie at paragraphs 48 and 49). The resisting party may end up paying its opponent’s costs, even if a strike-out application is successfully resisted.
In the final analysis, however, the deterrent is simpler than it appears. An effort to evade the Aldi requirement is overwhelmingly likely to be an abuse of process precisely because of its calculated nature. Actively trying to circumvent the Aldi requirement is likely to be an abuse in itself. This ought to be enough to deter attempts by litigants to land on the slender hinterland between a breach of the Aldi requirement and an abuse of the court’s process. As such, the main practical lesson to take from Clutterbuck and Otkritie is that the Aldi requirement should be seen as such: a requirement, which litigators are well-advised to observe.