Kotonou v National Westminster Bank Plc

This is an appeal by the claimant, Mr Angeli Luki Kotonou (“Mr Kotonou”) against a decision of Mr Justice Morgan (“Morgan J”) contained in a judgment dated 5 July 2010 (neutral citation reference [2010] EWHC 1659 (Ch)) (“the Morgan judgment”). By the Morgan judgment, the judge:

dismissed Mr Kotonou’s appeal from the decision of Master Teverson (“the master”) dated 21 August 2008 whereby, on an application by the defendant, National Westminster Bank plc (“the Bank”), he struck out Mr Kotonou's particulars of claim in these proceedings;

refused Mr Kotonou permission to amend his particulars of claim; and

granted the Bank summary judgment and dismissed Mr Kotonou’s claim.

Following an oral hearing, on 20 May 2014 Tomlinson and Vos LJJ granted Mr Kotonou permission to appeal in relation to two out of three revised grounds of appeal.

In summary, the issue for determination on this appeal is whether, in dismissing the appeal, Morgan J erred in law and/or failed to take account of material matters in concluding that the original particulars of claim in these proceedings (which advanced certain allegations of fact which were allegedly inconsistent with findings made by Mr Jules Sher QC, sitting as a deputy judge of the High Court (“the deputy judge”), in a reserved judgment dated 22 May 2006 in earlier proceedings (“the Sher judgment”)) were an abuse of process in the circumstances of this case. The issue for determination on the Bank’s respondent’s notice is whether, additionally, Mr Kotonou's claim was an abuse of process on the basis of the rule in Henderson v Henderson (1843) 3 Hare 100.

On the appeal, Mr David Sears QC appeared as counsel for Mr Kotonou and Mr Alan Gourgey QC appeared as leading counsel for the Bank.

The proceedings between the Bank and Mr Kotonou have a long and complex history, as set out in the Morgan judgment. For present purposes I summarise them as follows.

In around February 2000, Olympic Resources & Services PLC (“ORS”) wished to borrow £500,000 from National Westminster Bank Plc (“the Bank”). The Bank was only prepared to lend £500,000 to ORS if repayment of that sum by ORS was adequately secured.

At the time, Mr Kotonou was a director of, and the majority shareholder in, ORS. ORS, acting through Mr Kotonou, entered into an arrangement with Mr and Mrs Theodossiades. As a result of that arrangement, Mr and Mrs Theodossiades procured their bank, Barclays Bank plc (“Barclays”), to open a standby letter of credit (“the letter of credit”) in the maximum sum of £500,000, in favour of the Bank. The letter of credit provided the security required by the Bank and it duly made a loan of £500,000 to ORS.

The letter of credit provided that it could be called upon by the Bank up to 30 December 2000 and, if not called upon by that date, it would lapse. The period covered by the letter of credit was extended on a number of occasions and, finally, extended to 16 March 2001. The Bank did not call on the letter of credit before it lapsed.

On 16 March 2001, Mr and Mrs Theodossiades asked Barclays to extend the letter of credit to 31 March 2001. Barclays declined to do so on the grounds that it had not been given enough notice prior to the lapse of the letter of credit on 16 March 2001. Accordingly, on that date, the letter of credit lapsed, leaving ORS's liabilities to the Bank unsecured in an amount of £500,000. Mr and Mrs Theodossiades later declined to procure Barclays to renew the letter of credit in favour of the Bank.

The Bank recovered some £75,000 in respect of the debt of £500,000 due to it from ORS. On 12 July 2001, Mr Kotonou gave a personal guarantee (“the guarantee”) to the Bank in relation to the outstanding indebtedness of £425,000. ORS did not pay any part of the debt of £425,000 and went into insolvent liquidation on 2 February 2005.

On 5 March 2004, ORS executed a deed of assignment (“the ORS deed of assignment”) in favour of Mr Kotonou. For present purposes it is relevant to note that:

In the current proceedings the master held that it was arguable that the ORS deed of assignment could be construed as an assignment by ORS to Mr Kotonou of certain claims, which included the claims which are now put forward by Mr Kotonou in the present proceedings where he asserts that he is the assignee of causes of action previously vested in ORS. The Bank did not appeal this part of the master’s decision.

One provision in the ORS deed of assignment provided that the relevant assignment was only to take effect in the event that ORS should be “unable to continue as a going concern by entering into a voluntary liquidation or be the subject of a successful winding up petition”. Initially there was an issue before the judge in the present proceedings as to whether an assignment in those terms infringed the anti-deprivation rule: see Perpetual Trustee Co Ltd v BNY Corporate Trustee Services Ltd [2010] 1 BCLC 747. However the judge records in the judgment that it was later accepted by Mr Gourgey, on behalf of the Bank, that an issue of that kind would require some further investigation into the facts and that was not appropriate on the application for summary judgment.

On 2 April 2004, the Bank issued proceedings against Mr Kotonou under the guarantee. Mr Kotonou defended those proceedings on various grounds and the proceedings were tried before the deputy judge in March 2006.

Some two weeks before trial, Mr Kotonou instructed his then counsel, Mr Wormington, who prepared a lengthy draft amended defence which added to Mr Kotonou’s own defence without deleting anything of substance. The draft amended pleading included a lengthy counterclaim which set out detailed allegations in relation to the letter of credit. These were broadly equivalent, though not identical, to the claims which Mr Kotonou now seeks to bring in the present proceedings.

The deputy judge heard the contested amendment application on 8 and 9 March 2006, the first and second days of the trial. Mr Gourgey QC (counsel for the Bank) did not oppose Mr Kotonou pleading a lengthy factual history in relation to the operation, and the subsequent lapse, of the letter of credit. He did, however, take issue with Mr Kotonou pleading an assignment of ORS’ causes of action to Mr Kotonou. In the circumstances, Mr Wormington withdrew the application to the extent that the draft amended defence pleaded an assignment or anything founded upon the assignment. Had Mr Kotonou pleaded an assignment of ORS’s causes of action to himself there would have been a dispute of fact in relation to the assignment which would have necessitated an adjournment of the trial. Mr Kotonou wished to avoid responsibility for the costs of such adjournment and so that aspect of the amended pleading was withdrawn. In advancing his application for permission to amend, Mr Wormington submitted that the facts alleged in relation to the history of the letter of credit were not just a backdrop to the misrepresentation defence under the guarantee but rather:

The Bank also opposed the amendment of the defence to plead a duty owed by the Bank to ORS in respect of the letter of credit. The deputy judge held (in a judgment dated 9 March 2006) that, without the pleading of the assignment, the pleaded duty went nowhere. In my view he was wrong on that point. He also held that the existence of such a duty was irrelevant although it was possible that the perception of the Bank’s employees as to the existence of such a duty might be relevant. He concluded that he should not give permission to Mr Kotonou to plead the existence of a duty or the breach of that duty or loss flowing from such breach of duty. Mr Kotonou did not appeal against the judge’s refusal to permit an amendment which pleaded a breach of a duty owed by the Bank to ORS in respect of the maintenance of the letter of credit. He could have done so.

Mr Kotonou then served an amended defence and counterclaim, which pleaded, amongst other things, that the administration of the extensions to the letter of credit had been dealt with by the Bank through communication with Mr and Mrs Theodossiades and Barclays; that Mr Frampton of the Bank had been informed by Mr Kotonou of the commercial terms which had been agreed between ORS and Mr and Mrs Theodossiades; and that the Bank was at fault in not requiring the extension or calling on the letter of credit. The amended defence and counterclaim did not expressly allege that the Bank owed a duty in contract or in tort to ORS or to Mr Kotonou; nor did it expressly allege that there was a breach of duty causing loss and damage, to either ORS or Mr Kotonou or that ORS’s causes of action had been assigned to Mr Kotonou.

For the purposes of this appeal it is necessary to describe Mr Kotonou’s position in relation to the proposed amendments and what the deputy judge decided in relation to them in some detail. The position is best summarised by Morgan J in his judgment as follows:

At the end of the twelve day trial, at which Mr Kotonou, Mr Theodossiades and Mr Frampton gave evidence, Mr Kotonou's counsel specifically asked the deputy judge to make findings in relation to Mr Kotonou's case regarding the issues relating to the letter of credit and to form a view on whether there was fault by the Bank, in the sense of a breach of duty owed by the Bank to ORS: see e.g. page 31 of the transcript of the hearing for 23 March 2006 and paragraphs 5 and 19 of the Sher judgment, as to which see further below. Mr Gourgey, for the Bank, submitted to the deputy judge that the conflicts of evidence in relation to the letter of credit did not need to be resolved in order to decide the issue as to the validity of the guarantee.

The deputy judge gave a lengthy reserved judgment on 22 May 2006 in which he found in favour of Mr Kotonou that the guarantee should be set aside on the basis that it had been induced by one of the four misrepresentations alleged against the Bank. Like the judge, I consider that it is convenient to set out in full what the deputy judge said in paragraphs 5 to 20, 23 to 29 of the judgment:

What had occurred as a result of the “recent submissions” by Mr Worthington referred to in paragraph 20 of the Sher judgment, was described by Morgan J in his judgment as follows:

On 19 January 2007 Mr Kotonou purportedly entered into a written deed of assignment assigning to Mrs Kotonou all the benefits and/or claims conferred on him by the assignment from ORS to himself.

On 15 March 2007, Mr Kotonou issued the present proceedings against the Bank. He served particulars of claim on 20 July 2007. In these new proceedings, Mr Kotonou advances two claims, claiming both as the assignee of causes of action previously vested in ORS and in his personal capacity; in the first capacity, he contends that the Bank held the letter of credit upon trust for ORS and had broken its contractual, common law and fiduciary duties of care and fidelity in relation to the letter of credit, primarily by failing to obtain extensions to it; in the second capacity he contends that the Bank had assumed a common law duty of care to him personally and in like terms to the contractual duty of care owed by the Bank to ORS.

On 14 August 2007 the Bank pleaded a detailed defence relying on the findings in the Sher judgment. On 8 October 2007, the Bank issued an application notice seeking summary judgment pursuant to CPR Part 24 dismissing Mr Kotonou’s claim in its entirety and, in the alternative, seeking an order that Mr Kotonou’s claim, or at least part of it, should be struck out pursuant to CPR Part 3.4(2)(a) and/or (b).

That application was heard by the master who delivered a reserved judgment on 11 July 2008. He held that there was no issue estoppel operating against Mr Kotonou but that the particulars of claim amounted to a collateral attack on the findings of the deputy judge relating to the letter of credit; (see paragraph 37 of the master’s judgment as set out in paragraph 63 of the Morgan judgment). On 21 August 2008, the master made his order in the application. He ordered, pursuant to CPR Part 3.4(2)(b), that the particulars of claim dated 20 July 2007, served in support of the claim form, be struck out. He gave Mr Kotonou permission to appeal against that striking out order. The master adjourned the Bank’s application for summary judgment to the judge who was to hear Mr Kotonou’s appeal against the striking out order. The master reserved the costs of the application to the judge hearing Mr Kotonou’s appeal. The master also directed that Mr Kotonou was to serve draft amended particulars of claim so that any application for leave to amend was to be made to the judge hearing his appeal against the striking out order.

Mr Kotonou appealed the striking out order to the judge and the Bank served a respondent’s notice seeking to uphold the striking out order on an additional ground. Mr Kotonou’s appeal and the Bank’s application for summary judgment came before the judge at the same time. By the time the matter came before Morgan J, Mr Kotonou had pleaded an amended particulars of claim, repeating all the previous allegations which had been struck out and adding more.

The matter was argued before Morgan J over three days in March 2010 and he reserved his judgment. In his judgment delivered on 5 July 2010, the judge explained that he had been provided with a substantial amount of material and, in particular, a great deal of information as to the conduct of the previous proceedings. He set out the history in detail and dealt with the law at paragraphs 76-110. He referred to a number of authorities but relied primarily on the well-known cases of Hunter v Chief Constable [1982] AC 529 at page 536 per Lord Diplock and Johnson v Gore Wood [2002] 2 AC 1 at pages 30-31 per Lord Bingham and pages 58-60 per Lord Millett. He defined the issue that arose as whether Mr Kotonou’s new factual allegations as to the various ways in which the Bank was involved in the letter of credit were an abuse of process on the ground that it would be manifestly unfair to the Bank to make those allegations or on the ground that re-litigation of those matters of fact would bring the administration of justice into disrepute. He then decided that:

the allegations of fact put forward by Mr Kotonou in the original particulars of claim and in the proposed amended particulars of claim in the present proceedings were flatly contrary to the findings of the deputy judge made after a full trial when the relevant matters of fact were thoroughly investigated: see paragraph 96 of the Morgan judgment;

that the deputy judge had not said that the findings of fact were provisional, only that his finding as to the alleged duty of care was provisional;

that Mr Kotonou probably could not have appealed the findings of fact, but such an appeal anyway would have been hopeless because of the nature of the findings and in any event Mr Kotonou had not tried to appeal;

it would be manifestly unfair to the Bank to allow Mr Kotonou to relitigate those issues of fact and, furthermore, such relitigation would bring the administration of justice into disrepute: see paragraph 108 of the Morgan judgment;

on the basis of the allegations as put forward in the draft amended particulars of claim Mr Kotonou did not have an arguable case for saying that the Bank owed a duty to ORS or to Mr Kotonou, to make a call on the letter of credit before it lapsed: see paragraphs 137 and 141 of the Morgan judgment;

in view of the above conclusions in relation to the appeal on abuse of process, it was not necessary to consider the Bank’s respondent’s notice in relation to the alleged Henderson v Henderson abuse: see paragraphs 11 and 142 of the Morgan judgment.

Accordingly, the judge:

dismissed the appeal against the decision of the master striking out the particulars of claim on the grounds of abuse of process;

refused permission to amend the particulars of claim in accordance with the existing draft provided by Mr Kotonou on the basis that they also were based upon and repeated the allegations which the master had held amounted to an abuse of process; and

granted summary judgment in favour of the Bank on the basis of the factual findings made by the deputy judge (as opposed to on the basis of allegations in the proposed amended particulars of claim which were said to amount to an abuse);

as a consequence of the orders made in paragraphs i) to iii) above dismissed Mr Kotonou’s claim in its entirety; and

made consequential orders as to costs against Mr Kotonou.

On 6 September 2010 Mr Kotonou issued his appellants’ notice against Morgan J’s decision which was later amended on 1 June 2011. The then Master of the Rolls, Lord Neuberger, refused Mr Kotonou permission to appeal on the papers on 24 June 2011. Lord Neuberger defined the issue potentially raised by the appeal as being:

Lord Neuberger referred to Auld LJ's judgment in Bradford & Bingley Building Society v. Seddon [1999] 1 WLR 1482 at pages 1490 to 1493, suggesting that there was an argument that a further special factor was required beyond the position that the facts had been raised, subject to evidence and fully argued and rejected in the earlier proceedings, because A could not have appealed the adverse decision in the previous proceedings since they were not essential to that decision. Lord Neuberger then said that in this case there was anyway a powerful case for suggesting that there was an additional factor, since Mr Kotonou's counsel had positively asked the judge in the first proceedings to make the factual findings in question. Accordingly, he refused permission to appeal, saying that the appeal could only succeed if it were the law (which it was not), that it was always open to a litigant to reargue a point of fact determined against him unless it was essential to the result.

The appellant was adjudicated bankrupt on 8 September 2011 and discharged on 15 June 2013. Mr Kotonou's former trustee in bankruptcy has contested the validity of the deed of assignment to Mrs Kotonou in January 2007 but has never indicated a wish to take over Mr Kotonou's appeal. The period of Mr Kotonou's bankruptcy accounted for much of the delay between the date on which the Master of the Rolls refused permission to appeal on the papers and the renewed oral hearing which took place on 20 May 2014 when Tomlinson and Vos LJJ granted permission to appeal.

In granting permission to appeal in relation to the grounds of appeal (which I set out below), Vos LJ said:

Mr Kotonou's grounds of appeal in relation to which he was given permission to appeal were:

in relation to paragraph (1) of Morgan J’s order (dismissing the appeal against the master’s order that the particulars of claim should be struck out as an abuse of process):

that Morgan J was wrong and erred in law in finding that an abuse of process may arise on the basis that a party seeks to base a claim on facts inconsistent with factual conclusions reached in earlier proceedings where those conclusions did not resolve an essential part of any cause of action or defence; Mr Sears defined this ground as “ the scope of the abuse of process doctrine error”: and

that Morgan J erred in failing to consider the question of reciprocity in the doctrine of abuse of process (and related doctrines); specifically, Morgan J should have considered whether, in a hypothetical case where the background factual matters in question had been instead resolved in Mr Kotonou’s favour, it would have been an abuse of process for the Bank to seek to plead contradictory facts in defending a claim of the sort now brought by Mr Kotonou; since such a claim by the Bank would not have amounted to an abuse of process, Mr Kotonou has effectively been deprived of any opportunity properly to litigate the relevant issues; Mr Sears defined this ground as “the mutuality error”;

in relation to paragraph (2) of Morgan J's order (refusing Mr Kotonou’s application for permission to amend the particulars of claim) that:

Morgan J was wrong and erred in law in dismissing Mr Kotonou’s application for permission to amend the particulars of claim;

Morgan J’s reasoning on this issue was based solely on his wrong conclusion that the particulars of claim (either in their original or proposed amended form) would give rise to an abuse; without that underlying reason there was no basis not to allow the amendments, which provided further particulars as to Mr Kotonou’s case;

in relation to paragraph (3) of Morgan J's order (granting the Bank summary judgment) that:

The judge was wrong and erred in law in granting summary judgment on the Bank’s application;

the judge’s wrong reasoning was based on the conclusions reached by the deputy judge (on the basis that it would be wrong to consider the application on the basis of the facts as pleaded by Mr Kotonou, which the judge had held should be struck out). The judge ought to have considered the Bank’s application for summary judgment on the basis of the facts as pleaded by Mr Kotonou.

in relation to paragraph (4) of Morgan J's order (making consequential orders dismissing the claim and making orders for costs against Mr Kotonou) that such orders were wrong because they were based on his wrong conclusions as set out above.

By a respondent’s notice dated 5 August 2014, the Bank submitted that the Morgan judgment should be upheld on additional grounds, namely:

that Morgan J would have been entitled to strike out the particulars of claim on the further ground that they amounted to an abuse of process under the rule in Henderson v Henderson, on the basis that it was open to Mr Kotonou from the outset to raise allegations of a breach of duty by the Bank in allowing the letter of credit to lapse; if such a claim was to be advanced at all, it should have been advanced in the first action given that the factual matters central to such claim where the subject of consideration and decision in that action;

that, in granting summary judgment on the grounds set out in his judgment, Morgan J ought to have granted it on the additional ground that Mr Kotonou had no real prospect of success in establishing the factual premise for his claim given that (a) the facts had been thoroughly investigated in the March 2006 trial with adverse findings for Mr Kotonou, and (b) the new evidence relied upon by Mr Kotonou did not introduce any new material of significance.

At the outset of his written submissions on behalf of the Bank, Mr Gourgey made clear that it was the Bank’s contention that Mr Kotonou had no standing to bring the appeal; that, it was said, was because the Bank did not accept the validity of either the ORS assignment to Mr Kotonou on 5 March 2004; or the assignment by Mr Kotonou of all such benefits/claims (and any rights vested in Mr Kotonou) to his wife on 19 January 2007. The Bank contended that, if only the first assignment in time was valid, those rights remained vested in Mr Kotonou's trustee in bankruptcy. If neither assignment were valid, the rights (other than in respect of claims advanced by Mr Kotonou for breach of duties allegedly owed to him personally) remained vested in ORS. If, on the other hand, both assignments were valid, the Bank contended that the right to bring a claim, and the right to prosecute this appeal, vested in Mrs Kotonou, but that on any basis no rights to bring these claims could vest in Mr Kotonou. Accordingly, the Bank’s contentions on the appeal proceeded without prejudice to that objection. It was, however, common ground that the issue of the validity of the assignments was not an issue which affected the outcome of the appeal as the Bank had correctly recognised that such issues were not suitable for determination on its strike out and summary judgment applications.

However, as a result of the stance taken by the Bank in relation to the validity of the assignments, by an application notice filed on 7 January 2015, Mr Kotonou sought an order that his wife should be added as a party to the appeal. He supported this application by the signed written consent of Mrs Kotonou, as required by CPR 19.4(4). This application was directed by Aikens LJ to be determined at the hearing of the appeal. As it is important that, in the circumstances of this case, Mrs Kotonou should, in any event, be bound by the result of this appeal, in my judgment she should indeed be joined as a party to the appeal, without prejudice as to the Bank’s contention as to the validity of the assignments.

Accordingly in my judgment its appropriate to approach this appeal on the basis that, for the purposes of the strike out application and the summary judgment application, it must be assumed that, as a result of the assignments, Mr and/or Mrs Kotonou are entitled to contend (i) that ORS’ rights (if any) against the Bank for breach of duty owed to it to maintain the letter of credit, and (ii) Mr Kotonou's rights (if any) against the Bank for breach of duty owed to Mr Kotonou personally to maintain the letter of credit, are vested in either or both of Mr Kotonou and Mrs Kotonou personally

Mr Sears’s written and oral submissions in relation to Mr Kotonou’s appeal may be summarised as follows:

It was well established that only determinations which were necessary to the decision and fundamental to it would found an issue estoppel. Other determinations, however positive, cannot: Thoday v Thoday [1964] P 181.The question in this appeal was whether the Bank could nevertheless receive the same protection in respect of non-essential determinations by appealing to the doctrine of abuse of process.

The master held that the findings made by the deputy judge regarding the letter of credit were not a necessary ingredient in any cause of action before the deputy judge and that there could therefore be no issue estoppel. This conclusion was not challenged before Morgan J.

The abuse of process doctrine operated in two different contexts. The first was what had been referred to in these proceedings as Henderson v Henderson abuse of process, which prevents a party from raising an issue in litigation which could and should have been brought forward as part of an earlier dispute. The second situation arose where there was an inconsistency between what was said in earlier proceedings and what was being alleged in later proceedings such that the court concluded it would be unjust to permit the later proceedings to continue.

Both the master and the judge considered that Mr Kotonou’s case fell within this second category (“collateral attack abuse of process”) and would constitute a collateral attack on the findings of the deputy judge such that it would be an abuse of process to allow his claim to proceed.

The authorities showed that both Henderson v Henderson abuse of process and collateral attack abuse of process were (contrary to the approach taken by the judge) concerned solely with causes of action or issues (in the sense of findings necessary to the disposal of a cause of action). Accordingly, collateral attack abuse of process had little if any role to play in a case like this where the parties were the same as in the earlier proceedings. Rather, collateral attack abuse of process invariably arose where a cause of action or issue that was resolved in an earlier set of proceedings became a point of dispute in later proceedings between litigants one or more of whom was not a party to those earlier proceedings.

Furthermore, the collateral attack abuse of process was almost always concerned with a collateral attack on the final result of an earlier decision, yet in this case the result of the action before the deputy judge was that Mr Kotonou successfully defended a claim brought by the Bank on the basis of a guarantee given after the events in the present case took place. Mr Kotonou had no interest in attacking that decision and did not seek to do so.

The judge wrongly concluded that the category of collateral attack abuse of process was in fact much wider and could apply in circumstances where what was alleged in a set of proceedings was inconsistent with a conclusion reached on a non-essential background point in earlier proceedings. The judge wrongly concluded that it was “clear” on the state of the authorities that this was open to the court on the basis of its discretion under the doctrine of abuse of process; see paragraph 82 of the Morgan judgment.

Far from being clear, the authorities did not support this conclusion. The two cases relied upon in particular by Morgan J on this point were Bragg v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1982] 2 Lloyd’s Rep 132 and Bradford and Bingley BS v Seddon [1999] 1 WLR 1482. Neither case supported the judge’s proposition that even findings on non-essential issues might ground an abuse of process in the event that a party seeks to allege inconsistent facts in subsequent proceedings. The judge summarised the effect of the decision in Bragg far too broadly. It was clear from the judgment of Auld LJ (with whom Ward and Nourse LJJ agreed) in Bragg at pages 1492H-1493E that, in circumstances not giving rise to cause of action or issue estoppel, the maintenance of the second claim which could have been part of an earlier one or which conflicted with an earlier one should not per se be regarded as an abuse of process. Some additional element was required such as a collateral attack on previous decision or dishonesty. There were no such special factors in the present case.

If the judge’s decision were allowed to stand, it would result in a radical widening of the law in this area. It would, in effect, eliminate two existing legal principles. The first was that an issue estoppel may only be founded on issues essential to the disposal of a cause of action. If abuse of process is so wide as to prevent the relitigation of non-essential issues, that principle would have no effect since the doctrine of issue estoppel would be capable of being wholly subsumed by the broad discretion of abuse of process. The second principle was the rule that judgments in other proceedings are inadmissible as evidence of the facts established in them: Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 at paragraphs 15 to 27.

Moreover there was a lack of mutuality in the judge’s approach. It would clearly not have been an abuse of process for the Bank to have sought to challenge any findings made by the deputy judge on these matters. It would have been unfair to hold the Bank to conclusions on issues that it clearly was not obliged to contest and which it sensibly decided not to prosecute thoroughly. Furthermore, had the deputy judge resolved these points in Mr Kotonou’s favour, Mr Kotonou would have been precluded from relying on those findings in these proceedings on the basis of the rule set out above that judgments in other proceedings were inadmissible as evidence of the facts established in them.

The upshot of these points was that Mr Kotonou had nothing to gain at all from these findings being considered by the deputy judge and the conclusions reached by the deputy judge could never have been findings that would have assisted Mr Kotonou. But the result of the Morgan judgment was that Mr Kotonou was prevented from alleging facts that were inconsistent with those findings in circumstances where findings on those matters could never have assisted him. That was manifestly unfair.

Moreover there had been no detailed evidential investigation at the trial in front of the deputy judge into the issues as to whether the Bank owed ORS or Mr Kotonou a duty of care. Further evidence could have been relied upon.

Accordingly, Morgan J was wrong and erred in law in concluding that the present action would amount to an attempt to relitigate a question which had already been decided (see paragraphs 105 – 108 of the judgment). He was wrong and erred in law in failing to recognise that the relevant issues had not been decided in the relevant sense of having been finally resolved as between the parties.

These principles were analogous to the principle of mutuality which is basic to the doctrine of res judicata. In Petrie v Nuttall [1856] 11 Exch 569, Baron Alderson said (at 575), “It is essential to a [res judicata] estoppel that it be mutual, so that the same parties or privies may both be bound and take advantage of it”.

The same principle ought to apply in respect of any question of abuse of process. It would be unjust and inequitable for parties to be faced with an issue which may be resolved against one party but not in his favour by virtue of the asymmetrical application of the doctrine of abuse of process.

Morgan J was therefore wrong and erred in law in failing to conclude that the abuse of process doctrine contained a requirement of mutuality, such that, if it would not be an abuse of process for one party to plead facts inconsistent with factual conclusions made in earlier proceedings, then it could not (alternatively might only rarely be) an abuse of process for another party to plead facts inconsistent with those same factual conclusions.

The court also required Mr Sears, in his opening submissions, to deal with the point taken in the Bank’s respondent’s notice (namely that Morgan J would have been entitled to strike out the particulars of claim on the further ground that they amounted to an abuse of process based on the rule Henderson v Henderson). His submissions may be summarised as follows:

It was accepted that the abuse in question need not involve the reopening of a matter already decided in proceedings between the same parties. It was accepted that it might also cover:

However, it was wrong to hold that simply because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in subsequent proceedings necessarily abusive. Instead, a broad merits-based judgment should be adopted, taking account of all the public and private interests involved and all the facts of the case.

In his written submissions Mr Sears submitted that the particular circumstances which fell to be taken into account in this case were as follows:

The original action was a claim made by the Bank under the guarantee. Mr Kotonou successfully defended that action on the basis that there had been a misrepresentation. An investigation into the circumstances in which the letter of credit was allowed to lapse was only necessary in order to set the context for the alleged misrepresentation. In his oral submissions Mr Sears additionally submitted that there had not been a detailed factual investigation of the circumstances in which the alleged duties of care owed to ORS and Mr Kotonou arose.

Mr Kotonou was not represented initially in the guarantee proceedings. He served a defence which relied in large part on the loss of the letter of credit, for which he alleged the Bank was responsible and which he alleged amounted to a failure to carry out obligations owed to him, ORS and other related companies.

Mr Kotonou needed to raise funds to secure representation. He wanted to raise funds against the security of his home but the Bank contested his right to do so. Those proceedings were only resolved very shortly before the trial of the guarantee action with the result that Mr Wormington was only first instructed to act about a month before that trial commenced.

Mr Wormington had prepared a lengthy draft amended defence which included a counterclaim which set out similar allegations to the allegations which Mr Kotonou now makes in the current proceedings. The Bank resisted the application to amend, not only to plead the assignment of ORS’ causes of action to Mr Kotonou, but also the amendment to plead a duty owed by the Bank to ORS in respect of the letter of credit.

Mr Kotonou’s application to amend to plead the assignment was withdrawn when it became plain that it would result in an adjournment of the trial for which he did not have the means to pay. As the deputy judge held, without the pleading in relation to the assignment, the pleaded allegation in relation to the breach of duty went nowhere. The deputy judge held that the existence of such a duty was irrelevant although it was possible that the perception of the Bank’s employees as to the existence of such a duty might be relevant.

In those circumstances, it would not be not be just to deny Mr Kotonou the right to bring a genuine subject of litigation before the court because:

This was not a case where the Bank was being ‘twice vexed in the same matter’ by Mr Kotonou. The original trial was the Bank’s claim under the guarantee which the Mr Kotonou defended on the ground of misrepresentation. The issue as to what happened in relation to the letter of credit was material only to the setting of the context. The Bank had not yet had to deal with the allegation that it was in breach of duty to ORS and/or Mr Kotonou.

The fact that the application to amend was not made earlier (and in sufficient time to avoid the risk of any adjournment) was because the Bank contested his ability to raise the necessary funds to obtain legal representation against the security of his home. His lack of funds and therefore his inability to raise and pursue the issue of the alleged breach of duty was caused in large part by the party against whom it is sought to claim. As Lord Bingham recognised, in Johnson v Gorewood at [page 31E] that was a relevant factor which might excuse a failure to raise the issue in the earlier proceedings.

However, and importantly, in his oral submissions before this court, Mr Sears correctly accepted that Mr Kotonou's funding difficulties had not in fact been caused by the Bank. That was clearly a correct concession in the light of the detailed analysis of the relevant events set out in paragraphs 5-9 of Mr Gourgey’s supplementary skeleton argument dated 27 January 2015, which clearly demonstrated that, even if it had been the case that Mr Kotonou had funding difficulties in relation to the litigation (which was wholly unsupported by any witness statement from Mr Kotonou), such difficulties were not caused by the Bank or its initial objection to the release of its security.

This Court did not consider it necessary to call upon Mr Gourgey, leading counsel appearing on behalf of the Bank, to reply to Mr Sears’ submissions. The court had the benefit of Mr Gourgey’s written submissions both in relation to the appeal and in relation to the respondent’s notice. Since much of Mr Gourgey’s arguments are reflected in this judgment it is not necessary to rehearse them here.

Contrary to the approach taken by Tomlinson and Vos LJJ, when granting oral permission to appeal, I do not consider that it is necessary or useful for the court in this case to decide the issue of principle which Vos LJ articulated, namely:

It was common ground before Morgan J that a second set of proceedings may be held to be an abuse of process even where the claims put forward are not barred by either a cause of action estoppel, or an issue estoppel as between the two parties to the action: see the Morgan judgment at [76]. It was likewise common ground that the court has an inherent power to control its own process to prevent misuse of its procedure in a way which would be manifestly unfair to a party or would otherwise bring the administration of justice into disrepute among right-thinking people: see Hunter v Chief Constable of the West Midlands Police [1982] AC 529 per Lord Diplock at p.536. Hunter was of course a very different case, involving a collateral attack in subsequent civil proceedings upon the prior finding of a criminal court that there had been no assaults upon the claimant caused by the police (defendants to the later action) before, or to obtain, the claimant’s confession.

But as Lord Diplock emphasised in Hunter at p.536:

There are many similar statements to like effect in subsequent cases; see e.g. per Kerr LJ and Sir David Cairns in Bragg at 137 and 138 respectively; per Sir Thomas Bingham MR in Barrow v Bankside Agency Ltd [1996] 1 WLR 257, at 263B, where he stated that the doctrine should not be “circumscribed by unnecessarily restrictive rules”; per Auld LJ in Bradford & Bingley Building Society v Seddon at p.1492-1493; and per Lord Bingham in Johnson v Gore Wood & Co [2002] 2 AC 1 at 31. As Buxton LJ said in Laing v Taylor Walton (a firm) [2007] EWCA Civ 1146 at paragraphs 11 and 12, attempts to draw narrower rules applicable to particular categories of case are not likely to be helpful:

Thus, in my view, what is required in the present case is “an intense focus on the facts of this case”, to determine whether in broad terms Mr Kotonou’s new proceedings can be characterised as falling under one or other, or both, of the broad rubrics of unfairness or the bringing of the administration of justice into disrepute. That approach involves not merely concentrating on the effect of the findings of fact made by the deputy judge (as the master and Morgan J did), but also addressing the much wider question as to whether this is a case which, in all the circumstances, engages the Henderson v Henderson principle. That holistic approach is to be preferred to the artificial exercise of attempting to decide whether, in circumstances not giving rise to cause of action or issue estoppel, there is, or is not a rule, that some additional element or “special factor” is required, what such “special factor” might be and whether it is present in the particular circumstances of the present case.

Moreover, Lord Bingham in Johnson v Gore Wood & Co, having just quoted the passage in Auld LJ’s judgment in Bradford & Bingley Building Society v Seddon at 149 (upon which this court, in giving permission to appeal, and Mr Sears in his argument relied), expressly disavowed an approach that required there to be the identification of an additional element (such as a collateral attack on a previous decision or some dishonesty). Lord Bingham, also, advocated a broad, merits-based approach which took account of the public and private interests involved and of all the facts of the case, and which focused attention on the crucial question whether, in all the circumstances, a party was misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. He said at 39H-31F:

Helpful guidance is also provided by Lord Millett in the same case where he said at 59C-G:

Thus in my judgment it is unrealistic to approach this case constrained by the narrow strait jacket of a mere consideration as to whether or not there was an abuse of process in circumstances where a claimant seeks to bring a second claim based on facts inconsistent with earlier proceedings, where the conclusions of fact in the earlier proceedings did not resolve an essential part of any cause of action or defence. The alleged abuse of process in the instant case is not rooted solely in the fact that Mr Kotonou expressly asked the Court to make findings of fact. It is said by the Bank to arise on a much broader basis. Accordingly, this is a case where it is necessary for the court to consider not only that one aspect of the matter, but also to consider all relevant circumstances that might justify the court staying the proceedings under one or both of the principles articulated by Lord Diplock in Hunter, including that referred to in Henderson v Henderson.

The flexibility of the approach to the court’s determination as to whether proceedings should be stayed on the ground of abuse of process is emphasised by the recent decision of the Supreme Court in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd) [2014] A.C. 160, where Lord Sumption (with whom, in relation to the relevant paragraphs all other members of the court agreed) held at paragraphs 23 to 24 that the rule in Henderson v Henderson had not been taken out of the domain of res judicata altogether and re-categorised as a pure abuse of process. At paragraph 25 he stated that res judicata and abuse of process were distinct although overlapping legal principles with the common underlying purpose of limiting abusive and duplicative litigation. But his comprehensive analysis of the principles of res judicata and the relationship between those principles and the rule in Henderson v Henderson is well worth setting out in full, because of its application to the present case. He said:

Another helpful description of the rationale for the rule in Henderson v Henderson is that of Potter LJ in Divine-Bortey v Brent LBC [1998] I.C.R. 886 at 898 :

In my judgment the features of the present case which are critical for a determination as to whether the present proceedings amount to an abuse of process are the following:

It was clearly open to Mr Kotonou to have taken the following points by way of defence to its claim against him under the guarantee:

that the Bank owed a duty of care to the principal debtor, ORS, to ensure that the letter of credit did not lapse;

that the Bank was in breach of that duty of care owed to ORS by allowing the letter of credit to lapse, and accordingly was subject to a counterclaim at the suit of ORS for damages, the quantum of which exceeded any sum which ORS might have been obliged to pay the Bank under the loan facility and which it was entitled to set-off against any liability under the loan facility;

further, or alternatively (although this would have been extremely speculative), that the breach by the Bank of its duty of care discharged ORS from all liability under the loan facility, irrespective of the quantum of the set off;

that, accordingly, irrespective of whether Mr Kotonou had taken a valid assignment from ORS of ORS’ counterclaim for damages against the Bank, Mr Kotonou was entitled to rely on ORS’ alleged counterclaim and set off so as to demonstrate that in fact ORS owed nothing under the loan facility and that he had a complete defence to his liability under the guarantee;

that the Bank owed a personal duty to Mr Kotonou to ensure that the letter of credit did not lapse;

that the Bank was in breach of that duty and accordingly

Mr Kotonou was discharged from all liability under the guarantee; and/or

he had a counterclaim for damages which exceeded his liability under the guarantee and which he could maintain as a set off to any such liability.

It is to be emphasised that, as Mr Wormington had submitted to the deputy judge (as summarised by Morgan J in paragraph 30 his judgment quoted above), even without any proof of an assignment of ORS’ claims against the Bank to Mr Kotonou, it was nonetheless open to Mr Kotonou to rely by way of defence to the Bank’s claim under the guarantee on the fact that ORS did not owe any sums due under the loan facility because of the set-off of its claim for damages. It was also clearly open to Mr Kotonou to contend that the Bank owed him a duty of care personally to ensure that the letter of credit was maintained, and that because it had failed to do so, he was discharged from all liability under the guarantee. Neither of such defences involved relying on the assignment.

The Bank objected to any amendment of the defence and counterclaim to allege that it owed a duty to ORS in this respect. Mr Wormington, on behalf of Mr Kotonou, on 8 March 2006 apparently stated that he wished to withdraw the application to amend the defence and counterclaim “to plead assignment or anything founded upon assignment”, because of the concern that it would necessitate an adjournment of the trial and because Mr Kotonou wished to avoid such an adjournment. The decision not to plead the assignment, so as to avoid an adjournment of the trial, was that of Mr Kotonou. I comment that this concession would not have precluded Mr Kotonou from arguing that, even in the absence of any such assignment, he was entitled to maintain a defence to the claim under the guarantee on the basis of the Bank’s alleged breach of duty to ORS and on the basis of the Bank’s alleged breach of duty owed to Mr Kotonou personally. Nor, in the light of the course which the trial took - namely a detailed investigation of the responsibility of the Bank in relation to the maintenance and calling of the letter of credit - would it have precluded Mr Wormington from reapplying at any stage during the trial for permission to amend to plead such breaches of duty without reliance on any assignment. He could also have appealed on a limited basis the refusal to plead breach of duty irrespective of the assignment.

As a result of the concessions made by Mr Wormington on 8 March 2006, and Mr Kotonou’s attempt to reserve his right to pursue claims under the assignment, Mr Kotonou was clearly aware of the risk that principles relating to res judicata or the rule in Henderson v Henderson might preclude Mr Kotonou from raising at a future date claims based on assignment of ORS’s alleged breach of duty claims; see paragraph 32 of the Morgan judgment cited above.

On 9 March 2006, the deputy judge gave his judgment refusing the amendment. He held (wrongly in my view) that, without a pleading of an assignment to Mr Kotonou of ORS’ claim for damages against the Bank, the allegations which Mr Kotonou proposed to make in the amended defence and counterclaim of a contractual or tortious duty of care owed by the Bank to ORS, went nowhere. However Mr Kotonou did not appeal against that decision.

Following the deputy judge’s ruling, Mr Kotonou served an amended defence and counterclaim dated 10 March 2006 and signed by Mr Wormington. It pleaded no express defence based upon the Bank’s alleged breach of duty to ORS (irrespective of whether or not there had been an assignment) or the notional set-off of any claim by ORS for damages thereby discharging ORS’s debt. Nor did it contain any express defence relying upon the Bank’s alleged breach of duty owed to Mr Kotonou personally or a counterclaim for damages for breach of such duty. I agree with Morgan J (see paragraph 34 the Morgan judgment) that Mr Wormington could clearly have applied or reapplied for permission to run such defences and a counterclaim by Mr Kotonou in his personal capacity, notwithstanding Mr Wormington’s concession that Mr Kotonou was not seeking to rely upon any claim as an assignee of the alleged ORS’ counterclaim for damages. In my view, if such defences and counterclaims were available to Mr Kotonou, then they should have been put forward at that date. They were, if they were to be run at all, points of defence to the claim under the guarantee.

Mr Kotonou’s amended defence and counterclaim as served on 10 March 2006 was extremely verbose and is difficult to follow. However, despite the deputy judge’s refusal to allow the proposed amendments to plead a breach of duty on the part of the Bank to ORS, the pleading did contain specific allegations to the effect that: (i) the Bank had an obligation both to ORS and Mr Kotonou to call on and to secure the extension to the letter of credit; (ii) the Bank knew of the agreement between ORS and Mr and Mrs Theodossiades; (iii) the Bank wrongly failed to call upon the letter of credit and/or to secure its extension; (iv) both ORS and Mr Kotonou suffered loss and damage as a result of the Bank’s failure to do so in excess of the amounts advance pursuant to the letter of credit; see, for example, the preamble, paragraphs 19(G)(1)(iv), 19(G)(2)(iv), and19(4) (H), (I) and (J) of the amended defence and counterclaim.

During the course of the trial, Mr Kotonou made a number of allegations relating to what he alleged were the Bank’s duties and breaches of duty in relation to the letter of credit and its knowledge of the arrangements with the Theodossiades; and he, and a number of his witnesses, gave evidence which he contended supported those allegations.

During his closing submissions at the trial, Mr Wormington asked the deputy judge to make findings in relation to, effectively, the Bank’s knowledge of the agreement between ORS and Mr and Mrs Theodossiades, the Bank’s role in relation to the proposed extension, and whether there was fault in the sense of breach of duty owed by the Bank to ORS in relation to the failure to call and/or to extend the letter of credit.

The deputy judge extensively reviewed the considerable amount of evidence in relation to the letter of credit (much of which he considered irrelevant to the issues which he had to decide) and concluded in his draft judgment circulated to the parties (see for example paragraph 19 of his draft judgment and paragraphs 14-26 of his concluded judgment as handed down):

that, contrary to the evidence of Mr Kotonou, which the deputy judge did not accept, the Bank was not arranging the extensions of the letter of credit with the Theodossiades; these had all been instigated by Mr Kotonou on behalf of ORS; these allegations had been motivated by Mr Kotonou in an attempt to form the basis for a contention that the Bank had indeed assumed a duty to ORS to preserve the letter of credit;

that, contrary to the evidence of Mr Kotonou, the Bank had no knowledge of the agreement with the Theodossiades whereby the latter agreed to convert part of their loan into E-Comsport shares;

that, on the facts of the case, the Bank had assumed no legal duty to ORS not to allow the letter of credit to lapse; there was “nothing on the facts of the case before me to show that the bank assumed such a duty to ORS in relation to [the letter of credit] albeit that there had been an internal mistake on the part of the Bank, contrary to its own interests, in failing to call or secure the extension of the letter of credit; see paragraph 19 of the draft judgment circulated to the parties and paragraph 17 of the final judgment;

that Mr Kotonou had opportunistically tried to turn this factor to his advantage “by exonerating himself for payment under the guarantee” and by exploiting “the Bank's mistake as if it were a breach of duty towards his companies.”

As a result of Mr Wormington’s submissions post circulation of the deputy judge’s judgment in draft (see paragraph 41 - 42 of the Morgan judgment), the deputy judge revised his judgment to explain in paragraph 20 of the judgment as handed down that “a concluded view on whether the Bank owed ORS a duty to preserve the letter of credit is not a necessary finding leading to the final outcome of this judgment” and that accordingly he was prepared “to express my view in this regard as a provisional one based on the limited material put before me.”

There is no doubt that the pleadings in the present action repeat many of the factual allegations raised in the earlier proceedings, in particular in relation to the role played by the Bank in relation to the letter of credit, its knowledge as to the arrangements with the Theodossiades, and its responsibility to ORS and Mr Kotonou for allegedly failing to call upon and extend the letter of credit.

Despite Mr Wormington’s late attempts to row back from his invitation to the deputy judge to decide issues of fact, and indeed of law, in relation to the Bank’s role in relation to the letter of credit, the reality of the position was, as I have already set out above, that the judge engaged, at Mr Wormington’s request and with his participation, in a fully-fledged evidentiary investigation into the Bank’s role in relation to, and responsibility (if any) for, the failure to extend or call upon the letter of credit. That was in circumstances where not only was it clearly open to Mr Kotonou to raise, as a defence to his liability under the guarantee, any alleged breach of duty allegedly owed by the Bank personally to him, but also any alleged breach of duty allegedly owed by the Bank to ORS, in order to contend that the Bank’s liability in damages for such breach, by means of set-off, discharged any liability of ORS as principal debtor under the guarantee. Those defences were available to Mr Kotonou irrespective of any plea based on the assignment of ORS’ claims to Mr Kotonou. Moreover, that evidential enquiry took place against specific allegations contained in Mr Kotonou’s amended defence and counterclaim as to the role played by, and the duties owed by, the Bank in relation to the letter of credit, its knowledge of the arrangements with the Theodossiades and the losses allegedly suffered by ORS and Mr Kotonou personally.

As I have already mentioned, it was common ground between counsel, at all stages in the current proceedings, that there was no issue estoppel in relation to the deputy judge’s factual findings in relation to the Bank’s role in relation to the letter of credit. This was on the basis that these were not essential findings upon which the deputy judge’s conclusion that Mr Kotonou’s guarantee should be set aside on the grounds of misrepresentation was based. Despite that consensus, it seems to me that, in the light of Lord Sumption’s conclusion as set out in paragraph 22 of his judgment in Virgin Atlantic Airways Ltd, that,

But, irrespective of whether there was technically an issue estoppel in the present case (which is not an issue which this court needs to decide), I am satisfied that the Bank has discharged the burden imposed upon it of demonstrating that this is a case which clearly, in the circumstances outlined above above, engages both limbs of the abuse of process principle referred to in Hunter and the rule in Henderson v Henderson. It is a case where not only would it be unfair to the Bank to have to relitigate these factual issues, but also would bring the administration of justice into disrepute if a second court, years after the event, were obliged to examine the same substratum of fact which gave rise to the subject of litigation in the proceedings before the deputy judge: see Potter LJ in Divine-Bortey v Brent LBC supra at 898.

Mr Sears’ submissions did not in any way persuade me to the contrary. I address merely a few of them here.

I reject his submissions that there had been no detailed, or adequate, evidential investigation at the trial in front of the deputy judge into the issues as to whether the Bank owed ORS or Mr Kotonou a duty of care. Not only was Mr Sears unable to identify any such further evidence which could have been relied upon by Mr Kotonou, but it is also clear from the transcript of the proceedings before the deputy judge, and his judgment itself, that the relevant factual matters were investigated in considerable detail and at considerable length during the course of the twelve day trial. As Morgan J held at [96] of the Morgan judgment, the state of the pleadings in the earlier action did not in any real way curtail the extent to which those matters of fact were investigated. The deputy judge would not have ventured to make findings of fact, having been asked to do so, if he had not had sufficient basis upon which to do so. Morgan J held at [96] that nothing which happened in the earlier trial “caused there to be any concern about the way in which the Deputy Judge investigated the matters of fact and made his findings on them”. The deputy judge’s conclusion, after having carefully considered the evidence from both sides, was that many of Mr Kotonou's allegations of fact fell to be rejected, not least because of Mr Kotonou’s lack of credibility as a witness.

Nor am I impressed by the submission that Mr Kotonou was unable to appeal the adverse findings of fact against him on the basis that he had successfully defended the claim under the guarantee. It would have been open to him to have appealed the judge’s interlocutory refusal to give permission to amend the defence and counterclaim to plead a breach of duty owed to ORS, and, as I have repeatedly said, it would have been open to him to have relied on the alleged breach of duty claims as defences to the claim under the guarantee irrespective of any claim under the assignment. Moreover, in the case of the alleged breach of duty owed to him personally, he could have pleaded a counterclaim in respect of any sums that exceeded the amount of the liability.

In this context, I have given particular consideration as to whether the Bank’s opposition to Mr Kotonou’s application to amend the particulars of claim in order to allege that the Bank owed a duty to ORS in relation to the standby letter of credit, and the deputy judge’s refusal to allow such amendment, are factors which should persuade me that it would now be unfair to regard Mr Kotonou’s new proceedings as an abuse of process. Although these points initially troubled me, on analysis I do not think that they provide any sufficient reason for concluding that it would be appropriate for these proceedings to continue. Apart from the fact that Mr Kotonou never appealed the decision, the reality was: (a) that the issues of duty owed to ORS in relation to the letter of credit and breach of duty were effectively (if not expressly) pleaded in the amended defence and counterclaim that was permitted to go forward on the basis that the Bank’s alleged misconduct provided a reason for Mr Kotonou’s non-performance of his guarantee obligations; (b) that such issues were the subject of extensive evidence and submission at trial: (c) that Mr Kotonou never pleaded by way of defence and/or counterclaim to the Bank’s claim (as he could have done and now seeks to do) a personal duty owed by the Bank to himself in relation to the letter of credit; (d) that Mr Kotonou could, despite the judge’s initial refusal to permit the amendment, in the light of the evidence which was canvassed at trial, clearly have renewed his application to amend his defence to plead a duty owed by the Bank to ORS as a defence without any reliance on the assignment; and (e) that Mr Kotonou made the conscious decision not to seek an adjournment so as to be able to rely on the ORS assignment by way of defence and counterclaim. In all those circumstances I do not consider that the Bank’s opposition to Mr Kotonou’s application to amend the particulars of claim or the deputy judge’s refusal to allow such amendment, are factors which should persuade me that it would now be unfair to regard Mr Kotonou’s new proceedings as an abuse of process.

Contrary to Mr Sears’ submission, the fact that Mr Kotonou was a defendant in the original proceedings, whereas the Bank was the defendant in the current proceedings, did not lead to the conclusion that “this was not a case where the Bank was being ‘twice vexed in the same matter’ by Mr Kotonou”. In the second proceedings, the Bank is being put in a position where it is having to defend precisely the same factual allegations in relation to the letter of credit which had been made against it in the earlier proceedings. Moreover, despite the deputy judge’s statement in his revised judgment that his conclusion that there was no legal duty owed by the Bank was only “a provisional view”, for all practical purposes the Bank is indeed facing relitigation of that issue. Again, contrary to Mr Sears’ submissions, it was irrelevant that the original trial was the Bank’s claim under the guarantee. Given the allegations of fault, responsibility and damage pleaded in the amended defence and counterclaim in the earlier proceedings, and the evidential findings which Mr Wormington expressly invited the deputy judge to make, it is a mischaracterisation to describe Mr Kotonou’s defence (as Mr Sears did) as one based “on the ground of misrepresentation” or to describe the issue “as to what happened in relation to the letter of credit was material only to the setting of the context”. Even if this were an accurate description of Mr Kotonou’s defence, the points relating to duties of care, and breach of duty etc. owed by the Bank to ORS and/or Mr Kotonou were points which, in all the circumstances, if they were to be taken at all, should have been taken in the proceedings before the deputy judge by way of defence, irrespective of the need for an adjournment to litigate about the validity of the assignment.

Nor am I persuaded by Mr Sears’ submissions in relation to the alleged “lack of mutuality”. Mutuality may be a necessary component of issue estoppel (Petrie v Nutgall (1856) 11 Ex. 569), but it is not a requirement of the doctrine of abuse of process: see Michael Wilson & Partners Limited v Thomas Ian Sinclair [2012] EWHC 2560 (Comm.) per Teare J at paragraph 65. Mr Kotonou's complaint appears to be that it would not have been an abuse of process for the Bank to have challenged the findings of fact made by the deputy judge if they had been against the Bank’s case and that an alleged principle of mutuality thereby prevents Mr Kotonou's attempt to do the same from being an abuse. I disagree for two reasons. First, the authorities (as considered by Morgan J in [76] ff of the Morgan judgment) do not suggest that there is such a mutuality requirement in the context of abuse of process; the enquiry is a much more general one: namely, whether in the light of all of the circumstances, an attempt to relitigate the deputy judge's findings would be manifestly unfair and/or bring the administration of justice into disrepute. Second, Mr Kotonou's argument, that any such attempt by the Bank would "clearly" not have been an abuse of process, is wrong. If, to take a hypothetical example, the Bank had sought in subsequent proceedings to challenge a finding by the deputy judge that it had known about the arrangements with the Theodossiades in relation to the letter of credit, that clearly would have constituted an abuse of process. An abuse of process can arise in raising a defence to proceedings, as well as bringing a claim: see Johnson v Gore Wood at p.31.

I do not accept that, on the evidence, Mr Kotonou’s inability to obtain legal representation or the fact that the application to amend was not made earlier (and in sufficient time to avoid the risk of any adjournment) was in any way the responsibility of the Bank. Indeed Mr Sears accepted as much in his oral submissions. The actual position was that funds requested by Mr Kotonou were made available to his legal team over 7 months prior to trial and in advance of service of witness statements. Moreover lack of funds to meet the costs to plead the claims based on assignment was not the reason put forward at the time: see the transcript for 8 March 2006 at page 117, and the judgment of Morgan J. at paragraph 30. There was also evidence to demonstrate that Mr Kotonou had additional assets which he had not disclosed. In any event, as I have already said, there was nothing to prevent Mr Kotonou pleading the Bank’s alleged breaches of duty to ORS and himself by way of defences to the claim under the guarantee, irrespective of any reliance upon the assignment or the need for an adjournment to plead the latter claims.

Mr Kotonou knowingly took the risk, as Mr Wormington accepted at the time (see paragraph 32 of the Morgan judgment), that Mr Kotonou would be precluded from bringing any further claims for damages based on the assignment on the basis of res judicata or the rule in Henderson v Henderson. There has been a huge delay in these proceedings not least because of Mr Kotonou’s bankruptcy. There is nothing in relation to his personal position which in any way affects my conclusion that this is indeed an appropriate case in which to exercise the court’s discretion to strike out these proceedings on the grounds that they are an abuse of process.

Accordingly, for the above reasons which are somewhat broader than those given by the master and Morgan J, I would dismiss the appeal against paragraph 1 of Morgan J’s order and maintain an order that the particulars of claim should be struck out on the grounds of abuse of process, i.e. pursuant to CPR Part 3.4(2)(b). It follows that I would also dismiss Mr Kotonou’s appeal against paragraph (2) of Morgan J’s order whereby he refused Mr Kotonou permission to amend his particulars of claim;

It follows that, having concluded that any departure in Mr Kotonou’s pleading from the facts as found by the deputy judge would amount to an abuse of process, I would also maintain paragraph (3) of Morgan J’s order that there should be summary judgment in favour of the Bank on the basis of the findings of fact made by the deputy judge (as opposed to on the basis of the facts as alleged by Mr Kotonou in the present proceedings). On the basis of those former findings, I agree with Morgan J’s analysis of the law. Indeed there was no argument presented to this court on behalf of Mr Kotonou that, if it were necessary to proceed on the basis of the facts as found by the deputy judge, Morgan J had reached the wrong conclusion as a matter of law.

It also follows that I would dismiss Mr Kotonou’s appeal against paragraphs (4) – (6) of Morgan J's order (whereby he made consequential orders dismissing the claim and making orders for costs against Mr Kotonou).

In the circumstances, it is not necessary for me to consider the second ground set out in the respondent’s notice, namely that Morgan J ought to have granted summary judgment in favour of the Bank on the additional ground identified in paragraph 138 of his judgment, namely that ‘the contentions of fact relied upon by the Appellant have no real prospect of success in view of the fact that they have already been investigated by the deputy Judge and rejected.’

I would dismiss Mr Kotonou’s appeal.

I agree.

I also agree.