Collateral attack: where are we now?

Published on
6 min read

Within the space of four weeks the Court of Appeal have handed down three decisions dealing with collateral attack and abuse of process in the context of proceedings following earlier litigation.

The first was a claim against solicitors and a barrister (Allsop v Banner Jones [2021] EWCA Civ 7), the second was a claim against accountants (Pricewaterhousecoopers LLP v BTI 2014 LLC [2021] EWCA Civ 9) and the final decision arose out of proceedings for defamation and malicious falsehood after a boardroom bust up at Stobart (Tinkler v Ferguson [2021] EWCA Civ 8). Mills & Reeve acted of the barrister defendant in the Allsop case.

Background to Allsop v Banner Jones

The barrister had been instructed just one working day before the final FDR hearing in an acrimonious divorce between Mr Allsop and his ex-wife. Mr Allsop’s evidence had gone very badly before the matrimonial Judge, who preferred the evidence of his wife in all important respects. Mr Allsop brought a claim against his former solicitor and barrister alleging that the claim was badly prepared (by the solicitors) and, as against the barrister that an adjournment should have been obtained at the start of the hearing given the inadequate preparation and various failings in his conduct of the FDR hearing and appeal. Essentially it was said that if Mr Allsop had been better represented, and if further material had been before the Court, his evidence would have been better received by the matrimonial Judge who would then have ordered him to pay his wife less. 

An application to strike out was issued on the basis that:

  1. His claim was an abusive collateral attack since it was a challenge on the findings of the matrimonial Judge
  2. In any event, it had no real prospect of success  

Various of the claims which were struck out having no real prospect of success were not subject to appeal.  The appeal primarily concerned the aspects of the claims which had been struck out as being an abusive collateral attack.  At the original strike out, the Judge concluded that claims which effectively challenged the findings of the matrimonial Judge should be struck out unless Mr Allsopp could identify material which should have been, but was not, before the matrimonial court and which would entirely change the aspect of the case: a test drawn from Phosphate Sewage v Milleson in 1879. 

The appeal

The appeal succeeded in part. The barrister was successful in defeating two of the three grounds of appeal such that the surviving claim against him has now been reduced by more than £1 million from the originally claimed sum. The remaining elements of the claim will now go to trial. 

The decision however will have a significant potential impact on future applications involving collateral attack. The Court of Appeal, as did a differently constituted Court of Appeal in the PWC case only a few days later, significantly narrowed the ability to argue there has been a collateral attack in cases arising from a civil decision. The present position appears to be:

  1. It remains an abuse to bring proceedings which challenge a decision involving the same underlying parties. This however is not an issue of collateral attack. Instead the new proceedings will be subject to res judicata estoppel and as such would be abusive. The ordinary way to challenge the decision would be by way of appeal, but if that is not possible it can only be challenged if the underlying decision was procured by fraud, or if new evidence which entirely change the aspect of the case comes to light. 
  2. Where however the new proceedings are between different parties to the underlying claim (so in this case, the proceedings were by Mr Allsop against his lawyers, not his former wife), res judicata does not apply at all, and there is no estoppel. 
  3. The Court of Appeal found that a strike out for abuse based on collateral attack remains possible but should be seen as an exceptional remedy, where there is misuse of the court’s procedures.  Thus a court can, and should, control proceedings which would:
    • be manifestly unfair to a party to the litigation before it, or
    • would otherwise bring the administration of justice into disrepute among right thinking people  
  4. The Court of Appeal refused to try to define what sort of circumstances would still justify a strike out as a collateral attack, and said that the court would look at matters on a case by case basis.  However, where the underlying claim was criminal claim then the Court is more likely to be prepared to find an abusive collateral attack if there are subsequent civil proceedings than where the underlying decision was civil, since there is a public policy in criminal convictions only being challenged by way of appeal. 
  5. Finally, and crucially for those who insure lawyers, the Court of Appeal made it clear that it will not generally be an abuse to sue a lawyer on the basis that their preparation or conduct was negligent and led to an adverse underlying civil decision.  The Court of Appeal did not consider this to be a case of re-litigation at all, such that issues of abuse of process should be seen as of limited relevance.

The PWC and Tinkler decisions

The Court of Appeal in PWC adopted a very similar approach to that taken in the Allsop decision. 

However, the subsequent approach of the Court of Appeal in Tinkler might be seen to be slightly different. The Stobart Group had sued Mr Tinkler, where he had been a director, after a boardroom fallout. That action was expedited and following trial Mr Tinkler lost a number of elements of his claim, where he was found to have acted in breach of fiduciary duty and that his dismissal was lawful.  Permission to appeal was refused. 

Whilst the company action was proceeding, Mr Tinkler issued proceedings against various of the other directors for malicious falsehood. That action, in most respects, failed. In respect of the element of the claim which survived, the Directors issued an application to strike out on the basis that the continuing action was abusive since it involved the re-litigation of the company action, or was a collateral attack on that decision. Since the Stobart directors, and Stobart as a company, are legal different persons, then following Allsop and PWC you would assume that collateral attack would fail unless the litigation was manifestly unfair or if it brings the administration of justice into disrepute. 

In fact, the Court of Appeal upheld the strike out on the basis that this was one of those rare cases where the fact that the parties were different still allowed a strike out for abusive collateral attack. In essence, the issues in the company action was the same as in this litigation since, although the company was the party in the earlier action, the trial still explored the same actions by the same parties, ie the directors. In reality this was a case of re-litigation in a way that Allsop and PWC were not. 

Tinkler is therefore probably not a radical change but merely a helpful example of where an abusive collateral attack remains, reinforcing that such a case will be rare and will need a close analysis of what was actually decided in the earlier case.

How to approach these cases going forward?

The Court of Appeal has significantly narrowed the number of cases where a lawyer sued for their conduct of an earlier civil claim can apply to strike out on the basis of collateral attack. It remains more likely to be open to them to make such an application where they acted in a criminal matter but even that needs to be carefully considered. 

Going forward, in cases where the lawyer wants to consider a strike out they need to first concentrate their efforts on whether the claim has real prospects of success. The Court will still readily consider an application under CPR Part 24 but that will concentrate much more upon the nature of the evidence and the prospect of success, 

Abusive collateral attack remains a legitimate application but a Defendant will need to very carefully consider the factual position before launching such an application, and may well sensible not do so it if a Part 24 strike out cannot also be brought.

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