The Supreme Court held by a majority that the tort of malicious prosecution can apply to civil proceedings. Mr Willers alleged that a company controlled by Mr Gubay had sued him maliciously and without reasonable cause, causing damage to his reputation, health and earnings and leaving a large shortfall in his legal costs. The claim, which had been struck out, was allowed to proceed to trial.
Mr Peter Willers was Mr Albert Gubay’s right-hand man for more than 20 years until Mr Gubay dismissed him in 2009. One company controlled by Mr Gubay was Langstone Leisure Ltd, of which Mr Willers was a director. Before the dismissal, Langstone had brought a wrongful-trading claim against the directors of Aqua Design and Play Ltd. That claim was abandoned shortly before trial on Mr Gubay’s instructions.
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In 2010 Langstone sued Mr Willers, alleging that he had breached contractual and fiduciary duties by causing it to incur costs in the Aqua claim. Mr Willers defended and sought an indemnity from Mr Gubay, saying that he had acted on Mr Gubay’s directions. On 28 March 2013, two weeks before the trial, Langstone discontinued. On 16 April 2013 Newey J ordered Langstone to pay Mr Willers’ costs on the standard basis. The amount recovered was £1.7 million; Mr Willers said that his full costs were £3.9 million.
Mr Willers then sued Mr Gubay. Mr Gubay died during the appeal, and his executors continued the defence. Mr Willers alleged that the Langstone action was part of a campaign to harm him. It was not disputed that, if English law recognised malicious prosecution of civil proceedings, the pleading contained the necessary allegations: Mr Gubay caused the claim to be brought; it ended in Mr Willers’ favour; it lacked reasonable cause because Mr Gubay knew that he had directed the Aqua claim; Mr Gubay acted maliciously; and Mr Willers suffered damage to his reputation, health and earnings, together with the unrecovered costs.
Why the claim was struck out
Ms Amanda Tipples QC, sitting as a deputy judge of the Chancery Division, struck the claim out as disclosing no known cause of action. She was faced with the House of Lords decision in Gregory v Portsmouth City Council and the later Privy Council decision in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd. She held that she was bound by Gregory, but granted a leapfrog certificate. The Supreme Court gave permission to appeal.
In Gregory, disciplinary findings against a councillor were successfully challenged, but his malicious-prosecution claim was struck out. Lord Steyn rejected the argument that disciplinary proceedings should be treated like criminal proceedings. He observed that the tort had not been held to extend beyond criminal proceedings and a few special civil cases, including a malicious winding-up or bankruptcy petition, a malicious search warrant, bench warrant or execution, and the rare case of malicious arrest of a vessel. He regarded a general extension to civil proceedings as unnecessary for practical reasons, given other torts, although those observations were not required to decide Gregory. In Crawford, by contrast, a majority of the Privy Council held that the tort could apply to civil proceedings used maliciously and without reasonable cause to damage a professional man.
Why the majority allowed the claim to proceed
Lord Toulson, with whom Lady Hale, Lord Kerr and Lord Wilson agreed, held that the claim should go to trial. Lord Clarke agreed. Lord Toulson considered that the older authorities could respectably be read in more than one way and that the outcome should not depend on settling their precise historical boundary. He identified statements treating the malicious and groundless use of legal process, where it caused recognised damage, as capable of supporting an action. Later authority had applied the tort to particular civil processes, while also expressing doubts about ordinary civil actions.
The majority’s central point was justice. If someone intentionally causes injury by maliciously prosecuting civil proceedings without reasonable ground, compensation should be available unless a sufficient contrary consideration exists. Lord Toulson rejected the suggested objections. The possibility of bad follow-on claims did not justify excluding a properly constituted claim. Fear of deterring honest litigation was speculative, particularly because improper civil claims already risk indemnity costs. Unlike some satellite litigation, malicious prosecution does not ordinarily attack the result of the first case. Other torts did not cover the injustice alleged here or in Crawford.
Nor, in the majority’s view, was the claim inconsistent with witness immunity. The complaint concerns abuse of the court’s process, not the words spoken in evidence. It was also different from imposing a duty of care between opposing parties: careless conduct and malicious conduct are distinct. The tort was not confined to people exercising the state’s coercive powers. Recognising it for the commencement of proceedings did not require a matching claim for a malicious defence. Malice and absence of reasonable and probable cause are separate, demanding requirements. The claimant must show that the process was not used bona fide; knowingly baseless proceedings, or proceedings brought for an extraneous purpose, may meet that test. If Mr Willers proved his allegations, malice would be established.
The costs claim raised a separate concern. Lord Toulson accepted that a later action would be objectionable if a trial judge had already refused indemnity costs after being able to assess the conduct of the case. That had not happened. Because Langstone discontinued, Newey J could not have decided an indemnity-costs application without effectively trying the present claim. The likely gap between actual and recovered costs should not be treated as repaired by a fiction, and the claim for the excess was not an abuse of process.
Lord Clarke added that claims for wrongful arrest of a ship showed civil process being treated as actionable where it was malicious, or involved gross negligence implying malice. He saw no sensible basis for recognising the tort in criminal cases while denying it where malicious civil proceedings caused loss.
Why four Justices disagreed
Lord Mance, Lord Neuberger, Lord Sumption and Lord Reed would have dismissed the appeal. They read the historical cases as allowing claims for malicious criminal proceedings and for a limited group of ex parte civil measures with immediate effects on person, property or trading reputation, not for an ordinary civil action resolved between the parties. They considered a general extension unsupported by authority and undesirable. Their concerns included inconsistency with the absence of a duty of care between litigants, witness immunity, the discretionary costs regime, and the usual irrelevance of malice in tort; the risk of satellite litigation and tactical threats; uncertainty about malice and recoverable heads of damage; and authority treating extra costs as irrecoverable between parties to the original proceedings.
The separate Willers v Joyce (No 2) judgment explains which precedent a lower court should follow when a Privy Council ruling conflicts with domestic authority.
Verdict: By five votes to four, the Court allowed Willers’ appeal. His claim for malicious prosecution of civil proceedings, including his claim for unrecovered costs, could go to trial. The Court neither found Gubay liable nor awarded damages.
