knowledge 2 June 2017 |

Malicious Abuse of the Court Process

The court, in a development of the test for malicious abuse of the court process, taking account of the general desire to avoid satellite litigation, as classically set out in Henderson v Henderson¹, added to the test a requirement that where the claim arises in secondary proceedings, the primary litigation must have either failed in its entirety, or if it succeeded, can only have done so by reason of wrongdoing, such as a fraud on the court, thereby adding an additional bar to be met in establishing the tort.

Status of the Tort in the UK and Ireland

Although the traditional view in the UK, until the 2016 decision in Willers v Joyce², was that tort of malicious abuse of court process (sometimes referred to, incorrectly, as malicious prosecution) only applied in respect of criminal proceedings, with some very limited exceptions, the cause of action has been available in respect of civil proceedings in Ireland since at least the early 1980s.

In Willers v Joyce, the UK Supreme Court, by a narrow 5-4 majority, held that the cause of action of malicious abuse of court process is available in respect of civil proceedings generally, thereby settling a previously uncertain point in the United Kingdom. However, the 4 dissenting judges in Willers expressed serious concerns about the potential for the cause of action to promote unwarranted secondary or satellite litigation, and to discourage parties with valid claims from bringing proceedings in the first instance, for fear of facing a ‘malicious prosecution’ action in the future.

While the cause of action has been available in Ireland in civil proceedings since at least the 1981 High Court case of Dorene v Suedes³, as Clarke J stated as recently as 2006 in Independent Newspapers v Murphy⁴, "[t]he precise parameters of such a cause of action remain to be clearly defined".

The recent Commercial Court decision of Twomey J in the case of Dublin Waterworld v National Sports Campus Development Authority (“NSCDA”) (in which McCann FitzGerald acted for the successful defendant) has further refined the tort in this jurisdiction, and, in the process has narrowed the scope for further satellite or secondary litigation.

The Primary Litigation

In 2005, the defendant NSCDA, a State-owned Authority set up to manage the development of the National Sports Campus at Abbotstown, initiated proceedings (the "primary litigation") for, inter alia, the recovery of VAT of €10,254,600, charged in respect of the lease of the National Aquatic Centre to the lessee of the facility, Dublin Waterworld (“DWW”).

The dispute regarding the chargeability of VAT on the lease was initially referred to arbitration by the Commercial Court. The arbitrator found in favour of NSCDA, holding it was entitled to charge VAT on the lease. The lessee DWW appealed that decision to the High Court where the arbitrator’s award was upheld. On appeal, the Supreme Court in 2010 overturned the arbitrator’s decision remitting the matter to arbitration.

Malicious Abuse of Court Process Proceedings

In 2013, DWW instituted its claim (the "secondary litigation") against NSCDA, claiming damages for malicious abuse of the court process arising from the decision of NSCDA to pursue the primary litigation. In order to establish that NSCDA had wrongfully issued and maintained those proceedings, DWW sought to establish that NSCDA had sued (a) without reasonable and probable cause, (b) maliciously, and (c) that DWW suffered actual damage as a result of the institution of the proceedings, in accordance with the test set down Dorene v Suedes in 1981. The proceedings were fully defended by NSCDA and a split trial was ordered. The trial as to liability only was heard before Mr Justice Twomey over 21 days in the Commercial Court.

On 10 May 2017, Mr Justice Twomey delivered judgment in the secondary litigation, and rejected DWW’s claim in its entirety. In so doing, he clarified the scope of the cause of action in Ireland. In finding for the defendant NSCDA, Mr Justice Twomey has added an extra element to the test laid down in Dorene v Suedes, holding that in order to successfully make out a claim for malicious abuse of court process, it is a requirement that the primary proceedings, which it is alleged were brought without cause and maliciously, must have failed in their entirety.

Twomey J found that, in circumstances where NSCDA had a decision in its favour (ie that the lease was vatable) from an experienced and independent arbitrator, which was upheld by the High Court, there must always have been a reasonable chance such a finding would be reached and, therefore, that NSCDA had reasonable and probable cause to pursue the primary proceedings seeking recovery of the VAT. Twomey J also found, in the alternative, that if the court had to decide the case absent that additional limb, it would conclude that NSCDA had not only a reasonable and probable cause but a strong cause for pursuing the primary litigation, thus defeating the first limb of the original cumulative test in Dorene v Suedes. 

Impact of the Decision

Mr Justice Twomey’s decision is significant for a number of reasons. The decision in its terms adds a new limb to the test for a tortious claim of malicious abuse of court process.

Whether it can be said that the new test expressed by the court is in fact a development of the first limb of the Dorene v Suedes test, rather than a fresh or additional hurdle for a plaintiff seeking to establish malicious abuse, it is precedent for the proposition that a successful claim in primary proceedings before a court or an arbitrator or other competent tribunal will, absent fraud, defeat a claim in secondary proceedings for malicious abuse of court process.

While this approach is clearly rational and was more recently heralded by Clarke J in Independent Newspapers, it had not definitively been the position in Ireland prior to this judgment. The existence of this further limb precludes satellite litigation from being pursued against parties in the position of NSCDA who, although ultimately unsuccessful at final appellate stage, had prevailed in the primary litigation at first and second instance.

Mr Justice Twomey also echoed the concerns expressed by the dissenting judges in Willers v Joyce regarding the potential that this tort has to promote satellite litigation. He cited a significant passage from the judgment of Lord Sumption (who himself dissented in Willers) in the Privy Council judgment of Crawford Adjusters v Sagicor General Insurance (Cayman) Ltd⁵,  another case which considered the tort, namely:

"Litigation generates obsession and provokes resentment. It sharpens men’s natural conviction of their own rightness and their suspicion of other men’s motives. It turns indifference into antagonism and contempt. Whatever principle may be formulated for allowing secondary litigation in some circumstances, for every case in which an injustice is successfully corrected in subsequent proceedings, there will be many more which fail only after prolonged, disruptive, wasteful and ultimately unsuccessful attempts"

Also contributed by Patrick Longworth.