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Spicer & ANR v Tuli, Court of Appeal, 29 May 2012

12 July 2012
The issues

Discontinuance – estoppel – abuse of process

The facts

The appellants were receivers of a charge over a flat. When they came to sell the property they discovered that the respondent was in occupation. They brought possession proceedings. They brought them on the basis that the respondent was occupying the flat without either consent or a license. The respondent put in a defence claiming that she was a tenant under a tenancy agreement. The defence was filed the day before the date set for the hearing. The appellants, who took the view that the agreements produced were not genuine, nonetheless entered into discussions with ‘redrawing’ the proceedings to give them more time to have a look at the documents. In the end, the proceedings were withdrawn by consent. Subsequently, they brought further proceedings, challenging the tenancy and claiming possession. The respondent applied to strike out the claim either on cause of action estoppel or that the second claim was an abuse of process.

The matter went to the District Judge and the judge who found in favour of the appellant receivers. The respondent tenant appealed to the Court of Appeal.

The decision

In Johnson v Gore Wood & Co the House or Lords had taken a broad merits based approach to the question of abuse of process. It had been clear in the present case that the receivers had said that they had intended to pursue the claim against Ms Tuli. That was why they had suggested the action be withdrawn. The fact that the draft consent order had substituted ‘dismissed’ for ‘withdrawn’ instead of ‘discontinued’ which appeared to be a technical error could not alter the broad merits based approach. It would be unconscionable to allow Ms Tuli to take advantage of what was plainly a technical error. There was therefore no abuse of process.

Was there cause of action estoppel?
It was common ground that the principles of estoppel arising out of proceedings were grounded on the underlying principle that there was a public interest in the finality of litigation and that a person should not be unjustly harassed by a revival of proceedings that had already been dealt with.

What was the effect of the consent order?
In Acho v Rothchild Assett Management Ltd the Court of Appeal had looked at the circumstances in which an employment tribunal claim had been dismissed on withdrawal. There was a distinction between the tribunals and the civil courts, in that the employment tribunals did not have the option of discontinuance. In the Court of Appeal, Lord Justice Mummery had said that it was permissible to have regard to the general principle that the court might have regard to the surrounding circumstances in order to determine the extent of the consent given to the making of the order, and the extent of the estoppel arising from it. Lord Justice Dyson had said, following a review of earlier authorities in that case that what emerged was that there was no inflexible rule to the effect that a withdrawal or judgment by consent inevitably gave rise to a cause of action or issue estoppel. He commented that if it is clear that the party withdrawing was not intending to abandon the claim or issue then that party would not barred from raising the point in subsequent proceedings unless it would be an abuse of process to admit that to occur.

Lord Justice Parker agreed with Lord Justice Dyson and therefore what Lord Justice Dyson had said was an alternative basis on which the case had been decided. This was not based on any particularity of procedure in the employment tribunal. It was clear therefore that there were plainly exceptions as to what would otherwise be a rigid rule of law. This approach gained added force in light of Article (6 ) of the ECHR.

Applying these principles it would be unjust not to allow the receivers to proceed with their first claim even if the cause of action in the second action was the same as in the first. All the surrounding circumstances indicated that the receivers had not intended to abandon their claim and that Ms Tuli through her solicitors knew that.

Appeal dismissed.

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