Monks v National Westminster Bank Plc & Anor

The Defendants’ application dated 16 December 2015 appears to be very straightforward. It prays in aid CPR 3.4(2) and invites the court to conclude that the particulars of claim dated 15 November 2015 disclose no reasonable grounds for bringing the claim and/or constitute an abuse of process. Primarily, reliance is placed by Ms Phelps upon the well known principle explained in Henderson v Henderson (1843) 3 Hare 100; that is to say, that a claimant should generally process all complaints he may have, arising from a particular set of facts, through one set of proceedings. He should not be permitted to vex a defendant on more than one occasion by attempting a second or third “bite of the cherry”, whether by raising a new claim or by seeking new remedies, which could and should have been pleaded in the first action. There is a public interest in achieving finality in litigation and in preventing the unnecessary duplication or expenditure of costs. The classic modern restatement of the principle is to be found in the speech of Lord Bingham in Johnson v Gore-Wood [2002] 2 AC 1, at [31], where it was emphasised that the court should apply a broad “merits-based” approach, depending upon the circumstances of the individual case, and that it does not necessarily follow, just because a claim could have been brought in earlier proceedings, that it should have been so brought. (See also in this context Stuart v Goldberg Linde [2008] 1 WLR 823, at [57].)

In this case, the Claimant complains of inaccuracies in the first Defendant’s record keeping, which led it to record that debts were owed by him on one or other of his mortgage interest accounts, when they were not, and also to communicate in consequence with three credit reference agencies on a correspondingly false basis. He sought non-monetary remedies in an earlier set of proceedings in the Birmingham District Registry, which were confined to the grant of a declaration and an order for the records to be duly corrected. He succeeded in due course, after a number of preliminary case management hearings, and following a four day trial from 21 to 24 April 2015 before His Honour Judge Simon Barker QC, which led to a reserved judgment handed down on 31 July of that year.

The relevant findings can be briefly summarised. A declaration was made to the effect that the bank had for a period of approximately one year, from August 2011, wrongly maintained that the Claimant owed unpaid arrears of interest on his two mortgage accounts totalling in excess of £9,300 in addition to balances on those accounts, which already included the corresponding interest charges, and, in the course of so doing, overstated his liability under those mortgage accounts (i) internally within various departments of the bank, (ii) to the Claimant himself, and (iii) to one or more third parties. This relief was granted in the light of the Judge’s findings that the bank had agreed that six instalments on account 9830, for the period January to June 2010, and six instalments on account 2194, for the period December 2009 to May 2010, could be missed and the direct debits correspondingly cancelled. The interest accruing for those periods would be added to the respective loans and capitalised. It was thus concluded that the Claimant had not been in arrears in relation to either of those accounts and that the adverse credit reporting had thus been erroneous and should be corrected.

It is clear that a number of the issues raised in the current proceedings will already have become the subject of res judicata. It may have to be argued later exactly how far that extends.

The Claimant had up to that point eschewed any opportunity to include a claim for damages or other financial remedy notwithstanding a number of clear warnings, both from the Defendants’ solicitors and from the court, to the effect that he should bring all his complaints before the court in the existing proceedings. This had been mentioned specifically because he had said from the outset that he wished to bring such claims in the future, once he had established liability. (It was foreshadowed, for example, in a witness statement served as early as January 2014.) Ms Phelps complains that he regarded himself as entitled unilaterally to arrange a preliminary trial, on the limited issues pleaded in that claim, and to follow through with new causes of action and different remedies at some point in the future after he had issued a fresh claim. Not surprisingly, this approach did not commend itself either to the case management judges or to the Defendants, who would obviously be facing increasingly costly litigation with no clear sign of light at the end of the tunnel. He chose nonetheless to ignore the warnings he was given and to continue on “his own sweet way”.

I am told that the bank incurred costs in the region of £100,000 in defending the claim, according to the evidence of its solicitor Mr Elliot Nathan, and it now stands to lose even more in defending the new action, which was commenced on 16 November 2015, and which would almost certainly involve going over much of the same ground. The Claimant has little sympathy with this complaint, however, since they chose to spend all that money defending a claim which they ultimately lost. At all events, the Defendants say that the court should now put a stop to it. All his claims could, and should, have been swept up and dealt with on the same occasion. That would have been not only in the interests of the bank, but also consistent with public policy, which requires that disputes before the courts should be disposed of efficiently, proportionately and without wasting costs or court resources. It was an argument attractively presented by Ms Phelps in her written and oral submissions.

She laid particular emphasis upon the catalogue of warnings given to the Claimant consistently on so many occasions (all listed in Mr Nathan’s statement of 17 December 2015). I need not rehearse them in detail now, as they are water under the bridge. Suffice to say, he was alerted to the problem in a letter of 15 July 2013 wherein the Bank sought confirmation that all prospective claims had been included in the first action, but without response. Then, on 30 January 2014, at a procedural hearing, counsel for the bank drew attention expressly to the Henderson principle and the possibility of its making an abuse of process application if fresh claims were to be introduced later: the Claimant was thus aware of the risks at least from that point. Again, on 18 March 2014, he was told that he should not have included allegations of Data Protection breaches in his reply, but was given permission to amend his particulars of claim if he wished to raise that cause of action. He declined to do so, but these allegations resurfaced in his defence to the bank’s counterclaim (for which permission had been granted on 18 March). These were struck out on 18 July 2014 together with his evidence alleging such breaches.

Shortly before that, on 16 July, he had sent no less than eight letters raising new causes of action said to derive from the same set of facts which formed the subject matter of the first action. He then applied to transfer the existing proceedings to London with a view thereafter to consolidating them with the new claims. That application was rejected on 18 July. It was pointed out on the same occasion that he should have sought permission to amend his first particulars of claim, in order to add any new causes of action, and that any fresh proceedings he issued would be the subject of an application to stay them or to have them struck out in accordance with the Henderson principle. The same point was rammed home in a letter on 23 July. The matter was again raised before Newey J on 28 October 2014, who heard an application for permission to appeal the strike out of the data protection claims. This was refused, not least because the Claimant had declined to avail himself of the opportunity to amend his particulars, and he was warned by yet another judge that no damage issues would be considered at trial, since they had not been pleaded.

So it was that the second claim, when it was issued, introduced causes of action not raised in the first proceedings. Defamation was relied upon by reason of the publications to the credit reference agencies, as was malicious falsehood. Furthermore, the allegations of Data Protection Act breaches resurfaced, despite having been struck out in the first action. There were also allegations of negligent mis-statement. These too were based on the credit reference agency reports. Ms Phelps submits that these claims should all have been swept up in the Birmingham proceedings and disposed of before Judge Barker.

Unfortunately, the position is not quite as straightforward as it might appear. The adverse reports were published to the agencies on a continuing basis from December 2009 right through until the conclusion of the trial in July 2015. Each time a report was sent, it would appear that a separate cause of action arose. The Claimant could have applied at various points to bring earlier publications into the first proceedings (subject to the Limitation Act 1980, as amended). On the other hand, he could not be criticised for not making a claim in respect of any cause of action which had not by then arisen. It may be said with confidence that no such claim could have been made in the first proceedings. Likewise, he could arguably be forgiven for not making such an application, even in respect of past publications, at a time when it was likely to hinder the resolution of the existing claims. Even though an application could have been made, the court might well not have concluded that it should be: see e.g. Stuart v Goldberg Linde, cited above, at [68].

So far as defamation is concerned, there are other potential complications. In the course of the relevant period, the Defamation Act 2013 came into effect. Thereafter, any publication would have to be shown to have caused “serious harm” to the Claimant’s reputation, or to have been likely to do so. Ms Phelps submits that this hurdle could not have been overcome, if only because the reports published before the Act came into effect, on 1 January 2014, would already have caused such damage that any occurring thereafter would only be marginal. That may seem an unattractive argument, but it will need to be addressed at some point. The Claimant may wish to argue, for example, that the allegations became correspondingly more serious the longer it was being claimed that he was failing to comply with his obligations. (What is more, those publications which took place before the Act came into effect would by now be outside the primary 12 month limitation period.) It is not, however, generally appropriate, on an abuse application of this kind, to go into the merits of the claim itself (for the reasons given by Lloyd LJ in Stuart v Goldberg Linde, cited above, at [57]). In any event, those merits were not argued before me.

Also, she argued, the “single publication rule” introduced in the statute would mean that the later publications could no longer give rise to independent causes of action. I would doubt that proposition, however, since each monthly report was conveying new and current information, as at the date of its communication (or at least was purporting to do so). Earlier reports would have related to the extent of the Claimant’s indebtedness, and thus to his creditworthiness, at different dates (even though the wording may have been the same). This would appear to be a distinct situation from that in which defamatory words are published on the internet, or in a newspaper, and the same allegations remain accessible indefinitely. The point of sending monthly reports to credit agencies is to update them and to ensure that each report gives them the opportunity to know the current credit status of the individual concerned. That is, however, yet another matter going to the underlying merits of the claim and not to the issues arising on abuse of process. (In any event, it was only raised for the first time in the course of argument, and the Claimant could not possibly be expected to address it without notice.)

If any of the new causes of action survives Ms Phelps’ present application, it may be that some of these points will resurface. It may be submitted, for example, that the defamation claims are unsustainable for lack of “serious harm” evidence, or because of a different abuse argument based on Jameel v Dow Jones & Co [2005] QB 946 or, in some cases, because the relevant limitation period has expired. There may be a challenge also to the claims in malicious falsehood on similar grounds, or simply because evidence of malice is lacking. The Data Protection Act claims may well give rise to other arguments. Yet, as I have said, it would not be right for me to anticipate such disputes at this stage, still less to attempt to resolve them.

It is becoming clear that any of these potential issues to which the new claims give rise would require careful thought, pleading and perhaps additional disclosure of documents. Although one cannot be precise about it, it is quite likely that had the Claimant applied at any time in mid-2014, or thereafter, to add to the existing proceedings any of the monthly reports published up to that time, these arguments would have delayed the trial date. He would thus not have achieved his successful outcome until months later. Moreover, the introduction of these matters would undoubtedly have increased the cost of the pre-trial preparations, and of the trial itself, for both sides. In the circumstances, I am not convinced that the Claimant’s decision not to take that course, but rather to obtain as a first step rulings on the state of his indebtedness, and correspondingly as to the accuracy or otherwise of the monthly reports, can be said to constitute “abuse” of the court’s process. Others might have taken a different view as to the most efficient way of case managing these ongoing complaints, but that does not mean that his choice, made as a layman (and quite openly), should be so characterised. The matter was never brought to a head by an application for directions or “unless orders”. He was merely given rather general warnings as to what the Defendants might do if he left his options open.

There are nonetheless further issues arising on the Claimant’s pleading which fall to be considered on the present application. First, I would accept that there is no basis for suing the second Defendant, Royal Bank of Scotland, as the Claimant himself now recognises. Ms Phelps also submits that the claim under the Misrepresentation Act 1967 cannot succeed, since the Claimant is not relying on pre-contractual representations – only upon matters which arose later. Here again, I would accept that she must be right.

There is also a cause of action pleaded by the Claimant as arising from what he calls “adverse conduct”. He lists various complaints as to how the bank or its advisers conducted themselves in the course of the first proceedings. Yet it is quite unclear to what recognised cause of action the complaints would give rise. I am satisfied that there none of the claims under this head would be sustainable in law.

As to these individual complaints, the relevant passages in the particulars of claim should be struck out. Overall, however, I am unable to dismiss the claim for abuse of process for the reasons I have given. I cannot hold that all of the claims in libel, malicious falsehood and under the Data Protection Act could or should have been introduced into the first action. They had not all crystallised until a late stage. Furthermore, the claim in negligence can also survive for the moment. The Claimant may wish to contend that this conduct too was of a continuing nature (with the breaches occurring monthly on the occasion of each report). It may, for all I know, become the subject of further challenges in due course, on grounds other than abuse, but it can be considered in the second action at whatever stage is appropriate.

I was interested to understand, if I could, the true position as to the Claimant’s current indebtedness on the two mortgage accounts and, in particular, to what extent the Bank’s errors had been clarified and corrected in the light of Judge Barker’s findings. Accordingly, I gave the parties an opportunity to send me their respective submissions sequentially in order to see how much of a dispute (if any) still remained between them. I had hoped that a degree of harmony might at last be achieved. Sadly, this was not to be.

I received first a long letter dated 5 February 2016 from Ms Jayne Lewis, a technical recovery manager, in which she set out the Bank’s case. This acknowledged an error in the evidence and submissions placed before Judge Barker (and subsequently before me). I then received a lever arch file from the Claimant attached to his submissions dated 19 February. He viewed the error described by Ms Lewis as being of greater significance than she had suggested. He had come to the conclusion that the Bank had made a number of misrepresentations to the court and went so far as to claim that these amounted to contempt of court. He also said that he needed to amend his pleading in the current action to make a financial claim to take account of breaches of which he had previously been unaware. The history has clearly left the Claimant very suspicious of the Bank and he remains sceptical about its present contentions.

Ms Lewis in her latest witness statement of 24 February denies any wrongdoing on the part of the Bank and adheres to the statements made in her letter of 5 February. The mistakes have now been corrected, she says, and the Claimant has been more than compensated in respect of the mistaken calculations. I am afraid, therefore, the parties are still far apart on the history of interest charges and capitalisation in respect of the two accounts – and as to the legal consequences. I cannot possibly resolve the outstanding differences on the present application. I merely note that the implementation of the trial Judge’s ruling remains hotly disputed and, in the light of that, it is difficult as yet to be sure that finality had been achieved in those proceedings.

The Claimant now contends that “… the fact that there is doubt and confusion concerning the amounts shown in the manually prepared mortgage schedules submitted by the Defendant that can only be resolved following a thorough forensic examination of evidence at trial … is further reason why this matter is not suited to strike out or summary judgment”. At all events, the material received after the hearing has done nothing to undermine the conclusions I had reached, for the reasons set out above, and I cannot hold the present proceedings to be an abuse of process.