that Mr Delessio had noted a number of features surrounding the size of payments to Hurlstone which might, to the reasonable and objective observer, have seemed somewhat suspicious;

that, in particular, Mr Paterson’s reports to Sagicor had lacked customary detail; that he could have provided a somewhat fuller response, especially in writing, to Mr Delessio’s demands for information; that one of Mr Paterson’s former employees might have told Mr Delessio that the work done by Hurlstone at the Village had a value of only $1.3m; and that Mr Paterson had put himself into a position of conflict by agreeing to act as project manager for the proprietors as well as the loss adjuster for Sagicor;

that, while it was reasonable for Mr Delessio to have been somewhat suspicious, it had been unreasonable for him to believe that Mr Paterson had defrauded Sagicor;

that, however, Mr Delessio had believed that Mr Paterson had defrauded it;

that Mr Delessio’s belief that he had defrauded it was a significant contributing factor in leading Sagicor to make the allegations of fraud and conspiracy against Mr Paterson; but

that the dominant factor which led it to make those allegations against him had been Mr Delessio’s strong dislike and resentment of him, his wish to gain revenge on him and his obsessive determination to destroy him professionally.

the prior proceedings had been determined in favour of Mr Paterson;

the allegations of fraud and conspiracy made against him in the prior proceedings had been made without reasonable cause;

in the light of the finding set out in para 32(f) above, the allegations against him had been made maliciously; and

as a result of the allegations, he had, as was agreed, suffered substantial financial loss and significant other damage.

that, whatever the extent of the tort of malicious prosecution, its paradigm was of the prosecution of criminal proceedings (p 426);

that a distinctive feature of the tort was that the defendant had abused the coercive powers of the state (p 426);

that a claimant had to prove that the criminal prosecution was determined in his favour, that it was brought without reasonable and proper cause, that it was malicious and that he had suffered damage (p 426);

that the extension of the tort in the US to the prosecution of civil actions was related to the absence there of a general power to award costs against a claimant in favour of a successful defendant (p 429);

that the academic criticism in Australia, Canada and New Zealand of the apparent absence of redress for malicious prosecution of civil proceedings did not extend to criticism in relation to the prosecution of disciplinary proceedings (p 431); and

that, in relation to statements made in disciplinary, as opposed to in legal, proceedings, privilege under the law of defamation was only qualified, thus defeasible by proof of malice, and that a remedy in defamation was therefore a tort which (together with three other torts) might well be available to the victim of a malicious prosecution of disciplinary proceedings such as C claimed to be (pp 431-432).

“My Lords, it is not necessary for the disposal of the present appeal to express a view on the argument in favour of the extension of the tort to civil proceedings generally. It would, however, be unsatisfactory to leave this important issue in the air. I will, therefore, briefly state my conclusions on this aspect. There is a stronger case for an extension of the tort to civil legal proceedings than to disciplinary proceedings Both criminal and civil legal proceedings are covered by the same immunity. And as I have explained with reference to the potential damage of publicity about a civil action alleging fraud, the traditional explanation namely that in the case of civil proceedings the poison and the antidote are presented simultaneously, is no longer plausible. Nevertheless, for essentially practical reasons I am not persuaded that the general extension of the tort to civil proceedings has been shown to be necessary if one takes into account the protection afforded by other related torts. I am tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings are either already adequately protected under other torts or are capable of being addressed by any necessary and desirable extensions of other torts. Instead of embarking on a radical extension of the tort of malicious prosecution I would rely on the capacity of our tort law for pragmatic growth in response to true necessities demonstrated by experience.”

“but, in prosecutions for felony, it is usual to deny a copy of the indictment, where there is any, the least, probable case to found such prosecution upon. For it would be a very great discouragement to the public justice of the Kingdom, if prosecutors, who had a tolerable ground of suspicion, were liable to be sued at law whenever their indictments miscarried.”

“He said that there are three sorts of damages, any of which would be sufficient ground to support the action.

The damage to a man’s fame, as if the matter whereof he is accused be scandalous... But there is no scandal in the crime for which the plaintiff in the original action was indicted.

...damages...such as are done to the person; as where a man is put in danger to lose his life, or limb, or liberty... but these kinds of damages are not ingredients in the present case.

. ...damage to a man’s property, as where he is forced to expend his money in necessary charges, to acquit himself of the crime of which he is accused, which is the present charge. That a man in such case is put to expenses is without doubt, which is an injury to his property; and if that injury is done to him maliciously, it is reasonable that he shall have an action to repair himself.”

“It is the malice that is the foundation of all actions of this nature, which incites men to make use of law for other purposes than those for which it was ordained.”

“The difficulty, which stood most in the way of these actions, was the fear of discouraging prosecutions, and the regard to what was done in a legal course to bring offenders to punishment...[But] requiring satisfaction from those who proceed out of meer malice and wickedness without any reasonable ground, will be no discouragement at all to him who honestly proceeds on reasonable grounds.”

“I start with this, that at the present day the bringing of an action under our present rules of procedure, and with the consequences attaching under our present law, although the action is brought falsely and maliciously and without reasonable or probable cause, and whatever may be the allegations contained in the pleadings, will not furnish a ground for a subsequent complaint by the person who has been sued, nor support an action on his part for maliciously bringing the first action.”

“I do not say that if one travels into the past and looks through the cases cited to us, one will not find scattered observations and even scattered cases which seem to shew that in other days, under other systems of procedure and law, in which the consequences of actions were different from those of the present day, it was supposed that there might be some kind of action which, if it were brought maliciously and unreasonably, might subsequently give rise to an action for malicious prosecution. It is unnecessary to say that there could not be an action of that kind in the past, and it is unnecessary to say that there may not be such an action in the future, although it cannot be found at the present day.”

“So the exception of civil proceedings, so far as they are excepted, depends, not upon any essential difference between civil and criminal proceedings, but upon the fact that in civil proceedings the poison and the antidote are presented simultaneously. The publicity of the proceedings is accompanied by the refutation of the unfounded charge, if it be unfounded, which was made. If there be no scandal, if there be no danger of loss of life, limb, or liberty, if there be no pecuniary damage, the action will not lie.”

“if the proceedings are merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the Court is asked to adjudicate they are regarded as an abuse of process for this purpose...”

“In addition to the improper purpose, there must be some overt act or threat, distinct from the proceedings themselves, in furtherance of that purpose, such as in the [Grainger] case the extortion accompanying the capias. Were it otherwise, any legal process could be challenged on account of its ‘hidden agenda’.”

a petition for bankruptcy: Johnson v Emerson (1871) LR 6 Ex 329;

a petition for winding-up: the Quartz Hill case itself;

a writ to arrest and detain a judgment debtor who had in effect already paid the debt: Gilding v Eyre (1861) 10 CB (NS) 592, 142 ER 584;

the procurement of a bench warrant to arrest and produce a person for failure to respond to a witness summons which had not been served on him: Roy v Prior [1971] AC 470;

a writ to arrest a ship in the course of a dispute about a contract for its sale: The Walter D Wallet [1893] P 202;

a writ to arrest an aircraft in the course of a dispute about an alleged lease of it: Transpac Express Ltd v Malaysian Airlines [2005] 3 NZLR 709;

an order for the attachment of the claimant’s assets in advance of an arbitration: The Nicholas M [2008] EWHC 1615 (Comm), [2009] 1 All ER (Comm) 479; and

a search warrant: Gibbs v Rea [1998] AC 786.

“In our opinion, there is no longer justification for confining to a bankruptcy petition and an application to wind up a company the remedy for malicious abuse of civil proceedings where the damages claimed is to the plaintiff’s reputation.”

“the risk that maliciously made allegations in civil proceedings may cause perceptible harm to a person’s reputation is now a real risk under current law and procedures...”

(i) The spectre of being sued for malicious prosecution in the event of failure would inhibit litigants from bringing cases with merit and in good faith (Lord Neuberger, para 181). Ugly threats by prospective defendants with long pockets would drive prospective claimants from the seat of justice (para 184).

(ii) This argument deserves considerable respect. But it was, as it happens, considered and rejected by Parker CJ as long ago as 1713: para 55 above. Is his rejection still valid? If the litigant with a reasonable case and a proper purpose would otherwise be minded to trust the court fairly to appraise it, should we assume that he would not be minded to trust the court to discern the demerits of a case of malicious prosecution brought against him in the event of failure? The requirement of proof first of malice (notwithstanding that the concept extends beyond spite to where the predominant purpose is something other than the vindication of the law: Winfield and Jolowicz on Tort, 18th ed (2010), para 19-11) and then of the absence of reasonable cause places two high hurdles before a claimant. No evidence has been presented to the Board, for example from the states of the US which adopt the American Rule, of the chilling effect of the tort upon the honest bringing of litigation of arguable merit which this argument foretells. Should the law be shaped by concern about ugly threats of its misuse?

(ii) But the law recognises the need to give victims of malicious prosecution the opportunity to initiate consequential litigation in relation to criminal prosecutions and to the disparate situations broadly encompassed by the English Rule. The law has therefore already seen fit to override the argument in the first sentence and the only remaining question relates to the extent to which it should do so. Is the scenario posed by the second sentence fanciful?

(ii) But what other curative power (Mr Paterson might ask) does the American progenitor of this reflection have in mind?

(ii) But is this a principled approach to an analysis of legal rights?

(ii) But how powerful is this argument in the absence of empirical evidence in support of it?

(ii) The whole drift of my judgment to this point shows why, with great respect to Lord Neuberger, I cannot subscribe to any part of this final proposition.

“The general rule that where there is a wrong there should be a remedy is a cornerstone of any system of justice. To deny a remedy to the victim of a wrong should always be regarded as exceptional...any justification must be necessary and requires [to be] strict and cogent...”

in the Savile case, being one of malicious prosecution, Holt CJ had referred only to reimbursement for charges and expenses (para 54);

In the Grainger case itself the claim included damages for loss “of all the benefits, profits and advantages” which would have accrued to the claimant from the four lost voyages to Caen (p 215, p 771). There seems to have been no issue but that the claimant should recover in that regard.

But the early availability of an order for costs in favour of a successful defendant of civil proceedings often disabled him from proving the damage required by the tort, which for that reason, as well as for others, became – in practice – mainly focussed on criminal proceedings.

The limitation on the scope of the tort of malicious prosecution of civil proceedings, cast by the observations made in the Court of Appeal in the Quartz Hill case, was justified by reasoning which is no longer valid.

The disparate situations to which the tort of malicious prosecution of civil proceedings has been confined as a result of the observations in the Quartz Hill case are a rag-bag which include cases in which the gravity of the wrong (such as in the Roy case, in which the intended witness had, as a result of the malicious application for a bench warrant, been the subject of wrongful arrest and detention for 10 hours) would not approach its gravity in other cases of malicious prosecution of civil proceedings, such indeed as in the case before the Board.

Insofar as the rationale for the tort of malicious prosecution is the inability of a successful defendant to sue a claimant for defamation in respect of allegations made maliciously in legal proceedings, it applies as much to civil as to criminal proceedings.

In that (as Lord Steyn suggested in the Gregory case: see para 37 (b) above) a distinctive feature of the tort is that the defendant has abused the coercive powers of the state, it applies as much to civil as to criminal proceedings. There is no principle behind a redefinition of the distinctive feature as being an abuse of the coercive powers of the state only in criminal proceedings: that would be to generate a delineation of the contours of the tort in line only with what the draftsman of the redefinition subjectively preferred.

Irrespective of the malice which may prompt assertions made in a defence and of the damage which may thereby be done to another person, it may be that defendants, like witnesses, cannot be said to be abusing the coercive powers of the state. They may therefore be beyond reach of the tort and their immunity may remain absolute. But I would leave this point open, as, albeit with a different emphasis, does Lord Kerr at paras 111-113.

If no tort other than malicious prosecution is available to remedy the sort of wrong done to Mr Paterson, Lord Steyn’s observations in the Gregory case form no impediment to its recognition. On the contrary, they encourage it.

A tort of malicious prosecution of civil proceedings should enable a claimant to recover damages for foreseeable economic loss beyond out-of-pocket expenses.

The arguments of policy against restoration of a general tort of malicious prosecution of civil proceedings are worthy of respect but they are insufficiently strong to override the rule which has first claim. Perhaps also they fail to allow for the height of the hurdles which, as Lord Kerr explains in paras 109 and 110, confront a claimant in establishing, or even mounting an arguable case, not only that the defendant’s action lacked reasonable cause but that he prosecuted it maliciously.

It might be possible to limit the ambit of the tort of malicious prosecution to civil proceedings of which the basis was an allegation which might have been the subject of a criminal charge. Sagicor’s allegation of Mr Paterson’s conspiracy to defraud would fall within that limited ambit and so, strictly, the Board does not need to consider whether it has any wider ambit. But, provisionally, I would oppose the introduction of that potentially troublesome distinction and would deprecate, as illogical, the denial of a remedy for damage done to the victim of a malicious prosecution, brought without reasonable cause, of any action irrespective of its basis.

In that, as Lady Hale points out at para 84, control of abuse of legal proceedings is particularly well-suited to development in judge-made law, courts in future will need to monitor whether today’s reinstatement of a remedy for abuse of civil proceedings by their malicious prosecution is itself productive of abuse and, if so, to make any necessary adjustments to its effect.

DETERMINATION OF THE APPEAL

Sagicor did not commit the tort of abuse of process. Henderson J found that the predominant factor which led Sagicor to allege fraud and conspiracy against Mr Paterson had been Mr Delessio’s obsessive determination to destroy him professionally. But he did not proceed to find that Mr Delessio intended to achieve Mr Paterson’s professional destruction other than through the initiation and successful prosecution of the action. One can only speculate why, in that he was aware that Mr Purbrick’s reports were not a proper basis for the allegations, Mr Delessio anticipated that the action would succeed. But Mr Jacob failed in his attempt to persuade the Court of Appeal that the judge should have found that Mr Delessio, and thus Sagicor, had no intention of bringing the action to trial. In the absence of a finding of that character Mr Delessio’s purpose cannot be regarded as outside the scope of the action.

But in my view Sagicor committed the tort of malicious prosecution. Sagicor does not challenge the judge’s conclusion that, if the tort applied to civil proceedings, all four of its ingredients were present. The predominant purpose of Mr Delessio amounts to malice. Moreover the fact that he believed that Mr Paterson had defrauded Sagicor counts for nothing because of the absence of reasonable cause for any such belief. I propose that the Board should humbly advise Her Majesty that the appeal be allowed and that judgment be entered for Mr Paterson in the sum of $1.335m, the composition of which I have explained in para 29.

LADY HALE:

It is always tempting to pray in aid what Sir Thomas Bingham MR referred to as “the rule of public policy which has first claim on the loyalty of the law: that wrongs should be remedied” (X (Minors) v Bedfordshire County Council [1995] 2 AC 633, at 663). But by itself that wise dictum does not tell us what the law should define as a wrong. Some conduct is wrongful whether or not it causes any damage – that is the essence of the tort or torts of trespass; other conduct is only wrongful if it causes particular types of damage – that was the essence of the action on the case; but not all conduct which causes such damage is wrongful. The tort or torts of wrongfully bringing legal proceedings are actions on the case and therefore can only lie if there is damage of the kinds specified in Savile v Roberts in 1698. But that is not enough. Instigating legal proceedings in good faith and with reasonable cause, even if they fail and even if they do damage in the Savile v Roberts sense, is not wrongful. Even maliciously instigating legal proceedings is not always, or even often, wrongful. So how is the wrong done by instituting legal proceedings to be defined?

It would be understandable if there were no such wrong at all. Two policy reasons are cited against it. First, people should not be deterred from instigating criminal charges or bringing lawsuits by the fear of being sued if they fail. It does not matter that such tit-for-tat suits would usually fail. There would still be the so-called “chilling effect” of a potential liability, as Lord Hope pointed out in Jones v Kaney [2011] UKSC 13, [2011] 2 AC 398, at paras 130, 131. Second, once proceedings are over, the courts should not be troubled with further claims. Clearly, it cannot be open to every successful defendant to round upon his unsuccessful claimant or prosecutor, no matter how great the collateral damage. Defining the circumstances in which he can do so is fraught with difficulty, as this case shows. Hence both of the principal policy reasons given for declining a remedy in this case would support the denial of any remedy to anyone.

But that such a wrong has been recognised by the law for centuries is incontrovertible. It is not suggested that this Board either can or should abolish the torts of malicious prosecution and abuse of process. We are faced with the task of discerning some rational principles which will enable us to define their boundaries. In an ideal world the separate torts of malicious prosecution and abuse of process might be brought together in a single coherent tort of misusing legal proceedings. This looks like a task much better suited to the Law Commission than to this Board. This Board can research the existing state of the law in this country (which will apply in the Cayman Islands unless there is some local legislation to the contrary). It can research the law in some comparable common law jurisdictions, but by no means all. But it does not have the resources to research and develop the policy arguments, conduct empirical research and consult the legal and general public on possible ways forward. It was for those reasons that I did not support the abandonment of the long-established principle of witness immunity in order to impose a duty of care upon certain professional witnesses in Jones v Kaney.

But that was a case where there was (and remains) a clearly established immunity which the court was being invited to curtail. The majority felt able to take that radical step in the light of modern developments in the law and in pursuit of the first rule of public policy. They also felt that the judiciary were particularly well suited to develop the law relating to their own proceedings. This too is a case which is particularly well suited for judicial development: it is about the use and misuse of judicial proceedings; the law is entirely judge-made; and some would say that it is in a judge-made mess. If so, the judges should do what they can to sort it out. It is unfair to expect Parliament to do so.

Here we have an established cause of action, for malicious prosecution or abuse of process, the boundaries of which are either unclear or make little sense in today’s world. We can all read Savile v Roberts in one or more of the ten law reporters’ versions. It was a case of malicious prosecution of criminal proceedings for riot. It contemplated that the action might also lie for the malicious prosecution of some proceedings of a civil nature. But for most civil actions there would be no damage of the requisite sort. That was clearly the view taken in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, where a remedy was granted for the malicious presentation of a winding up petition on the analogy of the previously recognised remedy for the malicious presentation of a bankruptcy petition.

It is possible to characterise the list of cases in which claims for malicious prosecution of civil proceedings have been recognised as a “rag bag” or as a rational list of ex parte processes which do damage before they can be challenged. But that can be the only principle upon which they were singled out and today bringing an ordinary action can also do damage before it can be challenged, as this case shows only too well. It is particularly ironic that Mr Paterson would have done much better had he, too, been the subject of a freezing order, as the Hurlstone parties were. The judges who invented this modern form of advance protection also recognised that an unjustified grant might do damage which could not be compensated in other ways, so they extracted a so-called “undertaking in damages” which in fact is an undertaking to compensate. Such an undertaking bites even if the unsuccessful claimant was entirely without malice. But if he were malicious, the tort of malicious prosecution ought surely to extend to this modern form of pre-emptive coercive relief. The old reasons why the judges might have thought that simply bringing an action could do no damage have been exploded, as Lord Steyn recognised in Gregory v Portsmouth City Council [2000] 1 AC 419. If damage is done, why should it matter that it is done by the malicious obtaining of a search warrant or the malicious filing (and publicising) of a pleading alleging fraud?

Nor does the distinction between bringing criminal proceedings in the public interest and bringing civil proceedings in one’s own private interest make much sense today, if it ever did. In the days when the Queen’s peace depended upon private citizens bringing criminal prosecutions, it might have been thought even more important that they should not be deterred from doing so by the prospect of allegations of malice if the prosecution failed. While it is obviously reprehensible maliciously and unjustly to put a person at risk of condign punishment, it is also obviously reprehensible maliciously and unjustly to bring proceedings in the hope of personal gain. Some might think it the more so, as the protection available to the accused in criminal proceedings is so much greater than that available to the defendant in civil proceedings. (In other words, the chances of your wicked plot succeeding are so much greater.) The importance of deterring claimants from bringing false and malicious claims and protecting their victims from this injustice is at least as great as the importance of not deterring honest claimants from bringing just claims. We do not know how real the claims of a chilling effect can be; we do know how real the injustice of being the victim of malicious proceedings can be.

In Jain v Trent Strategic Health Authority [2009] UKHL 4; [2009] AC 853, Mr and Mrs Jain were ruined when their business was closed down in an ex parte procedure brought by the regulator without good cause. The House of Lords held that there was no duty of care, partly because the parties to litigation do not generally owe one another a duty of care and partly because regulators do have a duty of care towards the vulnerable people whom they are protecting, which could conflict with a duty of care to the people they are regulating. All that makes sense, although the Jains undoubtedly suffered a grievous injustice. But had the regulator been malicious, why should they not have had a cause of action in malicious prosecution? It is one thing to say that the regulator should not be liable for carelessness, and quite another to say that they should not be liable for malice.

The Jains, of course, suffered from an ex parte remedy of the sort which has previously given rise to liability for malicious prosecution. They also suffered at the hands of a body performing public functions, which is a distinction favoured by Lord Sumption. But it cannot be accepted that malice only turns right into wrong when public officials are concerned. Intentionally causing physical or psychological harm is a tort which can be committed by anyone. Intentionally causing economic damage is not a tort, because that is the object of most business competition. But intentionally abusing the legal system is a different matter. That is not simply doing deals to damage the competitors’ business. It is bringing claims which you know to be bad in order to do so.

For all these reasons, and for the reasons given by Lord Wilson and Lord Kerr, I agree that bringing a civil claim which you know to be bad and which results in damage to the defendant’s reputation, person, liberty, property or finances, comes within the scope of the tort of malicious prosecution and this appeal should succeed.

LORD KERR:

Introduction

That Frank Delessio wanted to ruin Alastair Paterson is no longer open to doubt. It has been established that in July 2005 he said that he intended to drive Mr Paterson out of business and destroy him financially. He set about his mission in a determined fashion, engaging attorneys, having private investigators carry out surveillance of his intended victim, meeting a senior police officer about possible criminal activity on Mr Paterson’s part and issuing proceedings against him alleging fraud. He did not stop there. He caused an immensely damaging article concerning the allegations made against Mr Paterson in the proceedings to be published in the local press. It is not in dispute that the action brought by Sagicor and the publication of the article caused enormous damage to Mr Paterson’s professional reputation and that his business suffered hugely. The trial judge fixed the amount of professional losses suffered by Mr Paterson at CI$1.3m. He found that, if Mr Paterson had been able to maintain an action for abuse of process or malicious prosecution, damages of CI$35,000 would have been awarded for the distress, hurt and humiliation that he suffered.

Mr Delessio failed to bring about Mr Paterson’s utter ruin. Although they do not amount to an unqualified vindication, the judge’s findings for the most part restore his reputation. But, if Mr Paterson fails in his claim for compensation, Mr Delessio’s campaign against him will have succeeded to no small extent.

Policy as an incentive for development of the law

This appeal gives rise to intense focus on the policy arguments for and against the extension (or renewed recognition) of liability for malicious prosecution to civil proceedings. (For the reasons given by Lord Wilson, the remedy of abuse of process is not available to Mr Paterson).

The policy considerations which militate in favour of this species of tortious liability and those which are opposed to it have been marshalled and powerfully analysed by Lord Wilson and Lord Sumption. I do not attempt to rehearse all of these but will touch briefly on those that I consider are the most significant. As a general observation, however, it is right to recognise that conclusions on matters of policy in the legal context are not usually the product of empirical research. Customarily, they are formed instinctually and constitute, at most, informed guesswork about the impact that the selection of a particular policy course will have. While, therefore, policy considerations can, and on occasions must, underlie decisions as to how law should develop, it is necessary to recognise the inherent impossibility of making an infallible prediction about the outcome of a policy choice. Where possible, therefore, such a choice should be aligned with principle. In my view, fundamental principle has a large part to play in the resolution of the debate in this case. And the pre-eminent principle at stake here is that for every injustice there should be remedy at law.

Mr Paterson has undoubtedly suffered an injustice. And, so far, the law has not afforded him a remedy. Those responsible for the injustice have been held to be immune from liability. As this court has said in Jones v Kaney [2011] UKSC 13, [2011] 2 AC 398, such an immunity must be justified. It is not enough that there are policy reasons, even compelling policy reasons, for retaining the immunity. Justification for its retention must be sufficiently powerful to warrant its retention as “necessary in the public interest” – per Lord Dyson at para 108 of Jones v Kaney.

The policy reasons for immunity from liability for malicious prosecution

It is suggested that the refusal to extend liability for malicious prosecution to civil proceedings is an instance of the law declining to afford a remedy for an obvious wrong because of the need to preserve intact the inviolability of legal proceedings from satellite or subsequent challenge; and that the demands of overall legal policy that the right to invoke the jurisdiction of the court should remain unfettered are so strong that they must trump Mr Paterson’s otherwise valid claim that his predicament should be legally recognised and alleviated.

A second and related argument is that malicious prosecution is anomalous in that it runs counter to the well-established principles that there should be absolute immunity for things done and said in the course of legal proceedings and that malice does not transform an otherwise lawful act into a tortious condition. As a corollary to this, the claim is made that the exceptional nature of the tort is justified because it is a form of misfeasance in public office and that this public function foundation of the tort is not present in civil proceedings between private parties.

Thirdly, it is suggested that to recognise the existence of the tort in the circumstances of Mr Paterson’s case will inevitably lead to its deployment in all manner of civil litigation. The fact that there are substantial difficulties in proving malicious prosecution will not operate as a deterrent to those aggrieved by the outcome of litigation.

Finally, it is argued that if there is to be a tort of malicious prosecution of civil proceedings there must be a tort of malicious defence. Theoretically, at least, as much damage can be done by the filing of a malicious defence which is publicised as in pursuing a malicious claim.

The need for inviolability of legal proceedings and immunity from things done and said in legal proceedings

Those contemplating legal proceedings should not be deterred by the prospect of subsequent litigation challenging the propriety of their having invoked the jurisdiction of the court. But it is surely too glib to say that this will be the inevitable consequence of rendering liable those who have pursued baseless claims for improper motives. A litigant in this jurisdiction (and in the Cayman Islands) must confront the likelihood of an award of costs in the event of his failure. In the case of a claimant with a genuine and reasonable belief in the rightness of his cause, will that habitual deterrent be enhanced by the possibility that his opponent will embark on further proceedings against him? Lord Sumption suggests that the fact that few may succeed will not deter the many who will allege malice. I cannot share his confidence in that assertion. True it may be, as he suggests, that litigation sharpens men’s conviction of their own rightness and their suspicion of their opponents’ motives. But those who launch proceedings rarely do so without regard to the possibility of failure. And the possibility of failure in all but the clearest cases of malicious prosecution is very real indeed.

Absolute immunity for things done and said in legal proceedings is not, in my opinion, infringed in any unacceptable way by recognition of liability for malicious prosecution in civil proceedings. Manipulation of the legal system lies at the root of the tort. A person will only be liable if he pursues a claim which has no foundation and which has, as its dominant purpose at least, an objective other than success in the claim. The underlying reason for immunity for what is said or done in litigation is surely the need to protect litigants who legitimately use the legal system to have perceived wrongs redressed or claims resisted. It should not be used as a charter for improper resort to legal proceedings to achieve an aim unrelated to their professed purpose.

Evidence given in the course of proceedings – even perjured evidence – will continue to enjoy the immunity that Lord Hope described in Darker v Chief Constable of the West Midlands Police [2001] 1 AC 435 if tortious liability for malicious prosecution of civil proceedings is recognised. It is not sufficient to show that a claimant (or, for that matter, a defendant) has proffered perjured evidence for the tort to be made out. It must be established that a baseless claim has been pursued for a reason other than that ostensibly advanced by way of action or defence. What Lord Sumption describes (in para 125) as the underlying policy of the immunity will remain intact.

The need for finality in legal proceedings and to avoid prolongation of unnecessary disputes must, of course, be considered. The suggestion made in some of the American cases, notably Norcross v Otis Bros & Co 25 A575 (1893) and Engel v CBS Inc 711 N E 2d 626 (1999), that permitting malicious prosecution claims in civil proceedings would lead to endless litigation seems somewhat fanciful. There is no evidence that this has in fact occurred in those states of America where the tort is recognised. And as Lord Atkin remarked in Ras Behari Lal v King Emperor (1933) 50 TLR 1, [1933] All ER Rep 723, “finality is a good thing, but justice is better”. Moreover, the evidential difficulties faced by a litigant seeking to establish the ingredients of malicious prosecution will militate strongly against the pursuit of pointless litigation in this field.

Does the tort of malicious prosecution require a public function element?

I do not agree that the tort of malicious prosecution is limited to a form of misfeasance in public office. Nor do I believe that there is any logical or sound policy reason that it should be so confined. The essence of the tort is the illegitimate use by an individual of coercive legal powers to cause harm to another. There is no reason that these should be state sanctioned. As Lord Wilson has explained (in para 43), malicious prosecution claims were usually brought after unsuccessful criminal proceedings and the ingredients of the tort were fashioned so that victims of crimes (who were customarily the prosecutors) should not be unnecessarily deterred from bringing prosecutions by the prospect of a ready remedy against them following acquittal. But that incidental historical circumstance should not be used as a basis for introducing the further condition on the availability of the remedy that there must be a public function dimension in the malicious prosecution of proceedings.

In Berry v British Transport Commission [1961] 1 QB 149, 159 Diplock J said that “the action on the case for malicious prosecution was available against a single defendant, and could be founded upon any form of legal proceedings, whether civil or criminal, brought maliciously and without any reasonable or probable cause against the plaintiff by the defendant.” Although this was obiter dictum, its correctness was not questioned in the Court of Appeal, [1962] 1 QB 306, despite the fact that Diplock J’s decision was reversed on other grounds.

The decision in Savile v Roberts (1698) 1 Ld. Raym. 374 has been fully considered by Lord Wilson in paras 44-54 of his judgment. It is not necessary to discuss it further other than to point out that, as Lord Wilson has demonstrated in para 45, the reason that the action was not generally available in civil proceedings was that claimants were required to post pledges which could be drawn down in favour of victims of false claims. Moreover, Holt CJ observed that an action for mere vexation might lie on proof of “particular damage”. There is no suggestion in the judgment that a public function element was a prerequisite for a claim of malicious prosecution.

Finally, the decision in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, although it asserted that malicious prosecution of ordinary civil actions could not lead to the types of damage that had been identified in Savile, did not suggest that the nature of the tort was as a form of or akin to misfeasance in public office. On the contrary, the issue of a winding up petition, which the court held could found an action for malicious prosecution, bears none of the hallmarks of state sanctioned action.

The possible proliferation of actions

The United States of America is the country where malicious prosecution of civil proceedings is most widely available. Lord Neuberger has conducted an extensive review of US jurisprudence in this area. As he has pointed out, there are sharply divided views among the judiciary of America as to whether what has been described as the American rule should be preferred to the English rule. What is notably absent from the various cases that Lord Neuberger discussed is any suggestion that adoption of the American rule has led to a significant increase in the number of cases based on malicious prosecution of civil proceedings. Colourful language has been used in some cases forecasting an avalanche of litigation but evidence for that having happened is conspicuously missing.

This is unsurprising. Establishing the various rudiments of the tort of malicious prosecution is no easy task. Two particular elements constitute significant challenge by way of proof. It has to be shown that there was no reasonable or probable cause for the launch of the proceedings. This requires the proof of a negative proposition, normally among the most difficult of evidential requirements. Secondly, malice must be established. A good working definition of what is required for proof of malice in the criminal context is to be found in A v NSW [2007] HCA 10; 230 CLR 500, at para 91:

There is no reason that proof of malice in the civil context should be any less stringent. Together these requirements present a formidable hurdle for anyone contemplating the launch of a claim for malicious prosecution. In my view, no convincing case has been made that these substantial requirements will not act as a deterrent to frivolous claims.

The availability of claims for malicious defence

There is obvious logic in the suggestion that if a claim for malicious prosecution of civil proceedings is to be available, so must a claim for malicious defence of such proceedings. In Aranson v Schroeder, 671 A 2d 1023 (1995), the Supreme Court of New Hampshire recognised the “tort of malicious defense”. The court outlined the basis of the tort in the following passage from its judgment:

Other states in America have been less ready to countenance the existence of a tort of malicious defence. In Young v Allstate Ins Co, 198 P.3d 666 (2008), the Supreme Court of Hawaii decried the possibility of such a basis for tortious liability, stating that as the party “hauled into court” the defendant had the right to vigorously defend itself against the plaintiff's claims.

Whatever view one takes about recognition of a tort of malicious defence, it is possible, I believe, to remain sanguine about its likely prevalence. Again it must be proved that the defendant knew or had notice of the lack of merit of the basis on which the claim was resisted and persisted in it for a reason unrelated to its legitimate defence. These are not insubstantial requirements of proof. They represent significant evidential hurdles. There is no reason to suppose that the theoretical possibility of such a claim being made will translate to an explosion in the number of actions based on malicious defence.

Historical reasons for not extending liability for malicious prosecution to civil proceedings

It is interesting to trace the various reasons given in the past for not recognising liability for malicious prosecution in civil proceedings. In Savile the availability of pledges posted by plaintiffs was considered to be an adequate means of compensating the victim of such proceedings. In the Quartz Hill case the judgment of the court rejecting the malicious allegation was considered to provide appropriate redress to the wronged defendant. Likewise in Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600 the simultaneous presentation of the poison (the unfounded allegation) and the antidote (its rejection by the court) was deemed a sufficient recompense for the wrongly accused defendant. In Quartz Hill, the recovery of costs against the unsuccessful claimant was treated as a factor justifying the refusal to contemplate the availability of a further remedy for malicious prosecution of civil proceedings. And this was perceived to be the basis for the English rule in some of the decided cases in America – see, for instance, Lord Neuberger’s reference at para 177 of his judgment to Ciparick J’s discussion of this issue in Engel.

In Gregory v Portsmouth City Council [2000] 1 AC 419 Lord Steyn concluded that many of these reasons were no longer valid. At pp 427-428 he said:

At page 432 Lord Steyn addressed the question whether the ambit of the tort should be extended to civil proceedings in the following passage:

This passage is highly significant, in my opinion. In the first place. Lord Steyn felt that it was not necessary to extend the tort to civil proceedings. It seems to me implicit in this statement, that had he considered it necessary to do so, there was no impediment of principle that would have made the extension impossible. Secondly, he considered that extension was not required because manifest injustices arising from groundless and damaging proceedings were already catered for or were capable of being adequately addressed by appropriate extensions of other torts.

Underlying Lord Steyn’s reasoning – and, indeed, the reasoning of earlier cases which refused to extend the tort to civil proceedings – is the rationale that manifest injustices suffered by victims of malicious prosecution of civil proceedings could be adequately redressed by other means – the verdict of the court, the award of costs, the availability of an action for defamation or the extension of other areas of tortious liability. No such rationale is possible here. In this case, the Board must frankly confront the reality that a manifest injustice will not be put right if Mr Paterson is denied the right to recover for the malicious prosecution of proceedings against him. To borrow Lord Steyn’s language, one cannot be “tolerably confident” that manifest injustices are adequately protected in the way that he envisaged. On the contrary this case is a graphic illustration of the inadequacy of alternative torts to afford Mr Paterson justice.

Conclusion

The case for recognising the existence of the tort for civil proceedings as well as in criminal proceedings seems to me far more grounded in logic than the case for refusing to extend it. Although the private prosecutor may take on the mantle of the state in criminal proceedings and although the coercive power of the state may be present in the prosecution by the DPP of offences, the central and critical species of wrongdoing is the same in malicious prosecution of civil proceedings. It is the procuring by malice of the discomfiture (at least) or the ruin (not infrequently) of the person against whom the action is taken for reasons disassociated with the professed purpose of the proceedings. Proceedings motivated by nothing more than malice are capable of wreaking devastation whether in pursuit of criminal prosecution or private action. Where it can be demonstrated that the court’s procedures do not provide an adequate remedy (or in this case no remedy at all) there can be no logic for denying the person who has suffered the same harm by the institution of civil proceedings as he who has been the victim of criminal proceedings. Indeed, it is not difficult to envisage cases where the harm will be considerably greater.

I therefore agree with Lord Wilson and Lady Hale that the Board should humbly advise Her Majesty that the appeal be allowed and that judgment be entered for Mr Paterson in the sum that Lord Wilson has proposed.

LORD SUMPTION (DISSENTING):

The tort of malicious prosecution was created in the seventeenth and eighteenth centuries to deal with the problem of abusive private prosecutions, which was then a serious social evil but has now almost entirely vanished as a result of the creation of public prosecuting authorities. As a result, the tort in its traditional form is now all but defunct. The majority of this court, however, proposes to expand its ambit so that it covers all civil litigation. I regret that I cannot agree that this is a justifiable development of the law. I would therefore have advised that the appeal should be dismissed and the judgments of the courts below affirmed. Both of them applied the law as the English courts right up the House of Lords have always held it to be.

General considerations

Mr Paterson has clearly suffered an injustice. He has been dragged through the courts to answer allegations of dishonesty which were known to Mr Delessio to be unfounded but were maintained until a late stage of the proceedings. He has been publicly discredited in his profession. He and his companies have lost much of their business. He has been put to great expense to defend himself, not all of which will be recoverable as costs. That this has happened to him is, on the Judge’s findings, the result of the malice and dishonesty of Sagicor’s Vice-President. However, the injustice which he has suffered is not the only factor which can determine whether the law recognises a cause of action in tort. Defining the legal elements of a tort and the legal limitations upon its ambit will commonly involve a large element of policy which may conflict with the simple principle that for every injustice there should be remedy at law.

Claims in respect of the initiation or conduct of litigation give rise to particular difficulty. The court has an inherent jurisdiction and extensive procedural powers to control its proceedings. The ordinary assumption is that these are apt to prevent abuse and injustice. In a case where their exercise is inappropriate or incapable of achieving that purpose, that is because the claimant is entitled to prosecute his proceedings and the only appropriate intervention by the court is to resolve them on their merits. In dealing with the risk that its process may be abused, the law has always been extremely reluctant to go beyond the exercise of the court’s procedural powers in a way that may fetter or deter access to justice or the right of parties to prosecute legally intelligible claims as they see fit.

This is the basis of the general rule that a litigant owes no duty to his adversary in relation to the conduct of proceedings: see Commissioners of Customs & Excise v Barclays Bank plc [2007] 1 AC 181, Elguzouli-Daf v Commissionerr of the Metropolis [1995] QB 335. These and similar cases were rationalised by the House of Lords in Jain v Trent Strategic Health Authority [2009] AC 853. The Defendant local authority in that case made a successful ex parte application to a magistrate to close down a registered nursing home on the basis of a slipshod investigation and inaccurate information. The proprietors of the business successfully applied to have the order set aside, but the process took four months and by that time the business had been ruined. The House of Lords held that it owed no duty to the proprietors of the home for the basis on which they made the application. Lord Scott, with whom the rest of the committee agreed, said at para 35:

It may fairly be said that there is a difference between the negligent and the dishonest conduct of litigation. But it is not a difference which has influenced this area of the law. Perjured evidence is necessarily dishonest, but it is well established that the perjurer is absolutely immune from civil liability. The rule was restated by Lord Hope, delivering the leading speech in Darker v Chief Constable of the West Midlands Police [2001] 1 AC 435, 445-446:

The immunity applies in subsequent proceedings which seek to assert liability not just for things said or done in the face of the court in earlier proceedings but also for statements sufficiently closely connected with them, for example by a potential witness when a witness statement is taken from him: Watson v M’Ewen [1905] AC 480; Taylor v Director of the Serious Fraud Office [1999] 2 AC 177. As a general rule, it applies not just in subsequent actions for defamation but irrespective of the cause of action: Hargreaves v Bretherton [1959] 1 QB 45, and Marrinan v Vibart [1963] 1 QB 528. No doubt, in recent years, some inroads have been made into the full breadth of the principle. It no longer applies to expert witnesses: Jones v Kaney [2011] 2 AC 398. Nor does it exclude the liability of a barrister in negligence to his own client: Arthur J S Hall & Co v Simons [2003] 1 AC 615. But these inroads reflect the voluntary and contractual character of the participation of experts and lawyers. They do not discredit the underlying policy.

All of this derives from two developed legal instincts, both of them based on long experience, and both endorsed comparatively recently by Lord Steyn, giving the reasoning of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419 in terms which make more copious citation unnecessary. The first is a concern about the deterrent effect of potential liability upon litigants, who may be inhibited from invoking the jurisdiction of the courts; and upon witnesses, who may be inhibited from freely assisting in the administration of justice. Lord Steyn put it this way at p 426D of Gregory:

The second instinct reflects a concern, in the interests of the efficient deployment of resources, to discourage secondary litigation in which the parties complain of the conduct of earlier litigation in what is potentially an unending sequence of actions upon actions. Explaining why the tort of malicious prosecution is narrowly defined, Lord Steyn said at p 426F-G:

These are not new problems. In England and other common law jurisdictions, actions seeking to impeach the propriety of earlier proceedings or the manner in which they were conducted have a long history, and the issues to which they give rise have provoked much judicial reflection. The case-law is testimony to the irrepressible persistence and optimism of litigants in cases good, bad or indifferent. It establishes two cognate torts both of which are subject to carefully formulated limits. The first is the tort of malicious prosecution which, with limited and anomalous exceptions, is confined to claims arising out of criminal prosecutions. The second is the tort of abuse of process, which enables a party to civil proceedings to recover damages in carefully circumscribed cases where the process of the court has been used for a wholly collateral purpose.

Malicious prosecution

It is convenient to consider the tort of malicious prosecution first, because historically it was the first of the two torts to make its appearance in English law, and because it provides the background to the later development of the tort of abuse of process.

The legal elements of the tort are defined in Clerk & Lindsell, The Law of Torts, 20^th ed (2012), at para 16-09 as follows:

This definition has appeared in successive editions of the work, and was adopted by the House of Lords in Gregory v Portsmouth City Council [2002] 1 AC 419, 426, and before that in Martin v Watson [1996] AC 74, 80.

On the findings of the judge in the present case, all of these elements are present except for the first. Mr Delessio did not set in motion proceedings on a criminal charge. He caused Sagicor to initiate a civil claim for damages. It follows that the appellants’ case under this head depends on the argument that the ambit of the tort should be extended from malicious criminal prosecutions to any malicious civil proceedings.

This question was directly considered by the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419. The appeal did not arise out of a civil action but out of the internal disciplinary proceedings of a local authority. Mr Gregory was a councillor of the City of Portsmouth. He had been removed from all the committees on which he sat after a disciplinary proceeding for breach of the Council’s code of conduct. He successfully applied for judicial review, obtained an order quashing the decision, and then began an action for malicious prosecution. The action came before the House on his appeal from the decision of the courts below to strike it out. The appeal was dismissed on the ground that an action for malicious prosecution was not available for the abuse of disciplinary proceedings. However the case necessarily raised the broader question whether the tort was or should continue to be confined to the abuse of criminal prosecutions. This issue had been fully argued in the Court of Appeal by reference to English, Commonwealth and United States authority, and had generated an eloquent dissenting judgment from Schiemann LJ proposing its extension to civil proceedings generally (1997) 96 LGR 569. In the House of Lords, it was expressly raised in the statement of issues: see [2000] 1 AC 419, pp 425-426. After full argument on the point, Lord Steyn, giving the leading judgment of a unanimous committee, held that “in English law, the tort of malicious prosecution has never been held to be available beyond the limits of criminal proceedings and special instances of abuse of civil legal process.” In response to the Appellants’ invitation to extend the ambit of the tort, Lord Steyn declined to extend them to disciplinary proceedings: pp 428-432. And, while recognising that there was a stronger case for extending them to civil actions, he declined to do so for “essentially practical reasons”, namely that “any manifest injustices arising from groundless and damaging civil proceedings are either already adequately protected under other torts or are capable of being addressed by any necessary and desirable extensions of other torts”: pp 432-433. In other words, the House did not envisage an extension of the tort of malicious prosecution, but a possible extension of other torts to cater for the more egregious injustices.

It has sometimes been suggested that the rationale for the distinction between civil and criminal proceedings is that in a civil proceeding the judgment of the court rejecting the allegation is a sufficient vindication of the defendant’s reputation and the award of costs a sufficient compensation for the expense. This appears to have been the view of Bowen LJ in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, 690. The same suggestion was made by Buckley LJ in Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600, 607, and Sir John Beaumont delivering the advice of the Privy Council in Mohamed Amin v Jogendra Kumar Bannerjee [1947] AC 322, 331. But as Lord Steyn pointed out in Gregory at p 432G-H, the factual premise of this explanation is not convincing. In the Court of Appeal 96 LGR 569, 594, Walker LJ doubted whether it ever had been. I respectfully agree. The defendant may suffer serious and irreversible damage to his reputation and business before the proceedings can be brought to judgment, as the facts of this and other cases illustrate. Assessed costs, even if awarded on an indemnity basis, are almost always less than a full indemnity and do not extend to losses attributable to the diversion of the defendant’s time and energy to the litigation. But the explanation is unsatisfactory for a far more fundamental reason than this, namely that it does not explain the particular elements of the tort. In particular it does not explain why proof of malice should be required in order to give rise to tortious liability for a baseless criminal prosecution.

Malice is as a general rule irrelevant to liability in tort. The principle was finally established by the decision of the House of Lords in Bradford Corpn v Pickles [1895] AC 587. It was restated by Lord Watson in Allen v Flood [1898] AC 1, 92, in terms which have been adopted or paraphrased by judges and writers ever since that case was decided:

There are two significant exceptions to this principle. The first is the tort of conspiracy to injure, where the existence of a dominant intention to injure the plaintiff may make actionable conduct which would otherwise be lawful. This has generally been regarded as sui generis, and is usually justified by reference to the especially pernicious effect of combinations. The second exception comprises a limited category of causes of action in which the essence of the tort is the abuse of a public function for some collateral private purposes of the person performing it. This may be (and generally is) established by proof of targeted malice. The paradigm case is the tort of misfeasance in public office, which in its modern form dates back to the decision in Ashby v White (1704) 14 St Tr 695. The tort may be committed by any person performing a public function notwithstanding that he is not actually employed in the public service: Henly v Lyme Corporation (1828) 5 Bing 91, 107-108. As Lord Steyn put it in Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1, 190, malice is a condition of liability notwithstanding the general rule that it is irrelevant in the law of tort, because “the rationale of the tort is that in a legal system based on the rule of law, executive or administrative power ‘may be exercised only for the public good’ and not for ulterior and improper purposes.”

It is to this latter category of malice-based torts that the action for malicious prosecution belongs.

The origins of the tort are colourful, archaic and technical. It arose out of the peculiarity of English legal history that until the creation in the 1830s of the first public police forces with prosecuting powers, almost all prosecutions were private prosecutions. They were brought by private individuals, generally the victims, or occasionally by public officers in their personal capacity. The private prosecutor nevertheless brought his indictment in the name of the Crown, and performed an essentially public function. The fact that the state’s coercive powers were invoked by a private individual, who controlled both the initiation and conduct of the proceedings, gave rise to frequent abuse, which was a constant preoccupation of the law from the thirteenth to the nineteenth centuries. It led to the early development of the tort of conspiracy, one of the first torts to be recognised in English law. Originally statutory, but subsequently developed by the common law in the course of the fourteenth and fifteenth centuries, the essential features of the early tort of conspiracy was the combination of two or more persons falsely and maliciously to indict or appeal another person of treason or felony: see Holdsworth, A History of English Law, 2^nd ed, viii (1937), 378-379, 385, and the citation from March’s Actions for Slaunder at p 385n⁵. It was not available for the malicious prosecution of civil actions.

The action on the case for malicious prosecution emerged from the shadow of the law of conspiracy in the sixteenth century. The most satisfactory account of this development is that of Professor Baker in The Oxford History of the Law of England, vi (2003), 797. It appears to have originated in the qualified privilege enjoyed by a prosecutor in a subsequent action for slander. The prosecutor’s defence of lawful prosecution was anticipated by a plea of malice which, if proved, defeated the privilege. The analogy with defamation was occasionally drawn in later periods, notably by Bowen LJ in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, 692. But, it has never been exact, and as a rationalisation of the tort it became redundant once statements in the course of legal proceedings were recognised as enjoying not just qualified but absolute privilege.

For many years, actions for malicious prosecution were rare, because the judges discouraged them. In 1664, the judges adopted the practice when presiding at criminal trials of refusing to release the original indictment to a defendant who had been acquitted, unless they were convinced that there had never been any foundation for the prosecution. This made it impossible under the then rules of evidence to bring an action for malicious prosecution. The reason for this judicial hostility, as Blackstone explained in his Commentaries, III.8, was the state’s dependence on private prosecutors to enforce the criminal law and the danger that they would be inhibited if they were exposed to retaliation. “It would be a very great discouragement to the public justice of the Kingdom,” he wrote, “if prosecutors, who had a tolerable ground of suspicion, were liable to be sued at law whenever their indictments miscarried.” In 1811, however, the judges’ practice fell away when it was held that the plaintiff in an action for malicious prosecution could prove the contents of the indictment without the original. This development opened the floodgates to unmeritorious actions in tort by acquitted defendants. The first half of the nineteenth century was the great age of such actions, many of which were tools of blackmail, harassment and extortion. The consequences are vividly described by Professor Hay in his essay “Prosecution and Power. Malicious Prosecution in the English Courts, 1750-1850” (Policing and Prosecution in Britain 1750-1850, ed. Hay and Snyder (1989), Chapter 8). Against this background, the tort of malicious prosecution provided the only means available to the common law of deterring the abuse of private prosecutions.

Eighteenth and nineteenth century judges were no more inclined than their modern successors to declare large general principles beyond the requirements of the case in hand. It is, however, clear that the rationale of the tort, the relevance of malice as one of its elements and the reason why it was treated as an exception to the absolute immunity attaching to things done and said in the course of legal proceedings, all lie in the public character of the function performed by the prosecutor. This accounted for both the continued existence of the tort and its limitations. In particular, it accounted for the fact that it was confined to the abuse of criminal proceedings.

Lord Wilson considers, adopting the view of Fleming, that the limitation of the tort to criminal proceedings was a distortion introduced into the law by the obiter dictum of the Court of Appeal in Quartz Hill Consolidated Gold Mining Company v Eyre (1883) 11 QBD 674. But this view is unsound. It has been a cardinal feature of the law relating to malicious prosecution from its inception. For nearly three centuries, the leading case on the elements of the tort was Savile v Roberts (1698) 1 Ld Raym 374. This famous case was decided just six years before the closely analogous tort of misfeasance in public office was authoritatively defined in Ashby v White (1704) 14 St Tr 695. Holt CJ reaffirmed the existence of the action for malicious prosecution of criminal proceedings and defined its ambit in the face of objections that it had become anomalous and redundant. One of the objections was that “there is no more reason that an action should be maintainable in this case than where a civil action is sued without cause, for which no action will lie.” Rejecting this argument, at p 379, Holt CJ said that the two processes were not comparable, for two reasons. One was that the malicious prosecution of crime was an abuse of a public function, whereas a civil action was undertaken for private purposes. The other was that costs were recoverable in civil proceedings but not in criminal ones. Holt CJ dealt with the point as follows:

In a passage that at first sight may be thought to contradict his rejection of liability for the malicious conduct of civil proceedings, Holt CJ added:

It is clear from the reference to Daw v Swaine that Holt CJ in this passage was talking about the action for malicious and vexatious arrest or distraint of goods, which was subsequently subsumed in the action for abuse of process. In Salkeld’s report of the same case (1 Salk 13, 14), it is expanded as follows:

Of Holt CJ’s two reasons, the first, relating to the public character of the functions of a criminal prosecutor was much the most significant and has proved to be the most fertile in the subsequent development of the law. The same point was made a decade later by Parker CJ in Jones v Givin (1713) Gilb KB 185, 186-187, where a similar objection was raised to the tort of malicious prosecution, namely that it had no counterpart in civil litigation. His response was that a civil litigant was allowed a degree of latitude which was not appropriate for a prosecutor seeking the punishment of the accused by the state:

From the outset of the modern history of the tort, the reason why proof of malice was required was that it negatived the public character of the prosecutor’s performance of his functions, and exposed him to liability which would not have attached to the proper albeit misguided performance of a public function. Restating the position in the leading modern case, Gregory v Portsmouth City Council [2000] 1 AC 419, 426, Lord Steyn observed that “a distinctive feature of the tort is that the defendant has abused the coercive powers of the state.” As the context of this remark demonstrates, what Lord Steyn meant by the “coercive power of the state” was its power to punish.

There is a small and anomalous class of civil cases in which an action has been held to lie for maliciously procuring an order of the court. Of these the only one of any real significance in modern conditions is the action for maliciously presenting a winding up petition (Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674). Other, less common special cases are procuring a search warrant without reasonable cause (Gibbs v Rea [1998] AC 786) or a bench warrant of arrest (Roy v Prior [1971] AC 470), maliciously setting in train a process of execution against property (Clissold v Cratchley [1910] 2 KB 244), and maliciously procuring the arrest of a ship (The Walter D Wallet [1893] P 202). All of these cases involved ex parte interlocutory orders improperly procured by the person initiating the proceedings, in circumstances where in the nature of things there would never be a final order. Such orders give rise to rather special considerations. They were reviewed by the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419, 427-428 and treated as examples of the ex parte abuse of the court’s coercive powers whose existence did not in itself justify a wider ambit for the tort of malicious prosecution. I respectfully agree with the analysis of these cases in Lord Neuberger’s judgment, by reference to the United States case-law.

It is in my opinion entirely clear that on the law as it presently stands there is no action for the malicious prosecution of civil proceedings outside the special case of malicious winding up petitions and a small number of analogous ex parte proceedings. The question is therefore whether the Board should develop the law so that this long-standing limitation on the reach of the tort is swept away. I acknowledge the attraction of doing so on the extreme and unpleasant facts of this case. But if the law is to be developed, it must be done in a manner which is principled, leaves it coherent across cognate subject areas, and does not simply resolve one problem at the cost of creating many more. Even if judges were Herculean, it would be pointless for them cut off the head of the Lernaean Hydra merely to see it grow two more in its place.

First, and fundamentally, the distinction between civil proceedings and criminal prosecutions is neither arbitrary nor unsatisfactory. Malicious prosecution is in modern conditions an anomalous tort. It was devised to meet a particular social problem, associated with the private prosecution of crime, which hardly exists today. It would be eccentric to enlarge the anomaly by extending liability to civil proceedings to which it has never previously applied. The tort is an exception to two well-established principles of English law, namely the principle that things done and said in the course of legal proceedings are absolutely immune from civil liability, and the principle that malice does not make an otherwise lawful act tortious. These exceptional features of the tort of malicious prosecution are justifiable only because the tort of malicious prosecution is a form of misfeasance in public office. It is a tool for constraining the arbitrary exercise of the powers of public prosecuting authorities or private persons exercising corresponding functions. A malice-based tort makes no sense in the context of private litigation where the plaintiff is not exercising any public function. Nor is there any justification in that context for making a further substantial inroad into the immunity from civil liability for things said and done in the course of legal proceedings.

Secondly, within the last few years, the House of Lords has held in Gregory v Portsmouth City Council [2000] AC 419 that the tort of malicious prosecution does not (with immaterial exceptions) extend beyond the abuse of criminal proceedings, and has declined to expand its scope. The House’s refusal to expand the scope of the tort so as to embrace civil proceedings other than disciplinary proceedings was obiter. However, there are dicta and dicta. The application of the tort to the abuse of civil proceedings was decided in Gregory because it was important to settle it: see Lord Steyn at p 432F-G. It had been fully argued both in the Court of Appeal and in the House, and the answer given at both levels was as carefully considered as any ratio decidendi. Schiemann LJ’s dissenting judgment in the Court of Appeal, which raised all of the points which are now urged upon the Board, was rejected. Nothing has changed since 2000 to undermine the authority of the Committee’s statement of the law. No considerations have been urged upon the Board to suggest that the common law of the Cayman Islands on this point should differ from that which applies in England and will continue to apply in England, at least until the point reaches the Supreme Court. There are no features of the present case which distinguish it from Gregory except that one is bound to have more sympathy for Mr Paterson. The conduct of Mr Delessio, for which the respondent is vicariously liable, was appalling. But the respondent was nevertheless entitled to defend the counterclaim on the basis of the common law as the House of Lords had so recently declared it, and Henderson J and the Court of Appeal were both entitled and bound to apply it. Litigants are entitled to a measure of stability and predictability in this relatively well-trodden area of law.

Third, the precise ambit of the tort, if it extends to civil proceedings of a private nature will be both uncertain and potentially very wide. The Board would have created a new malice-based tort the gist of which is the malicious initiation of baseless proceedings in a manner which damages the reputation of the victim. But if that is to be the essence of the tort, then it ought in principle to apply to the malicious abuse of disciplinary proceedings, the very proposition which the House of Lords was not prepared to accept in Gregory. Logically, it would also apply to any factual case advanced in civil proceedings which maliciously and baselessly discredited another party, including a case advanced by a defendant or a third party. Logically it would extend to cases where the action was not maliciously brought but the plaintiff gave malicious evidence, or indeed to a case where a witness who was neither the plaintiff nor the directing mind and will of the plaintiff gave malicious evidence. In the case presently before the Board, the particular abuse consisted in the introduction of a baseless allegation of fraud. But if the tort is extended to the conduct of civil proceedings, there is nothing in logic to suggest that liability can be limited to such cases.

Finally, there are real concerns about the practical consequences of any extension of the law in this area which would offer litigants an occasion for prolonging disputes by way of secondary litigation. It is no answer to these concerns to say that the bar can be set so high that few will succeed. Malice is far more often alleged than proved. The vice of secondary litigation is in the attempt. Litigation generates obsession and provokes resentment. It sharpens men’s natural conviction of their own rightness and their suspicion of other men’s motives. It turns indifference into antagonism and contempt. Whatever principle may be formulated for allowing secondary litigation in some circumstances, for every case in which an injustice is successfully corrected in subsequent proceedings, there will be many more which fail only after prolonged, disruptive, wasteful and ultimately unsuccessful attempts.

Abuse of process

Abuse of process emerged as a tort considerably later than malicious prosecution and differs from it in significant respects. It applies to the initiation or conduct of civil proceedings. It is not necessary to prove malice. It is not necessary to show that the proceedings have gone to judgment. It is not even necessary to show that they were baseless, although in practice they often will be. The essence of the tort is the abuse of civil proceedings for a predominant purpose other than that for which they were designed. This means for the purpose of obtaining some wholly extraneous benefit other than the relief sought and not reasonably flowing from or connected with the relief sought. The paradigm case is the use of the processes of the court as a tool of extortion, by putting pressure on the defendant to do something wholly unconnected with the relief, which he has no obligation to do. Such cases are extremely rare. Although there is a moderately substantial body of case-law, there are only two reported cases in England in which the action has succeeded, both involving the now obsolete procedures for the arrest of debtors, which had an obvious potential for abuse. No case has succeeded in England since 1860, although Australian litigants appear to have been both more persistent and more successful. Like the tort of malicious prosecution as it was conceived to be before this case, abuse of process is on the verge of extinction, the only recent sightings being in Australia.

The origin of the tort is the decision of the Court of Common Pleas in Grainger v Hill (1838) 4 Bing NC 212, a case expressly decided on the footing that there was no previous authority. It arose out of the right of a creditor to sue for a writ of capias ad respondendum, an ex parte administrative process by which a writ was issued to a creditor upon his verifying the debt on affidavit. The writ directed the sheriff to arrest the debtor to require him to answer the claim. These particular creditors had lent money to a shipowner, secured by a mortgage of his ship. Being concerned about the adequacy of their security, they threatened to have him arrested before the debt was due, unless he repaid it early. They then procured the writ and endorsed it with a direction to the sheriff’s officers that if the defendant could not find bail, they were to take the ship’s register, without which it could not trade. Neither the creditors nor the sheriff’s officers had any right to the ship’s register. In a subsequent action by the debtor on the case, the creditors applied for a non-suit, arguing that the merits of their earlier action had never been decided judicially and that there was no averment in the pleadings of a want of “reasonable and probable cause”. This argument was substantially based on the law relating to malicious prosecution. Rejecting it, Tindal CJ said, at 221:

The only other reported English case in which such an action has succeeded is Gilding v Eyre (1861) 10 CB (NS) 592, which concerned another ex parte process by way of enforcement. The defendant was a judgment creditor who had obtained a writ of capias ad satisfaciendum. This was a writ directing the sheriff to arrest the debtor and unless he satisfied the judgment to produce him in court. The writ in Gilding was endorsed with a direction to levy a sum substantially exceeding the true amount due. The debtor tendered the amount actually due but refused to pay the balance. He was therefore arrested by the sheriff’s officers and had to pay the balance to obtain his release. Willes J, delivering the judgment of the Court of Common Pleas, said at p 604:

Summarising the effect of these authorities in the High Court of Australia in Varawa v Howard Smith Co Ltd (1911) 13 CLR 35, 91, Isaacs J observed that:

Once the tort had been established, the courts consistently declined to extend it so as to cover cases in which the defendant was genuinely seeking the relief prayed in the writ but for an ulterior motive, even if that motive were malicious or improper. Insolvency proceedings were, and perhaps still are commonly initiated with a view to obtaining some benefit which will flow from the insolvency other than the recovery of the debt or a dividend. In King v Henderson [1898] AC 720, the creditor intended to obtain the dissolution of his partnership with the debtor, which would automatically follow from his bankruptcy. In the Australian case of Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509, the creditor hoped to discover from the bankrupt’s examination who had instigated him to make certain defamatory statements. In neither case was the creditor’s conduct tortious. He truly wanted a bankruptcy order, which was the purpose for which the proceedings were designed. Once that was demonstrated, the reason why he wanted it no longer mattered. In Dowling, Isaacs J put the point in this way at pp 521-522:

In England, perhaps the most striking modern illustration is the decision of the Court of Appeal in Goldsmith v Sperrings Ltd [1977] 1 WLR 478. The background to this decision was the well-established rule of English law that the distributors as well as the authors and publishers of a libel, are liable in an action for defamation. The question at issue was whether Sir James Goldsmith was entitled to sue the distributors of Private Eye for libel, with a view to making it impossible for the magazine to continue in business. This was to be achieved by putting pressure on the distributors to settle on terms that they ceased to distribute it. An application to stay or dismiss the proceedings as an abuse of process failed for a number of reasons, one of which was that Sir James’s objective was not in the relevant respect extraneous to the proper purpose of the proceedings. This was because, although he could not have got an order from the court preventing the distribution of Private Eye, a claim for damages against the distributors was a proper use of the court’s process and a settlement of such a claim on whatever terms the parties might fairly agree was simply a consequence of the distributors’ potential liability. It could not therefore be regarded as an abuse. Bridge LJ, at p 503 dealt with the applicant’s submissions on abuse of process in terms which go to the heart of the issue. Answering the question what is meant by a “collateral advantage” in the context of this tort, he said:

Perhaps the most illuminating analysis of the question is to be found in the majority judgments in the High Court of Australia in Williams v Spautz (1992) 174 CLR 509. Dr. Spautz had been dismissed from his lectureship at the University of Newcastle for persisting in a campaign against another academic member of the university after being required by the university’s council to desist. He instituted 32 actions against the university and various of its members, in which he made allegations of criminal libel, conspiracy, perverting the course of justice and the like. Some of those whom he had sued began separate proceedings against him seeking declarations that his actions were an abuse of process. The trial judge found that Dr Spautz’s predominant purpose was to put pressure on the university to reinstate him or to settle his claims on favourable terms. Other, subordinate, purposes, included the vindication of his reputation and the collection of material for his research into corruption at Australian institutions. Mason CJ and Dawson, Toohey and McHugh JJ reviewed the principal English and Australian authorities and summarised the essence of the tort as being that “the party who has instituted proceedings has done so for a purpose or to effect an object beyond that which the legal process offers”: para 27. In a valuable concurring judgment, Brennan J adopted the view of Bridge LJ in Goldsmith v Sperrings Ltd and concluded at para 12 that:

It is sometimes said, for example in Fleming, The Law of Torts, 10^th ed (2011), 708, that in addition to the extraneous purpose, it is necessary to prove some “overt act” other than the proceedings themselves, such as the extortionary threat in Grainger v Hill. The better view, however, is that this is not an additional requirement but merely evidence of the extraneous purpose. As Mason CJ and Dawson Toohey and McHugh JJ observed in Williams v Spautz (1992) 174 CLR 509, at para 41, in practice “the conclusion which the court reaches is more likely to be founded upon objective evidence rather than subjective evidence of intention.” In the great majority of cases, an overt act may be the only way of proving the abuse. But it is not a legal element of the tort. The abuse may sometimes be the inevitable inference from the surrounding circumstances, as it was in Dr Spautz’s case.

These limitations on the scope of the tort are not technicalities, but arise from a principled reluctance on the part of the courts to countenance civil liability for invoking the jurisdiction of the court. As Slade LJ observed, delivering the judgment of the Court of Appeal rejecting a claim for abuse of process in Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391, 470F, the limitation may well cause hardship, but if there is a gap in the law it rests on the same considerations of public policy which give immunity to witnesses against civil actions based on the falsity of evidence given in judicial proceedings. He added that “if the position were otherwise, honest litigants might, be deterred from pursuing honest claims or defences and honest witnesses might, be deterred from giving evidence.”

In the present case, the Judge recorded that it had not been alleged that the legal process was used by Mr Delessio for any purpose for which it was not designed, and that in any event such an allegation could not have been made out on the facts. This conclusion was inevitable once he had found that Mr Delessio genuinely believed that Sagicor had been overcharged. Relief was genuinely being claimed in order to recover the overcharge, which was a proper purpose of such an action. Mr Delessio’s dislike of Mr Paterson did not explain why the relief claimed was sought. It was only “the dominant factor which led him to present what should have seemed like an ordinary case of overcharging as one of fraud” (para 239). It is true that the allegation of fraud was both baseless and malicious, but neither baselessness nor malice are relevant to this cause of action.

Conclusion

In a passage which I have already cited from his speech in Gregory v Portsmouth City Council [2000] 1 AC 419, 432-433, Lord Steyn expressed the view that any manifest injustices arising from the limitation of the tort of malicious prosecution to criminal prosecutions were capable of being addressed by “any necessary and desirable extensions” of other torts. Lord Steyn had a number of possible torts in mind in addition to abuse of process. In my opinion he cannot be read as saying that an extension of either of the two torts relied upon in this case was “necessary and desirable”. Nor can he have thought that there would necessarily be a remedy in every case of “groundless and damaging civil proceedings”. His earlier observations about the problems of secondary litigation suggest that he did not. The principal difficulty faced by the appellants in this case is that on the Judge’s findings of fact the only tort which would avail them would not in fact be an extension of any existing tort. It would be a wholly new tort of maliciously making damaging allegations of fact in the course of advancing a genuine but unfounded claim in civil proceedings. In my opinion the law has never been prepared to countenance such a tort in the past and should not be prepared to do so now.

LORD NEUBERGER (DISSENTING):

Introductory

The issue on this appeal is whether we should extend the scope of either or both the established torts of abuse of process and malicious prosecution.

The facts giving rise to this issue are fully set out in paras 5 to 35 of Lord Wilson’s judgment on behalf of the Board, and I do not propose to repeat them.

In paras 128 to 148 and paras 149 to 158 respectively of his dissenting judgment, Lord Sumption has comprehensively, and in my view accurately, set out the history and current state of English law in relation to malicious prosecution and abuse of process.

Lord Wilson would use this opportunity to extend the law of malicious prosecution to cover a case such as the present, and Lord Sumption would not. Neither of them would extend the law of abuse of process. I agree with them about abuse of process and it is unnecessary to say any more about it. So far as extending the law of malicious prosecution is concerned, I agree with Lord Sumption. I do so with great sympathy for the appellants, because, as Lord Wilson’s opinion graphically establishes, one’s instinctive reaction as a human being is that Mr Paterson and his company should be entitled to compensation for their emotional and financial losses resulting from Mr Delessio’s actions.

However, there are sound reasons for not following this instinctive reaction, and for rejecting the suggestion that we should extend the scope of malicious prosecution. These reasons are contained in paras 144 to 148 of Lord Sumption’s opinion, when viewed in the context of the principles he sets out in paras 122 to 127, and, in my view, they strike the right balance between preventing malicious proceedings, and maintaining access to the courts.

The relevance of the United States jurisprudence

My conclusion is reinforced by consideration of a relatively large number of decisions of courts in the United States of America in this area of law. I believe that it is helpful to look at these cases for four reasons.

First, on this sort of issue, it is generally helpful to look at the experience of other common law jurisdictions. In the recent decision of the Supreme Court in Jones v Kaney [2011] 2 AC 398, para 76, Lord Collins said this:

Secondly, in this case, as in Jones, the position is as Lord Collins immediately went on to describe it, namely, “[i]t is only in the United States that there has been extensive discussion in the case law of the policy implications of” the issue in this case, extension of the scope of the tort of malicious prosecution, and in that case, “removal of immunity for actions by disappointed clients against their experts”.

Thirdly, in Gregory v Portsmouth City Council [2000] 1 AC 419, where, as Lord Sumption explains, the House of Lords decided that it would be wrong to extend the scope of the tort, Lord Steyn considered in some detail, at pp 428-430, the position which, as he understood it, had been taken by the courts in the United States. Having quoted passages from §674 and §680 of The American Law Institute, Restatement of the Law, Torts, 2d (1977) (“the Restatement”), and having referred to two decisions of state Supreme Courts and a decision of the District of Columbia Court of Appeals, he said that:

In fact, as a fuller analysis of the United States jurisprudence shows, it is by no means the general rule that the scope of the tort of malicious prosecution is significantly wider than it is in England and Wales following Gregory.

Fourthly, the United States jurisprudence casts illuminating light on, and helps to shape the contours of, “the small and anomalous class of civil cases in which an action has been held to lie for maliciously procuring an order of the court”, which are referred to by Lord Sumption in para 143 above, and renders those cases less anomalous than they appear at first sight.

The United States jurisprudence: an overview

It is convenient to start with the Restatement, which has various sections dealing with the torts which are the focus of this appeal. §653 is concerned with malicious prosecution of criminal proceedings, §674, §677 and §680 are concerned with malicious prosecution of civil and administrative proceedings, and §682 is concerned with abuse of process. For present purposes, one need, I think, focus only on §674, §677 and §680.

§674, which was quoted and relied on by Lord Steyn in Gregory, is to this effect:

§680, also referred to by Lord Steyn, is to similar effect, save that it applies to “civil proceedings … before an administrative board”.

On the other hand, §677 of the Restatement is in these terms:

This section appears to be unnecessary as it is a subset of §674. However, as the comment in the Restatement explains:

§674 is often referred to by United States judges and textbooks as “the American Rule” or “the Restatement Rule”, whereas §677 is often referred to as “the English Rule”.

The American Rule is summarised in Dobbs, Hayden and Bubick, The Law of Torts (2^nd ed, 2011) , at p 408, in these terms:

Dobbs explains the English Rule as mirroring the American Rule, but with the added requirement that the plaintiff must establish that the previous proceedings were not merely without probable cause and unsuccessful, but that they caused him “special injury”, i.e. what the Restatement refers to as “caus[ing] him to be arrested or deprived of the possession of his land or chattels or other things”. At pp 416-417, Dobbs says this:

Examination of the cases suggests that courts in the United States are almost as likely to adopt the English Rule as the American Rule. According to Dobbs, p. 415, “a majority of American courts” follow the American Rule. In terms of numbers, there is a list of jurisdictions which applied each Rule as at 1977 in footnotes 3 and 4 of the judgment of the Supreme Court of Oregon in O’Toole v. Franklin, 569 P.2d 561 (1977), 564. These footnotes identify 23 states (including California, Florida, Massachusetts and Missouri) which then adopted the American Rule, and 17 states (including Illinois, New York, Ohio and Texas) which then adopted the English Rule. However, since then, legislation has intervened in some states, and some states have changed their approach. Thus, in Illinois, statute has removed the requirement for a plaintiff to show “special injury” where he has been the defendant in what he now claims was a malicious medical malpractice claim; and New Mexico used to adopt the English Rule but now adopts the American Rule, although it has gone further still and restated the tort in its entirety.

The “small and anomalous class of civil cases”

It is, I think, convenient first to examine how the courts in the United States which have adopted the English Rule, have justified and applied the exceptions to the general rule that the tort of malicious prosecution does not extend to civil, as opposed to criminal, claims. As is apparent from §677 of the Restatement and the extract cited above from pp 416-417 of Dobbs, malicious prosecution can only be invoked by a former defendant to proceedings under the English Rule where the proceedings have caused him “special injury” – i.e. injury over and above the ordinary emotional and financial damage, including, as the Supreme Court of Texas put it, the “inconvenience [and] embarrassment”, normally caused by litigation – see Texas Beef Cattle Co v Green, 921 S.W.2d 203 (1996), 208.

In the New York Court of Appeals in Engel v CBS Inc, 711 N.E. 2d 626 (1999), at 629, Ciparick J explained the origin of “the special injury requirement” in these terms:

It appears to me that this satisfactorily explains and justifies the various established exceptions to the rule that the tort of malicious prosecution does not extend to civil proceedings. Those exceptions are set out by Lord Sumption in para 143. They all involve either ex parte or interlocutory orders being made against a defendant, and, because they are ex parte or interlocutory, they could quite conceivably have been granted in proceedings which could subsequently be established as having been “malicious”. Final relief will never be granted in such proceedings (save, I suppose, where the final order is subsequently set aside), as it is an essential ingredient of a claim in malicious prosecution that the proceedings in question will have failed. However, where interlocutory relief is granted, any loss thereby caused will be “special injury”, as it is not part of the normal emotional and financial detriment typically caused by litigation.

An obvious type of case where special injury could be caused is where interlocutory relief (or, in United States nomenclature, a provisional remedy) is granted against a defendant in the allegedly malicious proceedings. In practice, however, it would normally be unnecessary for the former defendant to resort to a malicious prosecution claim to recover compensation for such loss, as the interlocutory relief will have been an injunction, for which the former claimant normally will have given a cross-undertaking in damages.

In conclusion on this aspect, then, it seems to me that the “special injury” rule which United States jurisprudence has identified as the distinguishing ingredient of the English Rule, as against the American Rule, satisfactorily explains the otherwise seemingly anomalous exceptions to the general rule that a malicious prosecution claim does not lie in respect of civil proceedings. It is also interesting to note that its justification is said at least partially to lie in the fact that a successful defendant in English civil proceedings can expect to recover his costs. And, I would add, where such proceedings were “malicious”, he should recover them on an indemnity basis.

The United States jurisprudence: a little more detail

As is clear from the summary in para 175, the issue whether to adopt the English Rule or the American Rule has been considered by a large number of different courts at different levels in the great majority of the fifty states of the United States. It would be inappropriate, indeed it would be well-nigh impossible, to discuss each of them in this judgment. Whatever the ultimate decision, the nature of the court’s function in this field was well summarised by Freeman CJ in the Illinois Supreme Court decision of Cult Awareness Network v Church of Scientology International, 685 N.E. 2d 1347 (1997), p. 1356, as being the “responsibility to maintain a proper balance between the societal interest in preventing harassing suits and in permitting the honest assertion of rights”. Courts must “respon[d] to these competing interests” whilst maintaining that balance - per the District of Columbia Court of Appeals, Morowitz v Marvel, 423 A. 2d 196 (1980), pp 197-198.

Various judges have suggested that adopting the American Rule would mean that “there would be no end of litigation”, as “the parties could keep on suing each other to the end of time”, as it was put in the Supreme Court of Pennsylvania by Paxson CJ in Norcross v Otis Bros & Co, 25 A. 575 (1893), at 578. A successful defendant, “seeking additional vindication”, might be tempted to sue for malicious prosecution, “and, if unsuccessful in that claim, their opponents will be all too willing to return the favour”, as the New York Court of Appeals put it in Engel. However, these points did not impress the dissenting judges in the Supreme Court of Michigan, who, in expressing their support for the American Rule, did not, as Coleman CJ put it, “normally find significant the fact that unsuccessful suits may be brought”, as this was a factor which should not “be given added importance simply because the wrong to be compensated is itself a lawsuit”, see Friedman v Dozorc, 312 N.W.2d 585 (1981), at 612.

The English Rule was, however, supported by the majority in Friedman, in a judgment given by Levin J, who pithily said that “[t]he cure for an excess of litigation is not more litigation”, and that it was desirable “to cast off the limitations of a perspective which ascribes curative power only to lawsuits”. He also justified the English Rule on practical grounds, in the light of the heavy burden of proof the plaintiff in a malicious prosecution claim bears:

The chilling effect of the American Rule has also been cited as a reason for adhering to the English Rule. Thus, again in Friedman, Levin J referred to “defense litigators […] whose clients can afford to devote extensive resources to prophylactic intimidation”, and warned against “arm[ing] all prevailing defendants with an instrument of retaliation”. To the same effect, the New York Court of Appeals in Engel emphasised the importance of “plaintiffs remain[ing] relatively free from the threat of retaliatory law suits in bringing their good faith claims”.

However, many judges who prefer the American Rule make the point that the English Rule “denie[s] free access to the courts for all those who have suffered harm but not ‘special injury’ from wrongful litigation”, as Coleman CJ put it in Friedman. He and Moody J also characterised the English Rule’s requirement for special injury as arbitrary. Moody J thought that

A number of judges who prefer the American Rule have relied on the fact that, unlike successful English defendants, American defendants who successfully defeat a claim generally cannot recover their costs, even if the claim can be shown to have been “malicious”. This point was well made by Lockwood J giving the judgment of the Supreme Court of Arizona in Ackerman v Kaufman, 15 P.2d 966 (1932), when justifying the application of the American Rule. However, the distinction was considered and rejected as a good enough reason for departing from the English Rule in Pennsylvania – see per Paxson CJ giving the Supreme Court judgment in Norcross v Otis Bros & Co, 25 A. 575 (1893), essentially on the ground that otherwise “there would be no end of litigation”. It is also interesting to note that Myerscough J in the Appellate Court of Illinois, when refusing to depart from the English Rule, relied on the court’s power to “impose sanctions, which may include an order to pay the other party’s expenses incurred as a result of” a pleading which “harass[ed] or [caused] unnecessary delay or needless increase in the cost of litigation” - in Thomas v Hileman, 775 N.E.2d 231 (2002), at 237.

It is instructive to see some of the developments which have occurred in states whose courts have adopted the American Rule. In DeVaney v Thriftway Mktg. Corp., 953 P.2d 277 (1997), the Supreme Court of New Mexico concluded that the special injury requirement should be abandoned – ie that the American Rule should be followed. In so doing, the Court concluded that, in the light of the similarities between the tort of malicious prosecution and the tort of abuse of process, “there [was] no longer a principled reason for characterizing these two forms of misuse of process as separate causes of action”, and restated the elements of these two torts as the tort of malicious abuse of process. In Durham v Guest, 294 P.3d. 19 (2009), the Supreme Court of New Mexico overruled DeVaney in certain respects, so that, for instance, a claim of “malicious abuse of process” could be raised by a defendant in relation to a plaintiff’s improper use of any aspect of the court’s procedure.

In Aranson v Schroeder, 671 A.2d 1023 (1995), the majority of the Supreme Court of New Hampshire, which follows the American Rule, recognised the tort of “malicious defense”, where a defendant to proceedings raises a defence “without probable cause, …with knowledge … of the lack of merit …, [and] primarily for a purpose other than that of securing the proper adjudication of the claim […]”, and the defendant loses, thereby causing loss to the plaintiff. If, as Levin J considered in Friedman, the American Rule “push[es] the pendulum too far in favour of the defense”, one might more readily see why the Supreme Court of New Hampshire sought to level the playing-field. After all, “a plaintiff [is not] less aggrieved when the groundless claim put forth in the courts is done defensively rather than affirmatively”, although, quite understandably, the Supreme Court of Hawaii has criticised this extension in strong terms for “chilling legitimate defenses” – see Young v Allstate Ins Co 198 P.3d 666 (2008).

Principally because of concerns over its chilling effect, the Supreme Court of California, while adhering to the American Rule in relation to malicious prosecution claims based on civil proceedings, has described the tort as a “disfavored cause of action” and has consequently declined to extend its scope further - see Sheldon Appel Co v Albert & Oliker, 765 P.2d 498 (1989).

In Bidna v Rosen (1993) 23 Cal. Rptr. 2d 251, the Californian Court of Appeal interpreted Sheldon Appel as “enunciating a basic judicial policy in favour of curing the evil of abusive litigation at its source rather than allowing it to metastasize into yet more litigation”, and so decided that malicious prosecution claims could not be brought in respect of family law proceedings. Sills PJ said that “the inadequacy of the husband’s family law remedies” had to be “‘balanced’ against the ‘floodgates’ and ‘chilling’ effects” and that “this balance tilts against malicious prosecution”, as there were “several and substantial” arguments for “a bright line rule” in family cases, namely their “unique propensity for bitterness”, the desirability “to swiftly discourage litigious nonsense at its source”, the requirement for “special sensitivity and flexibility”, and the consequent concern about the chilling effect, and “albeit perhaps tangentially, […] the impact […] on lawyers’ malpractice insurance premiums”. However, a different view was taken by the Oregon Court of Appeals in Vazquez v Reeves, 907 P.2d 254 (1995), which found these points “ultimately unpersuasive”.

Conclusions to be drawn from the United States experience

There is no doubt that there is support both for maintaining the present English Rule and for adopting the American Rule in the United States jurisprudence. A person who wants to read a single case where both sides of the argument are articulately advanced, would be well advised to turn to the Michigan Supreme Court decision of Friedman.

The arguments summarised in paras 181 to 185 above do not specifically arise out of the United States jurisprudence, and they cut both ways. Accordingly, I do not propose to rehearse them again. There are, however, in my view, some more specific reasons why the United States experience supports the conclusion which Lord Sumption has reached.

First, and most obviously, even in a jurisdiction where successful defendants rarely can expect to recover their costs, there seems to be as strong judicial support for the English Rule as for the American Rule. That might at first sight appear to be a somewhat cheap or lazy point, but I believe that it has real force. In a highly developed common law country, where the issue has been considered in far greater depth and by almost infinitely more judges than here, there is about as much support for adhering to the English Rule as there is for departing from it, even though there is a significantly stronger case for departure than there is here.

Secondly, it is clear that departing from the English Rule would have the disadvantage of potentially confusing the law, causing unnecessary uncertainty. The present position is clear: there is a “bright line”, as identified in Bidna. However, if the law was to be changed, so that the American Rule became the norm, judges would have to consider questions such as whether to exclude family law proceedings from the ambit of the tort, whether to extend the tort to cover malicious defence, and whether to extend the law to cover the unjustifiable issue of applications or other steps in proceedings.

Thirdly, and more marginally, the United States jurisprudence, with its “special injury” requirement in the English Rule, justifies on a principled basis what would otherwise appear to be anomalous exceptions to the principle that a claim in malicious prosecution cannot be based on civil proceedings. Where a rule has apparently anomalous exceptions, it is, in my view, easier to justify departing from that rule or adding to the exceptions. Once, however, the exceptions are logically explained, it is harder to justify departing from the rule or adding to the exceptions other than on a logical basis.

Fourthly, the United States jurisprudence provides a reminder that wrongful civil litigation should not be viewed in isolation. The courts have procedural mechanisms at their disposal to preserve and strengthen the civil litigation process, and to target proceedings brought wrongfully or mistakenly. As Levin J recognised in Friedman, “[g]roundless civil litigation is […] more than an affliction visited upon a few scattered individuals; it besets the judicial system as a whole”. In circumstances where a party has not suffered special injury, the use of procedural mechanisms is preferable to “randomly providing a fortuitous amount of compensation in a handful of isolated cases”.

Other common law jurisdictions

In this judgment, I have concentrated on the United States jurisprudence, because it represents an extraordinarily rich seam of learning and thought on the topic which we are being invited to consider. The only other jurisprudence to which we were taken in argument was that of the Australian courts. In that connection, it would seem that the furthest the courts have gone is to refuse to strike out or stay claims based, to put it shortly, on the American Rule: see, for instance, Little v Law Institute of Victoria (No 3) [1990] VR 257; Kinghorn v HKAC Asset Management Services [2010] NSWDC 232. While Australian judgments always merit considerable respect, I believe that decisions which simply result in a refusal to strike out a claim are rarely of great assistance. While they no doubt help establish that the point raised is arguable, and often that it is important, they throw relatively little light on the issue of whether the point is right.

Conclusion

Accordingly, for the reasons given by Lord Sumption, as supplemented by the points made in this judgment, I would, for my part, have humbly advised Her Majesty that this appeal be dismissed.