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[1996] 1 All ER 973

C (a minor) v Hackney London Borough Council

COURT OF APPEAL, CIVIL DIVISION

BUTLER-SLOSS, SIMON BROWN AND SAVILLE LJJ


16, 25 OCTOBER 1995



Estoppel - Res judicata - Issue estoppel - Defective premises - Mother bringing proceedings and obtaining settlement from respondent council in respect of disrepair - Adult child under disability bringing subsequent proceedings for damages based on same facts - Whether dependant under disability effectively same party as mother - Whether double recovery in respect of same defects - Whether person under disability estopped from making claim - CCR Ord 10.

C, a Down's syndrome girl, lived for most of her life in a council house let to her mother in such a state of continuing disrepair and dampness as to cause or aggravate recurrent bouts of chest and upper respiratory infection. C's mother brought proceedings against the respondent council in respect of the disrepair, in which a consent order was made giving the mother £15,000 damages in compensation. Subsequently, C, suing by her stepfather as next friend, brought an action against the council in respect of personal injury caused by the council's negligence and breach of statutory duty under the Defective Premises Act 1972 and obtained judgment in default of defence. The council applied to the court to set aside the judgment and to strike out C's claim, contending (i) that the settlement figure agreed for the mother's claim included compensation for C's loss and accordingly that C's further claim would represent double recovery, and (ii) in the alternative, that the principle of res judicata in its wider sense applied to C's claim, so that in any event it should not be allowed to go ahead. The judge granted the council's application on the alternative ground and struck out C's action as an abuse of process. C appealed.

Held - (1) The doctrine of res judicata in its wider sense, which included a bar on the subsequent litigation not only of all issues resolved in earlier proceedings, but also of every point which properly belonged to the subject of the litigation, applied only where the cause of action or issue was or remained between the same parties or their predecessors in title, and did not extend to those not themselves party to the earlier proceedings. Furthermore, the doctrine could not be extended to include within the ambit of 'a party to earlier proceedings' a disabled and dependent child of one of the parties, with the result that, in the instant case, the judge was not entitled to find that C's dependence on her mother created a sufficient nexus between them that they should be regarded effectively as the same party. Since C had not been a party to the earlier proceedings, the doctrine of res judicata, even in its widest sense, had no application (see p 977 c to e, p 978 j to p 979 a and p 980 d, post); Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 and Talbot v Berkshire CC [1993] 4 All ER 9 considered.

(2) A settlement paid to a family member on behalf of the whole family did not include compensation for the loss suffered by a person under a disability, nor was the disabled person bound by that settlement, unless it had been approved by the court and dealt with under the provisions of CCR Ord 10^a, the primary function

^a     Order 10 is set out at p 977 g to j, post

[1996] 1 All ER 973 at 974

of which was to safeguard the interests of those under a disability. On the facts, C could not be prevented from bringing a fresh claim in respect of her loss, since the earlier settlement had not been approved by the court. It followed that the appeal would be allowed, C's claim would be reinstated, and, there being no substantive defence on the merits, her judgment secured upon it for damages to be assessed (see p 979 g h and p 980 c d, post).

Notes

For the doctrine of res judicata and issue estoppel, and for parties estopped by judgment, see 16 Halsbury's Laws (4th edn reissue) paras 974-977, 990-993, and for cases on the subject, see 16 Digest (2nd reissue) 123-125, 645-653.

Cases referred to in judgments

Arnold v National Westminster Bank plc [1991] 3 All ER 41, [1991] 2 AC 93, [1991] 2 WLR 1177, HL.

Ashmore v British Coal Corp [1990] 2 All ER 981, [1992] 2 QB 338, [1990] 2 WLR 1437, CA.

Black v Yates [1991] 4 All ER 722, [1992] QB 526, [1991] 3 WLR 90.

Fidelitas Shipping Co Ltd v V/O Exportchleb [1965] 2 All ER 4, [1966] 1 QB 630, [1965] 2 WLR 1059, CA.

Henderson v Henderson (1843) 3 Hare 100, [1843-60] All ER Rep 378, 67 ER 313.

Spencer & Spencer v Williams (1871) LR 2 P & D 230.

Talbot v Berkshire CC [1993] 4 All ER 9, [1994] QB 290, [1993] 3 WLR 708, CA.

Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581, [1975] 2 WLR 690, PC.

Cases also cited or referred to in skeleton arguments

Albazero, The [1976] 3 All ER 129, [1977] AC 774, HL

Beswick v Beswick [1967] 2 All ER 1197, [1968] AC 58, HL.

Branchett v Beaney [1992] 3 All ER 910, CA.

British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Rlys Co of London Ltd [1912] AC 673, [1911-13] All ER Rep 63, HL.

Coulls v Bagot's Executor and Trustee Co Ltd [1967] ALR 385, Aust HC.

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847, [1914-15] All ER Rep 333, HL.

Greene v Chelsea BC [1954] 2 All ER 318, [1954] 2 QB 127, CA.

Jackson v Horizon Holidays Ltd [1975] 3 All ER 92, [1975] 1 WLR 1468, CA.

Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1993] 3 All ER 417, [1994] 1 AC 85, HL.

Lloyd's v Harper (1880) 16 Ch D 290, CA.

Pioneer Container, The [1994] 2 All ER 250, [1994] 2 AC 324, PC.

Rimmer v Liverpool City Council [1984] 1 All ER 930, [1985] QB 1, CA.

Targett v Torfaen BC [1992] 3 All ER 27, CA.

Townsend v Bishop [1939] 1 All ER 805.

Tweddle v Atkinson (1861) 1 B & S 393, [1861-73] All ER Rep 369, 121 ER 762.

Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 All ER 571, [1980] 1 WLR 277, HL.

Appeal

By notice dated 22 September 1994 C, a Down's syndrome girl now aged 19, suing by her stepfather as next friend, appealed from the order of Judge Graham

[1996] 1 All ER 973 at 975

QC in the Shoreditch County Court on 26 August 1994, whereby he set aside the judgment which had been entered in default of defence against the respondent, Hackney London Borough Council, and struck out C's claim in respect of personal injury caused by the council's negligence and breach of statutory duty as an abuse of process on the ground that it should not be allowed to go ahead because the settlement of an earlier action by C's mother in respect of the same damage invoked the principle of res judicata in its wider sense. The facts are set out in the judgment of Simon Brown LJ.

Benet Hytner QC and Stephen Cottle (instructed by Dowse & Co) for C.

Ian Lewis (instructed by Christopher Hinde) for the respondent.

Cur adv vult

25 October 1995. The following judgments were delivered.



SIMON BROWN LJ.

The appellant, C, is a Down's syndrome girl now aged 19 who, on 2 July 1993, suing by her stepfather as next friend, brought proceedings in the Shoreditch County Court against the respondent borough council (hereafter 'Hackney') in respect of personal injury caused by Hackney's negligence and breach of statutory duty under s 4 of the Defective Premises Act 1972. In a sentence, she has lived for most of her life in a council house let to her mother in such a state of continuing disrepair and dampness as to cause or aggravate recurrent bouts of chest and upper respiratory infection.

On 23 August 1993 C obtained a regular judgment in default of defence for damages to be assessed. On 24 January 1994 Hackney applied to set aside that judgment and to strike out C's claim. The essential background to that application was an earlier action brought by C's mother, alleging against Hackney the identical history of disrepair, which had been disposed of by a consent order made at the Shoreditch County Court on 19 August 1992. Amongst the terms of that order were that upon Hackney undertaking to carry out a schedule of works agreed necessary to put the house into repair, C's mother would be paid £15,000 damages 'being compensation to date hereof'.

Hackney's application to strike out C's claim proceeded on a twofold basis. First, they contended that the settlement figure agreed for the mother's claim included compensation for C's loss, and accordingly that C's further claim would represent double recovery. Second, they contended, in the alternative, that the principle of res judicata in its wider sense applied to C's claim, so that in any event it should not be allowed to go ahead.

On 26 August 1994, in a reserved judgment following argument heard intermittently over three days, Judge Graham QC rejected the first limb but acceded to the second limb of Hackney's application and struck out C's action as an abuse of process.

C now appeals against that order. Hackney, by a respondent's notice, seek if necessary to uphold it by reference to the double recovery argument, the argument rejected by the judge below.

With that brief introduction let me turn at once to the central issue raised on this appeal: does the principle of res judicata in its wider sense apply to C's claim so as to require or justify its being struck out as an abuse of process?

The judge below appears to have founded his decision upon three central considerations. First, that C's claim could and should have been advanced at the

[1996] 1 All ER 973 at 976

same time as her mother's; the public interest so requires rather than that there should be a multiplicity of actions. Second, that C's mental condition is such that she is entirely dependent on her mother so far as legal proceedings are concerned:

'It is her mother who has custody and is in reality alone capable of authorising litigation on [C's] behalf. In that limited sense and because of the virtual identity of issues, mother and daughter could be regarded as the same party to the actions.'

Third, that there are here no special circumstances to exclude the principle of res judicata; on the contrary, C would be entitled to recover her loss in an action for negligence against the solicitors then acting both for her mother and herself, whom the judge found to have been either costs-mongering or neglectful in failing to add C as a party to her mother's action.

Before turning to consider these reasons and counsels' arguments upon the appeal, it is convenient first to indicate something of the law governing this issue. From the several authorities referred to during the course of argument I derive these central principles.

(1) The considerations of public policy underlying the plea of res judicata are enshrined in two Latin maxims: nemo debet bis vexari pro una et eadem causa, and interest reipublicae ut sit finis litium.

(2) The plea of res judicata encompasses two distinct forms of estoppel: cause of action estoppel and issue estoppel.

(3) 'Cause of action estoppel arises where the cause of action in the latter proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment.' (See Arnold v National Westminster Bank plc [1991] 3 All ER 41 at 46, [1991] 2 AC 93 at 104.)

(4) Issue estoppel represents an extension of the doctrine of res judicata to include a bar on the subsequent litigation not only of all decided issues whose resolution was essential to the determination of earlier proceedings, but also 'to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.' (See Fidelitas Shipping Co Ltd v V/O Exportchleb [1965] 2 All ER 4 at 10, [1966] 1 QB 630 at 643 per Diplock LJ, quoting from Henderson v Henderson (1843) 3 Hare 100 at 115, [1843-60] All ER Rep 378 at 382.) As Lord Keith put it in Arnold v National Westminster Bank plc [1991] 3 All ER 41 at 47, [1991] 2 AC 93 at 106:

'Issue estoppel, too, has been extended to cover not only the case where a particular point has been raised and specifically determined in the earlier proceedings, but also that where in the subsequent proceedings it is sought to raise a point which might have been but was not raised in the earlier.'

(5) 'The point' which might have been but was not raised in the earlier proceedings may itself be a cause of action. In Talbot v Berkshire CC [1993] 4 All ER 9 at 18, [1994] QB 290 at 301 the court spoke of the rule as 'a salutary one', observing that 'it prevents prolixity in litigation and encourages the earliest resolution of disputes'.

(6) In issue estoppel cases, the plea of res judicata will not be applied where to do so would cause injustice. The 'special circumstances' (the phrase used in several of the authorities) justifying the non-application of the rule ordinarily

[1996] 1 All ER 973 at 977

arise where further material becomes available which could not by reasonable diligence have been adduced in the earlier proceedings, or where (as in Arnold v National Westminster Bank plc) there has been a change or changed perception of the law.

(7) The plea of res judicata applies only where the cause of action or issue was and remains between the same parties or their predecessors in title. The single exception to this rule is to be found in the Privy Council decision, Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581, where the party held estopped in the subsequent proceedings had not itself been a party to the earlier action. It was, however, a closely related company with common directors and shareholders.

In seeking to support the judge's holding, Mr Lewis for Hackney relies heavily upon Yat Tung Investment v Dao Heng Bank and Talbot v Berkshire CC. Yat Tung Investment v Dao Heng Bank, he submits, allows the doctrine of res judicata in the wider sense to be applied against strangers; Talbot v Berkshire CC allows it to be invoked to bar a personal injury claim which could, and more conveniently should, have been brought in earlier proceedings. He contends that the judge was entitled to find as he did that C's dependence on her mother created a sufficient nexus between them that they should be regarded effectively as the same party.

In my judgment, this is an impossible argument, one that stretches the bounds of the doctrine beyond breaking point. If it were right, it would be right equally in the context of a road accident case where mother and infant child are both injured by the defendant's negligence. A mother sues and recovers judgment. Is it to be said that her child is thereby barred from making any subsequent claim? Such would be to my mind a novel and insupportable suggestion.

The argument furthermore involves this: that although here C's claim would be defeated because of her disability and dependence on her mother, her two older brothers, lacking that same nexus with the mother, could bring their own separate actions against Hackney for such limited injury to health as they too have suffered. That would be not merely curious but paradoxical too, having regard to the provisions of CCR Ord 10, rr 10 and 11 (corresponding with RSC Ord 80, rr 10 and 11):

'10.--(1) Where in any proceedings money is claimed by or on behalf of a person under disability, no settlement, compromise or payment and no acceptance of money paid into court, whenever entered into or made, shall so far as it relates to that person's claim be valid without the approval of the court.

(2) Where the sole object of an action in which a claim for money is made by or on behalf of a person under disability is to obtain the approval of the court to a settlement or compromise of the claim, the particulars of claim shall contain a brief statement of the cause of action together with a request for the approval of the settlement or compromise.

11.--(1) Where in any proceedings--(a) money is recovered by or on behalf of, or adjudged or ordered or agreed to be paid to, or for the benefit of, a person under disability, or (b) money paid into court is accepted by or on behalf of a person under disability, then, unless the court otherwise directs, the money shall not be paid to the person under disability or to his next friend, guardian ad litem or his solicitor but shall be paid into or remain in court.'

[1996] 1 All ER 973 at 978

It is a remarkable thought that C's claim can properly be held barred before it is brought merely because her mother's claim has been satisfied and C's claim could more conveniently have been litigated at the same time. I do not believe that the authorities establish any such principle.

That said, a further comment or two is required upon each of the two cases upon which Mr Lewis' argument primarily rests. It is noteworthy that the plaintiff in Talbot v Berkshire CC was also under a disability, and yet his personal injury claim was held estopped under the res judicata doctrine since it could have been litigated in earlier third party proceedings which he had brought when sued by his passenger. The plaintiff himself not having advanced a monetary claim in the earlier action, no question arose for the court's consideration under the above rules (there RSC Ord 80) and certainly the Court of Appeal judgments are silent as to this. As it seems to me, however, the court's conclusion that no special circumstances existed which required them to disapply the estoppel rule is only explicable upon the (unstated) basis that the disabled plaintiff would be entitled to recover his loss from his previous, negligent, solicitors--essentially the approach of the judge below in the present case. The critical difference, however, between this case and Talbot v Berkshire CC is that there the parties to the two actions were the same; here they are not.

Turning, then, to Yat Tung Investment Co Ltd v Dao Heng Bank Ltd, it is plain from close consideration of the facts of that case that in reality it represents no significant departure whatever from the long established principle that only the parties and their successors are vulnerable to the doctrine of res judicata. Wigram V-C's judgment in Henderson v Henderson (1843) 3 Hare 100 at 115, [1843-60] All ER Rep 378 at 382, applied in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590 and there stated by Lord Kilbrandon to be the locus classicus of the res judicata doctrine in its wider sense, expressly referred to 'the same parties', and stated that the plea applies '... to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time' (my emphasis). Yat Tung Investment Co Ltd v Dao Heng Bank Ltd, properly understood, held that the plaintiffs who were barred from bringing their later action were indeed able to be regarded as parties during the earlier, somewhat convoluted, course of the litigation; their new claim was in reality, if sound, a defence available in a previous action in which they had clearly been interested, although not formally a party.

The general rule is conveniently found stated in the short headnote in Spencer & Spencer v Williams (1871) LR 2 P & D 230:

'If parties litigate a question in a court of competent jurisdiction, and a final decision be given thereon, such parties or those claiming through them cannot afterwards re-open the same question in another court. This restriction does not extend to other persons whose interest is almost identical with that of one of the parties to the first suit if they do not actually claim through such party.'

See too, in this regard, Black v Yates [1991] 4 All ER 722, [1992] QB 526.

I therefore reject entirely the submission that Yat Tung Investment Co Ltd v Dao Heng Bank Ltd justifies extending the Talbot v Berkshire CC principle--that an unlitigated monetary claim is barred if it could have been advanced and established in earlier proceedings (itself to my mind an extended application of the res judicata doctrine)--to those not themselves party to the earlier proceedings.

[1996] 1 All ER 973 at 979

It follows from all this that in my judgment the doctrine of res judicata even in its widest sense has simply no application to the circumstances of the present case and that the judge erred in ruling to the contrary. One does not, therefore, reach the point of asking here whether special circumstances exist to exclude it; C's erstwhile solicitors' suggested negligence is, frankly, an irrelevance. Nor, in my judgment, does this case come within measurable distance of any other form of abuse of process based on public policy considerations analogous to those underlying the res judicata doctrine--see, for instance, the Court of Appeal decision in Ashmore v British Coal Corp [1990] 2 All ER 981, [1992] 2 QB 338.

All that said, this judgment should not be taken as any encouragement to lawyers or their clients to follow the course in fact adopted here. As the judge rightly recognised, in circumstances such as these, it is plainly in the public interest to have a single action in which the claims of all affected members of the household are included, rather than a multiplicity of actions. If, unjustifiably, separate actions are brought and the fault is found to lie with the solicitor, a wasted costs order may well be appropriate (as apparently at one stage was contemplated below). To some extent, however, the remedy lies with the defendant borough: when faced with a tenant's claim, they can inquire whether or not other claims too are to be advanced.

I pass to the respondent's notice, which I can deal with altogether more shortly. This, it will be remembered, raises afresh Hackney's argument, rejected below, that the settlement of the mother's action included compensation for C's loss. To succeed in this argument, as the judge rightly recognised, Hackney had to establish each of three contentions. First, that it was the intention of both the mother and Hackney, objectively ascertained, to compensate not just her but the whole family, including in particular C. Second, that the mother was entitled in law to claim under her tenancy agreement not only for her own loss but for C's loss too. Third, that C would be bound by the settlement even though it was not approved by the court and the whole of the agreed compensation was paid to the mother, instead of part being apportioned to C and dealt with under the provisions of Ord 10, r 11(1).

In the event, the judge resolved all three issues against Hackney, the first on the facts, the second and third on the law.

Mr Lewis on this appeal recognised that if he failed on the third issue, the other two became immaterial. As to the third issue, the difficulty in Hackney's path is obvious from the briefest perusal of Ord 10, rr 10 and 11. Mr Lewis seeks to overcome it by reference to Ord 10, r 1(1), '... a person under disability may not bring or make a claim in any proceedings except by his next friend.' Because no claim here had in fact been made by C's next friend, Mr Lewis submits, there was strictly no claim before the court of such a nature as to attract the provisions of rr 10 and 11. One has only to state the argument to appreciate its absurdity. It does not merit more elaborate refutation.

That disposes of the respondent's notice. Before finally leaving it, however, I would mention one further matter of general importance arising. During the hearing we were told that not infrequently in these cases, proceedings are brought by the tenant alone and yet settlement is reached (or, indeed, judgment is given) on behalf of the whole family. However convenient that may appear to be, it can plainly create serious problems. So far as other adult members of the family are concerned, there is probably little difficulty. Any attempt to claim afresh would doubtless be met by a successful plea that the tenant settled as their agent or, indeed, on general abuse of process grounds. With regard to those

[1996] 1 All ER 973 at 980

under a disability, however, the position is very different. The practice said to be followed wholly ignores the effect of Ord 10, rr 10 and 11. That may well disadvantage both the defendants and those under disability.

With regard to the defendants, they lose the protection of the settlement (or judgment) against future claims. That is illustrated by this very case, although in the event the judge rejected Hackney's contention on the facts that the mother's settlement included compensation for C. But if it had, then the solution lay with Hackney and their legal advisers who could, and plainly should, have insisted on C being made a party to the action and the matter then being properly dealt with under Ord 10. Order 10, r 10(2), after all, exists to give defendants the opportunity for protection when no proceedings would otherwise be necessary.

As to those under a disability, Ord 10 is, of course, designed to safeguard their interests too. Indeed, that is its primary function and the practice now followed clearly subverts it. It creates a serious risk that on occasions impoverished parents will be tempted to sacrifice their childrens' longer term interests in favour of more immediate gain. The practice, wherever presently followed, should cease.

For the reasons earlier given, in my judgment this appeal succeeds. C's claim must be reinstated. So too, there being no substantive defence on the merits, her judgment secured upon it for damages to be assessed.



SAVILLE LJ.

I agree.



BUTLER-SLOSS LJ.

I also agree.

Appeal allowed.

Paul Magrath Esq Barrister