Society of Lloyd's v Henderson and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUXTON,LADY JUSTICE SMITH,LORD JUSTICE MOORE-BICK |
| Judgment Date | 27 July 2007 |
| Neutral Citation | [2007] EWCA Civ 930 |
| Docket Number | No. A3/2005/1159(A), A3/2005/1319, A3/05/1159, A3/05/1192 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 July 2007 |
[2007] EWCA Civ 930
Lord Justice Buxton
Lord Justice Moore-bick and
Lady Justice Smith
No. A3/2005/1159(A), A3/2005/1319,
A3/2005/1755, A3/2005/1193,
A3/05/1159, A3/05/1192
IN THE SUPREME COURT OF JUDICATURE APPEAL
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(ANDREW SMITH J.)
Mr. P. Jenkins (Instructed by Grower Freeman) appeared on behalf of the uno names
Mr. K. Adams spoke with the leave of the court for Mrs. Heather Mary Adams
Mr. S.M. Butler appeared in Person
Mr. D. Foxton QC (Instructed by Freshfields Bruckhaus Deringer) appeared on behalf of The Society of Lloyd's.
Friday, 27th July 2007
(2.00 pm)
Background: the Lloyd's litigation.
This appeal from a decision of Andrew Smith J and an application within that appeal can only be understood against the background of the litigation about the affairs of and connected with the Society of Lloyd's that has occupied the courts for many years. The history was summarised in paragraphs 13-32 of the judgment under appeal. The parties indicated that they did not disagree with that summary, although one of the litigants in person made some forensic comments on those passages of the judgment. In those circumstances, I can confidently save time and unnecessary repetition by appending those paragraphs to this judgment.
The effect of the process there described was that the Threshold Fraud Point (TFP) was a preliminary issue, though a preliminary issue of central importance. It was important because, on the cases as then pleaded, it was capable of concluding the claims brought by the Names against Lloyd's. The Names who were party to the TFP issue, and who are bound by the decision of this court upon it, included a substantial number of those who are appellants in the appeals before us.
The proceedings before this court.
The proceedings before this court were originally concerned, and concerned only, with an appeal from various rulings of Andrew Smith J, [2005] EWHC 850. The first and most substantial group of applications are the Henderson applications, made in the case of Lloyd's v Jaffray already described, in which a group of defendants in that action, conveniently identified in these proceedings as the UNO Names, seek to introduce an amended defence and counterclaim in order to allege against Lloyd's Misfeasance in Public Office. The other matters of appeal are described in paragraphs 3 and 4 of the judgment of Andrew Smith J.
In addition, however, and since the judgment of Andrew Smith J, an application has been made by the UNO Names under CPR 52.11(2)(b) that the court should admit further evidence in support of the UNO Names' appeals. The only sensible way of dealing with that application is for us first to consider the issues in the appeals without reference to that further evidence. That will enable it to be decided, first, what parts of the appeals are viable as a matter of law; and then whether, in the state of the appeals as they stood before Andrew Smith J, the Names could establish any of the facts that they needed in order to succeed under those legal rules. Only when that is done will it be possible to identify whether any part of the new evidence is relevant to, and makes any substantial difference to, the case as it stood before Andrew Smith J. That enquiry will be important in any event, but particularly in the context of the formidable problems that the Names face in seeking to introduce this evidence at this very late stage of the process.
The issues in the appeals.
The issues before this court can be most conveniently demonstrated by an account of the findings made by Andrew Smith J.
The Henderson applications.
Andrew Smith J rejected the Henderson applications on four grounds:
(i) Lloyd's was not, as a matter of public law, a public officer in the sense required by the tort of Misfeasance in Public Office, and accordingly was not in any event susceptible to liability for that tort.
(ii) Even if Lloyd's came in principle within the tort of Misfeasance in Public Office, the UNO Names were precluded by the decision of the Court of Appeal on the TFP from asserting the bad faith on the part of Lloyd's which is an essential element in the tort.
(iii) If the UNO Names sort to rely on factual matters other than those addressed in the Threshold Fraud Point proceedings, the proposed amendment would fall foul of CPR 17.4(2), which forbids amendments after the end of a relevant limitation period (as is conceded to be the case with the proposed amendments) unless the new claim arises out of the same or substantially the same facts as the claim already standing in the proceedings.
(iv) The proposed amendments were an abuse of process (a) because of the diffuse nature of the pleading; and (b), as the judge thought more importantly, because the issue of Misfeasance in Public Office was only raised years after the commencement of the proceedings and turns on facts which on any view are closely related to those on which the TFP point was based. Not only had there been ample opportunity to take the point, if it was seen as a good one, but also opportunities to take the point had been expressly declined by counsel, including leading counsel, instructed on behalf of the Names.
It will be appreciated that, in order to succeed in this appeal, the UNO Names have to dislodge both of findings (i) and (iv); and to show that the judge was wrong in thinking that finding (iii) necessarily precluded success in respect of finding (ii); and to show that the judge was wrong about at least one or other of findings (ii) and (iii).
The Stockwell applications.
These applications turned on the ability of the applicants to plead Misfeasance in Public Office. The judge, at his paragraph 88, dismissed them for the same reasons as he refused to permit the UNO Names to amend to plead Misfeasance in Public Office. As Lloyd's pointed out to us, that was definitively the end of those applications. The original defences pleaded by these applicants had made no allegations at all of fraud or deceit; so, without question, an attempt now to rely on Misfeasance in Public Office would involve the introduction of new matter, and thus a demonstration that the claims did not arise out of the same or substantially the same facts as a claim already standing in the proceedings.
The Lowe applications.
The judge's general finding that Lloyd's are not susceptible in any event to the tort of Misfeasance in Public Office in itself caused these applications to fail. He also found against the applicants on at least two other elements in their case.
First, these applicants advanced a particular argument with regard to bad faith which, it is accepted, is an essential element in the tort of Misfeasance in Public Office. This argument was explained by Andrew Smith J in his paragraph 108:
“The fundamental reasoning of the draft pleading appears to be that because Lloyd's failed to appreciate that it was exercising public law powers, therefore it necessarily acted outside the proper constraints which control the lawful exercise of such powers; and because it did not ask itself whether its powers were public law powers, Lloyd's was 'recklessly indifferent' as to whether it was acting within such proper constraints. No other allegation of bad faith, or the necessary mental element of the tort of Misfeasance in public office, is pleaded with proper particularity and the proposed amendment depends on this reasoning.”
The judge explained in his paragraphs 109 to 111 why, as a matter of fact, that complaint could not be sustained. As will be explained below, there is a further reason why, as a matter of legal analysis, the complaint is ill-founded.
Second, the judge found that, as a matter of causation, the damage alleged by these applicants did not follow from anything done or omitted by Lloyd's. His reasoning is summarised in paragraph 112 of the judgment below.
It will be appreciated that the Lowe applicants have to dislodge all of the judge's reasons for finding against them before they can succeed in this court.
The forensic history.
Andrew Smith J refused permission to appeal against his decision, but that permission was granted by a somewhat differently composed constitution of this court on 14th February 2006. That permission had to extend to all of the matters of which the appellants complain because, for the reasons indicated above, the appellants have to succeed on every issue that was before Andrew Smith J in order to dislodge his decision. It was only on 25th October 2006, months after permission to appeal had been granted, and only three working days before these appeals were due to be heard, that the application was made to introduce further evidence into the appeal. The appeals were listed before, again, a somewhat differently composed constitution of this court for three days, commencing on 31st October 2006. At the sitting of the court on that day we were informed that the ENO appellants were in difficulties because, early on that same morning, they had parted company with counsel who had appeared before Andrew Smith J, settled the grounds of appeal and skeleton argument, and advised them up to and including the previous day. With very considerable hesitation, we agreed that the proceedings should be adjourned, to enable the ENO appellants to make other arrangements. The appeals and the application were relisted for 25th July 2007, the first available date. It may...
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