Dexter Ltd v Vlieland-Boddy

The Appellant, the First Defendant, Clive Vlieland-Boddy, and the Fourth Defendant, Edwina Harley, appeal, with the permission of Carnwath L.J., from the order made by Lloyd J. on 25 July 2002. The Appellants had applied to strike out the claims of the Claimant, Dexter Ltd. (“Dexter”), against them respectively as an abuse of process. The judge by his order dismissed those applications.

The facts alleged by Dexter in its pleadings in the present action commenced on 7 February 2002 are in large part disputed but must be taken to be correct for the purposes of this appeal, as they were at the hearing before the judge. I summarise them and Dexter’s claims as follows.

Dexter was incorporated on 20 May 1997 with the Fifth Defendant, Wensley Haydon-Baillie, as its sole director, and Martin Vlieland-Boddy (“MVB”) as its company secretary. On 30 September 1997 MVB was appointed a director of Dexter, having acted as a de facto director before then. MVB is the twin brother of the First Defendant, and they are the sons of the Fourth Defendant.

On 22 September 1997 the Co-operative Bank (“the Bank”) agreed to make available to Dexter a £5 million facility and on 2 October 1997 it agreed to allow Dexter to draw down £2 million for the purchase of an aircraft engine against the submission of copy invoices evidencing the purchase. That day it was provided with a faxed copy of what purported to be an invoice from Guest Aviation Corporation (“Guest”) to Dexter relating to the supply of one Rolls-Royce Olympus Concorde prototype engine and components for £2 million plus VAT. The sale was pursuant to an agreement dated 1 October 1997 between Guest, acting by Cliven Airways and Cliven Airparts (both being entities owned by the First Defendant), as seller and Dexter as buyer. The signature on behalf of Guest was purportedly that of Brad Lavoski but was forged by the First Defendant or by an employee of the Third Defendant, a firm of licensed insolvency practitioners then known as Marshalls but now known as Fortune Peat. At that time MVB was a consultant of, and the First and Second Defendants were the partners in, the Third Defendant. The invoice provided for the payment of £2 million to account no. 77161815 at National Westminster Bank plc (“NatWest”).

Another document which Dexter has seen purportedly relates to a sale of the same assets. This is an unsigned agreement dated 2 October 1997 between the Fifth Defendant as seller and Guest, acting through Cliven Airways, as buyer whereby the Fifth Defendant agreed to sell the engine to Guest for £1,950,000.

The purported acquisition of the engine and components from Guest was an entirely fictitious and fraudulent scheme on the part of MVB, the First and Fifth Defendants, effected to procure the advance of £2 million from the Bank for their use and not for the benefit of Dexter. The engine is not an aero engine at all but a test rig or prototype. It is of no substantial value, nor are the components. The engine and components were acquired by the Fifth Defendant in 1986 for £600.

The £2 million was advanced by the Bank to Dexter on 3 October 1997 and paid into an account (no. 77161696) in the name of the Third Defendant at the Blandford Forum branch of NatWest pursuant to written and oral instructions from the Second Defendant to credit the same to the Third Defendant’s account. The monies so credited were then paid and applied as follows:

(1)

£864,104 was paid on 6 October 1997 to a bank account in Jersey of a company called Channel Hotels and Properties Ltd., apparently in repayment of a personal loan of the Fifth Defendant;

(2)

£464,250 was paid on 3 October 1997 to the client account with NatWest of M Vlieland-Boddy & Co., of which MVB and his wife were partners;

(3)

£60,000 was paid in cash on 9 October 1997 to the First Defendant or MVB;

(4)

£261,226.14 was paid on 6 October to a client account of the Third Defendant the designation of which referred to the Fifth Defendant;

(5)

£350,000 was paid on 6 October 1997 to an account of the First Defendant with Barclays Bank.

Each payment was effected by or at the direction of one or more of MVB, the First, Second and Fifth Defendants and was paid or applied otherwise than for Dexter’s benefit.

Of the £464,250 paid on 3 October 1997 -

(1)

£150,000 was paid to MVB;

(2)

£314,250 was transferred on 6 October 1997 to an account with Lloyds Bank in the Channel Islands in the name of Portman Channel Islands Ltd. (“Portman”) to be held for the account of MVB’s father-in-law, Michael Hughes;

(3)

on 8 October 1997 that sum was placed in a fixed bond account for 12 months in the name of Mr. Hughes;

(4)

also on 8 October 1997 £315,422.88, the balance on the bond account, was transferred to another Portman account in the name of the Fourth Defendant;

(5)

between 8 October 1998 and 12 July 1999 various withdrawals were made from that account, leaving a balance of £291,870.55;

(6)

on 12 July 1999 that balance was transferred into another Portman account in the name of MVB.

Each payment was effected by or at the direction of one or both of MVB and the Fourth Defendant and was paid or applied otherwise than for Dexter’s benefit.

It is Dexter’s claim against the First Defendant that he dishonestly assisted one or both of MVB and the Fifth Defendant in the fraudulent scheme and that he is liable to account to Dexter for the £2 million as a constructive trustee on the ground of his dishonest assistance in the breaches of fiduciary duty owed to Dexter and breaches of trust committed by MVB and the Fifth Defendant. It further claims that the First Defendant received and/or benefited from part of the money fraudulently obtained by Dexter in the knowledge that such money was being paid in breach of fiduciary duty and in breach of trust, and the payments of £60,000 and £350,000 referred to in para. 7 (3) and (5) above are relied on.

It is Dexter’s claim against the Fourth Defendant that she knew that the sum of £315,422.88 referred to in para. 8 (4) above was transferred to her in breach of fiduciary duty and breach of trust, alternatively that she was reckless as to whether that was the case and failed to make such enquiries as a reasonable prudent person would have made in the circumstances. It is further alleged that she assisted MVB in his breach of fiduciary duty and breach of trust and that in so doing she acted dishonestly. Dexter claims that she is liable to account to Dexter for the sum of £315,422.88 as a constructive trustee on the ground of knowing receipt and dishonest assistance.

A further or alternative claim of conspiracy is made by Dexter against the First, Fourth and Fifth Defendants and MVB.

It is Dexter’s claim against the Second and Third Defendants that the First Defendant acted with the actual or apparent authority of one or both of the Second and Third Defendants and in the course of the Third Defendant’s business.

Dexter entered into administrative receivership on 23 April 1998.

On 24 August 1999 Dexter commenced proceedings (“the First Action”) against MVB alone, in which many of the alleged facts set out above were pleaded. But Dexter did not allege the forgery of the signature on behalf of Guest nor the full details of what happened to the £464,250 to which I have referred in paras. 7 and 8 above. However, it did allege that the purported acquisition of the engine from Guest was pursuant to a fictitious and fraudulent scheme on the part of MVB, the Fifth Defendant and/or the First Defendant to procure the advance of £2 million from the Bank for their own use and benefit and otherwise than for the benefit of Dexter, and that that sum was fraudulently misapplied by MVB, the Fifth Defendant and/or the First Defendant. It further alleged that MVB and/or the Fifth Defendant acted fraudulently in breach of their fiduciary duties and/or in fraudulent breach of trust, and that there was a conspiracy between MVB, the Fifth Defendant and/or the First Defendant. Dexter sought to make MVB liable as constructive trustee.

The First Action came on for trial on 20 November 2000 before Evans-Lombe J. The First Defendant provided MVB with a witness statement, but did not give oral evidence because, midway through being cross-examined, MVB went to Spain and abandoned his defence. Judgment was entered against him for £2 million plus interest and indemnity costs on 11 December 2000.

On 12 December 2000 Dexter successfully applied to Evans-Lombe J. for a freezing order against the Fourth Defendant without notice. It told that judge that from information only recently obtained some of its money had been paid to the Fourth Defendant in circumstances in which she was accountable for that money. Dexter on 13 December 2000 commenced proceedings (“the Second Action”) against the Fourth Defendant alone. In the Particulars of Claim Dexter repeated factual allegations similar to those in the First Action, but it also made allegations similar to those which I have set out in para. 8 above and made the claims similar to those to which I have referred in para. 10 above.

The Fourth Defendant is domiciled in Spain and has for some time been in poor health. She applied to set aside the Claim Form in the Second Action and service of it on the ground that there was no jurisdiction to bring the claim in this jurisdiction against her alone under the Brussels Convention. That application was acceded to by Lloyd J. on 8 March 2001. The judge granted Dexter permission to appeal and Dexter appealed. The freezing order was continued in the meantime. This court delivered judgment on 11 April 2001 in Casio v Sayo [2001] EWCA Civ 661 on somewhat similar issues. The Fourth Defendant’s solicitor invited Dexter in July 2001 to withdraw the appeal in the light of that case. But Dexter’s solicitors, who had in May 2001 said to the Fourth Defendant’s solicitor that they were instructed to issue new proceedings against her, refused to withdraw the appeal and repeated that they were instructed to issue new proceedings. The present action was commenced only on 7 February 2002. On 13 March 2002 Dexter sought to have the appeal in the Second Action, which was fixed for hearing on 20 March, taken out of the list. This court refused, and Dexter then agreed to the appeal being dismissed with costs. The Fourth Defendant agreed in turn to the continuation of the freezing order until the hearing of the application, which she was about to make, to strike out the claim against her.

On 15 March 2002 the First and Fourth Defendants respectively applied to strike out the claims against them as an abuse of process. They both relied on the rule in Henderson v Henderson (1843) 3 Hare 100 (as expounded by Sir James Wigram V.-C. at pp. 114,5) for the proposition that it was an abuse of process to bring proceedings against them when they could and should have been joined as defendants to the First Action. The Fourth Defendant also claimed that it was an abuse of process for Dexter to commence and pursue the later proceedings without having paid her costs of the Second Action.

On the applications the judge had written evidence from Mr. Shierson, one of the joint administrative receivers of Dexter. In his first Witness Statement dated 31 May 2002 he said that at the time Dexter brought the First Action it did not have a complete knowledge of the true extent of the involvement of the Defendants to the current action. He said that the relevant facts which form the basis of Dexter’s claim against the Fourth Defendant were not disclosed at any stage by MVB in the course of the First Action despite MVB’s obligation to do so under the terms of the freezing order and his disclosure obligations in that action. Those facts, he said, were only obtained shortly before and in the course of the trial of the First Action as a result of court orders requiring Portman to disclose information; that enabled Dexter to trace what had happened to the monies which had been fraudulently dissipated. That information showed the Fourth Defendant’s involvement as a recipient of monies of Dexter. Mr. Shierson said it would not have been possible to join the Fourth Defendant as a defendant to the First Action. Mr. Shierson said that the Fourth Defendant had never applied to set the freezing order aside although indicating on various occasions that she would do so. In Mr. Shierson’s second Witness Statement also dated 31 May 2002 he said that it was not possible to include the First Defendant as a defendant in the First Action because at that time Dexter did not consider that it had sufficient knowledge of the extent of the First Defendant’s involvement in the transaction, the true extent only becoming clear after Dexter obtained copies of his documents from Customs and Excise who had obtained the documents pursuant to their search and seizure powers. Those documents, he said, had been provided to Dexter too late to enable the First Defendant to be added as a defendant and maintain the trial date.

The First Defendant put in evidence in reply, by his second witness statement dated 6 June 2002 challenging Mr. Shierson’s explanation of why the First Defendant had not been joined in the First Action. The First Defendant pointed to the serious allegations made against him in the Particulars of Claim in the First Action. He drew attention to the fact that Mr. Shierson gave no indication as to when he received documents from Customs and Excise nor as to what documents he received and suggested that Mr. Shierson could have obtained the documents much earlier. The First Defendant said that he had been prejudiced by the very considerable delay in Dexter bringing proceedings against him and that prejudice included legal costs which he had incurred. He further stated that there would have been major costs savings if he had been sued in the First Action, and that further prejudice was caused to him by the delay because Mr. Brian Trubshaw, who gave a witness statement and oral evidence at the trial of the First Action, had since died and Mr. Lavoski may be difficult to trace.

The Fourth Defendant’s solicitor, Mr. Kevin Heath, put in two witness statements. In his second witness statement dated 7 June 2002 he said that correspondence between Dexter’s solicitors and Portman in September 1999 confirmed that Dexter was aware then of the existence of an account held by MVB with Portman.

The judge, in para. 17 of his judgment, said that Dexter’s reasons for not suing the First and Fourth Defendants could not be brushed aside as those defendants sought to do. He accepted that counsel for Dexter in the First Action could not have pleaded fraud and the other serious allegations without there being enough evidence to justify those allegations, but the judge said that it did not follow that there may not have been adequate reasons for wanting to wait before proceeding against parties such as the First Defendant. He continued:

“18 Martin Vlieland-Boddy was fairly obviously first in line as regards the potential Defendants, having been a director of the Claimant. The Fifth Defendant might well have been sued at the same time, but the fact that he was already subject to an i.v.a. is a fairly obvious reason why it may not have been thought worth suing him then. Whether it is really worth suing him now is another matter, but he has not sought to have the proceedings struck out himself. It is perfectly fair for the Defendants to say that the First Defendant could have been sued at the same time as his brother, even though part of his liability could be regarded as secondary, and that it would have been natural to have done so. On the other hand, the Second Defendant, who is sought to be made liable for the First Defendant’s defaults on the basis of vicarious liability, is someone whom it would have been less obvious to have sued at once. Since issue has not been taken by the Second Defendant with the Claimant’s failure to sue him in the first claim, Mr Shierson has not had to explain why he did not do so. But it could have been rational to have held back from suing someone such as him, who is liable only on a secondary basis, until after proceedings had been taken against those more obviously liable, and attempts made to recover on any judgment against them. On the other hand, if the Second Defendant was to be sued, it would be natural to join the First Defendant as a party to the same proceedings.”

The judge referred to the decision of the House of Lords in Johnson v Gore Wood & Co. [2002] 2 AC 1 as containing the relevant legal principles. After referring to certain other authorities on which the Appellants had relied, the judge said this:

“27 Approaching the matter on the basis of a broad, merits-based assessment, the onus being on the Defendants to show that the bringing of the present action is an abuse, and to show this clearly if the Claimant is to be denied the ability to bring the case before the court, it seems to me that it is at least highly relevant against it being an abuse that the Defendants are different, and not privies, and it is also relevant that the first action was successful, albeit not brought to a judgment on full evidence with findings of fact. The mere fact of the later action being brought does not show that it is an abuse, and I see nothing in the facts relied on by the two Defendants, as mentioned above, to show that it is abusive. The First Defendant is not being vexed a second time, even though he was involved as a witness in the first action. The Fourth Defendant is of course the subject of a second action, but the first having failed for want of jurisdiction she cannot complain of a second attempt in itself. Of course it is disagreeable for the First Defendant to have these allegations hanging over him, but that could be the case regardless of the prior proceedings. As for issues of costs, I do not see that it would necessarily have led to a lower costs bill if he had been sued in the first action together with his brother, as compared with the liabilities that may arise in the present proceedings. It may be that he will suffer from a disadvantage in his defence of the claim as a result of the death of Mr Trubshaw and of any difficulty that may be experienced in tracing Mr Lavoski, but these problems have nothing to do with there having been a previous claim. Indeed the consequences of Mr Trubshaw’s death may be alleviated by his having given evidence at the first trial.”

The judge considered specific points taken on behalf of the Fourth Defendant. He rejected the proposition that the non-payment by Dexter of the costs of the Second Action justified the striking out against her of the current proceedings when those costs have yet to be quantified. Her other points included that it was wrong to allow the appeal by Dexter in the Second Action to remain outstanding until March 2002, wrong to wait as long as Dexter did before starting the fresh proceedings, and wrong to have the new proceedings and the appeal pending at the same time. The judge rejected each of those points.

Accordingly, the applications to strike out failed.

On this appeal Mr. John Taylor for the First Defendant took, in effect, three points:

(1)

the proceedings against the First Defendant were an abuse of process as he could and should have been joined in the First Action and there were no evidential reasons for failing to join him;

(2)

the judge should have found that the claims against the Second, Third and Fifth Defendants in the current proceedings were also an abuse of process because they too should have been joined in the First Action;

(3)

the judge failed to take account of the policy consideration recognised in the Johnson case that there should be finality in litigation and was wrong to find that the First Defendant was not being vexed twice by the same allegations now being made against him as were made in the First Action.

Miss Linden Ife for the Fourth Defendant took the following points:

(1)

the conduct of Dexter in relying on the freezing order against the Fourth Defendant and in delaying the commencement of the current proceedings despite being informed of the Fourth Defendant’s frailty of health constituted an abuse of process;

(2)

the current proceedings were a device to give jurisdiction under Article 6(1) of the Brussels Convention to enable Dexter to proceed against the Fourth Defendant, and the claims against the other defendants in the current proceedings were an abuse as they could and should have been sued in the First Action;

(3)

the Fourth Defendant could and should have been sued in the First Action.

Mr. Andrew Sutcliffe Q.C. for Dexter submitted that none of the points taken by Mr. Taylor and Miss Ife established any basis for allowing the appeals. He argued that the exercise of discretion by the judge cannot be interfered with by this court.

I shall consider the points taken on each appeal in turn.

It is not in dispute that the most recent authoritative statement of the rule in Henderson v Henderson is to be found in the speech of Lord Bingham (with whom Lord Goff, Lord Cooke and Lord Hutton agreed) in the Johnson case [2002] 2 AC at p. 30H:

“It may very well be, as has been convincingly argued (Watt, "The Danger and Deceit of the Rule in Henderson v Henderson: A new approach to successive civil actions arising from the same factual matter" (2000) 19 CLJ 287), that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made, which was addressed to res judicata. 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.”

Lord Millett also made observations of relevance to the present case. At p. 59A he echoed Lord Bingham’s view of the policy reasons behind the rule in Henderson v Henderson, viz “to bring finality to litigation and avoid the oppression of subjecting a defendant unnecessarily to successive actions”. He continued at p. 59C:

“It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen's right of access to the court conferred by the common law and guaranteed by article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression. In Brisbane City Council v Attorney General for Queensland [1979] AC 411, 425 Lord Wilberforce, giving the advice of the Judicial Committee of the Privy Council, explained that the true basis of the rule in Henderson v Henderson 3 Hare 100 is abuse of process and observed that it "ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation". There is, therefore, only one question to be considered in the present case: whether it was oppressive or otherwise an abuse of the process of the court for Mr Johnson to bring his own proceedings against the firm when he could have brought them as part of or at the same time as the company's action. This question must be determined as at the time when Mr Johnson brought the present proceedings and in the light of everything that had then happened. There is, of course, no doubt that Mr Johnson could have brought his action as part of or at the same time as the company's action. But it does not at all follow that he should have done so or that his failure to do so renders the present action oppressive to the firm or an abuse of the process of the court. As May LJ observed in Manson v Vooght [1999] BPIR 376, 387, it may in a particular case be sensible to advance claims separately. In so far as the so-called rule in Henderson v Henderson suggests that there is a presumption against the bringing of successive actions, I consider that it is a distortion of the true position. The burden should always rest upon the defendant to establish that it is oppressive or an abuse of process for him to be subjected to the second action.”

Lord Millett then went on to express the view that the rule in Henderson v Henderson could not sensibly be extended to the case where the defendants are different. As his view on this point goes beyond what the majority held, I say no more about it.

Mr. Taylor argued that the judge was wrong in his treatment of the decision of this court in Bradford and Bingley Building Society v Seddon [1999] 1 WLR 1482 on which Mr. Taylor had placed particular reliance. In that case an earlier action had been brought by the defendant against an accountant for negligent advice including the funding of an investment by a loan from the claimant building society. Judgment was entered against the accountant but could not be enforced because of his lack of funds. When the building society instituted proceedings against the defendant for recovery of the loan, the defendant issued third party proceedings against the accountant and his partners. The third party claim was struck out by the county court judge as an abuse of process. This court allowed the defendant’s appeal. It distinguished between that form of res judicata, cause of action estoppel, which amounted to an absolute bar to relitigation, and mere relitigation in circumstances which did not give rise to cause of action or issue estoppel. Part of that reasoning is inconsistent with the Johnson case, but Mr. Taylor relied on what Auld L.J. (with whom Nourse and Ward L.JJ. agreed) said at p. 1491 G:

“In my view, it is now well established that the Henderson rule, as a species of the modern doctrine of abuse of process, is capable of application where the parties in which the issue is raised are different from those in earlier proceedings. Indeed, it is inherent in Sir James Wigram V.-C.'s reasoning that, as a general rule, all persons who are to be sued should be sued at the same time and in the same proceedings where such a course is reasonably practicable, and whenever it is so and is not taken then, in an appropriate case the rule may be invoked so as to render the second action an abuse; see e.g., Yat Tung Investment Co. Ltd. v Dao Heng Bank Ltd. [1975] A.C. 581 ...”

Lloyd J., in para. 22 of his judgment, commented that Auld L.J. did not address the instance of successive actions against different defendants who are not privies and that the cases cited by Auld L.J. for his proposition did not include any such example.

Mr. Taylor submitted that the Yat Tung did in fact provide such an example. In that case a second claim was struck out as an abuse of process even though one of the defendants to the second claim, Choi Kee Ltd., had not been a party to the first claim. It was pleaded by the unsuccessful appellant that Choi Kee Ltd. was in effect a privy of the sole defendant to the first claim which was a defendant to the second claim. But Lord Kilbrandon, giving the judgment of the Privy Council, made no mention of Choi Kee Ltd. being a privy when giving his reasons. Lloyd J. may not have been justified in treating Yat Tung as a case of successive actions against different defendants who were privies. However, Lloyd J. recognised that the rule in Henderson v Henderson could apply to successive claims involving different defendants who were not privies, referring as he did to the decision of His Honour Judge Bowsher Q.C. in Time Group Ltd. v Computer 2000 Distribution Ltd. [2002] EWHCT 126 (TCC) on 4 April 2002 for that. I can see no error in Lloyd J. saying in para. 24 of his judgment that it may be unusual for the rule to be properly applicable to such a case or in considering that it was at least highly relevant against it being an abuse that the defendants in successive claims are different and not privies. In my judgment it would be unrealistic not to recognise that as a material, albeit not a conclusive, consideration.

In my judgment, it is plain from para. 27 of his judgment (cited in para. 23 above) that Lloyd J. directed himself in accordance with the guidance given by Lord Bingham in the Johnson case which I have cited in para. 30 above. That guidance has superseded almost all the previous statements as to the applicable principle. Thus it is clear that Lord Kilbrandon expressed himself too widely in the Yat Tung case when he said ([1975] AC 581 at p. 590A) of the doctrine of res judicata:

“But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.”

The fact that matters could have been litigated in earlier proceedings does not entail that they should have been litigated then so as to make the subsequent proceedings an abuse of process, as the Johnson case makes clear.

The judge rightly approached the applications before him on the basis of the broad merits-based assessment which Lord Bingham had advocated. The judge considered whether Dexter in all the circumstances was abusing the process of the court by the current proceedings. He had recognised in para. 18 of his judgment (cited in para. 22 above) that the First Defendant could have been sued in the First Action, but the judge concluded that there was nothing in the facts relied on by the First Defendant to show that the bringing of the current proceedings was abusive. Those facts include that the First Defendant had been told before the trial of the First Action that Dexter would proceed against him but chose not to do so until the present action. The judge held that the First Defendant was not being vexed a second time even though involved in the First Action as the provider of a witness statement. The judge clearly thought that there was no unjust harassment of the First Defendant by the present action. I respectfully agree. It is only in this action that for the first time the First Defendant is sought to be made liable.

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. When asked to identify what was the relevant error of the judge, Mr. Taylor submitted that it was the failure of the judge to make findings that the reason given by Mr. Shierson for Dexter not joining the First Defendant as a defendant to the First Action (viz. that Dexter did not have a complete knowledge of the true extent of the involvement of the Defendants) was unsustainable, alternatively that the judge failed to find that there were no evidential grounds for not joining the First Defendant in the First Action.

For my part I am prepared to accept that, so far as the First Defendant was concerned, the general and largely unparticularised statement of Mr. Shierson, which appears to me to have been chiefly directed to the Fourth Defendant, provides little justification for Dexter not joining the First Defendant as a defendant to the First Action. But the judge does not treat it as justification. As I read the judgment, the judge was saying two things. First, he said it was for the First Defendant to establish that it was an abuse of process for a claimant to bring an action against a defendant who could have been joined in earlier proceedings, and the facts relied on by the First Defendant, such as the mere fact of the bringing of the later action, were not sufficient to show abuse. Second, the judge pointed to the fact that MVB was the obvious prime target for Dexter. That in itself was an important consideration for a claimant like Dexter in administrative receivership and therefore likely to have limited funds at its disposal for litigation. Although there were times when Mr. Taylor in the course of his argument appeared to be suggesting that it was an abuse for any person, who could have been joined in earlier proceedings for conspiracy but was not then joined, to be sued for conspiracy in subsequent proceedings, he rightly resiled from so broad a proposition, and confined his submission to saying that on the facts of the present case it was an abuse for the First Defendant to be sued in the present proceedings. But the judge had well in mind all the facts and I am unable to say that his assessment was not one properly open to him. The judge considered the prejudice said to have been suffered by the First Defendant in consequence of being sued in the present action rather than in the First Action, but was unimpressed by that point. Before us Mr. Taylor sought to establish detriment to the First Defendant resulting from the death of Mr. Trubshaw after the First Action; but I was not persuaded that the unavailability of Mr. Trubshaw, who had been called by Dexter as a witness in the First Action, constituted real prejudice to the First Defendant in his defence in the present proceedings.

As for Mr. Tayor’s point relating to the failure to join the Second, Third and Fifth Defendants in the First Action, it is to be noted that none of them has made any application to strike out. Under the Civil Procedure Rules the court can act of its own motion if it is of the view that the claims against those defendants constitute an abuse, but the fact that those defendants are not applying to strike out and that the claims against them will be tried (in the absence of the court acting of its own motion) is a matter of which the court can take note. The judge said that the Second Defendant, whom Dexter seeks to make vicariously liable for the First Defendant’s actions, was someone whom it would have been less obvious to have sued in the First Action than the First Defendant. The same point can be made in respect of the Third Defendant whose claimed liability is again only vicarious. The judge pointed out the rationality of holding back from suing someone liable only on a secondary basis until after proceedings had been taken against those primarily liable and judgment had been sought to be enforced. Further the judge said that he was entitled to infer that Dexter’s intention in bringing the current proceedings was to seek to recover from the defendants all or part of the money alleged to have been misappropriated. The Fifth Defendant, as the judge recognised, might well have been sued in the First Action, but the fact that he was already subject to an Individual Voluntary Arrangement was, to the judge, a fairly obvious reason why he was not sued then. The judge said that it was unclear to him that it would be appropriate to disregard the Fifth Defendant as possibly not worth suing, but that, even if it were appropriate, that would not lead to the conclusion that there was any element of abuse of process on Dexter’s part in proceeding against the other defendants by the current action. The conclusions of the judge seem to me to have been open to him and cannot be impugned.

Mr. Taylor’s third point on the policy consideration to which the judge is said to have paid insufficient regard seems to me no less difficult to make good. The judge quoted what Lord Bingham and Lord Millett said on that policy consideration, and it cannot be said that it was overlooked. Inevitably, the refusal to strike out an action which could have been the subject of earlier proceedings means that the court is accepting that those proceedings have brought no finality to the litigation. But it is clear from the Johnson case that the court, in applying the broad merits-based approach, may in an appropriate case properly reach that conclusion. And there is good sense as well as justice in that: the serious claims against the defendants to the present action have yet to be the subject of judicial determination.

For these reasons therefore I conclude that the First Defendant’s appeal fails.

By Miss Ife’s first point she complains that although Dexter had the benefit of a freezing order over the Fourth Defendant’s assets since 12 December 2000 in the Second Action which was struck out for want of jurisdiction on 8 March 2001 and although Dexter had told the judge and the Fourth Defendant’s solicitors that fresh proceedings against her would be commenced, it was not until February 2002 that the present proceedings, to which the Fourth Defendant is a party, were commenced. Thus, she says, for some 14 months the Fourth Defendant had been subject to a freezing order without any valid proceedings to support it. We were taken to Lloyds Bowmaker Ltd. v Britannia Arrow Holdings plc [1988] 1 WLR 1337 in which this court emphasised the obligation on a claimant who obtains a freezing order to press on with his action as rapidly as he can. Miss Ife drew attention to the fact that Dexter was made aware of the Fourth Defendant’s poor health. She says that Dexter should have got on with the fresh proceedings and abandoned the appeal. She therefore submits that the conduct of Dexter, in bringing the present proceedings when it could and should have brought them as soon as the Second Action was struck out, was an abuse.

The difficulty with those submissions is that the judge gave full consideration to this point and provided cogent reasons why it was not accepted. The judge, as the judge who struck out the Second Action, was in a good position to assess the merits of this point. He gave permission to appeal from his own decision and he considered that the appeal was being seriously pursued. In those circumstances there was jurisdiction to continue the injunction. At no time was that not the position. As I have noted, when the appeal was abandoned, the Fourth Defendant agreed to the freezing order being extended until after the application to strike out. Whilst I have sympathy with the Fourth Defendant in having this litigation hanging over her head while unwell, I cannot say that the judge made any error in his reasoning on the point.

Miss Ife’s second point is primarily based on what Mr. Shierson said at para 5 of his first witness statement dated 31 May 2002:

“…. Dexter’s sole concern has been to establish that the court has jurisdiction to determine the claim against Mrs. Harley.”

That, she argues, shows that the reason why the other defendants were not sued in the First or Second Action was that Dexter did not need to do so until it needed to establish jurisdiction against the Fourth Defendant under Article 6 (1) of the Brussels Convention (enabling a person domiciled outside the U.K. but in a state which has acceded to the Convention to be sued in the courts for the place where any co-defendant is domiciled). I do not accept that construction of what Mr. Shierson said. He was only addressing the question why Dexter had abandoned its appeal against the striking out by the judge of the Second Action and he was doing so in the context that the Fourth Defendant had applied for an order that the claim form in the current proceedings be set aside on the ground of want of jurisdiction as well as the ground of abuse of process. As Mr. Shierson explained in para. 5 of his first witness statement, Dexter thought that on the jurisdiction point the most sensible and cost effective route was to adjourn its appeal pending the determination of the Fourth Defendant’s application, but, when the Fourth Defendant opposed, and this court refused, the adjournment, Dexter thought that the proper course was to abandon the appeal and rely on Article 6 (1). Mr. Shierson does not appear to me to have been addressing the question whether Dexter genuinely intended to sue the other defendants.

As for the point that the claims against the other defendants were an abuse, I have already rejected that when dealing with the Fourth Defendant’s appeal.

Miss Ife’s third point was that the Fourth Defendant should have been joined as a defendant in the First Action. On the material before the judge, he was fully entitled to accept Dexter’s explanation as to why it did not join her. Dexter’s pleaded case in the First Action as to what happened to the £464,520, to which I have referred in para. 7 (2) above, was shown to be incorrect. No mention was made of any sum going into the Fourth Defendant’s account as that was not known. The true position only became apparent in consequence of the Guernsey Court’s disclosure order against Portman on 6 October 2000. An affidavit from Portman making disclosure was only sworn on 27 November 2000. In any event the Fourth Defendant, like the First Defendant, owed no fiduciary duty to Dexter and her alleged liability is as a constructive trustee. I repeat my comments on the judge’s view that MVB was the obvious prime target for Dexter. Dexter’s conduct in not making her a defendant in the First Action cannot fairly be criticised, and I agree with the judge that the Fourth Defendant has not shown the present action against her to be an abuse.

Accordingly in my judgment the Fourth Defendant’s appeal also fails.

I agree that these appeals should be dismissed for the reasons given by Peter Gibson LJ and wish to add a few words of my own with reference to the general approach to be adopted in cases of this kind.

The principles to be derived from the authorities, of which by far the most important is Johnson v Gore Wood & Co [2002] 2 AC 1, can be summarised as follows:

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.

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.

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.

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.

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.

However that may be in general, this is not in my opinion such a case, as explained by Peter Gibson LJ.

I agree with both judgments.