Mrs Beverley Goldman & Others v Zurich Insurance Plc
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 05 February 2020 |
| Neutral Citation | [2020] EWHC 192 (TCC) |
| Date | 05 February 2020 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2019-MAN-000021 |
[2020] EWHC 192 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
TECHNOLOGY AND CONSTRUCTION COURT (QB)
Manchester Civil Justice Centre,
1 Bridge Street West, Manchester M60 9DJ
HIS HONOUR JUDGE Stephen Davies
SITTING AS A JUDGE OF THE HIGH COURT
Case No: HT-2019-MAN-000021
Thomas Grant QC & Ryan James Turner (instructed by Walker Morris LLP, Solicitors, Leeds LS1) for the Claimants
Jeffrey Chapman QC & Tom Asquith (instructed by DAC Beachcroft, Solicitors, London EC4N) for the Defendants
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
His Honour Judge Stephen Davies
Introduction and summary of decision
On 10 April 2019 the claimants (“the current claimants”) issued the current proceedings (“the current action”) in which they claim damages and declaratory relief arising out of alleged deceit on the part of the first defendant, Zurich Insurance plc (“ZIP”), and/or conspiracy involving ZIP and others in connection with the issue of cover notes (“the cover notes”) relating to “new home” building warranty insurance policies (“the policies”) issued by ZIP to the claimants and to others in connection with their purchase of flats (“the flats”) in a development in Manchester known as New Lawrence House (“the development”). The development as proposed involved the construction of 139 flats in 3 blocks together with common parts. On 2 August 2019 the current claimants produced their Particulars of Claim which set out the detail of their claims, as summarised below.
On 1 October 2019 the defendants applied to strike out the current claimants' claims as an abuse of process on the basis that they could and should have been litigated in earlier proceedings (“the original action”) between the current claimants (and others) and the current defendants (and another). They did so without having first filed a Defence on the basis that, should their application fail, they would apply for an extension of time to do so.
I should explain that the second defendant (“EWIC”) is made a defendant, as it was on its own application in the original action, solely on the basis that ZIP has transferred to EWIC certain of its rights and duties in respect of its business pursuant to a scheme of arrangement sanctioned by the High Court of the Republic of Ireland, where ZIP is incorporated. No separate issue arises as between the claimants and EWIC on this application, which makes the application on the same basis as does ZIP.
In those proceedings (“the original action”): (a) all of the current claimants brought claims against ZIP and EWIC under the policies as regards defects in their flats and the common parts of the development; (b) some of the current claimants also brough claims against a related company of ZIP, Zurich Building Control Services Ltd (“ZBC”), alleging deceit by ZBC as regards the issue of final certificates issued by a building inspector employed by ZBC under the Building Regulations (“ Building Regulations final certificates”) in relation to their flats.
The trial of the original action came on before me in autumn 2018. As between the original claimants and ZIP I held that the claimants succeeded in their policy claims but that their claims were capped at the purchase price of their flats: Zagora Management Ltd & others v Zurich Insurance plc & others [2019] EWHC 140 (TCC). On appeal and cross-appeal the Court of Appeal in November 2019 upheld the decision on the policy claims but also overturned my decision that the claims were limited to the purchase price of the flats: Manchikalapati & others v Zurich Insurance plc [2019] EWCA Civ 2163. Thus, the original claimants achieved effectively a complete success in their policy claims. EWIC has, however, sought permission to appeal to the Supreme Court and a decision is awaited in that regard.
As between the original claimants and ZBC I held that, although the claimants had established that the Building Regulations final certificates had been issued deceitfully, the claimants had not established that they (whether directly or through their conveyancing solicitors) had relied upon the final certificates in purchasing the flats, so that their claims failed. A limited application for permission was sought by some of the original claimants to appeal against the dismissal of these claims but was refused.
The current claimants' case is that until evidence was heard in that trial neither they nor their legal advisers considered, or had reasonable grounds for considering, that they could advance a claim in deceit or conspiracy against ZIP in relation to the issue of the cover notes. They also contend that in any event there is no basis, upon a proper consideration of all of the relevant circumstances, for striking out the current action as an abuse of process even if it be found that they could have advanced the current claims in the original action.
The defendants' case is that there is no fundamental difference between the deceit claim which was advanced against ZBC in the original action and the deceit and conspiracy claims which are now sought to be advanced in the current action, so that there is no good reason why the current claims could not and should not have been advanced in the original action.
Both parties have filed lengthy and detailed witness statements in support of their respective cases: from Mr Ludlam of DAC Beachcroft (the defendants' solicitors in this action, and ZBC's solicitors in the original action); from Mr Hargreaves of Walker Morris (the claimants' solicitors in this and the original action). Mr Selby QC (the claimants' leading counsel in the original action) has also provided a witness statement. I have had regard to these statements together with the voluminous evidence exhibited and provided, including some of the trial bundles from the earlier action. In assimilating this considerable quantity of material I have, of course, the considerable advantage of having case managed and tried the original action.
I had also had the benefit of detailed and impressive written submissions from leading and junior counsel for the claimants and for the defendants and equally detailed and impressive oral submissions over 1 1/2 days on 16 & 17 January 2020.
In summary, I am satisfied that the current proceedings are not an abuse of process and that the claimants are entitled to proceed with them against both defendants, so that the application will be dismissed. My reasons appear below under the following section headings and in the following paragraphs.
A. The relevant legal principles
| A. The relevant legal principles | 12 – 33 |
| B. The original action | 34 – 51 |
| C. The current action | 52 – 54 |
| D. Could the current claimants have brought the current claims in the original action? | 55 – 70 |
| E. Should the current claimants have brought the current claims in the original action? | 71 – 80 |
In Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 the House of Lords set out the modern approach to what is commonly referred to as Henderson abuse, after the decision in Henderson v Henderson (1843) 3 Hare 100 in which it is said that Wigram V-C first articulated the principle. Lord Bingham summarised the position in a frequently cited passage which has subsequently been accepted as being authoritative:
“The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all circumstances, a party is misusing or abusing the process of the court in seeking to raise before it the issue which could have been raised before. […] While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.”
This speech makes clear that the crucial question is not whether the claimant could have raised the claim in the earlier proceedings but...
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