Successive Actions

Johnson v Gore Wood & Co H of L [2001] 2 WLR 72

The claimant was the majority shareholder in a property development company which had commenced proceedings against its solicitors, the defendants, for negligence. The action was compromised without admission of liability. The claimant also had a personal claim against the solicitors of which he had given notice before the settlement and which was not compensated for in the settlement. He alleged he had suffered personal loss as a result of the financial implications of not having money to invest from the company which he would have had were it not for the solicitors’ negligence. He claimed interest on money he had borrowed to fund his personal and other business outgoings and also claimed damages for diminution in the value of his pension as a result of the inability of the company to make its contributions. The defendants applied to strike out his action as an abuse of process and for a decision whether the damages he claimed were in principle recoverable. The House of Lords affirmed the decision in Henderson v Henderson (1843) Hare 100 that, unless there are exceptional circumstances, a litigant must bring forward the whole of his case in one action and that if he did not, the successor action could be struck out as an abuse of the process of the court. The test was one of fairness or unconscionability. The court should make “A broad, merits-based judgment which takes account of the public and private interest involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before”. Much of the claim was covered by the payment to the company under the terms of settlement and was therefore irrecoverable as reflective of the company’s loss. The claimant was however given permission to proceed with his claims for consequential loss, such as the loss arising from the company not having the money to invest in his pension and the cost of personal borrowings. The House of Lords also struck out the claimant’s claim for damages for mental distress and suffering, together with his claim for aggravated damages because of the financial hardship he had suffered and the effect on his family relationships. It confirmed the principle that such damages are not recoverable for breach of a commercial contract, unless the object of the contract was to provide pleasure, such as for a holiday.