The courts’ wide powers under CPR 3.4(2) and the factors a court will take into account when considering an application to strike out a statement of case for abuse of process were considered by the Court of Appeal in Walbrook Trustees (Jersey) Ltd & Others v Fattal & Others [2009] EWCA Civ 297.

In that case, the court considered a specific type of abuse of process, namely the bringing of successive actions in respect of the same subject matter where a claim could have been raised in earlier proceedings.

The facts in Walbrook Trustees are complex but the main facts can be summarised here. Family members, including the appellants, held shares, through various trusts, in a property company that managed a substantial property in central London. The relationship between the parties was governed by a joint venture agreement (JVA), which provided that if a member wished to sell their share in the company they would have to notify the other members of the proposed sale and the other members would then have pre-emption rights in respect of that share.

In 1998, the respondents requested consent from the members in order to transfer a share of a member who had died. One of the appellants provided his consent on the understanding that the share was being transferred to existing members. Following this, disputes arose between the members as to the management of the company and the appellants brought two sets of proceedings against the respondents and others in 2003. In the 2003 proceedings, the trial judge found in favour of the respondents. The remaining issues in the 2003 proceedings were settled on the undertaking by the respondents that they would provide further information to the appellants.

As a result of this disclosure, the appellants discovered that the 1998 transfer had in fact formed two separate transactions and, most importantly, that the share had been sold to a Mr N, a non-qualifying person under the terms of the JVA. Discovering this, the appellants issued an application in the 2003 proceedings for disclosure of documents relating to the 1998 sale. A further two actions were launched by the appellants in 2006 against the respondents, in which the appellants made a number of claims. In 2007 the appellants amended their claim in order to provide for the enforcement of the pre-emption rights, which, they argued, arose as a result of the sale to Mr N. Although the respondents noted in their skeleton arguments that the appellants should have raised this point in the 2003 proceedings, no application was made by the respondents in order to strike out the appellant’s claims for an abuse of process. The Court of Appeal noted that this was an important fact which placed the appellants’ claims on the court record without any of the respondents resisting it on the grounds that it was an abuse of process. In respect of the 2007 proceedings the trial judge found that there was a sale to Mr N and that Mr N was probably put in funds by two existing members. The trial judge then gave directions for a further preliminary issue to be decided (‘the new claim‘) which dealt with the issue of whether the sale to Mr N gave rise to pre-emption rights in favour of the appellants under the JVA. Defences were filed in respect of this new claim in which the respondent argued that the new claim was an abuse of process. The respondents succeeded in their application to strike out the appellants‘ claim for abuse of process and, in reaching his conclusions, the trial judge found that the identity and involvement of Mr N in the 1998 sale was ‘a relatively unimportant fact’. The matter proceeded to the Court of Appeal, which was required to determine whether or not the appellants’ new claim was, in actual fact, an abuse of process.

Lord Justice Arden, giving the leading judgment of the Court of Appeal, held that a decision by a trial judge as to whether an abuse of process did or did not exist is one of evaluation and balancing of the relevant factors. On the facts of Walbrook Trustees the trial judge had erred and the new claim should not have been struck out as showing an abuse of process. The appellants did not know or could not reasonably have found out the information they contend was material to their decision to make a claim (that is, the fact that Mr N was involved in the sale). In the light of this, Arden LJ argued: ‘In our judgment, a party cannot be criticised for not pleading something that would have been struck out, and so it cannot be an abuse of process for a party not to enforce his rights until he has the information that will prevent his case from being struck out.’

Arden LJ also held that the new claim should not have been struck out as the respondents had failed to make an application to strike out the claim in respect of the 2003 proceedings. This failure to make an application by the respondents was evidence that indicated the respondents’ agreement to try the issues at trial. It was also found that one of the respondents had given false evidence and had deliberately concealed the truth from the court. It followed that it would be ‘demonstrably unfair in all the circumstances not to allow the Fattals the opportunity to bring the new claim before the court’.

The court also found that the conduct of the appellants in making the new claim was a relevant factor in considering whether there had been an abuse of process. The fact that the new claim was made without delay after the appellants had learned about the involvement of Mr N was evidence that the new claim was not an abuse of process.

Walbrook Trustees provides valuable guidance to those wishing to make applications to strike out a claim for abuse of process as well as for those wishing to resist such applications. Walbrook Trustees confirmed that it is not enough to simply show that the claim could have been brought in the earlier proceedings. As Lord Bingham argued in Johnson v Gore Wood & C [2002] 2 AC 1, 31: ‘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 reigning of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach.’

It follows from Johnson and Walbrook Trustees that a court which has been presented with an application to strike out for an abuse of process must essentially consider two competing interests: the public interest in ensuring that there is finality in litigation (and that a party should not be ‘stung‘ twice in the same matter), and the private interest of the claimant who is seeking access to the courts. Further, the crucial question which the court must resolve, as it did in Walbrook Trustees, will be 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.

Therefore, courts will consider such applications by balancing the competing interests while at the same time taking into account a range of relevant factors. These factors, the existence of which will ultimately depend on the relevant facts of each individual case, will include matters such as whether the new issues raised depend on facts of which the party seeking to rely on them was, for some genuine reason, unaware at the time of the initial proceedings. The court in Walbrook Trustees also provides authority for the fact that the courts will look closely at the conduct of the party bringing subsequent proceedings in respect of the same matter and will take into account how quickly that party reacted in brining those proceedings after discovering the new facts which give rise to a further claim.

Following Walbrook Trustees, applications for strike out for an abuse of process must only be made after prospective applicants have placed themselves in the shoes of the court and weighed up all the relevant factors which may be taken into account by a court. Further, practitioners would be wise not only to consider carefully whether any new facts or issues justify a new claim but also that they would be required to make any applications promptly and without delay.

Masood Ahmed is a senior law lecturer at Birmingham City University