Richard Durkin Against Hsbc Bank Plc
| Jurisdiction | Scotland |
| Judge | Lord Malcolm,Lord Drummond Young,Lady Paton |
| Neutral Citation | [2016] CSIH 93 |
| Date | 22 December 2016 |
| Docket Number | XA28/16 |
| Court | Court of Session |
| Published date | 22 December 2016 |
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2016] CSIH 93
XA28/16
Lady Paton
Lord Drummond Young
Lord Malcolm
OPINION OF THE COURT
delivered by LORD MALCOLM
in the cause
RICHARD DURKIN
Pursuer and appellant
against
HSBC BANK PLC
Defenders and respondents
Appellant: Party
Respondent: Roxburgh; DLA Piper Scotland LLP
22 December 2016
Introduction and Overview
[1] In December 1998 Mr Richard Durkin (the pursuer) visited a PC World outlet in Aberdeen with a view to purchasing a laptop computer. For reasons explained later, this spawned a litigation which reached a final conclusion in the UK Supreme Court in March 2015. Although the merits of his claim against the suppliers and the bank providing credit facilities were decided in his favour, Mr Durkin was and remains extremely dissatisfied with the damages awarded to him, namely £8,000 plus interest. He has now raised the present action against HSBC Bank plc (the defenders) as the successors to the original bank, namely HFC Bank plc. In it he seeks decree for payment of £600,000 as “provisional” damages, plus decree for £12,000 per month until payment. The sheriff at Aberdeen dismissed the action, primarily on the basis that the pursuer is seeking to re‑litigate issues which were the subject of the first action (res judicata). That ruling was upheld by the sheriff principal. Mr Durkin now appeals to this court. He claims that the present action raises different issues for decision. The defenders have a subsidiary argument that if any part of the new action is not res judicata, it has prescribed in terms of the Prescription and Limitation (Scotland) Act 1973.
[2] The full circumstances of what is a long and complicated matter, plus a summary of the submissions made to this court, are set out in an appendix to this opinion. The decision of the court is based on the full circumstances, but to make this opinion more readable and understandable for those who do not wish to traverse every detail, what follows is a potted version of the history of events.
[3] Mr Durkin wished to purchase a laptop from PC World on credit facilities to be supplied by a bank. He required the computer to have an internal modem. He was told that he could take the item home, unseal its box and inspect the equipment. If it did not have an internal modem it could be returned, and his deposit would be refunded. The next day he returned the laptop because it did not have an internal modem. However, although ultimately retaining possession of the computer, PC World refused to accept his rejection, and in due course the bank insisted upon payment under the credit agreement. Mr Durkin told the bank what had happened, but it relied upon PC World’s assertion that the rejection of the item was invalid. Subsequently the bank issued a default notice in respect of Mr Durkin and informed certain credit reference agencies of this state of affairs.
[4] Mr Durkin raised an action in Aberdeen Sheriff Court against PC World and the bank claiming that he was entitled to reject the goods and that the contracts with them had been validly rescinded. After a proof, the sheriff agreed and pronounced declarators to that effect. Mr Durkin also claimed damages from the bank for breach of a duty of care to him when wrongly telling the credit reference agencies that he was in default. The claim was based upon (a) a general impact on his creditworthiness, (b) that this stopped him from taking advantage of zero interest credit cards, and (c) prevented him from buying a new family home in Spain. A total sum of £250,000 plus interest was claimed. The sheriff upheld all three heads of loss, though he quantified total damages at just over £116,500.
[5] Mr Durkin was not satisfied with the sheriff’s assessment of damages. He appealed to the Court of Session. The bank took advantage of this to cross appeal on the merits and in respect of the damages award. The First Division of the Inner House of the Court of Session rejected Mr Durkin’s appeal, and upheld the bank’s cross appeal in all of its branches. It held that the sheriff erred in concluding that the credit agreement had been rescinded. Furthermore, the bank did not breach any duty of care to Mr Durkin. The court noted that there had been no challenge to the assessment of £8,000 plus interest for injury to general creditworthiness, but it concluded that the evidence did not establish either of the other claimed heads of loss. The Inner House revised the sheriff’s findings in fact to reflect this decision.
[6] From substantial success before the sheriff, Mr Durkin’s appeal to the Court of Session resulted in complete failure against the bank. He was left with only the declaratory decree against PC World. He appealed to the UK Supreme Court. It held that the First Division erred in reversing the sheriff’s decision on the merits of the action, although it reached this view on different grounds from those presented to it and the courts below. It also concluded that the bank was in breach of a duty of care to the pursuer. Thus the unchallenged award of £8,000 plus interest for general damages was restored. However, given the terms of section 32(4) and (5) of the Court of Session Act 1988, and in the absence of demonstrable error on the part of the Inner House, the Supreme Court held that it had no jurisdiction to interfere with the revised findings in fact and the decision on the other heads of loss. Mr Durkin’s ultimate recovery was £8,000 plus interest. He was and remains considerably disappointed and aggrieved by this outcome.
[7] Mr Durkin has now raised a fresh initial writ at Aberdeen Sheriff Court seeking decree for damages against the current defenders, who, as the successors to the original bank, stand in their shoes. The main elements of the claimed losses concern recovery of legal expenses incurred in the first action, valued at £300,000, and the rise in the cost of purchasing a larger family home in Aberdeen since the events in question, again valued at £300,000. While the action is still based upon the consequences of the notices sent by the bank to the credit reference agencies, there are certain new features in the pleadings, which are noted in full in the appendix to this opinion.
[8] The action was dismissed by the sheriff, largely on the grounds that it was seeking to re‑litigate matters decided in the earlier litigation (res judicata). This decision was upheld by the sheriff principal. The reasoning of the sheriff and the sheriff principal, and the submissions made to this court in support of the current appeal against the decision of the sheriff principal, can be found in the appendix.
The Law as to Res Judicata
[9] The main question for decision is whether the sheriff and the sheriff principal were correct to uphold the bank’s plea of res judicata. The applicable law is well settled, and can be summarised as follows. The plea, which is found in most developed legal systems, is rooted in the public policy against repeated litigation between the same parties “on substantially the same basis” – Lord President Cooper in Grahame v Secretary of State for Scotland 1951 SC 368 at 387. In the same passage it is stressed that the court should not concentrate on the specific terms of the conclusions or the pleas in law, but look to “the essence and reality of the matter” and simply inquire – “What was litigated and what was decided?”. The court is not concerned with whether the first decision was right or wrong. In Grahame the plea failed because the two actions dealt with “essentially separate and distinct subjects of assessment” – Lord Russell at 392. Phosphate Sewage Co v Molleson (1879) 6 R (HL) 113 makes it clear that simply putting forward new facts to support a claim for relief previously refused will not overcome the plea – Lord Hatherley at 119.
[10] In Short's Trustee v Chung 1999 SC 471 the first action was one of reduction of two dispositions brought by a trustee in sequestration based on gratuitous alienations under section 34(4) of the Bankruptcy (Scotland) Act 1985. Given the meaning of certain provisions in the Land Registration (Scotland) Act 1979, it was discovered that the grant of the reductions had not altered the title to the lands, so in a second action restoration of the properties to the previously infeft proprietor was sought. A plea of res judicata failed. The court asked “the fundamental question”, namely, are there common features which lead to the conclusion that the second action would entail “unacceptable repetition of litigation?” The court rejected the submission that the same issue was being litigated. It derived little assistance from concepts such as a comparison of the medium concludendi of each action, but preferred the “more useful” test adumbrated in Grahame – see at 477H. The “nature of the (second) action” was different from the first. A “new matter” was being litigated.
[11] In Primary Health Care Centres (Broadford) Ltd v Ravangave 2009 SLT 673 Lord Hodge observed that a plea of res judicata depends upon a prior determination by a court of competent jurisdiction pronounced in foro contentioso; that the subject matter and media concludendi are the same; and that (other than in respect of decrees in rem) the parties are the same, or representative of the same parties, or with the same interest. The modern tendency is to focus on the essence of the matter rather than technical form. At paragraph 32 his Lordship noted the clear authority that, since there is only one cause of action, all grounds of pleading that a single act amounts to a delict (or breach of contract) must be raised in the same action. Thus, for example, one cannot seek damages for personal injury at common law, and then, if that is unsuccessful, bring an action based upon breach of statutory duty. It will not avail a pursuer to raise a new action pleading different facts in support of what is, in essence, the same issue;...
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