ABUSE OF PROCESS: claim in deceit permitted following unsuccessful claim in negligence

Was it an abuse of process to bring a claim in deceit following an unsuccessful claim in negligence?

Not where the basis of the claim in deceit had been speculative and inferential at the commencement of the negligence claim, said the Court of Appeal in Playboy Club London Ltd v Banca Nazionale Del Lavoro SpA [2018] EWCA Civ 2025.

The Appellant (A) operated a casino that granted credit to a gambler on the basis of a reference purportedly given by an employee of the Respondent bank (R). The gambler obtained credit of over £1 million from A on the basis of cheques that were subsequently dishonoured. A sued R for negligent misstatement in providing the reference. Ultimately, the claim failed, as R did not owe A a duty of care.

A issued a separate claim in deceit against R, alleging that the reference had been given fraudulently. It did so on the basis of further information that it had obtained both during oral evidence in the negligence claim and subsequently. R applied to strike out the deceit claim as an abuse of process on the basis that it should have been made within the original proceedings.

It was common ground that A could properly have included the claim in deceit in the negligence claim. The question was whether it should have done, on pain of losing the opportunity to plead it later.

The Court of Appeal decided the position had to be considered as at the start of the trial of the negligence claim. It would have been unreasonable to expect counsel to apply to amend to plead fraud in the middle of the trial in light of evidence emerging in cross-examination. So considered, it could not be said that the deceit claim should have been pleaded in the earlier claim. Pleading fraud was a serious step, with serious ramifications going beyond a claim in negligence. Parties were well- advised to be reticent before pleading fraud. Although A could have pleaded fraud, it acted reasonably and properly in deciding not to do so on the speculative and inferential basis that would have been available at that stage.

This was not a case where a party had decided for tactical reasons to keep material up its sleeve in relation to the deceit claim until after the negligence claim. Rather, important new evidence had come into its hands after commencement of that claim. Although A had declined to waive privilege of the advice it had received both before and after the negligence claim, it was a fair inference that it had proceeded to bring the deceit claim by reason of its receipt of highly material and strongly supportive new evidence.


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