Is there a more relaxed approach to Henderson v Henderson abuse of process in interim or interlocutory proceedings?

29 Dec 2016

This article was first published on Practical Law's Dispute Resolution Blog.

The on-going litigation between Mr Holyoake and the Candy brothers has recently produced further interesting debate. The most recent decision of Nugee J, on 29 November, which determined the defendants’ application for security for costs, considered the construction of a settlement and the adequacy of after-the-event (ATE) insurance. However, the issue on which this blog focuses is the court’s consideration of the law on abuse of process.

In Holyoake, the defendants applied for security for their costs, withdrew that application and then applied again. The claimants contended that that was an abuse of process. The withdrawal was prompted by a last minute witness statement from the defendants’ solicitors, which gave the impression that the claimant had €20 million sitting in a bank account which belonged to him. Faced with that evidence, the defendants agreed to withdraw their application, and a consent order was made to that effect. Subsequently, the defendants obtained evidence, which they considered cast real doubt on the impression given in the earlier witness statement; therefore, they made a second application based on that new evidence.

The claimants relied on the well known rule in Henderson v Henderson that was most famously considered in Johnson v Gore Wood & Co (No. 1). In summary, that rule provides that when a matter becomes the subject of litigation between parties in a court of competent jurisdiction, they should bring their whole case before the court. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise. The abuse at which this rule is directed, as articulated in Barrow v Bankside Agency Ltd, is:

“…desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on forever and that a defendant should not be oppressed by successive suits when one would do”.

What is of interest in the Holyoake decision is that the judge considered there to be an “apparent tension” in the case law. On the one hand, between statements of principle in cases such as Chanel v FW Woolworth & Co Ltd and Orb a.r.l. v Ruhan, or indeed in an earlier judgment in Holyoake v Candy itself given by Etherton C and those in Woodhouse v Consignia Plc. However, having recognised this apparent tension, the judge did not think it necessary to resolve it on the particular arguments before him.

How to resolve the tension

This calls for an examination of whether there is such a tension and, if so, how the courts might resolve it in any future case. The tension, as Nugee J saw it, was:

“The decisions in Orb v Ruhan and Holyoake v Candy proceed on the basis that a party who has sought and obtained relief on an interlocutory application cannot return to court and ask to extend (or “upgrade”, in the words of the Chancellor) the relief without showing a material change of circumstances. It is easy to see the policy reasons behind such a principle which are well articulated by both judges. Chanel indicates that similar considerations apply where a party has submitted to an order, and that the question does not turn on whether the applicant did in fact have the evidence at the earlier hearing but on whether it was reasonably available to him. Yet in Woodhouse v Consignia the Court of Appeal held that the rule in Henderson v Henderson was not applied so strictly in interlocutory matters, that the judges below had been wrong to dismiss the second application as a second bite at the cherry, and that it did not matter that the evidence deployed had in fact been available to the applicant at the time of the first application, at any rate if the evidence was conclusive.”

The former cases do talk of a “material” or “significant” change of circumstances being required before a party can have a rehearing of an interlocutory matter. However, Chanel says that that must be a change “in the potential ability of the defendants” to have resisted the application the first time around. Seen that way, this is simply an alternative expression of the general rule that a party must have become aware of facts which they could not reasonably have known or found out about at the time of the first matter. Similarly, whilst Popplewell J in Orb said that the fact of no significant or material change of circumstances was “fatal” to the application, he went on to say that this was:

“…based on the principle that a party must bring forward in argument all points reasonably available to him at the first opportunity; and that to allow him to take them serially in subsequent applications would permit abuse and obstruct the efficacy of the judicial process by undermining the necessary finality of unappealed interlocutory decisions.”

What does not appear, at least expressly, to have been considered in those cases, was whether there were any “special circumstances” which would permit the parties to take a second bite of the cherry.

By contrast, in Woodhouse, although the applicant was undoubtedly seeking a second bite of the cherry, the Court of Appeal did not consider that fatal to the application. Woodhouse was a highly unusual case, which dealt with the transitional provisions of the Civil Procedure Rules (CPR), and the facts of the appellant’s particular case were even more unusual. Brooke LJ, giving the lead judgment, stated at paragraph 56 that:

“…although the policy that underpins the rule in Henderson v Henderson has relevance as regards successive pre-trial applications for the same relief, it should be applied less strictly than in relation to a final decision of the court, at any rate where the earlier pre-trial application has been dismissed”.

The example then given was of an application for summary judgment in a substantial case, which was dismissed with the unsuccessful party then making a second application based on material that was available at the time of the first application, but which, through incompetence, was not deployed at that time. Brooke LJ assumed that the new material made the case for summary judgment unanswerable on the merits and stated:

“In so extreme a case, it could not be right to dismiss the second application solely because it was a second bite at the cherry. In those circumstances, the overriding objective of dealing with cases justly, having regard to the various factors mentioned in CPR 1.1(2) would surely demand that the second application should succeed, and that the proceedings be disposed of summarily. In such a case, the failure to deploy the new material at the time of the first application can properly and proportionately be reflected by suitable orders for costs, and (if appropriate) interest. The judge would, of course, be perfectly entitled to dismiss the second application without ceremony unless it could be speedily and categorically demonstrated that the new material was indeed conclusive of the case.”

Thus, if one were to take the statement of principle at paragraph 56 of Woodhouse on its own, there would appear to be a tension between it and the other authorities. However, when seen in the context of the explanatory example, it appears to be doing no more than applying the general Henderson rule, either by considering the extremity of the case as “special circumstances”, or by applying the proper interpretation of the Henderson rule as described in Johnson, that having a second bite of the cherry is not determinative and what is required is:

“…a broad, merits-based judgment which 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.”

Therefore, the potential hope that may be given to parties on a reading of the obiter comments in Holyoake, that the Henderson rule might be applied in a more relaxed fashion on interlocutory or interim matters is, in my view, misconceived. A proper application of the Henderson rule has always, whether on interlocutory or final matters, assumed that the fact that a matter was a second bite of the cherry was not of itself conclusive. To the extent that cases such as Chanel, Orb or the earlier decision in Holyoake may give a different impression is inconsistent with the decision in Johnson v Gore Wood. However, it will have to be for another judge on another day to determine conclusively the apparent tension identified by Nugee J.


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