Kotonou v National Westminster Bank Plc [2015] EWCA Civ 1106

Case No A3/2010/2153Neutral Citation Number: [2015] EWA Civ 1106
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE MORGAN
HC07C00673
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 30/10/2015
Before
LORD JUSTICE AIKENS LORD JUSTICE KITCHINLADY JUSTICE GLOSTER
Between
ANGELI LUKI KOTONOUAppellantNATIONAL WESTMINSTER BANK PLCRespondent
David Sears QC (acting pro bono) for AppellantAlan Gourgey QC and Laura Newton (instructed by Berwin Leighton Paisner LLP) for RespondentHearing Hearing dates: Tuesday 21 st and Wednesday 22 nd July 2015
JudgmentLady Justice Gloster :Introduction
[1]This is an appeal by the claimant, Mr Angeli Luki Kotonou (“Mr Kotonou”) against a decision of Mr Justice Morgan (“Morgan J”) contained in a judgment dated 5 July 2010 (neutral citation reference [2010] EWHC 1659 (Ch)) (“the Morgan judgment”). By the Morgan judgment, the judge: i) dismissed Mr Kotonou’s appeal from the decision of Master Teverson (“the master”) dated 21 August 2008 whereby, on an application by the defendant, National Westminster Bank plc (“the Bank”), he struck out Mr Kotonou's particulars of claim in these proceedings; ii) refused Mr Kotonou permission to amend his particulars of claim; and iii) granted the Bank summary judgment and dismissed Mr Kotonou’s claim.[2]Following an oral hearing, on 20 May 2014 Tomlinson and Vos LJJ granted Mr Kotonou permission to appeal in relation to two out of three revised grounds of appeal.[3]In summary, the issue for determination on this appeal is whether, in dismissing the appeal, Morgan J erred in law and/or failed to take account of material matters in concluding that the original particulars of claim in these proceedings (which advanced certain allegations of fact which were allegedly inconsistent with findings made by Mr Jules Sher QC, sitting as a deputy judge of the High Court (“the deputy judge”), in a reserved judgment dated 22 May 2006 in earlier proceedings (“the Sher judgment”)) were an abuse of process in the circumstances of this case. The issue for determination on the Bank’s respondent’s notice is whether, additionally, Mr Kotonou's claim was an abuse of process on the basis of the rule in Henderson v Henderson (1843) 3 Hare 100.[4]On the appeal, Mr David Sears QC appeared as counsel for Mr Kotonou and Mr Alan Gourgey QC appeared as leading counsel for the Bank.

Factual and procedural history

[5]The proceedings between the Bank and Mr Kotonou have a long and complex history, as set out in the Morgan judgment. For present purposes I summarise them as follows.[6]In around February 2000, Olympic Resources & Services PLC (“ORS”) wished to borrow £500,000 from National Westminster Bank Plc (“the Bank”). The Bank was only prepared to lend £500,000 to ORS if repayment of that sum by ORS was adequately secured.[7]At the time, Mr Kotonou was a director of, and the majority shareholder in, ORS. ORS, acting through Mr Kotonou, entered into an arrangement with Mr and Mrs Theodossiades. As a result of that arrangement, Mr and Mrs Theodossiades procured their bank, Barclays Bank plc (“Barclays”), to open a standby letter of credit (“the letter of credit”) in the maximum sum of £500,000, in favour of the Bank. The letter of credit provided the security required by the Bank and it duly made a loan of £500,000 to ORS.[8]The letter of credit provided that it could be called upon by the Bank up to 30 December 2000 and, if not called upon by that date, it would lapse. The period covered by the letter of credit was extended on a number of occasions and, finally, extended to 16March 2001. The Bank did not call on the letter of credit before it lapsed.[9]On 16 March 2001, Mr and Mrs Theodossiades asked Barclays to extend the letter of credit to 31 March 2001. Barclays declined to do so on the grounds that it had not been given enough notice prior to the lapse of the letter of credit on 16 March 2001. Accordingly, on that date, the letter of credit lapsed, leaving ORS's liabilities to the Bank unsecured in an amount of £500,000. Mr and Mrs Theodossiades later declined to procure Barclays to renew the letter of credit in favour of the Bank.[10]The Bank recovered some £75,000 in respect of the debt of £500,000 due to it from ORS. On 12 July 2001, Mr Kotonou gave a personal guarantee (“the guarantee”) to the Bank in relation to the outstanding indebtedness of £425,000. ORS did not pay any part of the debt of £425,000 and went into insolvent liquidation on 2 February 2005.[11]On 5 March 2004, ORS executed a deed of assignment (“the ORS deed of assignment”) in favour of Mr Kotonou. For present purposes it is relevant to note that: i) In the current proceedings the master held that it was arguable that the ORS deed of assignment could be construed as an assignment by ORS to Mr Kotonou of certain claims, which included the claims which are now put forward by Mr Kotonou in the present proceedings where he asserts that he is the assignee of causes of action previously vested in ORS. The Bank did not appeal this part of the master’s decision. ii) One provision in the ORS deed of assignment provided that the relevant assignment was only to take effect in the event that ORS should be “unable to continue as a going concern by entering into a voluntary liquidation or be the subject of a successful winding up petition”. Initially there was an issue before the judge in the present proceedings as to whether an assignment in those terms infringed the anti-deprivation rule: see Perpetual Trustee Co Ltd v BNY Corporate Trustee Services Ltd [2010] 1 BCLC 747. However the judge records in the judgment that it was later accepted by Mr Gourgey, on behalf of the Bank, that an issue of that kind would require some further investigation into the facts and that was not appropriate on the application for summary judgment.[12]On 2 April 2004, the Bank issued proceedings against Mr Kotonou under the guarantee. Mr Kotonou defended those proceedings on various grounds and the proceedings were tried before the deputy judge in March 2006.[13]Some two weeks before trial, Mr Kotonou instructed his then counsel, Mr Wormington, who prepared a lengthy draft amended defence which added to Mr Kotonou’s own defence without deleting anything of substance. The draft amended pleading included a lengthy counterclaim which set out detailed allegations in relation to the letter of credit. These were broadly equivalent, though not identical, to the claims which Mr Kotonou now seeks to bring in the present proceedings.[14]The deputy judge heard the contested amendment application on 8 and 9 March 2006, the first and second days of the trial. Mr Gourgey QC (counsel for the Bank) did not oppose Mr Kotonou pleading a lengthy factual history in relation to the operation, and the subsequent lapse, of the letter of credit. He did, however, take issue with Mr Kotonou pleading an assignment of ORS’ causes of action to Mr Kotonou. In the circumstances, Mr Wormington withdrew the application to the extent that the draft amended defence pleaded an assignment or anything founded upon the assignment. Had Mr Kotonou pleaded an assignment of ORS’s causes of action to himself there would have been a dispute of fact in relation to the assignment which would have necessitated an adjournment of the trial. Mr Kotonou wished to avoid responsibility for the costs of such adjournment and so that aspect of the amended pleading was withdrawn. In advancing his application for permission to amend, Mr Wormington submitted that the facts alleged in relation to the history of the letter of credit were not just a backdrop to the misrepresentation defence under the guarantee but rather: "the actual landscape in which this [misrepresentation defence] has to be solved. It is one of the most significant features of the situation, we say, in July when matters came to a head and the guarantee was given”.[15]The Bank also opposed the amendment of the defence to plead a duty owed by the Bank to ORS in respect of the letter of credit. The deputy judge held (in a judgment dated 9 March 2006) that, without the pleading of the assignment, the pleaded duty went nowhere. In my view he was wrong on that point. He also held that the existence of such a duty was irrelevant although it was possible that the perception of the Bank’s employees as to the existence of such a duty might be relevant. He concluded that he should not give permission to Mr Kotonou to plead the existence of a duty or the breach of that duty or loss flowing from such breach of duty. Mr Kotonou did not appeal against the judge’s refusal to permit an amendment which pleaded a breach of a duty owed by the Bank to ORS in respect of the maintenance of the letter of credit. He could have done so.[16]Mr Kotonou then served an amended defence and counterclaim, which pleaded, amongst other things, that the administration of the extensions to the letter of credit had been dealt with by the Bank through communication with Mr and Mrs Theodossiades and Barclays; that Mr Frampton of the Bank had been informed by Mr Kotonou of the commercial terms which had been agreed between ORS and Mr and Mrs Theodossiades; and that the Bank was at fault in not requiring the extension or calling on the letter of credit. The amended defence and counterclaim did not expressly allege that the Bank owed a duty in contract or in tort to ORS or to Mr Kotonou; nor did it expressly allege that there was a breach of duty causing loss and damage, to either ORS or Mr Kotonou or that ORS’s causes of action had been assigned to Mr Kotonou.[17]For the purposes of this appeal it is necessary to describe Mr Kotonou’s position in relation to the proposed amendments and what the deputy judge decided in relation to them in some detail. The position is best summarised by Morgan J in his judgment as follows:
“29. The draft amended defence and counterclaim was provided to Nat West shortly before the trial fixed for 8th March 2006. Nat West stated that it would oppose Mr Kotonou’s application for permission to amend the defence and counterclaim. The question whether Mr Kotonou should be given permission to amend the defence and counterclaim was argued before the deputy judge on the 8th and 9th March 2006 and he gave a judgment dealing with that application on 9th March 2006. 30. In the course of the hearing on 8th March 2006, Mr Wormington on behalf of Mr Kotonou explained in detail how Mr Kotonou intended to put his case by reference to the draft amended pleading. It seems that Mr Gourgey QC, who appeared in earlier proceedings on behalf of Nat West, had largely accepted that Mr Kotonou could plead the factual history in relation to the operation of, and the subsequent lapse of, the standby letter of credit. There was however a difference as to whether Mr Kotonou should be allowed to plead an assignment to himself of ORS’ causes of action, if any, against Nat West. Mr Wormington submitted to the deputy judge that, even without an assignment to those causes of action, it was open to Mr Kotonou as guarantor to point to the fact that the principal debtor, ORS, did not owe the debt alleged because the principal debtor ORS had a set off against Nat West of its claim to damages for Nat West’s alleged breach of the duty allegedly owed to ORS. Later in the course of 8th March 2006, Mr Wormington stated that he wished to withdraw the application to amend the defence and counterclaim “to plead assignment or anything founded upon assignment”
. As I understand it, Mr Kotonou adopted this position because there was a risk that if he pleaded an assignment of ORS’s causes of action to himself, there would be a dispute of fact as to the alleged assignment which would necessitate an adjournment of the trial and Mr Kotonou wished to avoid such an adjournment. 31. On 9th March 2006, the deputy judge gave a detailed judgment, extending to some 29 pages of transcript, on the application for permission to amend the defence and counterclaim. The deputy judge referred to the original defence and counterclaim and to the parts of it which referred to the history relating to the standby letter of credit. The deputy judge commented that Mr Kotonou unmistakably was putting forward in his defence the factual background concerning the lapsed standby letter of credit. He then recorded that he had indicated to the parties that he would be receptive to amendments which merely fleshed out Mr Kotonou’s original defence and identified the legal means whereby the relevant history in relation to the standby letter of credit furnished him a defence to the claim on the guarantee. Following that indication, the area of dispute on the application for permission to amend was considerably narrowed. Later in his judgment, the deputy judge referred to a concession by Nat West to permit Mr Kotonou to plead the whole background relating to the lapse of the standby letter of credit.However, Nat West opposed an amendment of the pleading to allege that it owed a duty to ORS in this respect. The deputy judge referred to the fact that Mr Wormington conceded that he should not be given permission to amend to plead the assignment of ORS’s causes of action to Mr Kotonou. The deputy judge indicated that without a pleading of an assignment, the allegations of a contractual or tortious duty of care went nowhere. He held that the existence of a duty was irrelevant although, possibly, the perception of Nat West’s employees as to whether Nat West owed such a duty might be relevant. He concluded that he should not give permission to Mr Kotonou to plead the existence of a duty or the breach of that duty or loss flowing from such breach of duty. 32. In the course of his submissions on 8th March 2006, having conceded that Mr Kotonou should not be given permission to amend to plead an assignment by ORS to Mr Kotonou, Mr Wormington said: “… my client would like me to point out that of course he, so far as he is able to, is proceeding to reserve the right to pursue that in the future in subsequent proceedings, but he understands that my learned friend not having been able to give any comfort in relation to res judicata or Henderson v Henderson, he takes the risk as to whether or not such pursuit would be barred by anything that happens in these proceedings.” 33. Following the deputy judge’s ruling on 9th March 2006, Mr Kotonou served an amended defence and counterclaim. This pleading repeated the original defence and counterclaim and set out Mr Kotonou’s averments as to the standby letter of credit and the circumstances in which it was allowed to lapse. In accordance with the draft amended defence and counterclaim, the final version of the defence and counterclaim pleaded, amongst other things, that the administration of the extensions to the standby letter of credit had been dealt with by Nat West through communication with Mr & Mrs Theodossiades and Barclays, that Mr Frampton of Nat West had been informed by Mr Kotonou of the commercial terms which had been agreed between ORS and Mr & Mrs Theodossiades and that Nat West was at fault in not extending and/or calling on the standby letter of credit. The amended defence and counterclaim, as served, did not allege that Nat West owed a duty in contract or in tort to ORS nor that there was a breach of duty causing loss and damage nor that ORS’s causes of action had been assigned to Mr Kotonou. 34. I should also point out that at no stage, whether in the original defence or in the draft amended defence and counterclaim, or in the final version of the amended defence and counterclaim, did Mr Kotonou allege that Nat West owed a duty of care directly to him in relation to the standby letter of credit. Although paragraph 20(E) of the original defence and counterclaim pleaded that Mr Kotonou in his capacity as the majority shareholder (98%) in the Olympic Group had suffered harm and loss for which he held Nat West responsible, he did not identify any cause of action to recover the alleged loss as being pursuant to a duty of care owed to him. If Mr Kotonou had alleged a duty of care of that kind then, subject to the possibility of an application to strike out such a claim, the matter would have been tried at the trial in March 2006. Even if the allegation of a duty owed directly to Mr Kotonou had not been pleaded in the original defence, if Mr Wormington had applied for permission to make such an averment then, subject to the deputy judge regarding such a claim as arguable, it may well have been the case that permission to amend would have been given to put forward that averment. It seems to me that the principal reason why the deputy judge did not allow Mr Kotonou to allege the existence of a duty of care owed by Nat West to ORS was because of the risk of an adjournment of the trial necessitated by a pleading of an assignment by ORS to Mr Kotonou. That risk would not have arisen in relation to an alleged duty of care owed direct to Mr Kotonou.” [My emphasis.][18]At the end of the twelve day trial, at which Mr Kotonou, Mr Theodossiades and Mr Frampton gave evidence, Mr Kotonou's counsel specifically asked the deputy judge to make findings in relation to Mr Kotonou's case regarding the issues relating to the letter of credit and to form a view on whether there was fault by the Bank, in the sense of a breach of duty owed by the Bank to ORS: see e.g. page 31 of the transcript of the hearing for 23 March 2006 and paragraphs 5 and 19 of the Sher judgment, as to which see further below. Mr Gourgey, for the Bank, submitted to the deputy judge that the conflicts of evidence in relation to the letter of credit did not need to be resolved in order to decide the issue as to the validity of the guarantee.[19]The deputy judge gave a lengthy reserved judgment on 22 May 2006 in which he found in favour of Mr Kotonou that the guarantee should be set aside on the basis that it had been induced by one of the four misrepresentations alleged against the Bank. Like the judge, I consider that it is convenient to set out in full what the deputy judge said in paragraphs 5 to 20, 23 to 29 of the judgment:
“5. I have been provided with a considerable amount of historical financial detail much of which is quite irrelevant to the issues I have to decide, even by way of background. I am conscious that there are other proceedings pending (under the directors’ disqualification legislation) in which this detailed financial history is likely to be more pertinent than it is here. In these circumstances, I am going to restrict myself in this judgment to the facts which are relevant to and impact upon the issues which arise in these proceedings. There is one exception to this and that relates to a standby letter of credit issued by Barclays Bank Plc for £500,000 on 24th February 2000 (the Barclays SLOC) which has loomed very large in ALK’s case, in my judgment out of all proportion to its real significance. However, Mr Wormington, his Counsel, has made it clear that he wishes me to make findings in relation to this aspect and I shall do so as economically as I can, even though I consider this part of the story has limited relevance. The Barclays SLOC 6. With that introduction I think I can take up the story in late 1999 when the amount owing to the Bank by various members of the ORS group was of the order of £4.5 million. Security at that stage consisted of a series of cross-guarantees given by the companies supported by debentures and a personal guarantee for part of the indebtedness by ALK. 7. By late January 2000 the group needed further significant facilities. £500,000 was made available against a standby letter of credit opened by the Union Bancaire Privée of Geneva (the Union Bancaire SLOC). By early February 2000 further facilities were sought by the group. The Bank regarded this as a cash crisis to be solved by an accelerated programme of capital raising so that the outstanding amount owing under the facilities (other than the £500,000 secured by the Union Bancaire SLOC) was repaid by the end of April 2000. The Bank made it clear that any further funding was only to be provided on a fully secured basis. It was envisaged that a further £500,000 could be raised against the security of another standby letter of credit. 8. ALK then proceeded to agree with a Mr and Mrs Theodossiades arrangements for the provision of a further standby letter of credit. Mr Frampton, who I have mentioned above and who was a senior corporate manager, wrote to ALK as the chairman of ORS on 23rd February 2000 as follows:- “Dear Angelos, I write with reference to the expected receipt of a Standby Letter of Credit in the sum of £500,000 from Barclays Bank Plc, in favour of the company Olympic Resources & Services Plc. My understanding is that this Standby Letter of Credit will be valid until 30th December 2000 and I will write to confirm that demand under this Letter of Credit will not be made before 30th November 2000 or any later than the maturity date. This should allow you to make any further arrangements necessary in order to see the Standby Letter of Credit released prior to its maturity. I trust that this is sufficient for your purposes. However, please contact me should you require any further information.” 9. On 24th February 2000 the standby letter of credit referred to in Mr Frampton’s letter was issued by Barclays. That was the Barclays SLOC. It was for a maximum sum of £500,000 and was valid until 30th December 2000. It was:- “AVAILABLE BY PAYMENT AT SIGHT UPON RECEIPT OF YOUR TESTED TELEX OR AUTHENTICATED SWIFT CONFIRMING TO US THAT THE AMOUNT CLAIMED UNDER THIS IRREVOCABLE STANDBY LETTER OF CREDIT NO: ST LC HAS BECOME DUE TO YOU BY OLYMPIC RESOURCES AND SERVICES PLC, 8 LLOYDS AVENUE, LONDON AND REMAINS UNPAID.” 10. The Barclays SLOC was the product of a complicated agreement between the Theodossiades and ORS dated 24th February 2000 which I need to refer to but only briefly. The Theodossiades agreed to lend ORS £500,000 by way of the provision of the Barclays SLOC. The loan was to be repaid by ORS by 31st December 2000. Upon a public listing of any of the red companies, the Theodossiades were entitled to convert the loan or part of it into ordinary shares in the capital of such listed company at a discount of 10% to the placing or offer price. ORS was further obliged on any such listing to give to the Theodossiades ordinary shares in such listed company up to a minimum market value at the date of listing of £100,000. 11. It is plain from Mr Frampton’s evidence, including his letter of 23rd February 2000, that the Bank’s understanding at the date of the issue of the Barclays SLOC was that ORS would be looking to replace the SLOC before its expiry. This is consistent with the evidence in relation to the way in which the Union Bancaire SLOC was treated. It is also consistent with the evidence of Mrs Theodossiades. The Barclays SLOC was, after all, simply a security for ORS’s underlying indebtedness, which was repayable on demand. To trigger the discharge of the Barclays SLOC by payment under it by Barclays, the Bank would have had to have made a demand on ORS, ORS would have had to have defaulted in meeting that demand and the Bank would then have had to have communicated those facts to Barclays precisely in accordance with the provisions of the Barclays SLOC which I have quoted above. The underlying indebtedness of £500,000 would thus have had to be repaid or secured in some other way by the expiry date of the Barclays SLOC in order to avoid a call being made on the SLOC. In an ongoing banking relationship one would not expect a call to be made. In practice one would expect the customer to procure payment of the underlying indebtedness or alternative security or an extension of the expiry date of the SLOC. Mr Frampton envisaged that ORS would use the time available down to maturity to raise funds to repay the loan, following which the SLOC would be released. The SLOC was there simply to cover the eventuality that ORS failed to fulfil its obligations. 12. What happened in fact is that by arrangement between ORS, the Theodossiades and Barclays the final date by which the Barclays SLOC had to be called was extended from time to time, no doubt to give ORS time to make other arrangements for payment of the underlying indebtedness (as, incidentally, happened in the case of the Union Bancaire SLOC). 13. To cut a long story short, Mr Frampton wrote to ALK on 21st December 2000 highlighting the fact that the Barclays SLOC was due to expire on 30th December 2000 and asking for instructions as to a clear way forward by 28th December 2000. Not having received confirmation as to the way forward, the Bank made a demand of ORS on 28th December 2000, but agreement was then reached between the Theodossiades and ALK to extend the Barclays SLOC to 31st January 2001 and this was confirmed to the Bank by Barclays on 29th December 2000. Then, towards the end of January, there was a similar extension to the end of February 2001. Again, on 21st February a demand was made by the Bank on ORS. Then there was an extension to 9th March 2001 and then another to 16th March 2001. 14. It was ALK’s evidence that ORS was, in his words, “out of the loop” by the time of the extensions in March 2001 and that the Bank was arranging these extensions with the Theodossiades. I do not accept this evidence. The Bank had no interest in using its own initiative in obtaining an extension. If ORS did not want to secure an extension, the Bank was in a position to make a demand on ORS followed, in the case of default, by a call on the SLOC. 15. The case put forward by ALK was that the Bank became pro-active in procuring these extensions from the Theodossiades without his involvement on behalf of ORS, and he points to the fact that he was in Australia in the first half of March 2001. As I have indicated I do not accede to this contention. I infer that all the extensions up to 16th March were instigated by ALK on behalf of ORS. Certainly, there is no reason at all why the Bank would have requested extensions, let alone such short ones. A similarly short extension was obtained by ORS in relation to the Union Bancaire SLOC (from 30th September 2000 to 13th October 2000). The motivation for the allegation that ALK was out of the loop in this regard is to form the basis for a contention that the Bank had assumed a duty to ORS to preserve the Barclays SLOC. The lapse of the Barclays SLOC 16. A further intended extension from 16th March 2001 to the end of March 2001 failed to take effect. Mrs Theodossiades made the request of Barclays for this extension at 10 a.m. on 16th March but, under the arrangements between her and Barclays, that request came too late to be acted upon. Barclays did not issue an extension and, it seems, no one in the Bank sufficiently monitored the situation (as had been done conscientiously on each previous extension) to enable the Bank to be protected against a failure to extend. The Barclays SLOC therefore expired completely on 16th March 2001. This was a serious embarrassment and loss to the Bank, and it is impossible on the detailed evidence before me to conclude otherwise than that that loss to the Bank was due to some failure within the Bank, not necessarily that of Mr Frampton himself. But the loser on the face of it was the Bank, not ORS. If Mr Frampton’s department is to be criticised, it is not for letting the customer down but for letting down the Bank itself. For all the Bank knew, if the Barclays SLOC lapsed, the Theodossiades would not have had to have paid the £500,000 and would not have been entitled to call for repayment of their loan. It was the Bank that was left high and dry, without security. The personnel in the Bank had a duty to look after the Bank’s interests and not let this happen. The Bank had no duty owed to ORS, or anyone else, not to let it happen. 17. Of course the position of ORS was complicated by its arrangements with the Theodossiades. The fee for the arrangement by way of gifted shares to the Theodossiades would, no doubt, continue to be payable by ORS. But ORS was committed to that outgoing in any event. As to the provision for conversion of the loan into shares at a discount to the issued price, there was one flotation that did occur, namely that of E-Comsport which I mentioned above. That happened in May 2000 and shares to the appropriate value were issued to the Theodossiades and paid for from within the group. That event might have put ORS, after lapse of the Barclays SLOC, in a position of having to claim payment from the Theodossiades to the extent of that value. It seems, however, from the oral evidence that there was no recovery in this respect from the Theodossiades, but it matters not for the purposes of this judgment whether there was a right of recovery or not. I do not have nearly enough material to form any view as to the true position between the Theodossiades and ORS but, even if ORS ended up losing as a result of the lapse of the Barclays SLOC, it does not follow that that loss can be laid at the door of the Bank. 18. I am comforted in this view by the fact, as I hold, that Mr Frampton had no knowledge of the conversion by the Theodossiades of part of their loan into E-Comsport shares pursuant to the options they enjoyed under their agreement with ORS. Indeed, I find that Mr Frampton had no knowledge of that agreement at all. ALK asserted otherwise and I have been asked by Mr Wormington to make a specific finding on this contested issue, and I make it now against ALK’s assertion. I accept Mr Frampton’s evidence in this respect. 19. I am conscious that one of the many amendments disallowed on the second day of the trial raised the issue whether there was a duty owed by the bank to ORS to preserve the Barclays SLOC. However, it was always part of ALK’s case, and remained so in closing written submissions, that the administration of the extensions to the SLOC was the responsibility of the Bank, and I was invited by Mr Wormington in oral closing to form a view on whether there was fault in the sense of breach of duty owed by the Bank to ORS in this regard. 20. My view on the existence of such a duty has accordingly been expressed above. However, Mr Wormington has very recently submitted that the disallowance of the amendment in this respect has limited the presentation of ALK’s case on this issue and, in the light of the fact that a concluded view on whether the Bank owed ORS a duty to preserve the SLOC is not a necessary finding leading to the final outcome of this judgment,I am prepared (so far as it may assist) to express my view in this regard as a provisional one based on the limited material put before me. It is sufficient for the purposes of this judgment to record my view that the management of the Bank were at fault in the sense of breach of duty to the Bank itself. … 23. I pause there to note that the position at that time was that the Bank was exposed to the extent of £500,000 or thereabouts, having lost the benefit of the Barclays SLOC. No further facilities had been granted pursuant to the requests by ALK mentioned above. Mr Brown and Mr Wilson had just taken over the account and were not, until the end of May 2001, aware of the exposure and that it was due to the loss of the Barclays SLOC. It is fairly clear from the evidence that I have heard and seen that Mr Frampton was embarrassed by the loss of the Barclays SLOC, and he was doing everything that he could to restore the position in discussions with ALK. ALK initially thought that it would be easy to persuade the Theodossiades to procure a renewal or reissue of the SLOC. In the weeks after the expiry of the SLOC on 16th March, Mr Frampton held on to the account at least for the purposes of restoring the position. He told Mr Brown that there was a problem but that it was being sorted out, and it was thought best to leave this aspect in Mr Frampton’s hands as he knew the customer and the circumstances giving rise to the problem. 24. There have been accusations in the evidence by ALK that Mr Frampton was involved in a cover up internally in the Bank concealing the fact that the Barclays SLOC had been lost inadvertently. It has been said that he engaged in this cover up in an attempt to sort the problem out himself in the hope that a solution by way of replacement security would be found before his superiors found out the true circumstances surrounding the loss. I say immediately that it is not necessary for me to make findings in detail as to what happened in relation to the loss of the SLOC and the attempt to rectify the position thereafter. It is quite sufficient for purposes of this judgment to find, as I do, that something went wrong in the Bank in letting the Barclays SLOC lapse without securing payment and that Mr Frampton tried desperately to recover the security position before he finally relinquished the problem to Mr Brown and Mr Wilson at the end of May 2001, when he informed them of the loss and the failure to rectify. Mr Wormington very fairly indicated in his closing submissions that a more detailed investigation in relation to Mr Frampton’s conduct would be unfair to Mr Frampton as he has not been separately represented in these proceedings. In my view such detailed investigation is not going to help me one bit in reaching a judgment on the issues that do arise and I readily accede to his invitation to avoid such detailed enquiry. Mr Frampton’s handover 25. On 29th May 2001, Mr Frampton sent an email to Mr Brown in which he eventually told Mr Brown that the Bank was in his words “unsecured contrary to sanction”
. As I have indicated, he had, earlier in April, simply told Mr Brown that there was a problem with the account and a standby letter of credit but that he would sort it out. Now he was telling Mr Brown that such attempt to sort it out had failed and that the account was unsecured contrary to the agreement under which the indebtedness had been created and sanctioned by the Bank. ALK complains that Mr Frampton was unjustifiably implying in his email that the fault was ALK’s in bringing about this situation and that this had a serious detrimental effect on ALK’s relationship with Mr Brown and Mr Wilson. I do not agree that Mr Frampton was throwing the blame entirely on ALK. The email was a little unclear, it must be said, but I think it accepted that Mr Frampton was in part himself to blame. If it carried the implication that ALK was to blame as well, I think that that was not unjustified. 26. I have gone into the history of the Barclays SLOC and its expiry in some detail (though not nearly in as much detail as it was gone into by Counsel in the course of trial). I have done that because it forms such a central part of ALK’s defence: indeed, until the extensive amendments to that defence permitted by me in an interlocutory judgment given on the second day of the trial, the allegations of ALK concerning the lapse of the SLOC formed the central part of the original defence and counterclaim; and it continues to form a part, albeit not a central part, of ALK’s currently pleaded case. The changes in ALK’s case permitted by me in that interlocutory judgment are, to put it bluntly, that he was tricked into giving the guarantee of 12th July 2001 by fraudulent misrepresentations made by the Bank to him in the period between 30th May and 12th July 2001. The story behind the SLOC and its expiry is, at best, of background relevance to the issues as to whether such fraudulent misrepresentations were made and relied upon. I must come in a moment to the events that led up to the giving of the guarantee (and the granting of a charge over the matrimonial home in support of that guarantee), but I say immediately that, in my judgment, ALK has latched onto the events surrounding the lapse of the SLOC and tenaciously hung on to those events because he (rightly) sensed that the bank had done something wrong or at least something embarrassing to it and he, opportunistically, tried to turn this to his advantage by exonerating himself from payment under the guarantee. He realised that the Bank had indeed made a mistake in letting the SLOC lapse and when, ultimately, the companies began to fail and it became clear that the guarantee and charge were not going to save them, he exploited the Bank’s mistake as if it were a breach of duty towards his companies. This is not the only occasion in the story where ALK’s stance at the time of trial stands in distinct contrast to his stance at the time when the relevant events occurred. 27. Another, rather stark, example of such opportunism was demonstrated on the first day of this trial. ALK sought to raise a defence challenging ORS’s liability to the Bank on the ground that he had signed the agreement giving rise to that liability on ORS’s behalf but without the authority of the Board of Directors. Once it became apparent that I would not permit such a new defence (at least not without an expensive adjournment), he sought, for the very first time, to raise a factual defence that when that agreement was sent by him to the Bank, it was sent with a covering note which made it clear that the execution of the agreement was conditional on further negotiations. That was, simply, quite incredible given the fact that there was no suggestion that any subsequent negotiations ever took place. ALK offered no explanation through his Counsel as to why such an absolutely critical piece of factual information had not been included in his very lengthy witness statement or the pleadings, even in the form as proposed to be amended on that day. Neither had it been included in any correspondence in this matter which is overburdened with years of correspondence. Needless to say no covering note survived in either side’s disclosure. This episode sounded for me a significant warning to treat ALK’s evidence with extreme caution. The witnesses 28. I raise this aspect of ALK’s personality to indicate my perception of ALK who was a critical witness in his own defence. One important function I have to perform in this judgment is to decide whether to believe his evidence against that of the Bank’s witnesses. I heard eight witnesses in the course of this trial and I have to say that, apart from ALK, I found all of them, including Mrs Kotonou, to be quite straightforward and to have given evidence on which I can rely. 29. The same cannot be said for ALK. He was not only wholly unrealistic in his optimism, he grasped at any explanation to get himself out of a tight corner. He talked endlessly and discursively in the witness box so that the point of the question was blunted or evaded. I thought it best at this early stage of this judgment to indicate, before I relate the rest of the story, that I consider that I cannot safely rely on ALK’s evidence except where it is corroborated by contemporary documentation (or is otherwise in accord with the probabilities as I have found them, on all the evidence, to be). I regret to have to say that because it is obvious that ALK is a likeable and extremely talented person and was liked by those he came into contact with at the Bank. I acquit him of any intention deliberately to mislead. It is simply that his exuberance and his unrealistic optimism has led him to elaborate some of the events to a point where I cannot accept his evidence. Where it conflicts with that of the Bank’s witnesses, I prefer theirs. As I say, I found all the other witnesses on both sides of the record quite straightforward and reliable and, save where I indicate otherwise, I accept their evidence. As to the precise details of what went wrong in relation to the Barclays SLOC and what Mr Frampton did or did not do in keeping those details from his superiors, I make no findings at all, following the invitation of Counsel, in relation to Mr Frampton’s evidence. I shall identify later in this judgment where I accept ALK’s evidence as being in accord with the probabilities as I find them.” The Barclays SLOC It was:- The lapse of the Barclays SLOC Mr Frampton’s handover

The witnesses

[20]What had occurred as a result of the “recent submissions” by Mr Worthington referred to in paragraph 20 of the Sher judgment, was described by Morgan J in his judgment as follows:
“41. I have quoted paragraph 20 of the deputy judge’s judgment when he referred to recent submissions from Mr Wormington. What happened in that respect was as follows. Shortly before 22nd May 2006 (when the judgment was handed down), the deputy judge had released a draft of his intended judgment. The draft judgment contained paragraphs 19 and 20 in these terms: “19. However, I would add that even if the bank knew of the terms of the agreement between the Theodossiades and the ORS and the conversion into stock of E-Comsport that would not (without very much more) have imposed upon the Bank a legal duty not to avoid the lapse of the Barclays SLOC. That is not to say, of course, that there could not exist circumstances in which a bank took on the responsibility of preserving the value of a standby letter of credit in its hands and ensuring, in the interests of the customer, that it would be called before expiring. But I see nothing on the facts of the case before me to show that the bank assumed such a duty to ORS in relation to the Barclays SLOC. 20. Recognising that I have sacrificed a lot of detail in the evidence in relation to the SLOC and its extensions and its expiry, I think I have said enough about it to get sufficient of the picture across for purposes of this judgment, and I move on to the more pertinent part of the factual history.” 42. Following receipt of the draft judgment, Mr Wormington sent an e-mail to the deputy judge. The relevant part of the e-mail reads: “On a different note at paras 16 last sentence, para 17 last sentence, para 19 and at the end of para [20] the Judge refers to no duty being owed by NWB to ORS or anyone else to the preservation/call etc of the Standby Letter of Credit – is it intended to make a finding that no legal duty was so owed? Such a legal duty was alleged in the proposed amendment, but it did not form any part of the amendment for which permission was granted (in part I thought I had understood, because of the difficulties in attempting to address that point at the late stage at which it was raised and because of the failure of the proposed amendment to rely on assignment by ORS). As a result this matter was not made the subject of submissions in the case. Could you please draw this query to the Judge’s attention.”
It was following receipt of this e-mail that the deputy judge amended his draft judgment, before handing it down, and in particular made the reference in paragraph 20 of the handed down judgment to recent submissions from Mr Wormington. 43. There was a later hearing before the deputy judge in relation to the question of the costs of the earlier proceedings. In the course of explaining his reasons for his award of costs, the deputy judge said (in a judgment given on the 19th June 2006) the following:
“As to the further representation concerning the standby letter of credit, namely, that it was the bank’s intention to launch an investigation into the circumstances of its loss and that if it were shown to be at fault it would release the replacement security, that claim too was rejected by me as untrue and it lengthened the trial considerably because it prompted a vast excursion into the history of the standby letter of credit. I indicated in my judgment that the time devoted to that history was out of all proportion to its significance. It would have been quite sufficient to deal with the standby letter of credit by indicating that the bank made some sort of internal mistake and lost the benefit of that security and that the embarrassment of that event caused it to be over eager to plug the gap caused by its own mistake, and that this led it to misrepresent the position to Mr Kotonou. Instead, to the end, Mr Kotonou fought on the basis that the bank was in some way responsible to him and his companies for failing to extend the standby letter of credit. This, again, considerably increased the size of the case. These separate issues in which Mr Kotonou lost amply justify departure from the normal rule that the winner takes all. But it is not only the fact of separate issues which justify such a departure. In my judgment, Mr Kotonou unreasonably and improperly raised those further allegations, which turned out to be untrue, and the allegation of fraud against upright bank officials was wholly unjustified.” [My emphasis.] 44. I have not seen the formal order made by the deputy judge following the conclusion of the guarantee proceedings. I was told that Mr Kotonou did not ask the deputy judge to make declarations to give effect to the findings of fact, adverse to Mr Kotonou, in relation to the bank’s involvement in the lapse of the standby letter of credit. It was suggested to me by Mr Gourgey that it would have been open to Mr Kotonou to seek declaratory relief in that respect, even though he had no claim for such declaratory relief in his counterclaim, in order to enable Mr Kotonou to appeal the adverse findings in those respects.”
[21]On 19 January 2007 Mr Kotonou purportedly entered into a written deed of assignment assigning to Mrs Kotonou all the benefits and/or claims conferred on him by the assignment from ORS to himself.[22]On 15 March 2007, Mr Kotonou issued the present proceedings against the Bank. He served particulars of claim on 20 July 2007. In these new proceedings, Mr Kotonou advances two claims, claiming both as the assignee of causes of action previously vested in ORS and in his personal capacity; in the first capacity, he contends that the Bank held the letter of credit upon trust for ORS and had broken its contractual, common law and fiduciary duties of care and fidelity in relation to the letter of credit, primarily by failing to obtain extensions to it; in the second capacity he contends that the Bank had assumed a common law duty of care to him personally and in like terms to the contractual duty of care owed by the Bank to ORS.[23]On 14 August 2007 the Bank pleaded a detailed defence relying on the findings in the Sher judgment. On 8 October 2007, the Bank issued an application notice seeking summary judgment pursuant to CPR Part 24 dismissing Mr Kotonou’s claim in its entirety and, in the alternative, seeking an order that Mr Kotonou’s claim, or at least part of it, should be struck out pursuant to CPR Part 3.4(2)(a) and/or (b).[24]That application was heard by the master who delivered a reserved judgment on 11 July 2008. He held that there was no issue estoppel operating against Mr Kotonou but that the particulars of claim amounted to a collateral attack on the findings of the deputy judge relating to the letter of credit; (see paragraph 37 of the master’s judgment as set out in paragraph 63 of the Morgan judgment). On 21 August 2008, the master made his order in the application. He ordered, pursuant to CPR Part 3.4(2)(b), that the particulars of claim dated 20 July 2007, served in support of the claim form, be struck out. He gave Mr Kotonou permission to appeal against that striking out order. The master adjourned the Bank’s application for summary judgment to the judge who was to hear Mr Kotonou’s appeal against the striking out order. The master reserved the costs of the application to the judge hearing Mr Kotonou’s appeal. The master also directed that Mr Kotonou was to serve draft amended particulars of claim so that any application for leave to amend was to be made to the judge hearing his appeal against the striking out order.[25]Mr Kotonou appealed the striking out order to the judge and the Bank served a respondent’s notice seeking to uphold the striking out order on an additional ground. Mr Kotonou’s appeal and the Bank’s application for summary judgment came before the judge at the same time. By the time the matter came before Morgan J, Mr Kotonou had pleaded an amended particulars of claim, repeating all the previous allegations which had been struck out and adding more.[26]The matter was argued before Morgan J over three days in March 2010 and he reserved his judgment. In his judgment delivered on 5 July 2010, the judge explained that he had been provided with a substantial amount of material and, in particular, a great deal of information as to the conduct of the previous proceedings. He set out the history in detail and dealt with the law at paragraphs 76-110. He referred to a number of authorities but relied primarily on the well-known cases of Hunter v Chief Constable [1982] AC 529 at page 536 per Lord Diplock and Johnson v Gore Wood [2002] 2 AC 1 at pages 30-31 per Lord Bingham and pages 58-60 per Lord Millett. He defined the issue that arose as whether Mr Kotonou’s new factual allegations as to the various ways in which the Bank was involved in the letter of credit were an abuse of process on the ground that it would be manifestly unfair to the Bank to make those allegations or on the ground that re-litigation of those matters of fact would bring the administration of justice into disrepute. He then decided that: i) the allegations of fact put forward by Mr Kotonou in the original particulars of claim and in the proposed amended particulars of claim in the present proceedings were flatly contrary to the findings of the deputy judge made after a full trial when the relevant matters of fact were thoroughly investigated: see paragraph 96 of the Morgan judgment; ii) that the deputy judge had not said that the findings of fact were provisional, only that his finding as to the alleged duty of care was provisional; iii) that Mr Kotonou probably could not have appealed the findings of fact, but such an appeal anyway would have been hopeless because of the nature of the findings and in any event Mr Kotonou had not tried to appeal; iv) it would be manifestly unfair to the Bank to allow Mr Kotonou to relitigate those issues of fact and, furthermore, such relitigation would bring the administration of justice into disrepute: see paragraph 108 of the Morgan judgment; v) on the basis of the allegations as put forward in the draft amended particulars of claim Mr Kotonou did not have an arguable case for saying that the Bank owed a duty to ORS or to Mr Kotonou, to make a call on the letter of credit before it lapsed: see paragraphs 137 and 141 of the Morgan judgment; vi) in view of the above conclusions in relation to the appeal on abuse of process, it was not necessary to consider the Bank’s respondent’s notice in relation to the alleged Henderson v Henderson abuse: see paragraphs 11 and 142 of the Morgan judgment.[27]Accordingly, the judge: i) dismissed the appeal against the decision of the master striking out the particulars of claim on the grounds of abuse of process; ii) refused permission to amend the particulars of claim in accordance with the existing draft provided by Mr Kotonou on the basis that they also were based upon and repeated the allegations which the master had held amounted to an abuse of process; and iii) granted summary judgment in favour of the Bank on the basis of the factual findings made by the deputy judge (as opposed to on the basis of allegations in the proposed amended particulars of claim which were said to amount to an abuse); iv) as a consequence of the orders made in paragraphs i) to iii) above dismissed Mr Kotonou’s claim in its entirety; and v) made consequential orders as to costs against Mr Kotonou.[28]On 6 September 2010 Mr Kotonou issued his appellants’ notice against Morgan J’s decision which was later amended on 1 June 2011. The then Master of the Rolls, Lord Neuberger, refused Mr Kotonou permission to appeal on the papers on 24 June 2011. Lord Neuberger defined the issue potentially raised by the appeal as being:
“whether it is open to A to start fresh proceedings against B based on allegations of fact which were rejected in earlier proceedings between A and B, but were not essential to the fact that A succeeded against B in the earlier proceedings.”
[29]Lord Neuberger referred to Auld LJ's judgment in Bradford & Bingley Building Society v. Seddon [1999] 1 WLR 1482 at pages 1490 to 1493, suggesting that there was an argument that a further special factor was required beyond the position that the facts had been raised, subject to evidence and fully argued and rejected in the earlier proceedings, because A could not have appealed the adverse decision in the previous proceedings since they were not essential to that decision. Lord Neuberger then said that in this case there was anyway a powerful case for suggesting that there was an additional factor, since Mr Kotonou's counsel had positively asked the judge in the first proceedings to make the factual findings in question. Accordingly, he refused permission to appeal, saying that the appeal could only succeed if it were the law (which it was not), that it was always open to a litigant to reargue a point of fact determined against him unless it was essential to the result.[30]The appellant was adjudicated bankrupt on 8 September 2011 and discharged on 15 June 2013. Mr Kotonou's former trustee in bankruptcy has contested the validity of the deed of assignment to Mrs Kotonou in January 2007 but has never indicated a wish to take over Mr Kotonou's appeal. The period of Mr Kotonou's bankruptcy accounted for much of the delay between the date on which the Master of the Rolls refused permission to appeal on the papers and the renewed oral hearing which took place on 20 May 2014 when Tomlinson and Vos LJJ granted permission to appeal.[31]In granting permission to appeal in relation to the grounds of appeal (which I set out below), Vos LJ said:
“19. The problem is that, as Morgan J thought, it would be surprising if Mr Kotonou could have appealed the findings made in the action that he won against NatWest. Thus there is an issue as to whether it is really necessary for some other special factor to be shown to exist before such proceedings can be an abuse and whether such a factor exists here. As Mr Sears QC has put it in argument before us today, "the nature of the request was given a character by the judge that it did not deserve and that it was certainly not to be regarded a special factor." 20. I would not want to give Mr Kotonou any encouragement to pursue this appeal since I have every respect for Morgan J's careful judgment, but I do believe that I can properly say that an important point of principle is raised by the intended appeal. With great respect to Lord Neuberger's reasons, it does not seem to me that his suggestions first that there was a powerful case for saying that there was an additional factor here since Mr Kotonou's counsel had positively asked the judge in the first proceedings to make the factual findings in question, and secondly that the appeal could only succeed if it were the law that it was always open to a litigant to reargue a point of fact determined against him unless it was essential to the result, were sufficient reasons for saying that an important point of principle here was not raised. It is true that Mr Kotonou's counsel asked for certain evidential points to be decided, but the legal effect of his having done so, and indeed precisely what he did and the inability to appeal, still seem to me to be open to interpretation. 21. The law in this area is far from straightforward and (a) the need for additional factors and (b) the nature of such additional factors which might turn the second proceedings from a permissible attempted vindication of rights into an abuse of process is certainly still debatable on the authorities. In these circumstances, I would not wish to tie the hands of the appeal court by dealing in any further detail with the legal principles.”

Mr Kotonou's grounds of appeal

[32]Mr Kotonou's grounds of appeal in relation to which he was given permission to appeal were: i) in relation to paragraph (1) of Morgan J’s order (dismissing the appeal against the master’s order that the particulars of claim should be struck out as an abuse of process): a) that Morgan J was wrong and erred in law in finding that an abuse of process may arise on the basis that a party seeks to base a claim on facts inconsistent with factual conclusions reached in earlier proceedings where those conclusions did not resolve an essential part of any cause of action or defence; Mr Sears defined this ground as “ the scope of the abuse of process doctrine error”: and b) that Morgan J erred in failing to consider the question of reciprocity in the doctrine of abuse of process (and related doctrines); specifically, Morgan J should have considered whether, in a hypothetical case where the background factual matters in question had been instead resolved in Mr Kotonou’s favour, it would have been an abuse of process for the Bank to seek to plead contradictory facts in defending a claim of the sort now brought by Mr Kotonou; since such a claim by the Bank would not have amounted to an abuse of process, Mr Kotonou has effectively been deprived of any opportunity properly to litigate the relevant issues; Mr Sears defined this ground as “the mutuality error”; ii) in relation to paragraph (2) of Morgan J's order (refusing Mr Kotonou’s application for permission to amend the particulars of claim) that: a) Morgan J was wrong and erred in law in dismissing Mr Kotonou’s application for permission to amend the particulars of claim; b) Morgan J’s reasoning on this issue was based solely on his wrong conclusion that the particulars of claim (either in their original or proposed amended form) would give rise to an abuse; without that underlying reason there was no basis not to allow the amendments, which provided further particulars as to Mr Kotonou’s case; iii) in relation to paragraph (3) of Morgan J's order (granting the Bank summary judgment) that: a) The judge was wrong and erred in law in granting summary judgment on the Bank’s application; b) the judge’s wrong reasoning was based on the conclusions reached by the deputy judge (on the basis that it would be wrong to consider the application on the basis of the facts as pleaded by Mr Kotonou, which the judge had held should be struck out). The judge ought to have considered the Bank’s application for summary judgment on the basis of the facts as pleaded by Mr Kotonou. iv) in relation to paragraph (4) of Morgan J's order (making consequential orders dismissing the claim and making orders for costs against Mr Kotonou) that such orders were wrong because they were based on his wrong conclusions as set out above.

The Bank’s respondent’s notice

[33]By a respondent’s notice dated 5 August 2014, the Bank submitted that the Morgan judgment should be upheld on additional grounds, namely: i) that Morgan J would have been entitled to strike out the particulars of claim on the further ground that they amounted to an abuse of process under the rule in Henderson v Henderson, on the basis that it was open to Mr Kotonou from the outset to raise allegations of a breach of duty by the Bank in allowing the letter of credit to lapse; if such a claim was to be advanced at all, it should have been advanced in the first action given that the factual matters central to such claim where the subject of consideration and decision in that action; ii) that, in granting summary judgment on the grounds set out in his judgment, Morgan J ought to have granted it on the additional ground that Mr Kotonou had no real prospect of success in establishing the factual premise for his claim given that(a) the facts had been thoroughly investigated in the March 2006 trial with adverse findings for Mr Kotonou, and(b) the new evidence relied upon by Mr Kotonou did not introduce any new material of significance.

Locus ofMr Kotonou to bring the appeal

[34]At the outset of his written submissions on behalf of the Bank, Mr Gourgey made clear that it was the Bank’s contention that Mr Kotonou had no standing to bring the appeal; that, it was said, was because the Bank did not accept the validity of either the ORS assignment to Mr Kotonou on 5 March 2004; or the assignment by Mr Kotonou of all such benefits/claims (and any rights vested in Mr Kotonou) to his wife on 19 January 2007. The Bank contended that, if only the first assignment in time was valid, those rights remained vested in Mr Kotonou's trustee in bankruptcy. If neither assignment were valid, the rights (other than in respect of claims advanced by Mr Kotonou for breach of duties allegedly owed to him personally) remained vested in ORS. If, on the other hand, both assignments were valid, the Bank contended that the right to bring a claim, and the right to prosecute this appeal, vested in Mrs Kotonou, but that on any basis no rights to bring these claims could vest in Mr Kotonou. Accordingly, the Bank’s contentions on the appeal proceeded without prejudice to that objection. It was, however, common ground that the issue of the validity of the assignments was not an issue which affected the outcome of the appeal as the Bank had correctly recognised that such issues were not suitable for determination on its strike out and summary judgment applications.[35]However, as a result of the stance taken by the Bank in relation to the validity of the assignments, by an application notice filed on 7 January 2015, Mr Kotonou sought an order that his wife should be added as a party to the appeal. He supported this application by the signed written consent of Mrs Kotonou, as required by CPR 19.4(4). This application was directed by Aikens LJ to be determined at the hearing of the appeal. As it is important that, in the circumstances of this case, Mrs Kotonou should, in any event, be bound by the result of this appeal, in my judgment she should indeed be joined as a party to the appeal, without prejudice as to the Bank’s contention as to the validity of the assignments.[36]Accordingly in my judgment its appropriate to approach this appeal on the basis that, for the purposes of the strike out application and the summary judgment application, it must be assumed that, as a result of the assignments, Mr and/or Mrs Kotonou are entitled to contend(i) that ORS’ rights (if any) against the Bank for breach of duty owed to it to maintain the letter of credit, and(ii) Mr Kotonou's rights (if any) against the Bank for breach of duty owed to Mr Kotonou personally to maintain the letter of credit, are vested in either or both of Mr Kotonou and Mrs Kotonou personally

Mr Kotonou's submissions

[37]Mr Sears’s written and oral submissions in relation to Mr Kotonou’s appeal may be summarised as follows: i) It was well established that only determinations which were necessary to the decision and fundamental to it would found an issue estoppel. Other determinations, however positive, cannot: Thoday v Thoday [1964] P 181.The question in this appeal was whether the Bank could nevertheless receive the same protection in respect of non-essential determinations by appealing to the doctrine of abuse of process. ii) The master held that the findings made by the deputy judge regarding the letter of credit were not a necessary ingredient in any cause of action before the deputy judge and that there could therefore be no issue estoppel. This conclusion was not challenged before Morgan J. iii) The abuse of process doctrine operated in two different contexts. The first was what had been referred to in these proceedings as Henderson v Henderson abuse of process, which prevents a party from raising an issue in litigation which could and should have been brought forward as part of an earlier dispute. The second situation arose where there was an inconsistency between what was said in earlier proceedings and what was being alleged in later proceedings such that the court concluded it would be unjust to permit the later proceedings to continue. iv) Both the master and the judge considered that Mr Kotonou’s case fell within this second category (“collateral attack abuse of process”) and would constitute a collateral attack on the findings of the deputy judge such that it would be an abuse of process to allow his claim to proceed. v) The authorities showed that both Henderson v Henderson abuse of process and collateral attack abuse of process were (contrary to the approach taken by the judge) concerned solely with causes of action or issues (in the sense of findings necessary to the disposal of a cause of action). Accordingly, collateral attack abuse of process had little if any role to play in a case like this where the parties were the same as in the earlier proceedings. Rather, collateral attack abuse of process invariably arose where a cause of action or issue that was resolved in an earlier set of proceedings became a point of dispute in later proceedings between litigants one or more of whom was not a party to those earlier proceedings. vi) Furthermore, the collateral attack abuse of process was almost always concerned with a collateral attack on the final result of an earlier decision, yet in this case the result of the action before the deputy judge was that Mr Kotonou successfully defended a claim brought by the Bank on the basis of a guarantee given after the events in the present case took place. Mr Kotonou had no interest in attacking that decision and did not seek to do so. vii) The judge wrongly concluded that the category of collateral attack abuse of process was in fact much wider and could apply in circumstances where what was alleged in a set of proceedings was inconsistent with a conclusion reached on a non-essential background point in earlier proceedings. The judge wrongly concluded that it was “clear” on the state of the authorities that this was open to the court on the basis of its discretion under the doctrine of abuse of process; see paragraph 82 of the Morgan judgment. viii) Far from being clear, the authorities did not support this conclusion. The two cases relied upon in particular by Morgan J on this point were Bragg v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1982] 2 Lloyd’s Rep 132 and Bradford and Bingley BS v Seddon [1999] 1 WLR 1482. Neither case supported the judge’s proposition that even findings on non-essential issues might ground an abuse of process in the event that a party seeks to allege inconsistent facts in subsequent proceedings. The judge summarised the effect of the decision in Bragg far too broadly. It was clear from the judgment of Auld LJ (with whom Ward and Nourse LJJ agreed) in Bragg at pages 1492H-1493E that, in circumstances not giving rise to cause of action or issue estoppel, the maintenance of the second claim which could have been part of an earlier one or which conflicted with an earlier one should not per se be regarded as an abuse of process. Some additional element was required such as a collateral attack on previous decision or dishonesty. There were no such special factors in the present case. ix) If the judge’s decision were allowed to stand, it would result in a radical widening of the law in this area. It would, in effect, eliminate two existing legal principles. The first was that an issue estoppel may only be founded on issues essential to the disposal of a cause of action. If abuse of process is so wide as to prevent the relitigation of non-essential issues, that principle would have no effect since the doctrine of issue estoppel would be capable of being wholly subsumed by the broad discretion of abuse of process. The second principle was the rule that judgments in other proceedings are inadmissible as evidence of the facts established in them: Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 at paragraphs 15 to 27. x) Moreover there was a lack of mutuality in the judge’s approach. It would clearly not have been an abuse of process for the Bank to have sought to challenge any findings made by the deputy judge on these matters. It would have been unfair to hold the Bank to conclusions on issues that it clearly was not obliged to contest and which it sensibly decided not to prosecute thoroughly. Furthermore, had the deputy judge resolved these points in Mr Kotonou’s favour, Mr Kotonou would have been precluded from relying on those findings in these proceedings on the basis of the rule set out above that judgments in other proceedings were inadmissible as evidence of the facts established in them. xi) The upshot of these points was that Mr Kotonou had nothing to gain at all from these findings being considered by the deputy judge and the conclusions reached by the deputy judge could never have been findings that would have assisted Mr Kotonou. But the result of the Morgan judgment was that Mr Kotonou was prevented from alleging facts that were inconsistent with those findings in circumstances where findings on those matters could never have assisted him. That was manifestly unfair. xii) Moreover there had been no detailed evidential investigation at the trial in front of the deputy judge into the issues as to whether the Bank owed ORS or Mr Kotonou a duty of care. Further evidence could have been relied upon. xiii) Accordingly, Morgan J was wrong and erred in law in concluding that the present action would amount to an attempt to relitigate a question which had already been decided (see paragraphs 105 – 108 of the judgment). He was wrong and erred in law in failing to recognise that the relevant issues had not been decided in the relevant sense of having been finally resolved as between the parties. xiv) These principles were analogous to the principle of mutuality which is basic to the doctrine of res judicata. In Petrie v Nuttall [1856] 11 Exch 569, Baron Alderson said (at 575), “It is essential to a [res judicata] estoppel that it be mutual, so that the same parties or privies may both be bound and take advantage of it”. xv) The same principle ought to apply in respect of any question of abuse of process. It would be unjust and inequitable for parties to be faced with an issue which may be resolved against one party but not in his favour by virtue of the asymmetrical application of the doctrine of abuse of process. xvi) Morgan J was therefore wrong and erred in law in failing to conclude that the abuse of process doctrine contained a requirement of mutuality, such that, if it would not be an abuse of process for one party to plead facts inconsistent with factual conclusions made in earlier proceedings, then it could not (alternatively might only rarely be) an abuse of process for another party to plead facts inconsistent with those same factual conclusions.[38]The court also required Mr Sears, in his opening submissions, to deal with the point taken in the Bank’s respondent’s notice (namely that Morgan J would have been entitled to strike out the particulars of claim on the further ground that they amounted to an abuse of process based on the rule Henderson v Henderson). His submissions may be summarised as follows: i) It was accepted that the abuse in question need not involve the reopening of a matter already decided in proceedings between the same parties. It was accepted that it might also cover: “...issues which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.” ii) However, it was wrong to hold that simply because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in subsequent proceedings necessarily abusive. Instead, a broad merits-based judgment should be adopted, taking account of all the public and private interests involved and all the facts of the case. iii) In his written submissions Mr Sears submitted that the particular circumstances which fell to be taken into account in this case were as follows: a) The original action was a claim made by the Bank under the guarantee. Mr Kotonou successfully defended that action on the basis that there had been a misrepresentation. An investigation into the circumstances in which the letter of credit was allowed to lapse was only necessary in order to set the context for the alleged misrepresentation. In his oral submissions Mr Sears additionally submitted that there had not been a detailed factual investigation of the circumstances in which the alleged duties of care owed to ORS and Mr Kotonou arose. b) Mr Kotonou was not represented initially in the guarantee proceedings. He served a defence which relied in large part on the loss of the letter of credit, for which he alleged the Bank was responsible and which he alleged amounted to a failure to carry out obligations owed to him, ORS and other related companies. c) Mr Kotonou needed to raise funds to secure representation. He wanted to raise funds against the security of his home but the Bank contested his right to do so. Those proceedings were only resolved very shortly before the trial of the guarantee action with the result that Mr Wormington was only first instructed to act about a month before that trial commenced. d) Mr Wormington had prepared a lengthy draft amended defence which included a counterclaim which set out similar allegations to the allegations which Mr Kotonou now makes in the current proceedings. The Bank resisted the application to amend, not only to plead the assignment of ORS’ causes of action to Mr Kotonou, but also the amendment to plead a duty owed by the Bank to ORS in respect of the letter of credit. e) Mr Kotonou’s application to amend to plead the assignment was withdrawn when it became plain that it would result in an adjournment of the trial for which he did not have the means to pay. As the deputy judge held, without the pleading in relation to the assignment, the pleaded allegation in relation to the breach of duty went nowhere. The deputy judge held that the existence of such a duty was irrelevant although it was possible that the perception of the Bank’s employees as to the existence of such a duty might be relevant. iv) In those circumstances, it would not be not be just to deny Mr Kotonou the right to bring a genuine subject of litigation before the court because: a) This was not a case where the Bank was being ‘twice vexed in the same matter’ by Mr Kotonou. The original trial was the Bank’s claim under the guarantee which the Mr Kotonou defended on the ground of misrepresentation. The issue as to what happened in relation to the letter of credit was material only to the setting of the context. The Bank had not yet had to deal with the allegation that it was in breach of duty to ORS and/or Mr Kotonou. b) The fact that the application to amend was not made earlier (and in sufficient time to avoid the risk of any adjournment) was because the Bank contested his ability to raise the necessary funds to obtain legal representation against the security of his home. His lack of funds and therefore his inability to raise and pursue the issue of the alleged breach of duty was caused in large part by the party against whom it is sought to claim. As Lord Bingham recognised, in Johnson v Gorewood at [page 31E] that was a relevant factor which might excuse a failure to raise the issue in the earlier proceedings.[39]However, and importantly, in his oral submissions before this court, Mr Sears correctly accepted that Mr Kotonou's funding difficulties had not in fact been caused by the Bank. That was clearly a correct concession in the light of the detailed analysis of the relevant events set out in paragraphs 5-9 of Mr Gourgey’s supplementary skeleton argument dated 27 January 2015, which clearly demonstrated that, even if it had been the case that Mr Kotonou had funding difficulties in relation to the litigation (which was wholly unsupported by any witness statement from Mr Kotonou), such difficulties were not caused by the Bank or its initial objection to the release of its security.

The Bank’s submissions

[40]This Court did not consider it necessary to call upon Mr Gourgey, leading counsel appearing on behalf of the Bank, to reply to Mr Sears’ submissions. The court had the benefit of Mr Gourgey’s written submissions both in relation to the appeal and in relation to the respondent’s notice. Since much of Mr Gourgey’s arguments are reflected in this judgment it is not necessary to rehearse them here. Discussion and analysis The relevant law and the correct approach to the determination of the issue in the present case

Discussion and analysis

[41]Contrary to the approach taken by Tomlinson and Vos LJJ, when granting oral permission to appeal, I do not consider that it is necessary or useful for the court in this case to decide the issue of principle which Vos LJ articulated, namely:
“In circumstances where A starts fresh proceedings against B based on allegations of fact which were rejected in earlier proceedings between A and B, but were not essential to the fact that A succeeded against B in the earlier proceedings, is it necessary for B to demonstrate that some other special factor exists before such proceedings can be an abuse? Nor do I consider it useful, in deciding whether Mr Kotonou's second set of proceedings are an abuse, to approach the matter simply by asking the question “does such a special factor exist here?”
[42]It was common ground before Morgan J that a second set of proceedings may be held to be an abuse of process even where the claims put forward are not barred by either a cause of action estoppel, or an issue estoppel as between the two parties to the action: see the Morgan judgment at [76]. It was likewise common ground that the court has an inherent power to control its own process to prevent misuse of its procedure in a way which would be manifestly unfair to a party or would otherwise bring the administration of justice into disrepute among right-thinking people: see Hunter v Chief Constable of the West Midlands Police [1982] AC 529 per Lord Diplock at p.536. Hunter was of course a very different case, involving a collateral attack in subsequent civil proceedings upon the prior finding of a criminal court that there had been no assaults upon the claimant caused by the police (defendants to the later action) before, or to obtain, the claimant’s confession.[43]But as Lord Diplock emphasised in Hunter at p.536:
“The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view and it would be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fix categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power.”
[44]There are many similar statements to like effect in subsequent cases; see e.g. per Kerr LJ and Sir David Cairns in Bragg at 137 and 138 respectively; per Sir Thomas Bingham MR in Barrow v Bankside Agency Ltd [1996] 1 WLR 257, at 263B, where he stated that the doctrine should not be “circumscribed by unnecessarily restrictive rules”; per Auld LJ in Bradford & Bingley Building Society v Seddon at p.1492-1493; and per Lord Bingham in Johnson v Gore Wood & Co [2002] 2 AC 1 at31. As Buxton LJ said in Laing v Taylor Walton (a firm) [2007] EWCA Civ 1146 at paragraphs 11 and 12, attempts to draw narrower rules applicable to particular categories of case are not likely to be helpful:
“Abuse of process and the approach of this court 11. The nature of a claim of abuse of process, and the categories of circumstance in which it can arise, are well settled, albeit that the law has inevitably to be stated in somewhat general terms. [He then cited the statement from the speech of Lord Diplock in Hunter already referred to above.] 12. The court therefore has to consider, by an intense focus on the facts of the particular case, whether in broad terms the proceedings that it is sought to strike out can be characterised as falling under one or other, or both, of the broad rubrics of unfairness or the bringing of the administration of justice into disrepute. Attempts to draw narrower rules applicable to particular categories of case (in the present instance, negligence claims against solicitors when an original action has been lost) are not likely to be helpful.”
[45]Thus, in my view, what is required in the present case is “an intense focus on the facts of this case”, to determine whether in broad terms Mr Kotonou’s new proceedings can be characterised as falling under one or other, or both, of the broad rubrics of unfairness or the bringing of the administration of justice into disrepute. That approach involves not merely concentrating on the effect of the findings of fact made by the deputy judge (as the master and Morgan J did), but also addressing the much wider question as to whether this is a case which, in allthe circumstances, engages the Henderson v Henderson principle. That holistic approach is to be preferred to the artificial exercise of attempting to decide whether, in circumstances not giving rise to cause of action or issue estoppel, there is, or is not a rule, that some additional element or “special factor” is required, what such “special factor” might be and whether it is present in the particular circumstances of the present case.[46]Moreover, Lord Bingham in Johnson v Gore Wood & Co, having just quoted the passage in Auld LJ’s judgment in Bradford & Bingley Building Society v Seddon at 149 (upon which this court, in giving permission to appeal, and Mr Sears in his argument relied), expressly disavowed an approach that required there to be the identification of an additional element (such as a collateral attack on a previous decision or some dishonesty). Lord Bingham, also, advocated a broad, merits-based approach which took account of the public and private interests involved and of all the facts of the case, and which focused attention on the crucial question whether, in all the circumstances, a party was misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. He said at 39H-31F:
“It may very well be, as has been convincingly argued (Watt, "The Danger and Deceit of the Rule in Henderson v Henderson: A new approach to successive civil actions arising from the same factual matter," 19 Civil Justice Quarterly, (July 2000), page 287), that what is now taken to be the rule in Hendersonv Henderson, has diverged from the ruling which Wigram VC made, which was addressed to res judicata. But Hendersonv Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.” [Emphasis supplied.]
[47]Helpful guidance is also provided by Lord Millett in the same case where he said at 59C-G: “However this may be, the difference to which I have drawn attention is of critical importance. It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen's right of access to the court conferred by the common law and guaranteed by Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (Rome, 4th. November 1950). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the Court from abuse and the defendant from oppression. In Brisbane City Council v A.-G. for Queensland [1979] AC 411 at p. 425 Lord Wilberforce, giving the advice of the Judicial Committee of the Privy Council, explained that the true basis of the rule in Henderson v Henderson is abuse of process and observed that it ". . . ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation."[48]Thus in my judgment it is unrealistic to approach this case constrained by the narrow strait jacket of a mere consideration as to whether or not there was an abuse of process in circumstances where a claimant seeks to bring a second claim based on facts inconsistent with earlier proceedings, where the conclusions of fact in the earlier proceedings did not resolve an essential part of any cause of action or defence. The alleged abuse of process in the instant case is not rooted solely in the fact that Mr Kotonou expressly asked the Court to make findings of fact. It is said by the Bank to arise on a much broader basis. Accordingly, this is a case where it is necessary for the court to consider not only that one aspect of the matter, but also to consider all relevant circumstances that might justify the court staying the proceedings under one or both of the principles articulated by Lord Diplock in Hunter, including that referred to in Henderson v Henderson.[49]The flexibility of the approach to the court’s determination as to whether proceedings should be stayed on the ground of abuse of process is emphasised by the recent decision of the Supreme Court in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd) [2014] A.C. 160, where Lord Sumption (with whom, in relation to the relevant paragraphs all other members of the court agreed) held at paragraphs 23 to 24 that the rule in Henderson v Henderson had not been taken out of the domain of res judicata altogether and re-categorised as a pure abuse of process. At paragraph 25 he stated that res judicata and abuse of process were distinct although overlapping legal principles with the common underlying purpose of limiting abusive and duplicative litigation. But his comprehensive analysis of the principles of res judicata and the relationship between those principles and the rule in Henderson v Henderson is well worth setting out in full, because of its application to the present case. He said: “Res judicata: general principles 17. Res judicata is a portmanteau term which is used to describe a number of different legal principles with different juridical origins. As with other such expressions, the label tends to distract attention from the contents of the bottle. The first principle is that once a cause of action has been held to exist or not to exist, that outcome may not be challenged by either party in subsequent proceedings. This is "cause of action estoppel". It is properly described as a form of estoppel precluding a party from challenging the same cause of action in subsequent proceedings. Secondly, there is the principle, which is not easily described as a species of estoppel, that where the claimant succeeded in the first action and does not challenge the outcome, he may not bring a second action on the same cause of action, for example to recover further damages: see Conquer v Boot [1928] 2 KB 336. Third, there is the doctrine of merger, which treats a cause of action as extinguished once judgment has been given upon it, and the claimant's sole right as being a right upon the judgment. Although this produces the same effect as the second principle, it is in reality a substantive rule about the legal effect of an English judgment, which is regarded as "of a higher nature" and therefore as superseding the underlying cause of action: see King v Hoare (1844) 13 M & W 494, 504 (Parke B). At common law, it did not apply to foreign judgments, although every other principle of res judicata does. However, a corresponding rule has applied by statute to foreign judgments since 1982: see Civil Jurisdiction and Judgments Act 1982, section 34. Fourth, there is the principle that even where the cause of action is not the same in the later action as it was in the earlier one, some issue which is necessarily common to both was decided on the earlier occasion and is binding on the parties: Duchess of Kingston's Case (1776) 20 St Tr 355. "Issue estoppel" was the expression devised to describe this principle by Higgins J in Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537, 561 and adopted by Diplock LJ in Thoday v Thoday [1964] P 181, 197-198. Fifth, there is the principle first formulated by Wigram V-C in Henderson v Henderson (1843) 3 Hare 100, 115, which precludes a party from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones. Finally, there is the more general procedural rule against abusive proceedings, which may be regarded as the policy underlying all of the above principles with the possible exception of the doctrine of merger. 18. It is only in relatively recent times that the courts have endeavoured to impose some coherent scheme on these disparate areas of law. The starting point is the statement of principle of Wigram V-C in Henderson v Henderson (1843) 3 Hare 100, 115. This was an action by the former business partner of a deceased for an account of sums due to him by the estate. There had previously been similar proceedings between the same parties in Newfoundland in which an account had been ordered and taken, and judgment given for sums found due to the estate. The personal representative and the next of kin applied for an injunction to restrain the proceedings, raising what would now be called cause of action estoppel. The issue was whether the partner could reopen the matter in England by proving transactions not before the Newfoundland court when it took its own account. The Vice-Chancellor said: "In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but 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... Now, undoubtedly the whole of the case made by this bill might have been adjudicated upon in the suit in Newfoundland, for it was of the very substance of the case there, and prima facie, therefore, the whole is settled. The question then is whether the special circumstances appearing upon the face of this bill are sufficient to take the case out of the operation of the general rule." 19. Wigram V-C's statement of the law is now justly celebrated. The principle which he articulated is probably the commonest form of res judicata to come before the English courts. For many years, however, it was rarely invoked. The modern law on the subject really begins with the adoption of Wigram V-C's statement of principle by the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581. Yat Tung was an appeal from Hong Kong, in which the appellant sought to unsuccessfully avoid the exercise by a mortgagee of a power of sale in two successive actions, contending on the first occasion that the sale was a sham and that there was no real sale, and on the second that the sale was fraudulent. Lord Kilbrandon, giving the advice of the Board, distinguished at 589-590 between res judicata and abuse of process: "The second question depends on the application of a doctrine of estoppel, namely res judicata. Their Lordships agree with the view expressed by McMullin J that the true doctrine in its narrower sense cannot be discerned in the present series of actions, since there has not been, in the decision in no. 969, any formal repudiation of the pleas raised by the appellant in no. 534. Nor was Choi Kee, a party to no. 534, a party to no. 969. But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings." Lord Kilbrandon referred to the statement of Wigram V-C in Henderson v Henderson as the authority for the "wider sense" of res judicata, classifying it as part of the law relating to abuse of process. 20. The implications of the principle stated in Henderson v Henderson were more fully examined by the House of Lords in Arnold v National Westminster Bank plc [1991] 2 AC 93. The question at issue in that case was whether in operating a rent review clause under a lease, the tenants were bound by the construction given to the very same clause by Walton J in earlier litigation between the same parties over the previous rent review. The Court of Appeal had subsequently, in other cases, cast doubt on Walton J's construction, and the House approached the matter on the footing that the law (or perhaps, strictly speaking, the perception of the law) had changed since the earlier litigation. Lord Keith of Kinkel began his analysis by restating the classic distinction between cause of action estoppel and issue estoppel: "Cause of action estoppel arises where the cause of action in the later 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. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be re-opened. (104D-E) Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re-open that issue." (105E) The case before the committee was treated as one of issue estoppel, because the cause of action was concerned with a different rent review from the one considered by Walton J. But it is important to appreciate that the critical distinction in Arnold was not between issue estoppel and cause of action estoppel, but between a case where the relevant point had been considered and decided in the earlier occasion and a case where it had not been considered and decided but arguably should have been. The tenant in Arnold had not failed to bring his whole case forward before Walton J. On the contrary, he had argued the very point which he now wished to reopen and had lost. It was not therefore a Henderson v Henderson case. The real issue was whether the flexibility in the doctrine of res judicata which was implicit in Wigram V-C's statement extended to an attempt to reopen the very same point in materially altered circumstances. Lord Keith of Kinkel, with whom the rest of the Committee agreed, held that it did. 21. Lord Keith first considered the principle stated by Wigram V-C that res judicata extended 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." He regarded this principle as applying to both cause of action estoppel and issue estoppel. Cause of action estoppel, as he had pointed out, was "absolute in relation to all points decided unless fraud or collusion is alleged". But in relation to points not decided in the earlier litigation, Henderson v Henderson opened up "the possibility that cause of action estoppel may not apply in its full rigour where the earlier decision did not in terms decide, because they were not raised, points which might have been vital to the existence or non-existence of a cause of action" (105B). He considered that in a case where the earlier decision had decided the relevant point, the result differed as between cause of action estoppel and issue estoppel: "There is room for the view that the underlying principles upon which estoppel is based, public policy and justice, have greater force in cause of action estoppel, the subject matter of the two proceedings being identical, than they do in issue estoppel, where the subject matter is different." (108G-H) The relevant difference between the two was that in the case of cause of action estoppel it was in principle possible to challenge the previous decision as to the existence or non-existence of the cause of action by taking a new point which could not reasonably have been taken on the earlier occasion; whereas in the case of issue estoppel it was in principle possible to challenge the previous decision on the relevant issue not just by taking a new point which could not reasonably have been taken on the earlier occasion but to reargue in materially altered circumstances an old point which had previously been rejected. He formulated the latter exception at 109B as follows: "In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result." This enabled the House to conclude that the rejection of Walton J's construction of the rent review clause in the subsequent case-law was a materially altered circumstance which warranted rearguing the very point that he had rejected. 22. Arnold is accordingly authority for the following propositions:(1) Cause of action estoppel is absolute in relation to all points which had to be and were decided in order to establish the existence or non-existence of a cause of action.(2) Cause of action estoppel also bars the raising in subsequent proceedings of points essential to the existence or non-existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised.(3) Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised. 23. It was submitted to us on behalf of Virgin that recent case-law has re-categorised the principle in Henderson v Henderson so as to treat it as being concerned with abuse of process and to take it out of the domain of res judicata altogether. In these circumstances, it is said, the basis on which Lord Keith qualified the absolute character of res judicata in Arnold v National Westminster Bank by reference to that principle is no longer available, and his conclusions can no longer be said to represent the law. 24. I do not accept this. The principle in Henderson v Henderson has always been thought to be directed against the abuse of process involved in seeking to raise in subsequent litigation points which could and should have been raised before. There was nothing controversial or new about this notion when it was expressed by Lord Kilbrandon in Yat Tung. The point has been taken up in a large number of subsequent decisions, but for present purposes it is enough to refer to the most important of them, Johnson v Gore-Wood & Co [2002] 2 AC 1, in which the House of Lords considered their effect. This appeal arose out of an application to strike out proceedings on the ground that the plaintiff's claim should have been made in an earlier action on the same subject-matter brought by a company under his control. Lord Bingham took up the earlier suggestion of Lord Hailsham of St. Marylebone LC in Vervaeke v Smith [1983] 1 AC 145, 157 that that the principle in Henderson v Henderson was "both a rule of public policy and an application of the law of res judicata". He expressed his own view of the relationship between the two at p 31 as follows: [Lord Sumption then cited the passage which I have already quoted above.] … The rest of the Committee, apart from Lord Millett, agreed in terms with Lord Bingham's speech on this issue. Lord Millett agreed in substance in a concurring speech. He dealt with the relationship between res judicata and the Henderson v Henderson principle at pp 58H-59B as follows: "Later decisions have doubted the correctness of treating the principle as an application of the doctrine of res judicata, while describing it as an extension of the doctrine or analogous to it. In Barrow v Bankside Members Agency Ltd [1996] 1 WLR 257, Sir Thomas Bingham MR explained that it is not based on the doctrine in a narrow sense, nor on the strict doctrines of issue or cause of action estoppel. As May LJ observed in Manson v Vooght [1999] BPIR 376, 387, it is not concerned with cases where a court has decided the matter, but rather cases where the court has not decided the matter. But these various defences are all designed to serve the same purpose: to bring finality to litigation and avoid the oppression of subjecting a defendant unnecessarily to successive actions. While the exact relationship between the principle expounded by Sir James Wigram V-C and the defences of res judicata and cause of action and issue estoppel may be obscure, I am inclined to regard it as primarily an ancillary and salutary principle necessary to protect the integrity of those defences and prevent them from being deliberately or inadvertently circumvented." 25. It was clearly not the view of Lord Millett in Johnson v Gore-Wood that because the principle in Henderson v Henderson was concerned with abuse of process it could not also be part of the law of res judicata. Nor is there anything to support that idea in the speech of Lord Bingham. The focus in Johnson v Gore-Wood was inevitably on abuse of process because the parties to the two actions were different, and neither issue estoppel nor cause of action estoppel could therefore run (Mr Johnson's counsel conceded that he and his company were privies, but Lord Millett seems to have doubted the correctness of the concession at p 60D-E, and so do I). Res judicata and abuse of process are juridically very different. Res judicata is a rule of substantive law, while abuse of process is a concept which informs the exercise of the court's procedural powers. In my view, they are distinct although overlapping legal principles with the common underlying purpose of limiting abusive and duplicative litigation. That purpose makes it necessary to qualify the absolute character of both cause of action estoppel and issue estoppel where the conduct is not abusive. As Lord Keith put it in Arnold v National Westminster Bank at p 110G, "estoppel per rem judicatam, whether cause of action estoppel, or issue estoppel is essentially concerned with preventing abuse of process." 26. It may be said that if this is the principle it should apply equally to the one area hitherto regarded as absolute, namely cases of cause of action estoppel where it is sought to reargue a point which was raised and rejected on the earlier occasion. But this point was addressed in Arnold, and to my mind the distinction made by Lord Keith remains a compelling one. Where the existence or non-existence of a cause of action has been decided in earlier proceedings, to allow a direct challenge to the outcome, even in changed circumstances and with material not available before, offends the core policy against the re-litigation of identical claims.” [My emphasis.] 50. Another helpful description of the rationale for the rule in Henderson v Henderson is that of Potter LJ in Divine-Bortey v Brent LBC [1998] I.C.R. 886 at 898 : "the avoidance of a multiplicity of litigation in relation to a particular subject or set of circumstances in order to avoid the prejudice to a defendant which inevitably results in terms or wasted time and cost, duplication of effort, dispersal of evidence and risk of inconsistent findings which are involved if different courts at different times are obliged to examine the same substratum of fact which gives rise to the subject of litigation.” [My emphasis.]

Application of the above principles the facts of this case

[51]In my judgment the features of the present case which are critical for a determination as to whether the present proceedings amount to an abuse of process are the following: i) It was clearlyopen to Mr Kotonou to have taken the following points by way of defence to its claim against him under the guarantee:(i) a defence by virtue of the Bank's duties of care owed to ORS a) that the Bank owed a duty of care to the principal debtor, ORS, to ensure that the letter of credit did not lapse; b) that the Bank was in breach of that duty of care owed to ORS by allowing the letter of credit to lapse, and accordingly was subject to a counterclaim at the suit of ORS for damages, the quantum of which exceeded any sum which ORS might have been obliged to pay the Bank under the loan facility and which it was entitled to set-off against any liability under the loan facility; c) further, or alternatively (although this would have been extremely speculative), that the breach by the Bank of its duty of care discharged ORS from all liability under the loan facility, irrespective of the quantum of the set off; d) that, accordingly, irrespective of whether Mr Kotonou had taken a valid assignment from ORS of ORS’ counterclaim for damages against the Bank, Mr Kotonou was entitled to rely on ORS’ alleged counterclaim and set off so as to demonstrate that in fact ORS owed nothing under the loan facility and that he had a complete defence to his liability under the guarantee;(ii) a defence by virtue of the Bank’s duty to Mr Kotonou e) that the Bank owed a personal duty to Mr Kotonou to ensure that the letter of credit did not lapse; f) that the Bank was in breach of that duty and accordingly i) Mr Kotonou was discharged from all liability under the guarantee; and/or ii) he had a counterclaim for damages which exceeded his liability under the guarantee and which he could maintain as a set off to any such liability. ii) It is to be emphasised that, as Mr Wormington had submitted to the deputy judge (as summarised by Morgan J in paragraph 30 his judgment quoted above), even without any proof of an assignment of ORS’ claims against the Bank to Mr Kotonou, it was nonetheless open to Mr Kotonou to rely by way of defence to the Bank’s claim under the guarantee on the fact that ORS did not owe any sums due under the loan facility because of the set-off of its claim for damages. It was also clearly open to Mr Kotonou to contend that the Bank owed him a duty of care personally to ensure that the letter of credit was maintained, and that because it had failed to do so, he was discharged from all liability under the guarantee. Neither of such defences involved relying on the assignment. iii) The Bank objected to any amendment of the defence and counterclaim to allege that it owed a duty to ORS in this respect. Mr Wormington, on behalf of Mr Kotonou, on 8 March 2006 apparently stated that he wished to withdraw the application to amend the defence and counterclaim “to plead assignment or anything founded upon assignment”, because of the concern that it would necessitate an adjournment of the trial and because Mr Kotonou wished to avoid such an adjournment. The decision not to plead the assignment, so as to avoid an adjournment of the trial, was that of Mr Kotonou. I comment that this concession would not have precluded Mr Kotonou from arguing that, even in the absence of any such assignment, he was entitled to maintain a defence to the claim under the guarantee on the basis of the Bank’s alleged breach of duty to ORS and on the basis of the Bank’s alleged breach of duty owed to Mr Kotonou personally. Nor, in the light of the course which the trial took - namely a detailed investigation of the responsibility of the Bank in relation to the maintenance and calling of the letter of credit - would it have precluded Mr Wormington from reapplying at any stage during the trial for permission to amend to plead such breaches of duty without reliance on any assignment. He could also have appealed on a limited basis the refusal to plead breach of duty irrespective of the assignment. iv) As a result of the concessions made by Mr Wormington on 8 March 2006, and Mr Kotonou’s attempt to reserve his right to pursue claims under the assignment, Mr Kotonou was clearly aware of the risk that principles relating to res judicata or the rule in Henderson v Henderson might preclude Mr Kotonou from raising at a future date claims based on assignment of ORS’s alleged breach of duty claims; see paragraph 32 of the Morgan judgment cited above. v) On 9 March 2006, the deputy judge gave his judgment refusing the amendment. He held (wrongly in my view) that, without a pleading of an assignment to Mr Kotonou of ORS’ claim for damages against the Bank, the allegations which Mr Kotonou proposed to make in the amended defence and counterclaim of a contractual or tortious duty of care owed by the Bank to ORS, went nowhere. However Mr Kotonou did not appeal against that decision. vi) Following the deputy judge’s ruling, Mr Kotonou served an amended defence and counterclaim dated 10 March 2006 and signed by Mr Wormington. It pleaded no express defence based upon the Bank’s alleged breach of duty to ORS (irrespective of whether or not there had been an assignment) or the notional set-off of any claim by ORS for damages thereby discharging ORS’s debt. Nor did it contain any express defence relying upon the Bank’s alleged breach of duty owed to Mr Kotonou personally or a counterclaim for damages for breach of such duty. I agree with Morgan J (see paragraph 34 the Morgan judgment) that Mr Wormington could clearly have applied or reapplied for permission to run such defences and a counterclaim by Mr Kotonou in his personal capacity, notwithstanding Mr Wormington’s concession that Mr Kotonou was not seeking to rely upon any claim as an assignee of the alleged ORS’ counterclaim for damages. In my view, if such defences and counterclaims were available to Mr Kotonou, then they should have been put forward at that date. They were, if they were to be run at all, points of defence to the claim under the guarantee. vii) Mr Kotonou’s amended defence and counterclaim as served on 10 March 2006 was extremely verbose and is difficult to follow. However, despite the deputy judge’s refusal to allow the proposed amendments to plead a breach of duty on the part of the Bank to ORS, the pleading did contain specific allegations to the effect that: (i) the Bank had an obligation both to ORS and Mr Kotonou to call on and to secure the extension to the letter of credit; (ii) the Bank knew of the agreement between ORS and Mr and Mrs Theodossiades;(iii) the Bank wrongly failed to call upon the letter of credit and/or to secure its extension;(iv) both ORS and Mr Kotonou suffered loss and damage as a result of the Bank’s failure to do so in excess of the amounts advance pursuant to the letter of credit; see, for example, the preamble, paragraphs 19(G)(1)(iv), 19(G)(2)(iv), and19(4) (H), (I) and (J) of the amended defence and counterclaim. viii) During the course of the trial, Mr Kotonou made a number of allegations relating to what he alleged were the Bank’s duties and breaches of duty in relation to the letter of credit and its knowledge of the arrangements with the Theodossiades; and he, and a number of his witnesses, gave evidence which he contended supported those allegations. ix) During his closing submissions at the trial, Mr Wormington asked the deputy judge to make findings in relation to, effectively, the Bank’s knowledge of the agreement between ORS and Mr and Mrs Theodossiades, the Bank’s role in relation to the proposed extension, and whether there was fault in the sense of breach of duty owed by the Bank to ORS in relation to the failure to call and/or to extend the letter of credit. x) The deputy judge extensively reviewed the considerable amount of evidence in relation to the letter of credit (much of which he considered irrelevant to the issues which he had to decide) and concluded in his draft judgment circulated to the parties (see for example paragraph 19 of his draft judgment and paragraphs 14-26 of his concluded judgment as handed down): a) that, contrary to the evidence of Mr Kotonou, which the deputy judge did not accept, the Bank was not arranging the extensions of the letter of credit with the Theodossiades; these had all been instigated by Mr Kotonou on behalf of ORS; these allegations had been motivated by Mr Kotonou in an attempt to form the basis for a contention that the Bank had indeed assumed a duty to ORS to preserve the letter of credit; b) that, contrary to the evidence of Mr Kotonou, the Bank had no knowledge of the agreement with the Theodossiades whereby the latter agreed to convert part of their loan into E-Comsport shares; c) that, on the facts of the case, the Bank had assumed no legal duty to ORS not to allow the letter of credit to lapse; there was “nothing on the facts of the case before me to show that the bank assumed such a duty to ORS in relation to [the letter of credit] albeit that there had been an internal mistake on the part of the Bank, contrary to its own interests, in failing to call or secure the extension of the letter of credit; see paragraph 19 of the draft judgment circulated to the parties and paragraph 17 of the final judgment; d) that Mr Kotonou had opportunistically tried to turn this factor to his advantage “by exonerating himself for payment under the guarantee” and by exploiting “the Bank's mistake as if it were a breach of duty towards his companies.” xi) As a result of Mr Wormington’s submissions post circulation of the deputy judge’s judgment in draft (see paragraph 41 - 42 of the Morgan judgment), the deputy judge revised his judgment to explain in paragraph 20 of the judgment as handed down that “a concluded view on whether the Bank owed ORS a duty to preserve the letter of credit is not a necessary finding leading to the final outcome of this judgment” and that accordingly he was prepared “to express my view in this regard as a provisional one based on the limited material put before me.” xii) There is no doubt that the pleadings in the present action repeat many of the factual allegations raised in the earlier proceedings, in particular in relation to the role played by the Bank in relation to the letter of credit, its knowledge as to the arrangements with the Theodossiades, and its responsibility to ORS and Mr Kotonou for allegedly failing to call upon and extend the letter of credit. xiii) Despite Mr Wormington’s late attempts to row back from his invitation to the deputy judge to decide issues of fact, and indeed of law, in relation to the Bank’s role in relation to the letter of credit, the reality of the position was, as I have already set out above, that the judge engaged, at Mr Wormington’s request and with his participation, in a fully-fledged evidentiary investigation into the Bank’s role in relation to, and responsibility (if any) for, the failure to extend or call upon the letter of credit. That was in circumstances where not only was it clearly open to Mr Kotonou to raise, as a defence to his liability under the guarantee, any alleged breach of duty allegedly owed by the Bank personally to him, but also any alleged breach of duty allegedly owed by the Bank to ORS, in order to contend that the Bank’s liability in damages for such breach, by means of set-off, discharged any liability of ORS as principal debtor under the guarantee. Those defences were available to Mr Kotonou irrespective of any plea based on the assignment of ORS’ claims to Mr Kotonou. Moreover, that evidential enquiry took place against specific allegations contained in Mr Kotonou’s amended defence and counterclaim as to the role played by, and the duties owed by, the Bank in relation to the letter of credit, its knowledge of the arrangements with the Theodossiades and the losses allegedly suffered by ORS and Mr Kotonou personally. 52. As I have already mentioned, it was common ground between counsel, at all stages in the current proceedings, that there was no issue estoppel in relation to the deputy judge’s factual findings in relation to the Bank’s role in relation to the letter of credit. This was on the basis that these were not essential findings upon which the deputy judge’s conclusion that Mr Kotonou’s guarantee should be set aside on the grounds of misrepresentation was based. Despite that consensus, it seems to me that, in the light of Lord Sumption’s conclusion as set out in paragraph 22 of his judgment in Virgin Atlantic Airways Ltd, that, “except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised” it is arguable that issue estoppel does indeed arise in the present case. The point that the Bank owed, and had breached, a personal duty of care owed to Mr Kotonou in relation to the security of the letter of credit, which (theoretically at least) conferred on him a defence on the basis that his guarantee had been discharged, or additionally gave rise to a defence by way of set-off of any claim which he might have for damages for breach of that duty, were clearly points which could with reasonable diligence, and should, have been taken as defences to the Bank’s claim under the guarantee (if they were ever to be raised as points at all). Likewise, a defence that ORS’ liability under the loan facility had been discharged as a result of set-off of its counterclaim for damages against the Bank in respect of the latter’s alleged breach of duty, was clearly a point which could and should have been taken, irrespective of Mr Wormington’s concession that he was not going to rely upon the assignment because of the necessity for an adjournment. The allegations of the Bank’s misconduct, and of its responsibility for the fact that the letter of credit was not called upon, or extended, were allegations that were clearly “on the table" as part of Mr Kotonou’s defence at the trial. That is apparent from the paragraphs in the amended defence and counterclaim dated 10 March 2006 to which I have already referred. Likewise, notwithstanding Mr Wormington’s post-hearing protestations that there should be no finding as to the existence, or breach, of any legal duty on the part of the Bank, the reality was that the deputy judge did indeed decide that factually the Bank was not aware of the agreement with the Theodossiades, was not involved in obtaining any extensions of the letter of credit and accordingly was not responsible to (i.e. did not owe a duty to) ORS or Mr Kotonou for the fact that the letter of credit was not called upon or extended.[53]But, irrespective of whether there was technically an issue estoppel in the present case (which is not an issue which this court needs to decide), I am satisfied that the Bank has discharged the burden imposed upon it of demonstrating that this is a case which clearly, in the circumstances outlined above above, engages both limbs of the abuse of process principle referred to in Hunter and the rule in Henderson v Henderson. It is a case where not only would it be unfair to the Bank to have to relitigate these factual issues, but also would bring the administration of justice into disrepute if a second court, years after the event, were obliged to examine the same substratum of fact which gave rise to the subject of litigation in the proceedings before the deputy judge: see Potter LJ in Divine-Bortey v Brent LBC supra at 898.[54]Mr Sears’ submissions did not in any way persuade me to the contrary. I address merely a few of them here.[55]I reject his submissions that there had been no detailed, or adequate, evidential investigation at the trial in front of the deputy judge into the issues as to whether the Bank owed ORS or Mr Kotonou a duty of care. Not only was Mr Sears unable to identify any such further evidence which could have been relied upon by Mr Kotonou, but it is also clear from the transcript of the proceedings before the deputy judge, and his judgment itself, that the relevant factual matters were investigated in considerable detail and at considerable length during the course of the twelve day trial. As Morgan J held at [96] of the Morgan judgment, the state of the pleadings in the earlier action did not in any real way curtail the extent to which those matters of fact were investigated. The deputy judge would not have ventured to make findings of fact, having been asked to do so, if he had not had sufficient basis upon which to do so. Morgan J held at [96] that nothing which happened in the earlier trial “caused there to be any concern about the way in which the Deputy Judge investigated the matters of fact and made his findings on them”. The deputy judge’s conclusion, after having carefully considered the evidence from both sides, was that many of Mr Kotonou's allegations of fact fell to be rejected, not least because of Mr Kotonou’s lack of credibility as a witness.[56]Nor am I impressed by the submission that Mr Kotonou was unable to appeal the adverse findings of fact against him on the basis that he had successfully defended the claim under the guarantee. It would have been open to him to have appealed the judge’s interlocutory refusal to give permission to amend the defence and counterclaim to plead a breach of duty owed to ORS, and, as I have repeatedly said, it would have been open to him to have relied on the alleged breach of duty claims as defences to the claim under the guarantee irrespective of any claim under the assignment. Moreover, in the case of the alleged breach of duty owed to him personally, he could have pleaded a counterclaim in respect of any sums that exceeded the amount of the liability.[57]In this context, I have given particular consideration as to whether the Bank’s opposition to Mr Kotonou’s application to amend the particulars of claim in order to allege that the Bank owed a duty to ORS in relation to the standby letter of credit, and the deputy judge’s refusal to allow such amendment, are factors which should persuade me that it would now be unfair to regard Mr Kotonou’s new proceedings as an abuse of process. Although these points initially troubled me, on analysis I do not think that they provide any sufficient reason for concluding that it would be appropriate for these proceedings to continue. Apart from the fact that Mr Kotonou never appealed the decision, the reality was:(a) that the issues of duty owed to ORS in relation to the letter of credit and breach of duty were effectively (if not expressly) pleaded in the amended defence and counterclaim that was permitted to go forward on the basis that the Bank’s alleged misconduct provided a reason for Mr Kotonou’s non-performance of his guarantee obligations;(b) that such issues were the subject of extensive evidence and submission at trial:(c) that Mr Kotonou never pleaded by way of defence and/or counterclaim to the Bank’s claim (as he could have done and now seeks to do) a personal duty owed by the Bank to himself in relation to the letter of credit;(d) that Mr Kotonou could, despite the judge’s initial refusal to permit the amendment, in the light of the evidence which was canvassed at trial, clearly have renewed his application to amend his defence to plead a duty owed by the Bank to ORS as a defence without any reliance on the assignment; and(e) that Mr Kotonou made the conscious decision not to seek an adjournment so as to be able to rely on the ORS assignment by way of defence and counterclaim. In all those circumstances I do not consider that the Bank’s opposition to Mr Kotonou’s application to amend the particulars of claim or the deputy judge’s refusal to allow such amendment, are factors which should persuade me that it would now be unfair to regard Mr Kotonou’s new proceedings as an abuse of process.[58]Contrary to Mr Sears’ submission, the fact that Mr Kotonou was a defendant in the original proceedings, whereas the Bank was the defendant in the current proceedings, did not lead to the conclusion that “this was not a case where the Bank was being ‘twice vexed in the same matter’ by Mr Kotonou”. In the second proceedings, the Bank is being put in a position where it is having to defend precisely the same factual allegations in relation to the letter of credit which had been made against it in the earlier proceedings. Moreover, despite the deputy judge’s statement in his revised judgment that his conclusion that there was no legal duty owed by the Bank was only “a provisional view”, for all practical purposes the Bank is indeed facing relitigation of that issue. Again, contrary to Mr Sears’ submissions, it was irrelevant that the original trial was the Bank’s claim under the guarantee. Given the allegations of fault, responsibility and damage pleaded in the amended defence and counterclaim in the earlier proceedings, and the evidential findings which Mr Wormington expressly invited the deputy judge to make, it is a mischaracterisation to describe Mr Kotonou’s defence (as Mr Sears did) as one based “on the ground of misrepresentation” or to describe the issue “as to what happened in relation to the letter of credit was material only to the setting of the context”. Even if this were an accurate description of Mr Kotonou’s defence, the points relating to duties of care, and breach of duty etc. owed by the Bank to ORS and/or Mr Kotonou were points which, in all the circumstances, if they were to be taken at all, should have been taken in the proceedings before the deputy judge by way of defence, irrespective of the need for an adjournment to litigate about the validity of the assignment.[59]Nor am I persuaded by Mr Sears’ submissions in relation to the alleged “lack of mutuality”. Mutuality may be a necessary component of issue estoppel (Petrie v Nutgall (1856) 11 Ex. 569), but it is not a requirement of the doctrine of abuse of process: see Michael Wilson & Partners Limited v Thomas Ian Sinclair [2012] EWHC 2560 (Comm.) per Teare J at paragraph 65. Mr Kotonou's complaint appears to be that it would not have been an abuse of process for the Bank to have challenged the findings of fact made by the deputy judge if they had been against the Bank’s case and that an alleged principle of mutuality thereby prevents Mr Kotonou's attempt to do the same from being an abuse. I disagree for two reasons. First, the authorities (as considered by Morgan J in [76] ff of the Morgan judgment) do not suggest that there is such a mutuality requirement in the context of abuse of process; the enquiry is a much more general one: namely, whether in the light of all of the circumstances, an attempt to relitigate the deputy judge's findings would be manifestly unfair and/or bring the administration of justice into disrepute. Second, Mr Kotonou's argument, that any such attempt by the Bank would "clearly" not have been an abuse of process, is wrong. If, to take a hypothetical example, the Bank had sought in subsequent proceedings to challenge a finding by the deputy judge that it had known about the arrangements with the Theodossiades in relation to the letter of credit, that clearly would have constituted an abuse of process. An abuse of process can arise in raising a defence to proceedings, as well as bringing a claim: see Johnson v Gore Wood at p.31.[60]I do not accept that, on the evidence, Mr Kotonou’s inability to obtain legal representation or the fact that the application to amend was not made earlier (and in sufficient time to avoid the risk of any adjournment) was in any way the responsibility of the Bank. Indeed Mr Sears accepted as much in his oral submissions. The actual position was that funds requested by Mr Kotonou were made available to his legal team over 7 months prior to trial and in advance of service of witness statements. Moreover lack of funds to meet the costs to plead the claims based on assignment was not the reason put forward at the time: see the transcript for 8 March 2006 at page 117, and the judgment of Morgan J. at paragraph 30. There was also evidence to demonstrate that Mr Kotonou had additional assets which he had not disclosed. In any event, as I have already said, there was nothing to prevent Mr Kotonou pleading the Bank’s alleged breaches of duty to ORS and himself by way of defences to the claim under the guarantee, irrespective of any reliance upon the assignment or the need for an adjournment to plead the latter claims.[61]Mr Kotonou knowingly took the risk, as Mr Wormington accepted at the time (see paragraph 32 of the Morgan judgment), that Mr Kotonou would be precluded from bringing any further claims for damages based on the assignment on the basis of res judicata or the rule in Henderson v Henderson. There has been a huge delay in these proceedings not least because of Mr Kotonou’s bankruptcy. There is nothing in relation to his personal position which in any way affects my conclusion that this is indeed an appropriate case in which to exercise the court’s discretion to strike out these proceedings on the grounds that they are an abuse of process.[62]Accordingly, for the above reasons which are somewhat broader than those given by the master and Morgan J, I would dismiss the appeal against paragraph 1 of Morgan J’s order and maintain an order that the particulars of claim should be struck out on the grounds of abuse of process, i.e. pursuant to CPR Part 3.4(2)(b). It follows that I would also dismiss Mr Kotonou’s appeal against paragraph (2) of Morgan J’s order whereby he refused Mr Kotonou permission to amend his particulars of claim;

Summary judgment on the basis granted by Morgan J

[63]It follows that, having concluded that any departure in Mr Kotonou’s pleading from the facts as found by the deputy judge would amount to an abuse of process, I would also maintain paragraph (3) of Morgan J’s order that there should be summary judgment in favour of the Bank on the basis of the findings of fact made by the deputy judge (as opposed to on the basis of the facts as alleged by Mr Kotonou in the present proceedings). On the basis of those former findings, I agree with Morgan J’s analysis of the law. Indeed there was no argument presented to this court on behalf of Mr Kotonou that, if it were necessary to proceed on the basis of the facts as found by the deputy judge, Morgan J had reached the wrong conclusion as a matter of law.[64]It also follows that I would dismiss Mr Kotonou’s appeal against paragraphs (4) – (6) of Morgan J's order (whereby he made consequential orders dismissing the claim and making orders for costs against Mr Kotonou).[65]In the circumstances, it is not necessary for me to consider the second ground set out in the respondent’s notice, namely that Morgan J ought to have granted summary judgment in favour of the Bank on the additional ground identified in paragraph 138 of his judgment, namely that ‘the contentions of fact relied upon by the Appellant have no real prospect of success in view of the fact that they have already been investigated by the deputy Judge and rejected.’

Disposition

[66]I would dismiss Mr Kotonou’s appeal.

Lord Justice Kitchin:

[67]I agree.

Lord Justice Aikens:

[68]I also agree.

Cited in 2 later judgments