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Amendments to statements of case and the rule in Henderson v Henderson

Published: Tuesday 14 April 2020

Article written by Martin Hutchings QC

 

1) Introduction

Is it possible to resist an application to amend on the grounds that the new case could and should have been advanced earlier in the same proceedings?

There is no mention of the relationship in CPR Part 17 (‘Amendments to Statements of Case’) between the Court’s wide discretionary power to allow amendments, and the abuse of process rule of law embodied in Henderson v Henderson [1843] 67 ER 313. Nor does the White Book address the point. The leading textbook on Res Judicata[1] also makes no mention of whether Henderson abuse can apply within the same set of proceedings. How if at all do they interrelate?

The point of principle was considered recently in Kensell v Khoury [2020] EWHC 567 (Ch)[2]. In the final section of this article I set out the implications of the decision.  Before explaining the conclusions of Zacaroli J in that case, it is worth remembering the basic principles.

 

2) Henderson v Henderson

In Henderson v Henderson (1843) Wigram VC famously laid down the rule that:

‘…The plea of res judicata applies, except in special cases, not only to points which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of the litigation, and which the parties, exercising reasonable diligence, might have brought forward.’

Henderson v Henderson was a case in which all relevant matters in a new (English) action had been previously litigated in Canada. That case and almost all subsequent cases relying on the ‘extended’ res judicata doctrine exemplified in it, are cases in which the issue was whether a new set of proceedings was an abuse of process in light of a determination in earlier proceedings.

The mischief to which the Henderson rule is therefore primarily directed is the bringing of a second action, not the making of an application to amend the first. Thus in Greenhalgh v Mallard[3] the Court of Appeal characterised the Henderson rule as applying to: ‘issues or facts which….clearly could have been raised [such] that it would be an abuse of the process to allow … new proceedings to be started….’. The most recent authoritative case on the Henderson rule (Johnson v Gore Wood & Co (no 1)[4]) was also concerned with the question whether the claim or defence ‘should have been raised in the earlier proceedings if it was to be raised at all’. Lord Bingham’s statements of principle in that case, including that ‘…..there will rarely be a finding of abuse unless the later proceedings involves what the Court regards as unjust harassment of a party’, seem also to confine the rule to circumstances where a second set of proceedings has been issued following the determination of the first. This is also apparent from Bingham MR’s earlier statement of principle in Barrow v Bankside Members Agency Ltd[5]:

The [Henderson] rule is…..a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.’ (Emphasis supplied)

One could therefore be forgiven for concluding that the danger that the rule in Henderson is designed to meet is the re-litigation of matters in fresh litigation, rather than attempts to amend statements of case to bring forward matters which might have been pleaded earlier in the same proceedings.

Amendments are allowed as a matter of principle because of the Courts’ willingness to ensure that all relevant arguments/claims are before the Court at one time during one set of proceedings. The application of the Henderson rule to amendments, by barring a party from bringing forward in one claim all relevant matters, even late in the day, might be said to call into question the justification for the rule’s original application, whilst also being inconsistent with the Court’s wide discretionary power to allow amendments under CPR Part 17.  Furthermore, the Henderson rule is a rule of law. There is no discretion for a Judge to exercise once s/he has decided that Henderson abuse will occur. Thus once it is determined, applying a ‘broad merits-based judgment[6]’, that the rule in Henderson is engaged, the claim/issue must be struck out. This fact might be said strongly to militate against a requirement that applications to amend statements of case must also be shown not to offend the Henderson abuse rule. The Court’s powers to allow amendment at any stage of proceedings – even after judgment – should not be trammelled by the additional need also to consider whether the Henderson rule is engaged.

Indeed, the idea that Henderson can apply to applications to amend a first set of proceedings could be argued to run contrary to the well-established practice, in strike out applications, that where, having heard argument, the Court is of the view that an application to strike out a statement of case as disclosing no arguable claim/defence is likely to succeed, the respondent should be given an opportunity to file a draft amended statement of case to attempt to cure the defects, before the pleading is struck out. The White Book, affirms the principle in note 3.4.2 which states: ‘Where a statement of case is found to be defective, the Court should consider whether that defect might be cured by amendment and, if it might be, the Court should refrain from striking it out without first giving the party concerned an opportunity to amend (Soo Kim v Young)[7]….’.  Thus if it were right that it could be a Henderson abuse of process to apply to amend defective pleadings at the point of strike out, it might be said that the general practice exemplified in Soo Kim on strike out / summary judgment applications, should not exist. On the other hand, that practice can be said to be entirely consistent with the Henderson rule, in that it encourages parties to bring forward all of their potential claims and arguments in one set of proceedings, rather than dragging matters out and wasting court time by the hearing of abuse applications in a second set of proceedings.

 

3) Ruttle Plant Hire Ltd v The Secretary of State for the Environment, Food and Rural Affairs [2007]

In the only High Court case before Khoury v Kensell to deal ‘head on’ with the relationship between the CPR’s amendment principles and Henderson abuse, Rupert Jackson J (later, Jackson LJ of CPR Reforms fame) found that the Henderson rule did not, as a matter of principle, apply to applications to amend statements of case to plead new causes of action, even after there had been a preliminary issue trial. In Ruttle Plant Hire Ltd v The Secretary of State for the Environment, Food and Rural Affairs [2007][8] the question before the Judge was: ‘  …….whether the rule in Henderson v Henderson can be invoked as a ground for opposing amendments in existing litigation’.

In Ruttle, there had been a lengthy trial of preliminary issues and a considerable amount of the Court’s and the parties’ time and resources had already been consumed. Over 5 months after the determination of those issues by Jackson J, the partially unsuccessful claimant applied to re-re-amend its PofC to plead new matters. The matters could have been pleaded at the outset. The application was opposed, partly on the basis that: ‘16.  …..a party cannot return to Court and advance arguments, claims or defences which that party could have put forward for decision on the first occasion but failed to raise’. Jackson J found that Henderson did not apply, and he gave four reasons why this was the case:

’36. Having considered the competing submissions of counsel, I have come to the conclusion that the rule in Henderson v Henderson cannot be invoked in order to prevent a party from pleading at a late stage in litigation issues which might have been pleaded earlier. I reach this conclusion for four reasons.

      1. The rule in Henderson v Henderson, both as formulated by Sir James Wigram VC, and as recast by other judges over the last two centuries, is a rule focused upon re-litigation.
      2. The mischief against which the rule is directed is the bringing of a second action, when the first action should have sufficed.
      3. In all of the cases cited by counsel or unearthed by my own researches in which the Henderson rule has been applied, there have been at least two separate actions. So far as I can see, the Henderson rule has never been invoked as a ground for opposing amendment in the original action.
      4. There is no need to extend the rule in Henderson v Henderson to the sphere of amendment applications. The powers of the Court to allow or disallow amendments are clearly set out in the Civil Procedure Rules. There already exists an established body of judicial authority to guide first instance judges who are faced with applications to amend. See White Book volume 1 paragraph 17.3.5. It is inappropriate to transplant into this field the Henderson line of cases which are focused upon a different juridical problem.’

In Kensell v Khoury [2020] Zacaroli J reached the opposite conclusion, finding that, as a matter of principle at least, the Henderson rule could be engaged on an application to amend a first set of proceedings.

 

4) Tannu v Moosajee [2003] and the post-Ruttle cases

Zacaroli J felt able to depart from Jackson J’s conclusions in Ruttle because (he reasoned) that an earlier Court of Appeal decision Tannu v Moosajee [2003][9] had not been cited in Ruttle (nor had Jackson J apparently found Tannu from his own, no doubt diligent, researches). In Tannu, two of the three Court of Appeal judges had tentatively accepted that, at least as a matter of principle, it was possible that the Henderson rule could apply in relation to ‘separate stages’ of the same litigation, although on the facts of the particular case, it was found to be inapplicable.

In Tannu, a Queen’s Bench claim had been brought for the repayment of an alleged loan of £110,000. The defendant denied there was a relationship of creditor/debtor, claiming there was a partnership. The Judge found there was no loan, declaring that there was a partnership at will. He ordered the taking of an account in the Chancery Division. In the account proceedings the claimant claimed that the £110,000 was a capital contribution to the partnership. One question for the Court of Appeal was whether the Henderson principle could apply to prevent the claimant advancing its capital contribution case in the account phase of the trial, on the basis that this ought to have been raised at the Queen’s Bench trial. Whilst rejecting the application of Henderson on the facts, at least two of the CA judges expressly accepted the possibility that the Henderson rule might apply in the same set of proceedings to separate stages of those proceedings; although one of the two, Arden LJ, went no further than saying that it was ‘not conceptually impossible’ for Henderson to apply to those different stages.

A few, more recent first instance cases, including a Commercial Court case (Tobias Gruber v AIG Management France SA [2019])[10] appeared to accept that Henderson might apply to applications for amendment to pleadings in existing claims, but each of those cases were ones in which there had been a trial of a preliminary issue and the unsuccessful party sought to amend at the next stage of the proceedings. Furthermore in none of those cases had the Courts apparently grappled, as a matter of principle, with whether and how Henderson could apply to a first set of proceedings. In none of those cases was Ruttle apparently cited. The obiter remarks in Tannu seemed a slender basis on which to find that the Henderson rule could be extended so as to apply within the same proceedings. Furthermore, it is to be borne in mind that in Tannu the status of the £110,000 payment had been determined in the first trial, before the account was taken in the second –  so there was arguably a much stronger rationale on the facts, for applying the Henderson doctrine in those circumstances, as compared to the subsequent cases that had referred to Tannu.

 

5) The decision in Kensell v Khoury

The facts: In Kensell v Khoury the claimants (the Khourys), alleged inter alia breaches of restrictive covenants by their neighbour, relying on a building scheme. Mrs Kensell secured summary judgment against the Khourys on the basis that there was no arguable case for the existence of a building scheme. The claim was not struck out altogether however, because the Khourys also advanced a separate, common law claim in nuisance. After instructing new counsel, the Khourys sought to amend their particulars of claim to advance a case to enforce the covenants based on s.56(1) of the Law of Property Act 1925. Mrs Kensell objected, including on the basis that the amendments would amount to a Henderson abuse. Mrs Kensell complained that she had already seen off the covenant claim by her successful summary judgment application and should not be vexed with it again.

The Khourys argued that: (i) Jackson J in Ruttle was correct to find as a matter of principle, that Henderson could not apply to amendments to pleadings in existing proceedings; (ii) on any basis the Henderson principle could not apply to a new case advanced after a successful summary judgment application (as opposed to a trial of a preliminary issue – where the Court had in effect decided to conduct the proceedings in distinct stages); and (iii) alternatively to (i) and (ii), it would be wrong, on the facts, to apply Henderson, because applying the merits-based test, no abuse of process was shown and, as a matter of discretion under CPR 17, it was right to allow the amendments, particularly as no trial date was imperilled.

Zacaroli J (on appeal from the County Court Judge) rejected (i) and (ii) above and found in the Khourys’ favour only on (iii).

In relation to (i) and (ii), Zacaroli J found that the authority of Ruttle was diminished because Tannu had not been considered. He felt free therefore to decide as a matter of principle whether Jackson J’s conclusion had been correct in light of Tannu and the post-Ruttle first instance decisions; noting however that Henderson had never been considered in the context of a case where an amendment was sought in existing proceedings, following a successful summary judgment application. Disagreeing with Jackson J the Judge found that there was no reason to preclude the application of the Henderson principle in the context of amendments; nor even as a matter of principle, where the earlier judgment had been obtained on a summary basis:  ‘51.  …………. If the bringing of the new claim would constitute unjust harassment…then it is difficult to see why the fact that the earlier summary judgment did not dispose of the whole action should make any difference.’ He did however hold that whilst the Henderson principle was capable of being engaged on an application to amend after strike-out of the original claim in the same proceedings: ‘63….It is likely to be appropriate to apply it in more limited circumstances than if the earlier judgment was given after a trial (for example on a preliminary issue) at an earlier stage in the same proceedings’.

However, on the facts, Zacaroli J declined to find that the application to amend to plead s.56(1) was an abuse of process, and he further found, although for somewhat different reasons, that the Judge below had been correct to exercise his discretion under CPR 17 to allow the amendment.

 

6) Is Kensell v Khoury right?

So, we know that Henderson can apply to the same set of proceedings. Statements such as those in Ruttle that ‘The mischief against which the [Henderson] rule is directed is the bringing of a second action, when the first action should have sufficed’ now require qualification. But this extension to the Henderson rule can be questioned.

First, it is unclear why the Courts should need to apply Henderson in this context when it has ample discretionary powers to refuse amendments, as explained in the well-developed jurisprudence under CPR Part 17. Secondly, as was pointed out in Ruttle, the jurisprudence is different, and designed to deal with ‘different juridical problem(s)’. It could also be said to be inappropriate to confuse or elide the discretion under CPR 17 with the Henderson principle, which is a rule of law. With Henderson, once abuse is found, there is no discretion not to strike out/refuse the amendment application. Should Judges therefore first consider the broad, merits-based test applied in the Henderson rule and only then (assuming the Henderson challenge fails) go on to consider how the CPR Part 17 discretion should be exercised? This could be said to be a recipe for confusion. Thus for example, we are told that the merits-based test for the purposes of Henderson abuse should invariably not include any assessment of the merits of the new claim that is being challenged[11]. Yet when considering whether to allow amendments under CPR Part 17 the position is more flexible: in certain circumstances, a Court is entitled to take at least some note of the underlying merits of proposed amendments. The Court’s different treatment (in relation to questions of delay and a failure to use reasonable diligence) where abuse of process is alleged, as compared to when it is considering late applications to amend,  is also worth noting. One might conclude that some applications to amend are likely now to become more complicated and time consuming.

 

7) Lessons from Kensell v Khoury

Despite the powerful reasoning in Ruttle it would seem that Courts nowadays will be prepared to consider whether an application to amend following a strike out of part of a claim, or summary judgment, amounts to an abuse of process engaging the Henderson rule.

It is as yet unclear to what extent the Henderson rule can be used successfully to oppose an application to amend.  Clearly the abuse allegation will have more weight if the application to amend follows a preliminary issue trial rather than an ‘interlocutory’ order to strike out, or for summary judgment. But more than ever it now behoves a party to ensure that all of its potential claims and every possible way of advancing those claims are set out at the outset, because parties seeking to amend are now more likely to be met with Henderson abuse arguments. Those arguments can be expected to be deployed tactically by those seeking to oppose amendments. The other point that emerges from the above cases including Kensell is the importance of the party who is seeking to amend (and avoid an abuse finding) making every effort to inform the other side as soon as possible that it intends to raise the new claim or issue.

Whether this might also impact the practice on strike out applications exemplified in Soo Kim (above), or even the amendment of other documents such as grounds of appeal, remains to be seen.

 

Martin Hutchings QC represented the successful Respondents in Kensell v Khoury, you can read the full judgment from this case here.

 

[1] Res Judicata: Spencer Bower and Handley (5th edition) 2019

[2] Also reported at [2020] 3 WLUK 434

[3]  [1947] 2 All ER 255

[4] [2002] 2 AC 1

[5] [1996] 1 WLR 257 per Bingham MR @ 260

[6] As explained by Lord Bingham in Johnson v Gore Wood (above)

[7] [2011] EWHC 1781 (QB))

[8] [2007] EWHC 1773 (TCC)

[9] [2003] EWCA Civ 815

[10] [2019] EWHC 1676 (Comm)

[11] Stuart v Goldberg [2008] 1 WLR 823 @ para 57 per Lloyd LJ