Bradford and Bingley Building Society v Seddon Hancock and Others, Third Parties
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE AULD,LORD JUSTICE WARD,LORD JUSTICE NOURSE |
| Judgment Date | 11 March 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0311-6 |
| Docket Number | LTA 1998/5821/2 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 March 1999 |
and
[1999] EWCA Civ J0311-6
Lord Justice Nourse
Lord Justice Auld
and
Lord Justice Ward
LTA 1998/5821/2
CCRTI 1999/0075/2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MANCHESTER COUNTY COURT
(His Honour Judge Kershaw)
Royal Courts of Justice
Strand, London WC2
Mr M Black QC (Miss E Gardner 11.3.99) (instructed by Messrs Putsmans, Birmingham) appeared on behalf of the Appellant Defendant.
Mr M Halliwell (Mr S Hilton 11.3.99) (instructed by Messrs Oldham Rust Jobson, Stafford) appeared on behalf of the Respondent 2nd Third Party.
Mr P Raynor QC (Mr S Hilton 11.3.99) (instructed by Messrs Lyons Wilson & Co, Manchester) appeared on behalf of the Respondent 3rd Third Party.
Thursday, 11th March 1999
This is an appeal by the Defendant, Malcolm Seddon, against an order of HHJ Kershaw QC, sitting as a Judge of the High Court in Manchester, striking out as an abuse of process his third party proceedings against the three Third Parties, as partners in a firm, because, in his, the Judge's view, they were inconsistent with a claim made by the defendant against the first Third Party, Rodney Hancock, in his personal capacity in an earlier action ("the Preston action").
Introduction
The appeal raises the question in what circumstances a court may strike out as an abuse of process on the ground of inconsistency an action between parties and on issues different from those in an earlier action. Is inconsistency enough in the absence of special circumstances or, for example, must there be some additional factor such as dishonesty or a collateral attack on the earlier judgment to render the inconsistency an abuse?.
Mr Seddon's claim in the Preston Action was against Mr Hancock, an accountant, for damages for negligence and/or an indemnity in respect of a failed investment which Mr Hancock had advised him to fund by taking a mortgage loan of £120,000 from the plaintiff, the Bradford & Bingley Building Society ("the Bradford"). Mr. Seddon claimed a total of £163,000, representing that principal sum, incurred interest and a further and earlier mortgage loan, all of which he maintained Mr Hancock's investment client had agreed to discharge. Mr Hancock admitted liability under the indemnity for £120,000 and did not traverse the allegation of negligence. Mr Seddon entered judgment for the admitted sum and Mr Hancock was given unconditional leave to defend as to the balance.
Mr Seddon was unable to enforce the judgment against Mr Hancock as the latter had no money and it was pointless proceeding with the balance of the claim against him. However, as a result of all this, he owed the Bradford over £180,000, and when the Bradford instituted proceedings against him for possession of his mortgaged home and recovery of that sum, he sought by these third party proceedings to revive the unsatisfied claim against Mr Hancock and to include in it two of his partners, Mr Walsh and Mr Rhodes. He expressed the third party claim in broader terms than his claim in the Preston action. He sought against all three an indemnity against or contribution towards his liability to the Bradford and damages in respect of their failure to indemnify him and/or in negligence and/or for misrepresentation.
The broad question is whether this second claim falls foul of the well established principle in Henderson v. Henderson (1843) 3 Hare 100, that a party should, save in special circumstances, bring forward his whole case in one go and not subsequently seek to re-open the same subject matter by reference to claims against different persons and/or in respect of different issues.
The Facts
The history of the matter giving rise to the two actions is as follows. In 1990 Mr Seddon owned a house subject to a mortgage loan of £38,000 from the plaintiff, the Bradford. The three Third Parties were chartered accountants and partners practising as a partnership in the name of "Hancocks". The firm was, in addition, an agent of the Bradford.
According to Mr Seddon's pleaded claim in the Preston action, in October 1990, Mr Hancock advised him to borrow more money from the Bradford, secured by a further mortgage on his house and to pass it to him, Mr Hancock, for investment with a client. Mr Hancock said that the return on the investment would be made by the investment client within 3 years and would consist of repayment of the entire sum, payment of Mr Seddon's current commitments on his existing mortgage borrowing of £38,000 and the complete discharge of that borrowing. In reliance on that advice and also on a "personal indemnity" given to him by Mr Hancock, Mr Seddon, in October and November 1990 obtained two mortgage advances from the Bradford of a total of £120,000, and passed them to Mr Hancock for investment.
Unfortunately, Mr Hancock or his investment client did not produce the return and he and his fellow partners seem to have run into financial difficulties. In February 1991 they dissolved their partnership. On 19th March 1992, in response to a letter before action from Mr Seddon's solicitors, Mr Hancock wrote acknowledging the investment money that Mr Seddon had placed with him, stating "I did tell Mr Seddon at the time the loan originated, that I would hold myself personally responsible".
In March 1992 Mr Seddon commenced the Preston action against Mr Hancock claiming £163,000 or damages for negligent advice, an indemnity against any liability to the Bradford and a declaration of an entitlement to an indemnity. Although the statement of claim, in paragraph 1, averred that Mr Hancock was a chartered accountant, the pleading made no averment one way or another as to whether he was acting as a partner of the firm, Hancocks, in giving the advice and indemnity. However, in paragraph 4, specifying the negligent advice, and paragraph 6, pleading Mr Hancock's written acknowledgment in March 1992 of the indemnity, Mr Seddon alleged that:
"The Defendant gave such advice in the further context of his personal indemnity as hereinafter set out."
"The said indemnity is acknowledged by the Defendant in writing by his letter to the Plaintiff's solicitors of 19th March 1992. … the Plaintiff in particular relies upon the acknowledgment therein that 'I did tell Mr Seddon at the time the loan originated that I would hold myself personally responsible."
Mr Hancock, by his defence, admitted liability to indemnify Mr Seddon to the limit of £120,000, namely the total of the two 1990 mortgage loans, of which he claimed to have paid £9,340, leaving a balance outstanding of £110,660, and did not deny that his advice had been negligent as alleged. On 27th May 1992 a District Judge, on the strength, it appears, of Mr Hancock's admission as to the indemnity, ordered judgment for Mr Seddon for that sum and gave Mr Hancock unconditional leave to defend as to the remainder of the claim.
Mr Seddon had difficulties in enforcing payment of the judgment debt. He clearly considered that to proceed with the remainder of his claim against Mr Hancock would be to throw good money after bad. He appears to have taken the view that he would have a better chance of recovery against two of Mr Hancock's former partners, one of whom was Mr Walsh, and to have taken steps to obtain legal aid to join him and another former partner named Sutcliff as defendants in the Preston action. He did not, in the event, join them, possibly because he was unable to obtain legal aid to fund the continuance of the action against them.
That piece of litigation was overtaken by the Bradford's institution in February 1994 of these proceedings against Mr Seddon for possession of his house in respect of the mortgage debt arising from the three loans, which, with principal and interest, then amounted to £183,887.07. Mr Seddon served a defence, alleging that the two later loans had been undertaken on Mr Hancock's advice for the benefit of the firm of Hancocks or one of their clients and that, on 24th August 1990, the firm had agreed in writing to guarantee the repayment of the three mortgage loans and/or to indemnify him against liability to the Bradford in respect of them. The Bradford, by its Reply, admitted that Mr Hancock, Mr Walsh and two other partners of Hancocks had given that written guarantee.
In September 1995 Mr Seddon issued the Third Party Notice in this action seeking as against Messrs Hancock, Walsh and Rhodes: first, an indemnity against or contribution towards liability to the Bradford and damages in respect of their failure to indemnify him and/or in negligence and/or for misrepresentation. His pleaded case against them, unlike that against Mr Hancock in the Preston action, made plain that he was alleging that Mr Hancock, in advising and giving him the indemnity, had acted on behalf of the partnership. So far as material it read:
"1.You [the Third Parties' firm] … had been accountants retained by the Defendant and inter alia by a company Limefarm of which the Defendant was a director and shareholder
2. You at all material times held an agency for and on behalf of the Plaintiffs.
3. You (acting in particular by Rodney Clifford Hancock) advised the Defendant to enter into the loan[s] … and/or advised and/or represented and/or agreed that you would be entirely responsible … for repayment of all monies due … and/or agreed to indemnify the Defendant against any liability … [under the loans] and/or to guarantee payment of all said loans within three years from...
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