Barrow v Bankside Members Agency Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Sir Thomas Bingham MR,Peter Gibson,Saville L JJ. |
| Judgment Date | 07 November 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J1107-1 |
| Docket Number | 95/0641/B |
| Court | Court of Appeal (Civil Division) |
| Date | 07 November 1995 |
[1995] EWCA Civ J1107-1
(Mr. Justice Phillips) (Appeal)
Before: The Master of the Rolls (Sir Thomas Bingham) Lord Justice Peter Gibson Lord Justice Saville
95/0641/B
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN'S BENCH DIVISION
MR. P SIMON QC & MR. S BRYAN (Instructed by Messrs Elborne Mitchell, EC3N 2LB) appeared on behalf of the Appellant
MR. A MANN QC & MR. D LORD (Instructed by Messrs Travers Smith Braithwaite, EC1A 2AL) appeared on behalf of the Respondent
Tuesday 7 November 1995
THE MASTER OF THE ROLLSThe rule in Henderson v Henderson (1843) 3 Hare 100 is very well known. It requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the Court so that all aspects of it may be finally decided (subject, of course, to any appeal) once and for all. In the absence of special circumstances, the parties cannot return to the Court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.
The question raised in the present appeal is, on its facts, novel: how should the rule in Henderson v Henderson be applied in the unusual circumstances of the Lloyd's litigation? By "the Lloyd's litigation" I mean to refer to the mass of claims (involving names, members' agents, managing agents, underwriters, brokers and the Society of Lloyd's) which has arisen from losses suffered in the Lloyd's insurance market in recent years.
It would theoretically have been possible for each claimant individually to have issued proceedings against each defendant whom he alleged to be liable to him. The cost to individual plaintiffs would have been prohibitive, the burden on the lawyers involved of preparing so many individual claims and defences would have been enormous, and the courts would have lacked the capacity to try such actions, running into thousands, within any meaningful timescale. But the litigation could theoretically have been handled in this way, which is what the rules of procedure have conventionally envisaged and provided for.
The Lloyd's litigation has not, however, been handled in this way for sound reasons of economy and convenience. There have been two departures from conventional practice, neither of them unique in English procedural history but together involving procedural steps for which there is probably no exact precedent.
First, groups of claimants formed themselves into action groups, the members of which accepted certain rules and contributed towards the very high cost of litigating issues common to them all. Thus the action groups were in practice single issue, or if not single issue, common issue, groups. An example relevant to this appeal is the Gooda Walker action group. This included over 3,000 names, all of whom claimed to have suffered losses on the Gooda Walker syndicates. They issued proceedings against their respective members' agents and against the two Gooda Walker companies which had acted as managing agents for the loss-making syndicates. The common complaint of the names, made in contract against the members' agents and in tort against the managing agents, was one of negligent underwriting, i.e. failure to conduct the underwriting business of the relevant syndicates with reasonable care and skill. When the action brought by the Gooda Walker action group came to trial, that was the issue which Phillips J decided. He decided it in favour of the names, although he did not hold that they were entitled to recover all the damages they had claimed against the defendants in that composite action.
Secondly, the Commercial Court (as the Court of first instance responsible for trying the Lloyd's litigation) sought to manage the various actions on the basis of the generic class into which they respectively fell. Some were called "LMX cases". These were actions in which the plaintiffs complained of losses suffered as a result of writing London Market excess of loss reinsurance. Some were called "long tail cases". These were actions in which the plaintiffs complained of action taken, or not taken, to close, or provide for the discharge of liabilities arising under, underwriting years well in the past. Others were called "portfolio selection cases". In these the complaint was not of negligent underwriting but of inappropriate selection of syndicates for individual names. For some names of ample means and adventurous temperament there might be great attractions in syndicates offering the chance of large profits but an unquantifiable risk of serious loss. For other names of more modest means, relatively speaking, and more cautious disposition, the prospect of smaller but more dependable profits and the avoidance of loss might be more appropriate, and instructions might be given by the name that this was the policy which he wished to be adopted. Names who fell into this last category, and who made large losses as a result of participating in high risk syndicates, complained that their participation in such syndicates represented a breach of the duty which their members' Agents owed to them to serve their best interests and comply with their instructions.
In giving directions for the preparation and trial of cases (including cases brought by action groups) the object of the Commercial Court was to exploit the trial capacity of the Court in the most productive possible way. Thus the Court identified issues common to numerous claims and ordered early trial in the expectation that the decision, whichever way it went, would prove determinative of many cases, whether by promoting settlement or leading to abandonment of claims. And the court selected certain cases for trial, not as test cases in the formal sense, but in the hope that the formulation of the relevant principles and the application of those principles to different sets of facts, would allow other claimants to assess their prospects of success and act accordingly.
Our attention was drawn to one issue pleaded in the Gooda Walker action which did not fall within the single issue I have defined, and which was thought to require consideration of the personal position of individual names. It was ordered that trial of this issue should be deferred. This order made complete procedural sense. The cohesion (and, probably, the economics) of action group suits depended on their being single issue, or common issue, proceedings; and the Court's procedural objectives would plainly have been frustrated had the trial of determinative issues become bogged down in detailed enquiry into the personal circumstances of thousands of names, their relationships with their agents, and so on.
In devising its immediate programme the Court inevitably confined its attention to cases actually begun and proceeding before it. But in 1993, when the process of effective management of the Lloyd's litigation took shape, it was appreciated that the actions then in train did not represent the full extent of the litigation which might ensue. Some plaintiffs were known to be preparing claims, others to be considering proceedings. Knowledge of these embryonic and potential claims gave added relevance to the preliminary issues and sample cases selected for trial, since the need for further actions might thereby be obviated or reduced.
It was also appreciated that the generic classes of claim into which, for convenience, the actions had been divided were not mutually exclusive. A single plaintiff might belong to an LMX action group, and have a long tail claim, and complain of the way in which his portfolio was selected. Mr. Brown is an example. He was a Gooda Walker name and a member of the Gooda Walker action group. He was also a portfolio selection claimant. The two claims, one made as a member of an action group, the other as an individual, proceeded side by side. His portfolio selection claim was one of the sample claims selected for early trial, and he was one of the first names to recover judgment in his favour. Later, his claim as one of the 3,000 Gooda Walker claimants also succeeded.
That brings me to Mr. Barrow, the Plaintiff in the present action. He also was a Gooda Walker plaintiff and as such he also succeeded. But he only obtained judgment for about 60% of the damages he had claimed. Up to then he had issued no proceedings claiming damages for negligence or breach of duty by his members' agent in selecting his portfolio. But shortly after the Gooda Walker judgment he did so. It seems probable that these new proceedings were issued in the hope of making good the shortfall in the damages he had recovered in the Gooda Walker action.
Mr. Peregrine Simon QC, who represents the defendant members' agent in this Court, challenges Mr. Barrow's right to bring these new proceedings at this stage. He bases his challenge on Henderson v Henderson. Mr. Simon points out that the writ in the Gooda Walker action was expressed in terms wide enough to cover any claim in negligence by Mr. Barrow...
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