The recent High Court judgment in Tinkler v Ferguson and others provides an excellent summary of the principles relevant to abusive subsequent proceedings. The judgment was made following the defendants’ application to strike out the claimant’s claim.
This blog considers the procedural background to the case, the useful summary which the judge provided when explaining the principles relevant to determining abusive subsequent proceedings, and the importance of proactive case management when dealing with litigation.
The procedural background to this case is complicated. The case involved a high profile boardroom spat between the majority of the directors of Stobart Group Limited and Mr Tinkler, who was an executive director and a substantial shareholder of Stobart. Tinkler thought that Stobart’s non-executive chairman, Mr Ferguson, should be removed from his position and Tinkler took steps, which a judge later referred to as “guerrilla tactics”, to try to prevent Ferguson’s re-election. The defendants, who were each board members or directors of Stobart, took steps against Tinkler, which are discussed below. Stobart made an announcement on the London Stock Exchange, on 29 May 2018, about Tinkler’s attempts to oppose the re-election of Ferguson (the announcement). As also discussed below, Tinkler took issue with the announcement.
Stobart removed Tinkler from the business and issued a claim against him on 14 June 2018 seeking an account of profits, equitable compensation and damages for the alleged breaches of duty and conspiracy. Tinkler brought a counterclaim against Stobart for declaratory relief and an injunction. Tinkler challenged the validity of his removal from office and, consequently, sought an injunction preventing his removal. Judgment was handed down on 15 February 2019. The court upheld the termination of Tinkler’s employment on the grounds that Tinkler’s actions justified his removal from the business (the Stobart action).
Tinkler’s claim against the defendants was issued in June 2018. The focus of Tinkler’s claim was the announcement. The claim included an action for defamation and malicious falsehood (the malicious falsehood action). At a hearing on 17 December 2018, the court was asked to adjudicate on the meaning of the announcement. This hearing took place after the Stobart action had been heard, but before judgment had been given (as stated above, judgment was given in that action on 15 February 2019).
When determining the meaning of the announcement, the court found against Tinkler and held, among other things, that the announcement was mostly factual, or consisted of opinion and was not defamatory. The court held that only one aspect of the announcement was defamatory, but that the statement was not serious enough to satisfy the test under section 1 of the Defamation Act 2013, which provides that there must be an inference of serious harm. This meant that if Tinkler wished to advance his case further, he would have to rethink his case. Tinkler did so and took two steps. First, he appealed the findings that the judge had made in respect of the 17 December 2018 hearing. The appeal was heard on 3 April 2019 and Tinkler’s appeal was dismissed. By the time the appeal hearing took place, the Stobart action had concluded. Secondly, Tinker sought to amend his particulars of claim in the malicious falsehood action.
The proposed amendments were challenged by the defendants. The defendants argued that Tinkler had still failed to spell out how theannouncement had caused serious harm to Tinkler’s reputation. As the parties were unable to reach agreement on the proposed amendments, Tinkler made an application to court. The court gave permission for limited amendments to be made, but required Tinkler to give full details about why he said he had suffered serious harm.
Tinkler amended his particulars of claim and abandoned the defamation claim, leaving only the malicious falsehood allegations. After filing their defence, the defendants issued an application to strike out or stay the claim on the basis that the claim was an abuse of process. The defendants argued that the continued litigation would involve the re-litigation of, or collateral attack upon, the Stobart action.
The High Court’s decision
The judge concluded that the continued litigation of the malicious falsehood action would be an abuse of process. This was because it would represent a collateral attack on key findings in the Stobart action, given the overlap of issues in relation to publication of the announcement between the two actions. The claim was struck out.
Subsequent abusive litigation: the key principles
Though the procedural background to this case may have been complicated, the court’s application of the principles relevant to adjudicating on an alleged abuse of process was not. The judge provided an excellent checklist, which will be of use to all litigators faced with determining whether proceedings are an abuse of process.
First, the judge considered the principles relevant to duplicate litigation. The judge’s comments may be summarised as follows:
- The court has an inherent power to prevent the misuse of court procedure which would be either “manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute”. This was established in Hunter v Chief Constable of the West Midlands. In other words, even if steps in litigation may not, strictly speaking, be contrary to a specific rule, the court can still object to the litigation if it is fundamentally unfair or against the interests of justice.
- The court should not be unduly prescriptive when determining the circumstances in which an abuse of process may have arisen. This was established in Kotonou v National Westminster Bank plc.
- Abuse of process is wider than merely res judicata or issue estoppel (where a point has already been adjudicated on). In explaining this, the judge referred to Virgin Atlantic Airways v Zodiac Seats UK Ltd, and noted the following principles:
- Cause of action estoppel is absolute in respect of all the points which had to be decided to establish the existence, or otherwise, of a cause of action. It bars a party from raising points, in subsequent proceedings, which are essential to the existence, or otherwise, of a cause of action. This is so even if the points were not raised in earlier proceedings, or were raised and were unsuccessful.
- Issue estoppel arises where, although the cause of action is not the same in the subsequent action, an issue which is necessarily common to both actions has been decided in the earlier case and is binding on the parties.
- Henderson abuse is where a party seeks to raise, in subsequent proceedings, matters which were not, but could and should have been, raised in the earlier proceedings. There does not necessarily need to be a collateral attack on a previous decision, but an element which is present at a later stage of proceedings is more likely than not to be found abusive.
- Estoppel (or res judicata) is different from abuse of process. The former is a rule of law, whereas abuse of process is a concept designed to protect the court’s process. However, the objective of both is to avoid duplicative litigation.
- Duplicative litigation causes prejudice to the defendant, owing to the wasted time, costs and effort, and it is also contrary to the public interest. There would be a risk of inconsistent findings being made, if different courts at different times were required to examine the same facts.
- To the extent that Henderson abuse does apply, a second action, which involves a collateral attack on a final decision of a court, is also liable to be struck out as an abuse of process. It is abusive for a litigant to change the form of the proceedings in order to re-litigate the same point: Hunter v Chief Constable of the West Midlands.
Secondly, the judge considered Jameel abuse of process (Dow Jones & Co Inc v Yousef Abdul Latif Jameel), where the court may stay or strike out a claim if no real or substantial wrong has been committed and litigating the claim would result in no tangible benefit to the claimant. The key consideration here is whether the benefit to the claimant would be disproportionate to the likely cost. The court will only strike out a claim on this basis in exceptional cases. This is particularly important in defamation cases, because the likely damages award in a defamation claim may be low in comparison to the cost of bringing the proceedings. However, there is an important element of a claimant wanting vindication in such cases and the vindication of legal rights, in some circumstances, is important to society as a whole.
Finally, the judge also considered the dynamics of managing multi-party litigation and applied Aldi Stores v WSP Group plc. In Aldi, the court observed that, in multi-party litigation, a party may wish to pursue other actions while reserving a right in an existing action. The fact that a claim could have been raised in the first action does not mean that it is necessarily an abuse of process to raise it in a separate action. However, if a party proceeds on that basis, it must advise the court accordingly. The sensible time to do that is at a case management conference. This is so that the court can express a view on how the court’s resources may be used and how the proceedings may be conducted in the most efficient way.
A party’s failure to advise the court that there is an issue, which has not been raised in proceedings but could have been and may the subject to further litigation, is a factor which the court will later take into account in assessing whether a party is abusing the process of the court, if that party subsequently raises the issue in separate proceedings.
Though Mr Tinkler was unrepresented at the strike out hearing, he was represented throughout the majority of the dispute and so this is not a case of a litigant in person failing to understand the relevant law. What this case does highlight is how much importance the court places on litigants “laying their cards on the table”. A failure to do so will not be considered lightly by a judge. The case also demonstrates the wide discretion of the court when dealing with such issues.
Mr Tinkler commenced the malicious falsehood action a week before the Stobart action, and all parties and the court were aware of both actions before the judgment in the Stobart action. However, the court held that Tinkler did not make it possible for the court to manage the issues fairly for both sides. This is because Tinkler failed to ask the court to address what was going to happen with the malicious falsehood action after the Stobart action had been tried. Further, the court was not asked by any of the parties whether the two actions should be consolidated, or tried together. As stated above, generally speaking, it would be wise to raise issues such as these at a case management conference.
It is therefore clear that it is not enough for a claimant to highlight a key issue in litigation; the claimant must actively assist the court by providing the court with the opportunity to manage the issue too. Ideally, this should be done at a case management conference. In fast moving, high value and complex litigation, it is easy to overlook this important procedural point.