Citation: [2024] EWCA Civ 844
A breach of the Aldi Stores guidelines did not automatically justify the striking out of a new claim as an abuse of process. The Aldi guidelines are only one factor in a broad, merits-based evaluation. It would be rare for a court to find an abuse in the absence of factors such as vexation, harassment, or oppression.
The Respondent was engaged as the main contractor in the construction of a power plant. It engaged the First Appellant as a sub-contractor, with the Second Appellant, the parent company, providing a guarantee to the Respondent.
Following a delay in the construction works, the Respondent’s main contract was terminated by the employer. Proceedings were commenced by the employer against the Respondent in respect of the delays and the consequences of termination. The Respondent defended these proceedings and brought a Part 20 claim against the First Appellant. Adverse findings were made against the Respondent in this action (see [2022] EWHC 3293 (TCC) https://www.bailii.org/ew/cases/EWHC/TCC/2022/3293.html and [2023] EWHC 1142] https://www.bailii.org/ew/cases/EWHC/TCC/2023/1142.html). In particular, it was found that the employer had been entitled to terminate the main contract.
Following these findings, the Respondent commenced proceedings against the Appellants claiming the sum of £179m and alleging that it had been induced to enter into the main contract and the sub-contract with the First Appellant on the basis of fraudulent or negligent misrepresentations. The Appellants applied for strike out on the grounds that these proceedings were an abuse of process and ought to have been raised in the earlier proceedings, in breach of the guidelines set out by the Court of Appeal in the case of Aldi Stores Limited v WSP Group plc: https://www.bailii.org/ew/cases/EWCA/Civ/2007/1260.html.
The High Court refused the application because the position between the Respondent and Appellants during the pre-contractual stages of the agreement (which was relevant to the question of misrepresentation) had not been in issue in the main action and did not therefore involve the re-litigation of these issues. While the Judge decided that the Respondent had breached the Aldi guidelines in failing to raise these issues in the earlier proceedings, this failure did not merit strike out. The Appellants appealed.
Decision (Coulson, Arnold, and Stuart-Smith LJJ)
Appeal dismissed.
General Principles
On an application to strike out for abuse of process, the Court must adopt a broad, merits-based judgment which accounts for all the facts and interests involved. Absent vexation, harassment, or oppression, a finding of abuse would be rare. In litigation, a party who realises that it might have connected, unpleaded claims must, under the Aldi guidelines, raise the existence of these claims in court. However, non-compliance with these guidelines is only one factor in the broader evaluation; non-compliance does not result in automatic strike-out. An appellate court will only interfere where the trial judge has ignored a relevant matter, accounted for irrelevant matters, erred in principle, or reached a conclusion that was plainly wrong.
Application
The Judge had evaluated the factors of the case and had come to a conclusion that was not plainly wrong or with which the appellant court should interfere. The factors pointing away from striking out the claim outweighed – by a small but meaningful margin – the factors which indicated striking the claim out as an abuse of process. While the Respondent ought to have raised the claims in the earlier proceedings, this admittedly serious breach of the Aldi guidelines did not automatically render a new claim abusive. The need for the complaining party to demonstrate vexation, oppression, or harassment is not obviated by a breach of the Nevertheless, in the present case, even if the Aldi guidelines had been followed and the Respondent had raised the misrepresentation arguments in the earlier proceedings, the lack of overlap between the two claims may well have led to separate actions for each claim. In summary, there was no obvious vexation, oppression, harassment or detriment to the public interest in the misrepresentation claims being pursued at this stage, and there was no negative effect on court time and resources.
Representation
Adrian Williamson KC, Paul Bury, and John Steel (Keating Chambers) for the Appellants, instructed by Walker Morris LLP. Simon Hale (4 Pump Court) for the Respondent, instructed by Holman Fenwick Willian LLP.
The full judgment can be found here.
