“[2] In this claim Mr Willers contends that Mr Gubay maliciously caused proceedings for negligence and breach of fiduciary duty to be brought against him, in circumstances where Mr Gubay knew that the claim was false because he was the author of the acts complained of within those proceedings. Those proceedings are known herein as “the Langstone Action” and were brought against Mr Willers by Langstone Leisure Limited (“Langstone”), a company within a group of companies known as the Anglo Group. The Anglo Group is controlled by Mr Gubay. [3] In the Langstone Action it was alleged that Mr Willers had acted in breach of his common law and fiduciary duties to Langstone as a director in causing Langstone to fund and indemnify the Liquidator of a company known as Aqua Design and Play Limited (“Aqua”) for the purpose of investigating and prosecuting an action against David and Shaun Adams, Aqua’s former directors, for wrongful trading and the giving of unlawful preferences. The costs incurred by the Liquidator and those of the Adams family, for which Langstone became liable after that action was abandoned shortly before trial in late 2009 on the instructions of Mr Gubay, amounted to£1.95m . The underlying action is known herein as the “Wrongful Trading Action”. [4] By his Defence and Part 20 Claim in the Langstone Action Mr Willers denied liability and sought an indemnity from Mr Gubay, whom he joined into the action as Third Party. The indemnity was claimed on the grounds that Mr Gubay was the sole effective decision maker of the Anglo Group and Mr Gubay had directed Mr Willers to prosecute and carry on the Wrongful Trading Action through Aqua’s Liquidator; such that he was responsible for any loss and damage caused to Langstone as a consequence. [5] On28 March 2013 , 2 weeks before the date fixed for a 5 week trial of the Langstone Action, Langstone gave notice of discontinuance of the action. By order of Newey J dated 16April 2013, Langstone was ordered to pay Mr Willers’ costs and Mr Gubay’s costs of the Part 20 Claim.”
“Essentials of the tort of malicious prosecution In an action for malicious prosecution the claimant must show first that he was prosecuted by the defendant, that is to say, that the law was set in motion against him by the defendant on a criminal charge [footnote 48]; secondly, that the prosecution was determined in his favour; thirdly, that it was without reasonable and probable cause; fourthly, that it was malicious.”
“… will remain the case unless the English courts decide to follow the majority of the Privy Council in [Crawford Adjusters]...”
“[82] The House of Lords forcefully reaffirmed the rules of stare decisis in Davis v Johnson[1979] AC 264 , but nothing was said about the decisions both in the Court of Appeal (eg Doughty v Turner Manufacturing Co Ltd[1964] 1 QB 518 and Worcester Works Finance Ltd v Cooden Engineering Co Ltd[1972] 1 QB 210 ) and at first instance which suggest that both a judge of first instance and the Court of Appeal are free to follow decisions of the Privy Council on common law principles which depart, after full argument, from earlier decisions of the Court of Appeal … [85] The system of precedent would be shown in a most unfavourable light if a litigant in such a case were forced by the doctrine of binding precedent to go to the House of Lords (perhaps through a leap-frog appeal under theAdministration of Justice Act 1969, section 12 ) in order to have the decision of the Privy Council affirmed. That would be particularly so where the decision of the Privy Council is recent, where it was a decision on the English common law, where the Board consisted mainly of serving Law Lords, and where the decision had been made after full argument on the correctness of the earlier decision.”
“[43] What are the exceptional features in this case which justify our preferring the decision in Holley’s case to that in the Morgan Smith case? We identify the following. (i) All nine of the Lords of Appeal in Ordinary sitting in Holley’s case agreed in the course of their judgments that the result reached by the majority clarified definitively English law on the issue in question. (ii) The majority in Holley’s case constituted half the Appellate Committee of the House of Lords. We do not know whether there would have been agreement that the result was definitive had the members of the Board divided five/four. (iii) In the circumstances, the result of any appeal on the issue to the House of Lords is a foregone conclusion. [44] We doubt whether this court will often, if ever again, be presented with the circumstances that we have described above. It is those circumstances which we consider justify the course that we have decided to take, and our decision should not be taken as a licence to decline to follow a decision of the House of Lords in any other circumstances.”
“(1) The decision in Twinsectra[2002] 2 AC 164 is of course binding on this court and the judge. But the Barlow Clowes decision[2006] 1 WLR 1476 does not involve a departure from, or refusal to follow, the Twinsectra case. Rather, the Barlow Clowes case gives guidance as to the proper interpretation to be placed on it as a matter of English law. It shows how the Tan case[1995] 2 AC 378 and the Twinsectra case can be read together to form a consistent corpus of law. (2) … It would appear therefore that the Privy Council was also intending to clarify English law since that is the only logical implication from the methodology of interpretation of an English authority… (3) Furthermore, the members of the Privy Council in the Barlow Clowes case are (or were at the date of the hearing of the appeal) all members of the Appellate Committee of the House of Lords. Their number was five, and that does not represent a majority of the Appellate Committee as in Holley. But the approach in Barlow Clowes was to clarify the meaning of the speeches of Lord Hutton and Lord Hoffmann in the Twinsectra case. The view expressed by Lord Hutton represented the view of the majority. Two members of the constitution of the Appellate Committee which sat in Twinsectra (Lord Steyn and Lord Hoffmann) were parties to the decision of Barlow Clowes. It is difficult to see that another constitution of the Appellate Committee would itself come to a different view as to what the majority in Twinsectra had meant. Put another way, I do not see how in these particular circumstances this court could be criticised for adopting the interpretation of the Twinsectra decision unanimously adopted by the Privy Council, consisting of members of the Appellate Committee at least two of whom were parties to the Twinsectra decision, in preference to its own.”
“My Lords, on this appeal the question is whether the tort of malicious prosecution is in law capable of extending to the malicious institution of domestic disciplinary proceedings by a local authority against a councillor.”
“Mr Gregory appealed to the Court of Appeal… On5 November 1997 by a majority (Simon Brown and Robert Walker LJJ) the Court of Appeal dismissed the appeal: Gregory v Portsmouth City Council(1997) 96 LGR 569 . Schiemann LJ dissented. Simon Brown LJ gave the leading judgment. He pointed out that on existing authority most but not all criminal proceedings, and certain specific civil processes, will ground the tort. He rejected an argument that the law should be developed beyond these categories to extend the tort to disciplinary proceedings… In a separate judgment Robert Walker LJ expressed agreement with the reasons of Simon Brown LJ. He too accepted that the present boundaries of the tort of malicious prosecution are not easy to justify. He said, at p 595, that the proposed extension is likely to lead to numerous practical difficulties, and was a matter for Parliament. In an important and valuable judgment Schiemann LJ saw the matter differently. He observed, at p 593: “Such rationale as there was for the various fine distinctions which we find in this branch of the law sprang from history and historical circumstances which no longer appertain. I see no advantage in retaining them. It is a commonplace of legal history that a rule is established for perfectly sensible reasons and yet is adhered to for years after the underlying reasons no longer apply… While of course I accept that the common law judge will look at how the law has developed from its origins, I myself find the concept of ‘true scope’ of a particular tort conceptually unhelpful in the sort of exercise upon which the court is currently engaged. As I have indicated, I prefer to start from the other end, as it were. In my judgment, if the facts are as pleaded in the statement of claim, it is consonant with the general approach of our law as it now stands that the plaintiff has a remedy. I can see no policy reason for not giving him one … I prefer to be guided by principle than by dicta echoing down the generations.”
“(1) Do the following agreed and assumed facts give rise to a cause of action in malicious prosecution, namely: (i) the agreed fact that disciplinary proceedings were instituted by a local authority against Mr Gregory, a councillor; and (ii) the assumed facts that the proceedings were instituted maliciously and without reasonable and proper cause, and that Mr Gregory thereby suffered loss of reputation, injury to health, mental anguish and legal costs? (2) Is there a general tort of maliciously instituted civil proceedings? (3) Does the tort of malicious prosecution extend to the malicious institution of domestic disciplinary proceedings by a local authority against a councillor?”
“While he contended that in principle the tort of malicious prosecution should extend to all civil proceedings, counsel for Mr Gregory [Mr Richard Lissack QC] submitted that, even if this was not accepted, nevertheless the tort should extend to disciplinary proceedings on the ground that such proceedings are quasi criminal. Counsel invited your Lordships to develop the law in this way in the present case.”
“The original boundaries of malicious prosecution derived from a legitimate desire not to discourage citizens from assisting in the law enforcement process. The tort was therefore restricted to criminal proceedings. However, those boundaries were set in a different age when there was no police force and the legal system and social conditions were quite unlike what they were at present. Therefore malicious prosecution should now be reconsidered and extended to cover disciplinary proceedings.”
“Extending the action to wrongful civil proceedings has encountered anything but enthusiastic response. Admittedly, there is nothing in the history of the action nor any pronouncement of binding authority to suggest that the action is confined to criminal proceedings…”
“The law as it stands The paradigm is the tort of malicious prosecution of criminal proceedings. A distinctive feature of the tort is that the defendant has abused the coercive powers of the state. The law recognises that an official or private individual, who without justification sets in motion the criminal law against a defendant, is likely to cause serious injury to the victim. It will typically involve suffering for the victim and his family as well as damage to the reputation and credit of the victim… The fear is that a widely drawn tort will discourage law enforcement: it may discourage not only malicious persons but honest citizens who would otherwise carry out their civic duties of reporting crime. In the result malevolent individuals must receive protection so that responsible citizens may have it in respect of the hazards of litigation. The tort of malicious prosecution is also defined against the backcloth that there are criminal sanctions, such as perjury, making false statements to the police, and wasting police time, which discourage the mischief under consideration. Moreover, the tort must be seen in the context of overlapping torts, such as defamation and malicious falsehood, which serve to protect interests of personality. The inquiry must proceed from the premise of the law as it stands. The tort of malicious prosecution is narrowly defined. Telling lies about a defendant is not by itself tortious: Hargreaves v Bretherton[1959] 1 QB 45 . A moment’s reflection will show what welter of undesirable relitigation would be permitted by any different rule. To ground a claim for malicious prosecution a plaintiff must prove (1) that the law was set in motion against him on a criminal charge; (2) that the prosecution was determined in his favour; (3) that it was without reasonable and proper cause, and (4) that it was malicious: Martin v Watson[1996] AC 74 , 80. Damage is a necessary ingredient of the tort. This element of the tort was explained in a dictum of Holt CJ in Saville v Roberts (1698) 12 Mod Rep 208. Holt CJ defined the interests protected by the tort as follows: “there are three sorts of damages, any one of which is sufficient to support this action. First, damage to [the plaintiff’s] fame, if the matter whereof he be accused be scandalous. Secondly, to his person, whereby he is imprisoned. Thirdly, to his property, whereby he is put to charges and expenses.”
“it would be better not to concentrate on types of proceedings in which groundless allegations are made but rather on the fact of malicious and unwarranted abuse of any proceedings resulting in serious damage to an individual.”
“On balance though it seems realistic to take into account that the difference in the way in which the tort of malicious prosecution has developed in the United States and England is to a considerable extent the result of structural differences between the two legal systems. In England the award of costs in the discretion of the court is an important weapon in deterring groundless actions. But in the United States there is no such general judicial power... The fact that the courts in the United States do not have a general power to award costs against a plaintiff who has brought a groundless claim is a significant difference. In the United States the absence of a general judicial power to award costs in respect of a groundless claim apparently played a part in the development and extension of the tort of malicious prosecution to all civil proceedings… And that was the springboard for the extension of the tort to administrative tribunals. In these circumstances the development in the United States, while undoubtedly relevant to the issue before the House, must be seen in the light of two legal systems which in material respects diverge. It does not necessarily follow, however, that a similar development is not justified in the context of the particular circumstances and needs of our legal system. That question still remains to be considered.”
“One must consider the generality of cases of groundless disciplinary proceedings. From my part the existence of closely related torts, which protect individuals subjected to unwarranted and malicious disciplinary proceedings, destroys the simplistic case that there is no alternative remedy. Indeed, it makes it unnecessary and undesirable to make the extension of the tort of malicious prosecution advocated by counsel. If the existing protection afforded to such victims by other torts is shown by the experience of the courts to be inadequate a better solution may be the development of other torts, such as the Court of Appeal undertook in Khodaparast v Shad [[2000] 1 WLR 618 ]. For these reasons I would hold that the tort of malicious prosecution does not extend to disciplinary proceedings...”
“There is a stronger case for an extension of the tort to civil legal proceedings that to disciplinary proceedings. Both criminal and civil legal proceedings are covered by the same immunity. And as I have explained with reference to the potential damage of publicity about a civil action alleging fraud, the traditional explanation namely that in the case of civil proceedings the poison and the antidote are present simultaneously, is no longer plausible. Nevertheless, for essentially practical reasons I am not persuaded that the general extension of the tort to civil proceedings has been shown to be necessary if one takes into account the protection afforded by other related torts. I am tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings are either already adequately protected under other torts or are capable of being addressed by any necessary and desirable extension of other torts. Instead of embarking on a radical extension of the tort of malicious prosecution I would rely on the capacity of our tort law for pragmatic growth in response to true necessities demonstrated by experience.”
“[36] At the outset of the interesting legal excursion which this appeal invites the Board to undertake, it is worthwhile to assess the extent to which the observations made in the Gregory case, cited above, impede – or do not impede – Mr Paterson’s ability to succeed in establishing what, as I will explain, I regard as otherwise the more arguable of the torts on which he relies, namely that of malicious prosecution.”
“(a) that, whatever the extent of the tort of malicious prosecution, its paradigm was of the prosecution of criminal proceedings (p 426); …”
“[39] In my view Lord Steyn’s observations should in no way discourage the Board from concluding, were it otherwise minded to do so, that the tort of malicious prosecution applies to Mr Paterson’s case. It cannot be doubted that he suffered manifest injustice as a result of groundless and damaging civil proceedings brought maliciously. If, as I will conclude, no other tort is capable of extension so as to address the injustice of the present case, the rationale behind Lord Steyn’s hesitation loses all its force. And, if, as he had earlier observed, a distinctive feature of the tort is an abuse of the coercive powers of the state, the Board will need to ask why it does not generate liability as much in the case of malicious prosecution of civil proceedings as in that of criminal proceedings. Unfortunate though it may be for members of the Board to favour such different constructions of Lord Steyn’s apparently straightforward observations, I find myself unable to subscribe to Lord Sumption JSC’s conclusion, at para 146, that the House of Lords thereby “decided” and “declared” that the tort of malicious prosecution did not extend to civil proceedings; nor, for reasons which will become apparent, can I associate myself with his suggestion that this area of law is “relatively well-trodden”.”
“Here we have an established cause of action, for malicious prosecution or abuse of process, the boundaries of which are either unclear or make little sense in today’s world”
“[117] This passage is highly significant, in my opinion. In the first place. Lord Steyn felt that it was not necessary to extend the tort to civil proceedings. It seems to me implicit in this statement, that had he considered it necessary to do so, there was no impediment of principle that would have made the extension impossible. Secondly, he considered that extension was not required because manifest injustices arising from groundless and damaging proceedings were already catered for or were capable of being adequately addressed by appropriate extensions of other torts. [118] Underlying Lord Steyn’s reasoning – and, indeed, the reasoning of the earlier cases which refused to extend the tort to civil proceedings – is the rationale that manifest injustices suffered by victims of malicious prosecution of civil proceedings could be adequately redressed by other means – the verdict of the court, the award of costs, the availability of an action for defamation or the extension of other areas of tortious liability. No such rationale is possible here. In this case, the Board must frankly confront the reality that a manifest injustice will not be put right if Mr Paterson is denied the right to recover for the malicious prosecution of proceedings against him. To borrow Lord Steyn’s language, one cannot be “tolerably confident” that manifest injustices are adequately protected in the way that he envisaged. On the contrary this case is a graphic illustration of the inadequacy of alternative torts to afford Mr Paterson justice.”
“[159] In a passage which I have already cited from his speech in Gregory v Portsmouth City Council[2000] 1 AC 419 , 432-433, Lord Steyn expressed the view that any manifest injustices arising from the limitation of the tort of malicious prosecution to criminal prosecutions were capable of being addressed by “any necessary and desirable extensions” of other torts. Lord Steyn had a number of possible torts in mind in addition to abuse of process. In my opinion he cannot be read as saying that an extension to either of the two torts relied on in this case [malicious prosecution and abuse of process] was “necessary and desirable”
“The action came before the House on [Mr Gregory’s] appeal from the decision of the courts below to strike it out. The appeal was dismissed on the ground that an action for malicious prosecution was not available for the abuse of disciplinary proceedings. However, the case necessarily raised the broader question whether the tort was or should continue to be confined to the abuse of criminal prosecutions. This issue had been fully argued in the Court of Appeal by reference to English, Commonwealth and United States authority and had generated an eloquent dissenting judgment from Schiemann LJ proposing its extension to civil proceedings generally(1997) 96 LGR 569 . In the House of Lords, it was expressly raised in the statement of issues[2000] 1 AC 429 , 425-426. After full argument on the point, Lord Steyn, giving the leading judgment of a unanimous committee, held, at p 428, that “in English Law, the tort of malicious prosecution has never been held to be available beyond the limits of criminal proceedings and special instances of civil legal process.”
“The question is therefore whether the Board should develop the law so that this long-standing limitation on the reach of the tort is swept away. I acknowledge the attraction of doing so on the extreme and unpleasant facts of this case. But if the law is to be developed, it must be done in a manner which is principled, leaves it coherent across cognate subject areas, and does not simply resolve one problem at the cost of creating many more. Even if judges were Herculean, it would be pointless for them to cut off the head of Lernaean Hydra merely to see it grow two more in its place.”
“The House’s refusal to expand the scope of the tort so as to embrace civil proceedings other than disciplinary proceedings was obiter. However, there are dicta and dicta. The application for the tort to the abuse of civil proceedings was decided in Gregory because it was important to settle it: see Lord Steyn at p 432F-G. It had been fully argued both in the Court of Appeal and in the House, and the answer given at both levels was as carefully considered as any ratio decidendi. Schiemann LJ’s dissenting judgment in the Court of Appeal, which raised all of the points which are now urged on the Board, was rejected. Nothing has changed since 2000 to undermine the authority of the Committee’s statement of the law. There are no features in the present case which distinguish it from Gregory except that one is bound to have more sympathy with Mr Paterson. The conduct of Mr Delassio, for which the respondent is vicariously liable, was appalling. But the respondent was nevertheless entitled to defend the counterclaim on the basis of the common law as the House of Lords had so recently declared it, and Henderson J and the Court of Appeal were both entitled and bound to apply it. Litigants are entitled to a measure of stability and predictability in this relatively well-trodden area of the law.”
“However, it seems to me that the judges in the [Crawford Adjusters] case considered the extent if at all to which Gregory precluded the holding which they made. They were applying the English law cases and there is no suggestion in the judgments (or at least none that I was referred to) to suggest that they were drawing any distinction between the law of England and Wales on the one hand and the law of the Cayman Islands on the other. They clearly considered that there was no relevant distinction and that Gregory did not preclude the conclusion which they reached.”
“The basis of the action on the case was damage caused by D to C; and, for the purpose of this particular species of it, the crucial additional element was malice. In my view the best encapsulation of the central decision in Savile v Roberts, which makes no distinction between criminal and civil proceedings, is to be collected from the report at 5 Mod 394, as follows: “It is the malice that is the foundation of all actions of this nature, which incites men to make use of law for other purposes than those for which it was ordained.””
“For nearly three centuries, the leading case on the elements of the tort [of malicious prosecution] was Savile v Roberts (1698) 1 Ld Raym 374… Holt CJ reaffirmed the existence of the action for malicious prosecution of criminal proceedings and defined its ambit in the face of objections that it had become anomalous and redundant. One of the objections was that “there is no more reason that an action should be maintainable in this case, than where a civil action is sued without cause, for which no action will lie”
“Unfortunately, in upholding [the company’s] entitlement to allege malicious prosecution of that form of civil proceedings, the court in Quartz Hill case drew a distinction between a petition to wind up a company and an ordinary civil action, which, particularly in England and Wales, has had negative repercussions long after the distinction ceased to be valid, indeed right up until today.”
“In its very nature the presentation or prosecution of an indictment involves damage, which cannot be afterwards repaired by the failure of the proceedings, to the fair fame of the person assailed, and for that reason, as it seems to me, the law considers that to present and prosecute an indictment falsely and without reasonable and probable cause, is a foundation for a subsequent action for a malicious prosecution.”
“In my opinion it is more like a bankruptcy petition, and the very touchstone of this point is that the petition to wind up is by force of law made public before the company can defend itself against the imputations made against it; for the petitioner is bound to publicly advertise the petition seven days before it is heard and adjudicated upon;… Therefore I venture to differ from the judges of the Queen’s Bench Division in their decision that this case is to be governed by the rule applicable to an action, and I differ from them when they held, as in effect they must be assumed to have done, that although a petition to wind up a trading company be presented falsely and maliciously and without reasonable and probable cause, an action will not lie; I think that under those circumstances the action will lie.”
“In the present instance we have to consider whether a petition to wind up a company falls upon the one side of the line or the other – whether, as the Master of the Rolls has said, it is more like an action which does not necessarily involve damage, and therefore will not, however, maliciously and wrongfully brought, justify an action for malicious prosecution, or whether it is more like a bankruptcy petition. I do not see how a petition to wind up a company can be presented and advertised in the newspapers without striking a blow to its credit… I therefore answer the two first questions – whether this action will lie, and whether it will lie without further proof of special damage – in the following manner: I think that the action will lie, for the reason that special damage is involved in the very institution of the proceedings (which ex hypothesi are unjust and without reasonable or probable cause) for the purpose of winding up a going company.”
“The action for malicious prosecution was an action on the case in consimili casu to the action brought by the old writ of conspiracy which lay only when there was a combination between two or more persons maliciously to indict the plaintiff for treason or felony. The action on the case for malicious prosecution was available against a single defendant, and could be founded upon any form of legal proceedings, whether civil or criminal, brought maliciously and without any reasonable or probable cause against the plaintiff by the defendant. As the action was in case, however, damage was an essential ingredient.”