Stuart v Goldberg & Ors

Mr Stuart, the Claimant, appeals against an order which prevents him from suing the Respondents, Goldberg Linde, solicitors, in respect of two causes of action, on the grounds that if he wanted to assert such claims against them he should have done so in other proceedings which he brought against them in 2000, and which came to trial, successfully from his point of view, in January 2001. I will call this the 2000 Action; the word “action” is not used by the Civil Procedure Rules, but I use it here to avoid confusion between “claim”, in the sense of proceedings brought by a claimant, and “claim”, in the sense of a cause of action asserted, or relief sought, in those proceedings. Master Fontaine held that for Mr Stuart to bring the second claim (which I will call the 2005 Action) was an abuse of the process of the court, of the kind discussed in Johnson v Gore Wood [2002] 2 AC 1. Burton J gave Mr Stuart permission to appeal to the High Court, and directed that the appeal come before a High Court Judge. Despite that direction, the appeal was listed before Judge Seymour Q.C., who heard and dismissed the appeal. On Mr Stuart’s behalf Mr Cooper Q.C. contends that this decision is wrong, and that it was not an abuse of the process for him to start the 2005 Action, in particular because on one of the two causes of action now raised, Mr Stuart was not aware of all the relevant facts until after the trial of the 2000 Action in 2001.

The disputes arise from dealings between Mr Stuart, Mr Linde and a Mr Vardinoyannis in 1999. Mr Stuart and Mr Vardinoyannis made an agreement on 21 June 1999 with a view to Mr Stuart acting together with Mr Vardinoyannis (and not with others) in relation to possible commercial enterprises in Mongolia. It is not in dispute that Mr Vardinoyannis thought better of the agreement very shortly after entering into it, and did not proceed with it. Mr Stuart has a separate claim against him in these proceedings, which has not been struck out, but is not relevant to this appeal.

His claims against Mr Linde are two-fold. The first is that he induced Mr Vardinoyannis to break the contract, by untrue statements about Mr Stuart. Mr Stuart became aware of the statements which Mr Linde had made to Mr Vardinoyannis in October 2000, from a witness statement of Mr Linde in the 2000 Action. In respect of that claim, which I will call the Inducement Claim, Mr Stuart knew the facts before the trial of the 2000 Action.

The second claim is in misrepresentation, and relies on statements made to himself by Mr Linde, some about Mr Linde’s own position and others about Mr Vardinoyannis. (I will refer to it as the Misrepresentation Claim.) These statements are said to have influenced Mr Stuart in entering into the contract with Mr Vardinoyannis. He knew what had been said to him, but he did not know the true facts, he says, at any rate as regards some of the statements, until after the trial of the first claim.

The 2000 Action was brought to enforce a solicitor’s undertaking; I will refer to that claim as the Undertaking Claim. Mr Linde is a solicitor, and was acting for Mr Vardinoyannis at the time. Mr Stuart alleged, successfully, that in the course of two telephone conversations on 9 and 10 June 1999 Mr Linde had given him an oral undertaking, as a solicitor, that he would in any event be paid $350,000, regardless of whether Mr Vardinoyannis entered into the contract which was then contemplated. Mr Stuart needed this assurance in order to enable him to undertake a trip to Mongolia for which he left later on 10 June. Normally, proceedings to enforce a solicitor’s undertaking are not lengthy or complex; they are often suitable for summary procedure. Usually, however, the undertaking has been given in writing. In the present case Mr Linde disputed having said the words relied on at all, and also denied that, if he had done so, he did so in his capacity as a solicitor. Thus the proceedings were not suitable for summary determination and had to go to trial with oral evidence over five days. Nevertheless, the issues were clear and simple, even if not easy to resolve: had the words alleged to constitute the undertaking been spoken, and if so were they spoken by Mr Linde as a solicitor? If so, Mr Stuart was entitled to be paid the balance of the sum covered by the undertaking (he had been paid a small part of it in any event).

By contrast, the 2005 Action, as against Mr Linde, gives rise not only to issues of fact as to what was said, and its truth or otherwise, but also as to its materiality, and, if false statements were made, whether they had any causative effect – on the one hand (misrepresentation) on Mr Stuart in inducing him to enter into the contract with Mr Vardinoyannis, and on the other hand (inducement of breach of contract) on Mr Vardinoyannis leading him to break the contract with Mr Stuart. They also give rise to substantial issues as to damages, since Mr Stuart claims to have lost large profits on projects that he would have been able to undertake in Mongolia, and seeks to recover these as damages.

I will first set out the facts in some more detail, sufficiently for the purposes of this appeal, then I will refer to the law, now set out in Johnson v Gore Wood, and then refer to the basis on which the matter was decided below, before dealing with the application of the relevant principles to the facts of the case.

Mr Stuart is himself a solicitor but has never practised as such. He is the managing director of Mongolian Development Corporation Ltd, through which he sought to develop commercial opportunities in Mongolia with the Mongolian Government, in relation to the privatisation of state assets and other commercial matters. Early in 1999 he met Mr Linde, who acted for Mr Vardinoyannis. The latter was interested in investing in Mongolia. Mr Linde arranged several meetings between Mr Stuart and Mr Vardinoyannis, which led eventually to their signing Heads of Agreement on 21 June 1999. During the negotiations, at a time when Mr Stuart had signed the Heads of Agreement but before Mr Vardinoyannis had done so, Mr Stuart went to Mongolia for a week, to prepare the ground for commercial co-operation with Mr Vardinoyannis. He anticipated having to incur substantial expenditure in the course of this visit, and wanted to be sure that he would be indemnified for that expenditure come what may, and in particular even if Mr Vardinoyannis did not sign the Heads of Agreement, bearing in mind that he would not only be spending money, but would be doing so specifically in relation to Mr Vardinoyannis, and thereby losing the opportunity to promote the interests of other potential investors.

Mr Stuart left for Mongolia on 10 June 1999, having had two telephone conversations with Mr Linde, in the course of which, as the judge found at the trial of the first claim, Mr Linde had given, and reiterated, an unconditional undertaking, in his capacity as a solicitor, that $350,000 would be transferred into bank accounts set up by Mr Stuart for the purpose.

On 21 June 1999 Mr Stuart was in Athens to meet Mr Vardinoyannis. In the course of that visit Mr Vardinoyannis signed the Heads of Agreement. Soon afterwards he thought better of the project, and did nothing towards it. In particular the $350,000 was not paid to Mr Stuart, though eventually £11,500 was paid to cover particular expenses.

Mr Stuart makes two relevant claims in the 2005 Action. The Misrepresentation Claim is that his own entry into the Heads of Agreement was induced by misrepresentations by Mr Linde. The Inducement Claim is that Mr Vardinoyannis’ breach of the agreement (which breach he alleges separately against Mr Vardinoyannis) was induced by derogatory and untrue statements made to Mr Vardinoyannis by Mr Linde.

Misrepresentation. Mr Stuart’s case as to the misrepresentations made to him is set out in paragraphs 59 to 62 of his Particulars of Claim in the present action. The representations are said to have been about Mr Vardinoyannis, or his family, and also about Mr Linde. Those about Mr Vardinoyannis were in summary as follows: statements that his family were the sole owners of Xiosbank, whereas in truth they had only a minority stake; that they owned Motor Oil Hellas, whereas they only owned 50% of it; that Mr Vardinoyannis owned Panathinaikos Football Club, whereas it was owned by two others (possibly relations of his); that he was involved in the take-over of certain European Airlines (whereas he failed in his attempt to acquire a majority stake in Olympic Airways); that he was not involved in any court proceedings at the time, whereas proceedings had been brought against him by Aramco, freezing assets to the order of $100 million, and his sister had also started proceedings against him.

The statements about Mr Linde were: that he was the first foreign member of the Zurich Bar, whereas he was never such a member; that he was chief executive of Motor Oil Trading, the parent company of the group, whereas he later denied this, and the company was in any event a defunct Luxembourg company, and not the parent of the group; that while at Baker & McKenzie he had specialised in and led cross-border mergers and acquisitions and privatizations; whereas this was not true and he had only worked in their construction department.

Inducement of breach of contract. Mr Stuart knew nothing of the statements made by Mr Linde to Mr Vardinoyannis until they were referred to in Mr Linde’s witness statement in the 2000 Action, made on 20 October 2000, and no doubt filed and served shortly afterwards. As such they were not relevant to the Undertaking Claim, but if true they would have reflected on Mr Stuart’s credibility. That was why Mr Linde introduced the topic into his evidence.

In his witness statement, Mr Linde said (paragraph 24) that he became increasingly concerned about Mr Stuart from a bizarre story which he says Mr Stuart told him while they were driving through Athens on the way to the meeting on 21 June. He had previously (paragraph 8) mentioned a conversation in which Mr Stuart is said to have claimed to have psychic powers enabling him to exercise mental control over situations. He does not say that he told Mr Vardinoyannis anything about this before the meeting. He does say (paragraph 32) that he made Mr Vardinoyannis aware shortly afterwards that Mr Stuart suffered from psychological problems, and that Mr Vardinoyannis was irritated that he had not checked up on Mr Stuart more fully beforehand. The relevance of this aspect of the story, at that stage, was not whether it had had any effect on Mr Vardinoyannis, but to show that Mr Stuart was a fantasist, whose evidence should not be believed.

As regards the Inducement Claim, Mr Stuart knew enough, once he had received and read the witness statement, to realise that he might have a claim for inducement of breach of contract against Mr Linde. No doubt Mr Linde’s story was explored a good deal more in cross-examination in order to show that it was Mr Linde who ought not to be believed.

In relation to the Misrepresentation Claim, Mr Stuart says that he did not discover the falsity of the statements until after the trial of the 2000 Action. That is true as regards Mr Linde’s statements about himself, at least as regards the Zurich Bar and Baker & McKenzie. Mr Stuart exhibited correspondence showing that he enquired about these in 2002 and was then given the information on which he now relies for showing that the statements were false.

As for the statements about Mr Vardinoyannis, on the other hand, on Mr Linde’s behalf it is pointed out that, in Mr Stuart’s own witness statement in the 2000 Action, he referred both to the statements (or some of them) and to the fact that they were either false or at least doubtful. In paragraph 65 he said that he had learned on 19 July 1999 of the proceedings by Aramco, and at paragraph 68 that Mr Linde told him on 2 August 1999 that Mr Vardinoyannis’ sister had sued him. In the course of describing events early in July 1999, in paragraph 55, as the background to why it was said that Mr Vardinoyannis did not, as had been planned, visit Mongolia himself, Mr Stuart referred to being told of a crisis in relation to the family-owned bank, Xiosbank, and said “I was not sure which of all these stories to believe during this period. In fact subsequent research and conversations continue to cast doubt on Mr Linde’s various explanations.” There is no reference in that witness statement to the falsity of the other statements alleged as misrepresentations.

Mr Stuart issued the Claim Form to commence the 2000 Action on 6 March 2000. He was professionally represented throughout those proceedings. At that stage the sum of $350,000 (less £11,500) was claimed both by virtue of the undertaking and separately under what was alleged as a written agreement dated 8 June 1999 and a side letter signed on 21 June 1999. It was not alleged that the undertaking itself constituted a contract between Mr Linde and Mr Stuart. On 20 December 2000 Mr Stuart was given permission to amend the Particulars of Claim so as to drop the claim in contract based on the 8 June document. At the hearing on that day, it seems, Mr Vardinoyannis, who was not a party to those proceedings, applied unsuccessfully to be joined as a party. The trial took place from 15 to 19 January 2001 before Mr Arthur Marriott Q.C sitting as a Deputy Judge of the Queen’s Bench Division. In the course of the trial, without formal amendment, Mr Arkush, then representing Mr Stuart, put his case on the undertaking as such (for which it is not necessary to show that any consideration was given) but also, in the alternative, on the basis that the conversations between Mr Stuart and Mr Linde gave rise to a contract; a claim in contract, therefore, but different from that which had originally been put forward on the basis of the 8 June 1999 document, and then abandoned by amendment in December 2000. The judge gave judgment on 22 January in favour of Mr Stuart, holding that both ways of putting the case were justified. Mr Linde obtained permission to appeal to the Court of Appeal, but the appeal was dismissed by consent.

On 17 June 2005 Mr Stuart, acting in person, issued the claim form in the 2005 Action. He repeated (in substance) the first 41 paragraphs of the Particulars of Claim in the first action, and then proceeded to allege, first, a contractual claim which was later struck out by the Master on other grounds, not challenged on appeal, and then the Inducement and Misrepresentation Claims against Mr Linde, as well as alleging breach of contract against Mr Vardinoyannis, and claiming damages for that breach. The claim against Mr Vardinoyannis is irrelevant to this appeal. Mr Linde then applied to strike out. Master Fontaine acceded to the application on 27 July 2006, in a reserved judgment after a hearing on 19 July. Judge Seymour heard and dismissed Mr Stuart’s appeal on 15 February 2007. Sir Henry Brooke gave permission for the further appeal to this court.

The origin of the principle invoked by Mr Linde and relied on by the Master and the Judge is generally ascribed to observations of Sir James Wigram V-C in Henderson v Henderson (1843) 3 Hare 100. That, however, was a case in which the issue in both the first and the second proceedings was the same, namely the taking of an account of the estate of an intestate who had been in partnership with the defendant. The principle has been developed since then so as to apply to a case in which the objection to the second proceeding is not that it seeks to raise the same issue as has been decided before, but that it raises a different issue, not decided before, but which could have been raised at the same time. In that respect, the law is now set out in Johnson v Gore Wood [2002] 2 AC 1, in which coincidentally (not relevantly for the present appeal), on the other point in the case, the House of Lords had to consider another principle driving from a decision of Wigram V-C, namely the rule in Foss v Harbottle (1843) 2 Hare 461.

At [2002] 2 AC 31 Lord Bingham of Cornhill said this:

“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 early 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.”

In the same case Lord Millett, at 59-60, said this:

“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 European Convention for the Protection of Human Rights and Fundamental Freedoms. 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 A G for Queensland [1979] AC 411 at 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 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 at 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.”

The other members of the House of Lords agreed with Lord Bingham on this point without adding anything which I need to quote.

The court’s power to strike a claim out is discretionary, but it does not seem to me that on an application to strike out a claim based on the proposition that the proceedings are an abuse of the process of the court, on the principle of Johnson v Gore Wood, the case is likely to turn on the exercise of a discretion, at any rate if the court decides in favour of the application. Either the proceedings are an abuse of the process, or they are not. It could not be right to strike the case out (on this ground) unless the court is satisfied that the claim is an abuse of the process, and if the court were so satisfied, it would be only in very unusual circumstances that it would not strike the claim out. In Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536 Lord Diplock spoke of the court’s inherent power to prevent misuse of its procedure and of the court’s

“duty (I disavow the word discretion) to exercise this salutary power”.

I note that Longmore LJ has expressed the same view, agreeing with Thomas LJ, in Aldi Stores Ltd v WSP Group plc and others [2007] EWCA Civ 1260 at paragraph 38. Judgment in this case was delivered after we had heard argument, but at our invitation the parties provided additional written submissions about it.

In the present case two particular points (among many) have been relied on by the defendant, and by the court, in favour of a finding that the claim is an abuse: lack of merit in the second claim, and delay in bringing it. Moreover, as regards Mr Stuart’s reliance on the fact that he did not know the falsity of some of the statements relied on as misrepresentations, Mr Linde argues that this is irrelevant because Mr Stuart could have found out the correct position before the first trial, and that by failing to do so, he was not exercising reasonable diligence, and his lack of knowledge should therefore be disregarded. That is not based on anything in Johnson v Gore Wood, but rather on a phrase of Wigram V-C in Henderson v Henderson at 3 Hare 115:

“The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

Thus, this appeal seems to me to raise three general points which deserve examination, as to whether they are properly to be taken into account in considering whether a second claim is an abuse of the process. So far as I know they have not featured in previous decisions on the point. They are these: is it relevant to consider (a) the prospects of success, or otherwise, of the second claim, or (b) the promptness, or otherwise, with which the second claim has been brought; and if the claimant explains the failure to include the second claim in the first proceedings by reference to not having known relevant facts at the time of the first proceedings, is it relevant to consider (c) whether he might, with reasonable diligence, have found them out in time?

Master Fontaine. The Master was, of course, referred to Johnson v Gore Wood. At paragraph 31 she set out what she calls the ratio of Henderson v Henderson, rather than Lord Bingham’s own formulation of the relevant principle, though she quoted part of that formulation later in her judgment at paragraph 66.

At paragraph 32 she commented, as noteworthy, on the repetition in the Particulars of Claim in the 2005 Action of the first 41 paragraphs from the Particulars of Claim in the 2000 Action. She then summarised the Inducement Claim and the Misrepresentation Claim. She considered a number of arguments relied on by the claimant (who appeared before her in person) for saying that it was not an abuse not to include these claims in the earlier proceedings. I do not need to refer to all of these.

One was that he had wished to proceed on the undertaking separately, as a simple and quicker proceeding. The Master discounted this point, though describing it as superficially reasonable, because the claim took 18 months to come to trial and the trial took 5 days. She said:

“it is difficult to envisage that it would have taken very much longer, even had the other claims been included”.

Another was Mr Stuart’s professed lack of knowledge of the possibility of the claims until after the trial. She rejected that as regards the Inducement Claim, since it was Mr Linde’s witness statement that disclosed the relevant facts. She commented that an application could have been made to amend the Particulars of Claim, even though there were only 3 months left to go before the trial. She pointed out in that context that Mr Stuart relied on an additional contract claim at the trial, and said:

“There is no explanation as to why, if his legal advisers had decided at the late stage to include an additional claim, they did not also include the Inducement Claim, as it would be very much in their contemplation having received Mr Linde’s witness statement where such allegations were made.”

As regards the Misrepresentation Claim, Mr Stuart is recorded as having contended that he did not know that the statements were untrue until after the trial, but as having been unable to say when he found out the true position. In fact the evidence showed that he found out the truth as regards Mr Linde’s statements about himself only in early 2002, but, as mentioned above, that he knew the true position as regards some of the statements about Mr Vardinoyannis before the claim was brought. She also recorded (paragraph 47) that Mr Stuart had made no independent investigation as to Mr Vardinoyannis’ financial position before entering into the agreement, nor after it became apparent that he was not intending to comply with his obligations under the agreement.

The Master said (at paragraphs 49 and 50) that all the relevant evidence on the Inducement Claim was before the court in the 2000 claim, and the judge had failed to make findings only because it was unnecessary for him to do so. She said:

“Thus, the Court could very easily have explored this issue without very much more time being taken up in the 2000 Action.”

She accepted that not all the evidence relevant to the Misrepresentation Claim was before the court, but she said that some of it was, and went on:

“In addition, the same points apply that the factual background was before the court, the relevant witnesses were giving evidence, and they could have given further evidence in respect of the Misrepresentation Claim with perhaps only a day or two extension of the trial.”

Later in her judgment she addressed a number of points on which Mr Stuart relied to show that there were special circumstances which showed that the 2005 Action should not be regarded as an abuse of process. She mentioned eight elements relied on by Mr Stuart in this context. In the light of the argument in this court, I need mention only one of these points. Mr Stuart had said this in a document put before the Master:

“The Claimant’s legal advisers … advised not to obscure the issue of breach of undertaking with other emerging claims, in a situation where the Defendants were not disclosing any information, and that such other issues would be better dealt with within subsequent separate proceedings when more information could be gleaned from the Defendants, as transpired as a result of cross-examination.”

The Master’s comment was that this was a matter entirely between the Claimant and his legal advisers, and not a matter which she should consider as between the Claimant and the Defendant.

She then referred to the merits of the new claims, and commented that Mr Stuart would face evidential difficulties on each claim. She also said that Mr Stuart would face a problem with the “reasonable diligence” test both because he had not instructed a solicitor himself at the time of the negotiations for the agreement in 1999, and because of his failure to investigate Mr Vardinoyannis’ financial position himself at that time. On all these aspects, and as regards proving loss, she clearly took the view that the prospects of success on both of the new claims were small.

She also mentioned Mr Stuart’s delay in bringing the 2005 Action, not by reference to anything that had happened during the period of delay, but on the basis that “one would have expected” him to have brought his separate claims fairly shortly after the conclusion of the 2000 Action, or at the very latest after the settlement negotiations broke down (which was in April 2002), rather than wait until almost the end of the limitation period of 6 years.

She summarised her reasons for holding that the 2005 Action was an abuse of the process in respect of both claims in her paragraph 80, as follows:

“The Inducement Claim

(a)

The Claimant and his then legal advisers were or should have been aware of the claim by October 2000 at the latest.

(b)

The Claimant successfully attempted to bring in an additional claim (for breach of contract) in the 2000 Action at a late stage. He must therefore have considered, through his legal advisers, whether any other claims could and should be brought.

(c)

If a decision was made in 2000 not to bring this claim in that action for any good reason, that was not communicated to the Defendants nor were the Claimant’s rights reserved in any way. If that had been done the Claimant might well have been able to rely on an estoppel by convention or an implied waiver.

(d)

The evidence upon which this issue depends was ventilated before the Court in considerable detail in the 2000 Action. Had the claim been before the Court then, the judge could have made a finding upon it, without very much further evidence being necessary.

(e)

The risk now of a collateral attack on parts of the Judgment in the 2000 action, if a different judge reaches different conclusions on the evidence.

(f)

The weakness of the merits of the claim.

(g)

The long unexplained delay in bringing the claim.

(h)

The absence of any special circumstances which would justify permitting the claim to proceed, notwithstanding the above.

The Misrepresentation Claim

(a)

The Claimant’s lack of explanation as to why this claim could not have been brought in the 2000 Action, other than the general explanation that he did not know the representations were false until after the trial, without giving particulars.

(b)

The fact that the claimant clearly failed to exercise reasonable diligence in ascertaining whether or not he had such a claim by taking no action to investigate the truth of the alleged misrepresentations, not only during the 2000 Action but until some considerable time later.

(c)

The pleaded case does not, on its face, show any causal link between the alleged misrepresentations and the loss.

(d)

Even if the Claimant were permitted to amend this claim, the weakness of the claim on the merits. No application to amend has been made.

(e)

The fact that the Claimant did not indicate during the 2000 Action that he reserved the right to bring further claims, giving reasonable grounds why it would be preferable not to include such a claim in the 2000 Action. I accept that there may have been such grounds, as this claim might have considerably prolonged the 2000 Action, and a much smaller part of the relevant evidence was before the Court than the Inducement Claim, but the Defendants should have had the opportunity to put their position as to whether this claim should have been heard at the same time as the 2000 Action, or should be more conveniently have been dealt with at a later stage.

(f)

The unexplained and lengthy delay in bringing this action. Even if it had been brought as part of the 2000 Action, and a decision made to hear this part of this action separately, the background and the witnesses were essentially the same and the same judge could have heard this claim very shortly after the issues had been dealt with. Even if this had involved a delay in the trial, it would have been unlikely to have been lengthy, in my view, and it would have been far preferable to coming back to the matter some six or more years later.

(g)

The absence of any special circumstances which might justify this claim being permitted to proceed.”

Judge Seymour Q.C. By this stage, Mr Stuart had the benefit of Mr Cooper Q.C. to represent him. The judge set out at paragraph 9 the passage from Lord Bingham’s speech in Johnson v Gore Wood which I have quoted above.

Like the Master, he found it noteworthy that the Particulars of Claim in the 2005 Action repeats much of the content of that in the 2000 Action, including assertions of matters which in the 2005 Action Mr Stuart relies on as misrepresentations.

To Mr Cooper’s submission that the Master had wrongly underestimated the additional evidence that would be relevant, and the time required, if the Inducement Claim had had to be determined at the same time as the Undertaking Claim, he said (at paragraph 22) that the Master, at paragraphs 49 to 51, was concentrating only on the evidence relevant to liability. He rejected the contention that, if Mr Stuart had applied for permission to amend the Particulars of Claim after receiving Mr Linde’s witness statement in late October 2000, with the trial coming up in January 2001, the application would have failed. He said at paragraph 30 that, on such an application, the court would have been able to consider several different courses, including not only an adjournment of the trial but also directing a split trial of liability and damages, as well as others which he did not identify.

The judge rejected at paragraphs 32 and 33 a submission by Mr Cooper that the Master was wrong to take account of the perceived merits of the 2005 Action, and also to take the view that the Inducement Claim could have been included in the 2000 Action by amendment.

At paragraphs 35 and 36 he referred to a submission by Mr Quest, for the Respondent, that on a trial of the second action Mr Linde’s veracity, already tried and found wanting at the hearing of the first claim, would again be in issue, so that he would again be in jeopardy. The judge did not pay any regard to that submission on the basis that it had not been made to the Master, and that the judge was not concerned with what conclusion he would have come to if the matter had come before him at first instance, “but simply with whether it has been demonstrated that Master Fontaine’s judgment was wrong”. This point is not important in itself, but it suggests that, although he does not say so in terms, the judge was treating the Master’s decision as one reached in the exercise of a discretion, only to be discharged on the very limited basis on which an appellate court can interfere with such an exercise. If that was his view, it was wrong, for reasons given in paragraph [24] above. Of course, the judge was correct to say that for the appeal to be allowed, the Master’s order had to be shown to be wrong: see CPR 52.11(3)(a). On a question of abuse of process of this kind raised at a preliminary stage such as this, with no oral evidence, it seems to me that the appellate court is often likely to be, and in the present case is, in as good a position as the court below to assess whether the proceedings are or are not an abuse of the process.

That point was touched on by Thomas LJ in Aldi Stores Ltd v WSP Group plc and others [2007] EWCA Civ 1260 at paragraph 16, in relation to a case of much greater complexity, in which there were many more factors to be balanced than are relevant in the present case in deciding whether the second proceedings amounted to an abuse of the process. Nothing in what Thomas LJ says seems to me to be inconsistent with my view that this court is (and the Judge was) in as good a position as the Master to decide in the present case whether to bring the 2005 Action was an abuse of the process on the part of Mr Stuart.

In the end, the Judge held that the Master had correctly identified the law which had to be applied to the issues before her, and had applied it correctly to those issues, and could not be shown to be wrong in her decision.

As I have mentioned, three of the points relied on by Master Fontaine are of some general importance, namely the prospects of success of the Misrepresentation and the Inducement Claims, Mr Stuart’s delay in bringing the 2005 Action, and his supposed failure to use reasonable diligence. Another of the points she relied on is also noteworthy, namely the relevance of Mr Stuart’s failure, having decided not to add other claims to the 2000 Action, to warn Mr Linde of the fact that he was considering other claims against him arising from the same matters. Before I deal with these four points, I will mention more briefly some of the other points taken.

I do not regard it as of significance that Mr Stuart, when preparing the Particulars of Claim in the 2005 Action, acting in person, copied large parts of the Particulars of Claim from the 2000 Action in which the factual background to the matters at issue was set out. Obviously there was a lot of common ground between the subject matter of the two Actions. Inclusion of the same text in the two statements of case, especially given that Mr Stuart was acting for himself, does not seem to me to demonstrate by itself that either the Misrepresentation Claim or the Inducement Claim should have been included with the Undertaking Claim in the 2000 Action. The overlap between the two Actions needs to be assessed by reference to the substance of the respective claims, not by a literal comparison of the two statements of case. I respectfully disagree on this with the Master and the Judge; I consider that this was irrelevant.

Master Fontaine was right to regard Mr Stuart’s wish to enforce the undertaking by separate self-contained proceedings, which would come to trial faster than proceedings asserting the Inducement Claim or the Misrepresentation Claim, as being a reasonable position. She discounted it because the undertaking claim took much longer to come to court, and at the hearing, than a claim on the solicitor’s undertaking would normally require. It is true that it did, because it was a most unusual case on the facts. I cannot, however, agree with her comment, in paragraph 44, that “it is difficult to envisage that it would have taken much longer even had the other claims been included”. That seems to me to underestimate greatly the additional scope of the Inducement Claim and the Misrepresentation Claim. That also goes with her comment, in paragraphs 49 and 50, that the court had all the evidence that would have enabled the Inducement Claim to be made. This ignores the issues of causation and damages, which would no doubt be hotly contested. Oddly, when she came to the merits, at paragraph 69(d) she referred to the causation question, and at paragraph 75 to the damages issue. It seems to me that as regards even only the Inducement Claim, let alone the Misrepresentation Claim, the proceedings would have been on a wholly different scale if either of these had been added to the 2000 Action. If the result had been that the resolution of the Undertaking Claim had to await the trial on liability of the other issues, that would have been inconsistent with the essential point of an undertaking, namely that it provides a relatively swift and uncontroversial way for the person to whom the undertaking is given to claim performance of the subject of the undertaking.

Equally, her comment in paragraph 52 that the witnesses relevant to the Misrepresentation Claim were giving evidence already, and that they could have given further evidence on that claim with perhaps only a day to two extension to the trial, seems to me to underestimate altogether the consequences of adding the Misrepresentation Claim to the 2000 Action, quite apart from the fact that not all the statements now relied on were known to be false at the time of the trial.

If either of the additional claims had been included in the 2000 Action with the Undertaking Claim, it would have been possible for the claims to have been directed to be heard separately, or for issues in each claim to be heard separately from other issues. But it does not seem to me that the Master’s comments on the feasibility and implications of joining all claims in one action allow for the practical consequences as regards delay and expense. Accordingly, it does not seem to me that she was right to regard Mr Stuart’s position in seeking to enforce the undertaking by itself as other than reasonable.

As for the judge’s comments, unlike him I cannot discern anything in paragraphs 49 to 51 of the Master’s judgment which suggests that she was only considering evidence as to liability, with a view to a split trial. No doubt on an application for permission to amend in late 2000 several different courses would have been open to the court. It seems to me that any of them other than the dismissal of the application would have led almost inevitably to the loss of the trial date, and thus to additional delay on the undertaking claim, which had already been substantially delayed by Mr Linde’s denial, on which Mr Linde was not believed at the trial, of having given the undertaking at all.

As for the Master’s comments on Mr Stuart’s knowledge of the circumstances relevant to the Inducement Claim and the Misrepresentation Claim, it is fair to say that Mr Stuart did know of facts on which the Inducement Claim could be based, once he had read and considered Mr Linde’s witness statement served on 20 October 2000. He therefore knew these facts before the trial of the 2000 Action. He also knew some of the facts relevant to the Misrepresentation Claim, but it is not shown that he knew all of them, and the evidence is that as regards some of them he did not. There was no material before the court from which it could be said that he ought to have realised the falsity of these statements before the trial in January 2001.

In these circumstances I do not understand how it could be said that Mr Stuart ought to have brought the Misrepresentation Claim – at least insofar as it relied on the statements which he did not know to be false until 2002 – as part of the 2000 Action. What view one may take of the respective significance of the falsity of the different statements is another matter, but it does not seem to me fair to criticise Mr Stuart for not advancing the Misrepresentation Claim as part of the 2000 Action even though he knew, at the time of those proceedings, that some of the statements he says he relied on were false, given that he did not discover the falsity of others until after the trial.

On the question whether he should have applied to amend his Particulars of Claim in the 2000 Action, the Master relied, among other things, on his late reformulation of the Undertaking Claim as a claim in contract. She did not refer in terms to his abandonment, in December 2000, of the separate claim (to the same effect) based on the 8 June 1999 document. I cannot see that to have put the undertaking claim forward in the alternative on the basis of a contract is remotely comparable to the amendment which would have been necessary in order to add the Inducement Claim. The alternative contractual formulation did not bring in any matters of relevant evidence that were not already before the court, and exactly the same remedy was sought as before. That is apparent both from the inherent nature of the claim and from the fact that it was possible and appropriate for the judge to allow it to be raised without amendment of the statement of case.

By contrast, amendment of the statement of case to include the Inducement Claim would have transformed the whole proceedings, by introducing all sorts of issues (above all causation and loss) which were wholly irrelevant to the Undertaking Claim, and thereby expanding substantially the scope of the necessary evidence. The application for permission to amend could hardly have been brought on earlier than the case management conference or pre-trial review which was held on 20 December 2000. On the basis that the Claimant would have put forward a fully pleaded Amended Particulars of Claim, for which permission to amend could have been given, it would then have been necessary, if permission was granted, for the Defendant to amend the Defence, and for the future case management to be reconsidered in the light of the amended statements of case. It seems to me inconceivable that the existing trial date in January 2001 could have been held. In that way Mr Linde’s reference in his witness statement to the derogatory remarks made by him to Mr Vardinoyannis, intended to provide the basis for an attack on Mr Stuart’s credibility, would in addition have delayed the trial of the Undertaking Claim substantially. In my judgment the Master’s reliance on this factor, and the Judge’s endorsement of it, was incorrect.

I can now turn to the points of more general application: relevance of prospects of success, delay, and lack of reasonable diligence, and the Claimant’s failure to warn the Defendant that he was considering another claim.

Prospects of success. Given Lord Bingham’s emphasis on the need for the court to avoid adopting “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”, it is necessary to proceed with care in relation to a contention that some aspect of a particular case must be disregarded as irrelevant in principle. However, it seems to me that it would at most only be in an extreme case (either way) that the merits, in the sense of prospects of success, of the second proceedings can be relevant to deciding whether bringing it separately is an abuse of process. If the case can be shown to be cast-iron, so that judgment could be obtained for the claimant under Part 24, this might perhaps outweigh factors suggesting that the case ought to have been brought as part of the earlier proceedings. If, on the other hand, the case is hopeless, then it may be capable of being struck out for that reason in any event. But if (as here) the prospects of success are uncertain, but the case is not suitable for summary judgment for either party under Part 24, then it seems to me that it is inappropriate to attempt to weigh the prospects of success in the balance in deciding whether it is an abuse of the process to bring the claim in later proceedings, rather than as part of the earlier proceedings. In my judgment, when Lord Bingham spoke of a “broad, merits based approach”, the merits he had in mind were not the substantive merits, or otherwise, of the actual claim, but those relevant to the question whether the claimant could or should have brought his claim as part of the earlier proceedings. A defendant may feel harassed by having brought against him what appears to be a weak claim, but that factor should not count in this context. Whether the claim appears to be weak or strong, it is the fact of it being brought as a second claim, where the issue could have been raised as part of or together with the first claim, that may constitute the abuse.

Delay. For similar reasons, I consider that delay of itself is not relevant to whether the second claim is an abuse of process. Delay may be met with a defence under the Limitation Act, or an equitable defence such as laches. Absent any such factor, the mere fact that the claimant has brought his second claim late, but in time, is not relevant to the question whether bringing the new claim in a second set of proceedings is an abuse of process. Of course, things may have happened during the period of delay which are relevant, but nothing of that kind is relied on in the present case.

Failure to use reasonable diligence. As for the relevance of a claimant’s failure to use what the court might consider to be reasonable diligence in finding out facts relevant to whether he has a possible claim, it may be that this could possibly be relevant to the enquiry described by Lord Bingham, depending on the circumstances. On the other hand, it does not seem to me that there can be a general principle that a potential claimant is under a duty to exercise reasonable diligence, not yet having brought proceedings asserting a particular claim, to find out the facts relevant to whether he has or may have such a claim. Moreover, I do not see how it can be relevant at all that the claimant may have failed to use due diligence in attending to his own interests at the time of the transaction or the events giving rise to the claims asserted. Unless, on the merits, that is a complete and inevitable defence to the claim, it seems to me to be entirely irrelevant to the enquiry which is necessary under Johnson v Gore Wood. Nothing in Sir James Wigram’s observations in Henderson v Henderson supports that. That, however, is the context of the Master’s comments on lack of reasonable diligence in paragraphs 70 and 72. If relevant at all, an enquiry as to any suggested lack of diligence on the part of the claimant would have to involve considering the circumstances of the particular claimant, including what knowledge he did have of the facts at any relevant stage, in order to decide whether he knew enough to put him on enquiry so as to try to find out more. In this context, as generally, it is also relevant that the onus is always on the defendant to show that the claimant’s conduct is an abuse of process.

Failure to warn the Defendant. That leaves one point to be considered, as expressed by the Master in sub-paragraph 80(c) under the heading the Inducement Claim and 80(e) under the heading the Misrepresentation Claim: what is the relevance of the fact that the Claimant knew of a possible claim against the Defendant which related to the subject matter of the first action, thought about asserting it, but said nothing about it to the Defendant before the trial of the first action?

In Johnson v Gore Wood the Defendant knew that Mr Johnson was contemplating bringing his own proceedings at the time when the first proceedings, brought by Mr Johnson’s wholly-owned company, were compromised. Mr Johnson was a party to the compromise agreement, and the terms of that agreement affected expressly the separate claim by Mr Johnson in various ways. Those facts were undoubtedly relevant to the decision on the facts that it was not an abuse of the process for Mr Johnson to bring separate proceedings, even though they were for an identical cause of action, and involved virtually the same evidence: see Lord Bingham, [2002] 2 AC at 33H to 34G. Logically, therefore, it must be potentially relevant that a Claimant knows about another claim, is contemplating asserting it against the same Defendant, but says nothing about it. That is borne out further by a passage in Lord Millett’s speech in the same case, [2002] 2 AC at 61:

“Given that Mr Johnson was entitled to defer the bringing of his own proceedings until after the company’s claims had been resolved, it would have been unconscionable for him to have stood by without disclosing his intentions and knowingly allowed the firm to settle the company’s action in the belief that it was dealing finally with all liability arising from its alleged negligence in the exercise of the option. To bring his own claim in those circumstances would, in my opinion, amount to an abuse of the process of the court.”

Lord Millett was alone in making that comment, but its force, in the context of that case, is evident.

In Aldi Stores Ltd v WSP Group plc Longmore LJ mentions as relevant (at paragraph 39) the fact that Aldi made their position clear to the parties whom they later sued in the second proceedings (see also paragraphs 2(xii) and (xv) in the summary of facts). Thomas LJ also alludes to the Defendants’ awareness of the position at paragraphs 29 and 30.

Here, by contrast with Johnson v Gore Wood, and even more so with Aldi Stores v WSP Group plc, the parties to both proceedings are the same (disregarding Mr Vardinoyannis, who is important, but not for the purposes of this application). But the separate claims are very different. The claim on the undertaking is by its nature intended to be a relatively summary and easy procedure, and should be so because the issues are so limited: was the undertaking alleged given, and if so was it given by the person in question as a solicitor? No question of consideration arises, nor of causation, foreseeability or proving loss. Admittedly in the present case there was the unusual difficulty on the first point that it was not in writing, and there was an acute dispute of evidence on the factual question. But it was a relatively confined enquiry, as compared with that which would be necessary on either of the other claim.

Neither the Inducement Claim, of which Mr Stuart was aware by the time of the 2000 Action trial, nor the Misrepresentation Claim, as to which he knew some but not all of the relevant facts, is at all straightforward. The evidence as to the original statements would overlap with that which was involved on the Undertaking Claim, but that would be just the starting point. There would in addition be important, substantial and no doubt controversial evidence on causation, and on damages. Moreover, it seems to me also highly relevant that the first knowledge that Mr Stuart had of the facts relevant to the Inducement Claim came from a witness statement of Mr Linde filed less than 3 months before the trial of the 2000 Action. No doubt it did make Mr Stuart and his advisers aware of the possible Inducement Claim, but it seems to me altogether a different proposition to say that it was incumbent on Mr Stuart, having become aware of these facts in these circumstances, to risk delaying the trial of the Undertaking Claim by drawing attention to the possibility that he might assert the Inducement Claim in separate proceedings.

The cases on this aspect of abuse of process include many reminders that a party is not lightly to be shut out from bringing before the court a genuine cause of action. That point is now underwritten by article 6 of the European Convention on Human Rights, but I do not think that this article changes English domestic law at all. It is consistent with the article to allow the court to strike out a claim which is an abuse of the process, but at common law it must be clearly shown to be an abuse before it can be struck out. The court must consider critically any suggestion that a particular cause of action should not be allowed to be asserted because of the bringing of other proceedings based on a different claim. The typical example of abuse is where the claimant is really trying to relitigate a claim or contention already unsuccessfully advanced. A good example of that is Manson v Vooght [1999] BPIR 376. The principle is not, of course, limited to cases where the earlier proceedings were unsuccessful. But the present case is not an example of relitigating the subject-matter of a previous claim, despite the overlap between the evidence relevant to the respective claims.

In Barrow v Bankside Agency Ltd [1996] 1 WLR 257 (where the later proceedings were held not to be an abuse) the abuse was identified as being that “the defendant should not be oppressed by successive suits when one would do”. So it is a question of assessing whether, comparing the respective claims, and considering the circumstances including the conduct of the relevant parties, it is “manifestly unfair” (see Hunter, per Lord Diplock [1982] AC 529 at 536) to the defendant that the later proceedings should be brought against him, after the earlier proceedings had been brought and disposed of.

Mr Cooper submitted that, if either of the later claims had been added to the 2000 Action, at best there would have been a split trial, of liability and damages, and that the fact that there would have been a second hearing in those circumstances meant that it could not be an abuse to bring a second claim which would itself result in a second hearing. I do not accept that. If there was an abuse in the present case, it lay in the fact that Mr Linde went through the first trial supposing that all that was at issue was his liability on the undertaking, whereas in fact Mr Stuart was already contemplating bringing other proceedings against him on the Inducement Claim, based in part on the same facts, and was hoping to discover additional material relevant to whether he could or should start those additional proceedings.

I do not consider that it was incumbent on Mr Stuart to seek to add the Inducement Claim to the 2000 Action, because the facts came to his attention so late before the trial of the 2000 Action, because to do so would (if successful) have delayed the trial of the 2000 Action, and because of the disparity between the different claims, the Undertaking Claim being essentially summary and certainly relatively simple, and also relatively (at least by comparison with the other claims) speedy, the other claims being much more complex in terms of issues and evidence, and therefore likely to take much more time to come to trial, and at trial as well.

That being so, should Mr Stuart have put Mr Linde on notice that he was considering bringing the Inducement Claim, so that Mr Linde would be aware, in the course of the trial of the 2000 Action, that more might depend on how his evidence was received than a claim for payment of $350,000? At most, having received and considered Mr Linde’s witness statement, and having concluded that it might provide the basis for the Inducement Claim, Mr Stuart’s solicitors ought to have written to those acting for Mr Linde to inform them of the possible claim, stating that Mr Stuart reserved his rights in relation to this claim, while not intending to complicate or delay the 2000 Action by applying for permission to amend.

It seems to me relevant to this that the information which made Mr Stuart aware of the possible Inducement Claim came from Mr Linde himself, and that it came at a very late stage, being deployed by Mr Linde in order to attack Mr Stuart’s credibility. It may not have occurred to Mr Linde that he was providing to Mr Stuart material for a possible different claim against himself, but he was as well able to draw conclusions as to its possible relevance as Mr Stuart was. There was no disparity of knowledge, other than as to the actual impact of the statements on Mr Stuart. To write a warning letter would have been a prudent and a proper course to take. In the light of what Lord Millett said in Johnson v Gore Wood, cited at paragraph [61] above, of the decision in Aldi, and of what the Master of the Rolls says at paragraph [101] of his judgment in this case, to give notice of a possible claim might make all the difference if it is said, later, that a second claim is an abuse of the process. The question is whether, such a letter not having been written in the present case, it is an abuse of the process for Mr Stuart to bring the 2005 Action as he did.

In my judgment to hold that this fact makes the bringing of the 2005 Action an abuse of process would be a substantial and unjustified extension of the law in this respect. It is not right, in my view, to say, as a general proposition of law, that where the claimant in existing proceedings comes to know, in the course of those proceedings, from information provided by the defendant, of an additional cause of action against the defendant, which is quite different from that asserted in his existing claim and one which it would not be reasonable, in the circumstances, to expect him to seek to combine with that existing claim, he must inform the defendant of the fact that he is contemplating bringing such a claim in future before he brings his existing proceedings to trial. Different facts might lead to a different conclusion. For example, it might be different if the information came from another source, so that the parties’ knowledge of the facts was not the same. It might well be different if the claims were essentially similar (as in Johnson v Gore Wood) or closely related (as in Aldi Stores) so that they could readily have been combined. It might perhaps be different if the information had come to the claimant’s knowledge at a much earlier stage than occurred here. But on the facts of this case I cannot, with respect, agree with the Master or the Judge that Mr Stuart’s failure to tell the defendant, before the trial of the 2000 Action, that he was contemplating asserting the Inducement Claim made the bringing of the 2005 Action an abuse of the process. The same goes, all the more strongly, for the Misrepresentation Claim, as to which Mr Stuart did not know all the relevant facts at the time of the trial of the 2000 Action.

I have already given my reasons for considering that neither delay, nor the prospects of success on the Inducement Claim or the Misrepresentation Claim were properly to be brought into account in deciding whether the 2005 Action is an abuse, and similarly as to the irrelevance of any lack of reasonable diligence on the part of Mr Stuart at the time of the original dealings between the parties, or in seeking to find out whether he had a worthwhile claim sooner. I have also explained why I consider that the Master came to the wrong conclusion on the other points depending on the facts of the particular case, and therefore took into account matters which she should not have done.

For the several reasons which I have given, I conclude that it was not an abuse of the process of the court for Mr Stuart to bring the 2005 Action against Mr Linde, having first brought the 2000 Action against him on the undertaking, and despite his having been aware, before the trial of the 2000 Action, of the facts relevant to the Inducement Claim and some of the facts relevant to the Misrepresentation Claim, and not having warned Mr Linde of the possibility of later proceedings for a claim of that kind.

I would therefore allow this appeal.

I agree that this appeal should be allowed, essentially for the reasons given by Lord Justice Lloyd. But I would respectfully adopt two important points made by Sir Anthony Clarke MR in the course of his qualified assenting judgment.

First, while the Aldi approach gives the judgment below a substantial margin of respect so long as the judge has not committed any of the classic errors of reasoning, it does not mean that the appellate role is confined to correcting such errors. As the words “reluctant” and “generally” imply, the appellate court also has a broader role which entitles it to intervene if, notwithstanding the absence of either a mistaken inclusion or exclusion of factors or a perverse conclusion, the decision at which the judge has arrived is plainly wrong. To reserve more to this court would be to render the exercise of judgment at first or second instance merely provisional; but to reserve less would be to abdicate part of the appellate function. For these reasons I respectfully adopt what is said at the end of §81 of the Master of the Rolls’ judgment.

Secondly, as Aldi again makes clear and as the Master of the Rolls stresses, a claimant who keeps a second claim against the same defendant up his sleeve while prosecuting the first is at high risk of being held to have abused the court’s process. Moreover, putting his cards on the table does not simply mean warning the defendant that another action is or may be in the pipeline. It means making it possible for the court to manage the issues so as to be fair to both sides.

I gratefully adopt Lloyd LJ’s account of the facts and history of the two sets of proceedings. I write a judgment of my own because my approach is somewhat different from his in some respects.

I agree that the question in a case of this kind is whether the second set of proceedings is an abuse of process and that that question must be decided by the application of the principles set out in Johnson v Gore Wood [2002] 2 AC 1. Thus, as Lord Bingham observed, the crucial question is whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it an issue which could have been raised before. The burden is on the party asserting the abuse to establish it. Moreover, as Lord Bingham put it, there will rarely be a finding of abuse unless the later proceedings involve what the court regards as the unjust harassment of a party. There may be such harassment if, as Wigram V-C put it in the passage from Henderson v Henderson quoted by Lloyd LJ at [25], a party fails to rely upon a point which properly belonged to the first litigation and which, with reasonable diligence, he might reasonably have brought forward at the time. However, the question must be resolved by a consideration of all the circumstances of the case.

This approach seems to me to be consistent with the principles identified by Thomas LJ, with whom Wall and Longmore LJJ agreed, in the recent case of Aldi Stores Limited v WSP Group Plc, [2007] EWCA Civ 1260, where (at [6]) the court adopted my own summary of the principles in Dexter v Vlieland-Boddy [2003] EWCA Civ 14.

I agree with Lloyd LJ that the decision on the question whether a second action is an abuse of process is not the exercise of a discretion. However, although the court in Aldi said that there is only one answer to the question, that statement must be read subject to the important statement of principle set out by Thomas LJ at [16] as follows:

“In considering the approach to be taken by this court to the decision of the judge, it was rightly accepted by Aspinwall that the decision to be made is not the exercise of a discretion; WSP were wrong in contending otherwise. It was a decision involving the assessment of a large number of factors to which there can, in such a case, only be one correct answer to whether there is or is not an abuse of process. Nonetheless an appellate court will be reluctant to interfere with the decision of the judge where the decision rests upon balancing such a number of factors; see the discussion in Assicurazioni Generali v Arab Insurance Group [2002] EWCA Civ 1642, [2003]1 WLR 577 and the cases cited in that decision and Mersey Care NHS Trust v Ackroyd [2007] EWCA Civ 101 at paragraph 35. The types of case where a judge has to balance factors are very varied and the judgments of the courts as to the tests to be applied are expressed in different terms. However, it is sufficient for the purposes of this appeal to state that an appellate court will be reluctant to interfere with the decision of the judge in the judgment he reaches on abuse of process by the balance of the factors; it will generally only interfere where the judge has taken into account immaterial factors, omitted to take account of material factors, erred in principle or come to a conclusion that was impermissible or not open to him. In this case, I consider that the judge, despite the weight that must be accorded his view given his great experience in this type of litigation and the conspicuous success with which he has managed the TCC, reached a decision which was impermissible by taking into account factors which he should not have done and omitting factors which he should have taken into account.”

I agree with that analysis, subject only to this. If the judge reached a conclusion that was plainly wrong, it would be the duty of the appeal court to interfere. I feel sure that in referring to the possibility of a judge might come to a conclusion that was impermissible or not open to him Thomas LJ intended to include the case where the judge is plainly wrong. In any event, I am firmly of the view that it should be included.

Although I agree that the exercise upon which a judge of first instance embarks in a case of this kind is not, strictly speaking, the exercise of a discretion, the role of an appellate court is very similar in the two classes of case. This can be seen from Thomas LJ’s conclusion that the appellant must persuade the court that the judge was wrong and will only succeed in doing so if he shows that the judge “has taken into account immaterial factors, omitted to take account of material factors, erred in principle or come to a conclusion that was impermissible or not open to him” or is plainly wrong. The line between the approach of an appellate court reviewing the exercise of a discretion and its role reviewing a decision of this kind is a very narrow. This is because the decision whether a second action is an abuse of court involves the court balancing a series of different factors before reaching its conclusion.

In this case, as Lloyd LJ observes at [43], Judge Seymour QC (‘the judge’) said that he was not concerned with what conclusion he would have come to himself if the matter had come before him at first instance but with whether Master Fontaine (‘the master’) was wrong. He was of course correct to say that the question was whether the master was wrong because that is the question identified by CPR 52.11(3)(a). I am not persuaded that he was wrong to say that he was not concerned with the decision which he would have reached if he had been the judge of first instance (here the master) because it seems to me that, if the approach to the appellate process identified by Thomas LJ in the passage above is correct, there may well be cases in which the appellate court might itself have reached a different conclusion but cannot properly say that the judge or master was wrong because he or she took into account immaterial factors, omitted to take account of material factors, erred in principle, came to a conclusion that was impermissible or not open to him or her or, if that is different, was plainly wrong.

In these circumstances I do not think that it is fair to the judge to hold that he treated the exercise as an exercise of discretion and thereby erred in principle in that respect. However, this conclusion is not critical to the outcome of this appeal because I agree with Lloyd LJ that both the master and the judge erred in principle in significant respects.

The question for us is the same as it was before the judge, namely whether the master was wrong to reach the conclusion which she did. I agree with Lloyd LJ that she was wrong in two respects, namely as to the relevance of delay and as to the relevance of the strength or weakness of the claimant’s case in this second action. I agree with him that both factors are irrelevant for the reasons Lloyd LJ gives. As to delay, if the action is not otherwise an abuse and is not statute barred (or perhaps infected by laches) I can see no reason why the claimant should not be permitted to advance it. Equally, as to the merits, if the action cannot be struck out as bound to fail and if it is not a case in which it would be appropriate for the court to give summary judgment for the defendant under CPR Part 24, I cannot see why it should not be permitted to proceed unless it is otherwise an abuse of process. Since the judge upheld the approach of the master on these issues, it follows that he too fell into error.

In these circumstances, applying the principles identified by Thomas LJ in Aldi, it is as I see it for us to consider afresh whether this action is an abuse of process. While I have ultimately reached the conclusion that, in all the circumstances, this action is not an abuse, I have found this issue more troubling than perhaps Lloyd LJ has done. In particular it seems to me that there are some aspects of the claimant’s approach to the first action which were abusive, or at the very least would now be held to be abusive in the light of the guidance in the Aldi case.

While it is true that a claim on a solicitor’s undertaking ordinarily raises a simple question, if only because the undertaking is usually in writing, this was an unusual case because the alleged undertaking was oral and there was a dispute as to whether it had been given. The resolution of that issue depended upon the credibility of the claimant on the one hand and Mr Linde on the other. That in turn depended upon what view the trial judge took of the oral evidence of the two protagonists with regard to two telephone conversations on 9 and 10 June 1999. While it is true, as Lloyd LJ says at [6], that the issues were clear and simple, their resolution depended upon the credibility of the claimant on the one hand and Mr Linde on the other. As Lloyd LJ explains at [3] and [14-16], Mr Linde introduced into his witness statement made in October 2000 evidence of matters which he said that the claimant had told him before the meeting on 21 June. He said that he had informed Mr Vardinoyannis of them after the meeting and, as I understand it, before Mr Vardinoyannis withdrew from the agreement.

As Lloyd LJ says at [15] and [16], the relevance of this aspect of the story to the first trial was not the effect of the statements on Mr Vardinoyannis but to enable Mr Linde to show that the claimant was a fantasist, whose evidence should not be believed. Once he had read the witness statement, the claimant knew enough to realise that he might have a claim for inducement of breach of contract against Mr Linde. Yet he decided not to advance the claim. It is plain that this was a deliberate decision made on legal advice. This can be seen from the document quoted by Lloyd LJ at [34]:

“The Claimant’s legal advisers … advised not to obscure the issue of breach of undertaking with other emerging claims, in a situation where the Defendants were not disclosing any information, and that such other issues would be better dealt with within subsequent separate proceedings when more information could be gleaned from the Defendants, as transpired as a result of cross-examination.”

The deliberate decision taken was thus not to raise “other emerging claims” but, in effect, to prepare for “subsequent separate proceedings” after more information had been gleaned from Mr Linde as a result of cross-examination.

As Lloyd LJ puts it at [16], Mr Linde’s story was no doubt explored a good deal more in cross-examination by the claimant in order to show that Mr Linde should not be believed. Thus it was decided by the claimant, on legal advice, to use the material to cross-examine Mr Linde as to his credit for two purposes, first to improve his case at the trial in 2001 and secondly to prepare his case for future proceedings. In short, it was a purely tactical decision. In these circumstances, there appears to me to be a strong case for concluding that the issues arising out of these conversations naturally belonged to one set of proceedings, that it was undesirable for a trial judge to have to reach conclusions on credibility in one action when either the very same or similar issues of credibility were likely to become relevant in a future action, which would be likely to be tried by a different trial judge, with the consequent risk of inconsistent conclusions.

This conclusion is I think highlighted by the approach of this court in Aldi. The facts of that case were very different from this. I refer the reader to the report of that case for the detailed facts. However, to put the position shortly, in the second action the defendants were, as Longmore LJ put it at [41], facing a claim by the appellant (‘Aldi’) for the first time. Moreover, Aldi had made its intention to bring future claims clear in letters dated 13 June and 4 September 2003, to which it received no reply. None of the parties had, however, made the position clear to the court. This court held that a second action was not an abuse of process and that the judge at first instance had erred in principle in holding that it was.

After reaching that conclusion, Thomas LJ said this about the future in such cases:

“29.

I also wish to add a word as to the approach that should be adopted if a similar problem arises in the future. In circumstances such as those that arose in this case, the proper course is to raise the issue with the court. Aldi did write to the court … but not in terms that made it clear what the court was being invited to do. WSP and Aspinwall knew of Aldi’s position and were before the court on numerous occasions; they did nothing to raise it.

30.

Parties are sometimes faced with the issue of wishing to pursue other proceedings whilst reserving a right in existing proceedings. Often, no problem arises; in this case, Aldi, WSP and Aspinwall each in truth knew at one time or another between August 2003 and the settlement of the original action in January 2004 that there was a potential problem, but it was never raised with the court. I have already expressed the view that it should have been. The court would, at the very least, have been able to express its view as to the proper use of its resources and on the efficient and economical conduct of the litigation. It may have seen if a way could have been found to determine the issues applicable to Aldi in a manner proportionate to the size of Aldi’s claim and without the very large expenditure that would have been necessary if Aldi had to participate in the trial of the actions. It may be that the court would have said that it was for Aldi to elect whether it wished to pursue its claim in the proceedings, but if it did not, that would be the end of the matter. It might have enquired whether the action against excess underwriters could have been expedited. Whatever might have happened in this case is a matter of speculation.

31.

However, for the future, if a similar issue arises in complex commercial multi-party litigation, it must be referred to the court seized of the proceedings. It is plainly not only in the interest of the parties, but also in the public interest and in the interest of the efficient use of court resources that this is done. There can be no excuse for failure to do so in the future.”

At [36] Wall LJ expressed his agreement with those paragraphs and statements and at [39], after referring to the failure of the parties to bring the matter before the court for their own good commercial reasons, Longmore LJ added:

“This failure is, in my judgment, more attributable to WSP and Aspinwall than to Aldi who had made their intentions clear in their letters of 13^th June and 4^th September 2003. The judge said (paragraph 82) that no response was appropriate. In one sense that may be right since no one is ever bound to reply to another person’s intimation of intention. But it seems to me to be inappropriate to make no response at that stage but then at a later stage, when intentions turn into action, to assert that that action is an abuse of process.”

I wonder whether the court would have reached the same conclusion if Aldi had not made its position clear to the other parties in its letters. However that may be, I entirely agree with the views expressed in Aldi which I have just set out.

In the instant case, although the claimant knew that he had a potential claim for inducement to breach the contract after he received Mr Linde’s witness statement in October 2000, he did not make that clear either to Mr Linde or to the court. In my opinion he should have done so and it is at least arguable that his deliberate failure not to do so for partisan tactical reasons renders this second action an abuse of the process of the court.

I appreciate that the information upon which an inducement claim would be based came from Mr Linde, who introduced it into his witness statement for his own purposes, that this part of the evidence did not go directly to the issues in the first action but only to credibility, that the statement was received less than three months before the trial, that the issues in a trial on inducement were different from those on the alleged solicitor’s undertaking, especially extensive issues on causation and quantum and that the trial date might be lost if the inducement claim were raised. I recognise that these are relevant factors in deciding whether this second action is an abuse.

However, I would attach significantly less importance to those factors than Lloyd LJ has done. I do not think that the fact that the relevant information came from Mr Linde’s witness statement and not from some other source is of any real significance. It is true that the evidence went to only credibility in the first action but, as I said earlier, the same credibility of the same witnesses is relevant in both actions and should, in principle, have been resolved by one judge in one trial. The matter should have been raised by the claimant with Mr Linde and, had it been, by both parties with the court.

I accept that that might have affected the trial date for the first action but it is by no means certain. The issues which centred on what statements were made were directly relevant in both actions, either as to credibility or substance, and were in comparatively short compass. I also accept that there would be likely to have been separate trials of quantum and perhaps materiality and causation in the inducement claim. Separate trials in commercial (and indeed other) litigation are now common. This would have been a classic case for a split trial or trials. As I see it, a trial could have taken place on the Undertaking Claim and on a key aspect of liability in the Inducement Claim at the same time and either at about the time that the trial in fact took place or shortly thereafter. A trial on key aspects of liability on the Inducement Claim would be likely to have had a significant effect on whether or not it was sensible to litigate further issues.

For my part, I do not think that parties should keep future claims secret merely because a second claim might involve other issues. The proper course is for parties to put their cards on the table so that no one is taken by surprise and the appropriate course in case management terms can be considered by the judge. In particular parties should not keep quiet in the hope of improving their position in respect of a claim arising out of similar facts or evidence in the future. Nor should they do so simply because a second claim may involve other complex issues. On the contrary they should come clean so that the court can decide whether one or more trials is required and when. The time for such a decision to be taken is before there is a trial of any of the issues. In this way the underlying approach of the CPR, namely that of co-operation between the parties, robust case management and disposing of cases, including particular issues, justly can be forwarded and not frustrated.

While these considerations have been highlighted in Aldi, they have been relevant considerations at least since the CPR came into force in 1999. It is for these reasons that in my view the claimant should have notified the defendants and the court of a proposed inducement claim in the autumn of 2000. I entirely understand the point made by Lloyd LJ at [48] that if the result had been that the Undertaking Claim had to await trial of liability on the inducement issues that would (or at any rate might) have been inconsistent with the essential point of an undertaking. That, however, would have been a matter for the case management judge, who would have given such directions as were appropriate. I respectfully disagree with Lloyd LJ, in so far as he says at [50] that the master was wrong to regard the claimant’s position in seeking to enforce the undertaking by itself as other than reasonable. For the reasons I have given, the reasonable course was to raise the matter with the defendants and the judge rather than to make a tactical decision to keep his powder dry until he saw how the cross-examination of Mr Linde went.

Notwithstanding the views I have expressed, this was undoubtedly an unusual case and the question is not simply whether the claimant acted unreasonably in not raising the Inducement Claim in 2000, or indeed whether his failure to do so was an abuse of the process. The question is whether the second action is an abuse of the process, which involves a consideration of all the circumstances of the case, judged as at the time the second action was brought.

By that time, the claimant may not have learned much more about the Inducement Claim but he had learned important new facts which form the basis of the Misrepresentation Claim. As Lloyd LJ has explained, in that claim the claimant relies upon facts which he did not know to be false until 2002. In these circumstances, this is not a simple case in which the new action is based on facts which the claimant knew and ought to have deployed in the first action. There is a further dimension.

In these circumstances, although if the inducement claim stood alone I might well have taken a different view, as it is I am not persuaded that the second action, in this unusual case, is an abuse of the process of the court. Since the burden is on the defendants to persuade the court that it is an abuse, it follows that, albeit with some hesitation, I agree with Lloyd LJ that the appeal should be allowed and the action permitted to proceed.

I only add by way of postscript that litigants and their advisers should heed the points made by this court in Aldi and underlined here that the approach of the CPR is to require cards to be put on the table in cases of this kind or run the risk of a second action being held to be an abuse of the process.