COURT OF APPEAL, CIVIL DIVISION
SIR THOMAS BINGHAM MR, PETER GIBSON AND SAVILLE LJJ
6, 7 NOVEMBER 1995
Action - Dismissal - Abuse of process of court - Plaintiff bringing individual action after obtaining judgment in group action - Lloyd's litigation - Judgment in group action in respect of negligent underwriting - Individual plaintiff subsequently bringing individual claim against same defendant for damages in respect of negligent portfolio selection - Rule that plaintiff could not return to court to raise claim that could have been dealt with in earlier action - Whether fresh claim an abuse of process.
The Commercial Court in its management of claims in respect of losses suffered in the Lloyd's insurance market (the Lloyd's litigation) divided the mass of actual and potential claims into generic classes for reasons of economy and convenience, while recognising that such classes were not mutually exclusive. Some groups of the Lloyd's claimants also formed themselves into action groups, which were in practice single-issue or common-issue groups, whereby members accepted certain rules and contributed to the cost of litigating single or common issues. B was a member of the Gooda Walker action group, which consisted of over 3,000 names who had joined together to bring proceedings claiming damages for negligent underwriting against their respective members' agents and managing agents. At the trial of the Gooda Walker action, the judge found in favour of the names, but did not grant the full extent of damages claimed. Thereafter B, who had obtained judgment for only 60% of the damages he claimed, issued fresh proceedings against his members' agent (who had been one of the defendants in the Gooda Walker action) and an associated company, claiming damages for breach of duty or negligence in selecting his portfolio, which was a different class of claim from that tried in the Gooda Walker action and which required consideration of B's individual circumstances. The defend
ants applied to strike out B's claim on the ground that since B had not brought his portfolio selection claim in the Gooda Walker action (even though the defendants conceded that such a claim would not and should not have been decided at that trial) he was estopped from bringing a fresh action in respect of the same damage against the same defendant, alternatively that the proceedings were an abuse of process of the court. The judge dismissed the defendants' application and the first defendant appealed.
- (1) The rule that parties to litigation were required to bring their whole case before the court at the outset and that, in the absence of special circumstances, they could not return to court to advance arguments, claims or defences which they had failed to put forward for decision on the first occasion, applied only to matters that could and should have been dealt with on that occasion, the purpose of the rule being to avoid a multiplicity of proceedings and abuse of process and bring a certain end to litigation. In the context of the Lloyd's litigation it was in the interests of the parties and of achieving a substantial981
reduction in costs and the multiplicity of proceedings that the common issues between the plaintiff names should be litigated in a single action, and that single action could only be achieved if individual claims that the names might have against their members' agents were not included. Thus, even if the names involved in the Gooda Walker claim later brought portfolio selection claims, the result would be far more manageable than if each had joined with that claim a claim in respect of negligent underwriting. It followed in the particular circumstances that the first defendant could not invoke the rule as rendering the course adopted by B vexatious or an abuse of process (see p 983 g
, p 986 g h
, p 987 e g h
, p 988 c d
, p 990 a
, p 991 f
and p 992 g h
, post); Henderson v Henderson
[1843-60] All ER Rep 378 considered.
(2) Further, even if B had raised his individual portfolio selection claim in the course of the Gooda Walker action, it would not have been decided then, so that he was not exposing the first defendant to an unnecessary series of trials or making it any worse off than if B had pleaded the claim at the outset. It followed that the facts did not fall within the mischief at which the rule was directed. However, if the facts did fall within that mischief, given the special setting of the Lloyd's litigation and the fact that the first defendant could not point to any prejudice that it had suffered, the case fell within the exception to the rule based on special circumstances excusing B from compliance with the duty to put forward his whole case at the outset. It followed that the judge's refusal to strike out B's fresh claim was correct and the appeal would be dismissed (see p 986 j,
p 987 a c d
, p 988 b
and p 992 c
For abuse of process, see 37 Halsbury's Laws
(4th edn) para 443.
For doctrine of res judicata and issue estoppel, see 16 Halsbury's Laws
(4th edn reissue) paras 974-982, and for cases on the subject, see 21(2) Digest
(2nd reissue) 123-125, 645-653
Cases referred to in judgments
Afromar Inc v Greek Atlantic Cod Fishing Co, The Penelope II
 2 Lloyd's Rep 17, CA.
Arnold v National Westminster Bank plc
 3 All ER 41,  2 AC 93,  2 WLR 1177, HL.
Brown v KMR Services Ltd, Sword-Daniels v Pitel
 4 All ER 385; varied
 4 All ER 598, CA.
Brisbane City Council v A-G for Queensland
 3 All ER 30,  AC 411,  3 WLR 299, PC.
Cargill v Bower
(1878) 10 Ch D 502.
Deeny v Gooda Walker Ltd
(1994) Times, 7 October.
Greenhalgh v Mallard
 2 All ER 255, CA.
Henderson v Henderson
(1843) 3 Hare 100, [1843-60] All ER Rep 378, 67 ER 313, V-C.
Lewis & Lewis v Durnford
(1907) 24 TLR 64.
Henderson v Merrett Syndicates Ltd, Hallam-Eames v Merrett Syndicates Ltd, Hughes v Merrett Syndicates Ltd, Arbuthnott v Feltrim Underwriting Agencies Ltd, Deeny v Gooda Walker Ltd
)  3 All ER 506,  2 AC 145,  3 WLR 761, HL; affg
(1993) Times, 30 December, CA; affg
 2 Lloyd's Rep 193.
Lockyer v Ferryman
(1877) 2 App Cas 519, HL.
Talbot v Berkshire CC
 4 All ER 9,  QB 290,  3 WLR 708, CA.
Yat Tung Investment Co Ltd v Dao Heng Bank Ltd
 AC 581,  2 WLR 690, PC.
Cases also cited or referred to in skeleton arguments
C v Hackney London BC
 1 All ER 973, CA.
Chiron Corp v Organon Teknika Ltd
 CA Transcript 1155.
Mekhanik Evgrafov and Ivan Derbenev, The
)  1 Lloyd's Rep 330.
By notice of appeal dated 4 May 1995 the first defendant, Bankside Members Agency Ltd, appealed from the order of Phillips J ( 2 Lloyd's Rep 42) dated 21 March 1995 dismissing the summons dated 21 December 1994 issued by the first defendant and second defendant, Bankside Underwriting Management Ltd (formerly Frizzell Members Agency Ltd), whereby the defendants applied to strike out the writ dated 19 October 1994 issued by the plaintiff, Gerald Barrow, under RSC Ord 18, r 19 and/or the court's inherent jurisdiction on the grounds that he was estopped from bringing the proceedings and/or the points of claim and the action was an abuse of the court's process and/or frivolous and vexatious by reason that Mr Barrow had previously recovered damages in respect of the same loss pursuant to the judgment of Phillips J dated 4 October 1994 in an action begun in 1993 when he, together with 3,062 other plaintiff Lloyd's names, claimed damages for negligence against 71 defendants, including the first defendant, for alleged breach of their duty to conduct the underwriting business of specified syndicates with reasonable skill and care. The second defendant took no part in the appeal. The facts are set out in the judgment of Sir Thomas Bingham MR.
Peregrine Simon QC
and Simon Bryan
(instructed by Elborne Mitchell
) for the defendant.
Anthony Mann QC
and David Lord
(instructed by Travers Smith Braithwaite
) for Mr Barrows.
SIR THOMAS BINGHAM MR.
The rule in Henderson v Henderson
(1843) 3 Hare 100, [1843-60] All ER Rep 378 is very well known. It requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided (subject, of course, to any appeal) once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion, but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.
The question raised in the present appeal is, on its facts, novel: how should the rule in Henderson v Henderson
be applied in the unusual circumstances of the Lloyd's litigation? By 'the Lloyd's litigation' I mean to refer to the mass of claims (involving names, members' agents, managing agents, underwriters, brokers and the Society of Lloyd's) which has arisen from losses suffered in the Lloyd's insurance market in recent years.
It would theoretically have been possible for each claimant individually to have issued proceedings against each defendant whom he alleged to be liable to him. The cost to individual plaintiffs would have been prohibitive, the burden on the lawyers involved of preparing so many individual claims and defences would have been enormous, and the courts would have lacked the capacity to try such actions, running into thousands, within any meaningful timescale. But the litigation could theoretically have been handled in this way, which is what the rules of procedure have conventionally envisaged and provided for.
The Lloyd's litigation has not, however, been handled in this way, for sound reasons of economy and convenience. There have been two departures from conventional practice, neither of them unique in English procedural history, but together involving procedural steps for which there is probably no exact precedent.
First, groups of claimants formed themselves into action groups, the members of which accepted certain rules and contributed towards the very high cost of litigating issues common to them all. Thus, the action groups were in practice single-issue, or if not single-issue, common-issue, groups. An example relevant to this appeal is the Gooda Walker action group. This included over 3,000 names, all of whom claimed to have suffered losses on the Gooda Walker syndicates. They issued proceedings against their respective members' agents and against the two Gooda Walker companies which had acted as managing agents for the loss-making syndicates. The common complaint of the names, made in contract against the members' agents and in tort against the managing agents, was one of negligent underwriting, ie failure to conduct the underwriting business of the relevant syndicates with reasonable care and skill. When the action brought by the Gooda Walker action group came to trial, that was the issue which Phillips J decided. He decided it in favour of the names, although he did not hold that they were entitled to recover all the damages they had claimed against the defendants in that composite action.
Secondly, the Commercial Court (as the court of first instance responsible for trying the Lloyd's litigation) sought to manage the various actions on the basis of the generic class into which they respectively fell. Some were called 'LMX cases'. These were actions in which the plaintiffs complained of losses suffered as a result of writing London market excess of loss reinsurance. Some were called 'long tail cases'. These were actions in which the plaintiffs complained of action taken, or not taken, to close, or provide for the discharge of liabilities arising under, underwriting years well in the past. Others were called 'portfolio selection cases'. In these the complaint was not of negligent underwriting, but of inappropriate selection of syndicates for individual names. For some names of ample means and adventurous temperament there might be great attractions in syndicates offering the chance of large profits but an unquantifiable risk of serious loss. For other names of more modest means, relatively speaking, and more cautious disposition, the prospect of smaller but more dependable profits and the avoidance of loss might be more appropriate, and instructions might be given by the name that this was the policy which he wished to be adopted. Names who fell into this last category, and who made large losses as a result of participating in high risk syndicates, complained that their participation in such syndicates represented a breach of the duty which their members' agents owed to them to serve their best interests and comply with their instructions.
In giving directions for the preparation and trial of cases (including cases brought by action groups) the object of the Commercial Court was to exploit the984
trial capacity of the court in the most productive possible way. Thus, the court identified issues common to numerous claims and ordered early trial in the expectation that the decision, whichever way it went, would prove determinative of many cases, whether by promoting settlement or leading to abandonment of claims. And the court selected certain cases for trial, not as test cases in the formal sense, but in the hope that the formulation of the relevant principles and the application of those principles to different sets of facts would allow other claimants to assess their prospects of success and act accordingly.
Our attention was drawn to one issue pleaded in the Gooda Walker action which did not fall within the single issue I have defined, and which was thought to require consideration of the personal position of individual names. It was ordered that trial of this issue should be deferred. This order made complete procedural sense. The cohesion (and, probably, the economics) of action group suits depended on their being single-issue, or common-issue, proceedings; and the court's procedural objectives would plainly have been frustrated had the trial of determinative issues become bogged down in detailed inquiry into the personal circumstances of thousands of names, their relationships with their agents, and so on.
In devising its immediate programme the court inevitably confined its attention to cases actually begun and proceeding before it. But in 1993, when the process of effective management of the Lloyd's litigation took shape, it was appreciated that the actions then in train did not represent the full extent of the litigation which might ensue. Some plaintiffs were known to be preparing claims, others to be considering proceedings. Knowledge of these embryonic and potential claims gave added relevance to the preliminary issues and sample cases selected for trial, since the need for further actions might thereby be obviated or reduced.
It was also appreciated that the generic classes of claim into which, for convenience, the actions had been divided were not mutually exclusive. A single plaintiff might belong to an LMX action group, and have a long tail claim, and complain of the way in which his portfolio was selected. Mr Brown is an example. He was a Gooda Walker name and a member of the Gooda Walker action group. He was also a portfolio selection claimant. The two claims, one made as a member of an action group, the other as an individual, proceeded side by side. His portfolio selection claim was one of the sample claims selected for early trial, and he was one of the first names to recover judgment in his favour. Later, his claim as one of the 3,000 Gooda Walker claimants also succeeded.
That brings me to Mr Barrow, the plaintiff in the present action. He also was a Gooda Walker plaintiff and as such he also succeeded. But he only obtained judgment for about 60% of the damages he had claimed. Up to then he had issued no proceedings claiming damages for negligence or breach of duty by his members' agent in selecting his portfolio. But shortly after the Gooda Walker judgment he did so. It seems probable that these new proceedings were issued in the hope of making good the shortfall in the damages he had recovered in the Gooda Walker action.
Mr Peregrine Simon QC, who represents the defendant members' agent in this court, challenges Mr Barrow's right to bring these new proceedings at this stage. He bases his challenge on Henderson v Henderson
. Mr Simon points out that the writ in the Gooda Walker action was expressed in terms wide enough to cover any claim in negligence by Mr Barrow against his members' agent. In the first paragraph of the points of claim the duty of the members' agent was similarly985
pleaded in terms wide enough to support a portfolio selection claim. But no such claim was made. Now, having failed to make full recovery in the Gooda Walker action, Mr Barrow is bringing another action against the same defendant for breach of the same contract to recover the same damages. That, says Mr Simon, is a flagrant breach of the Henderson v Henderson
requirement that a plaintiff bring forward his whole case at the outset, instead of hoarding parts of it against a rainy day. Mr Simon unreservedly accepts that Mr Barrow's portfolio selection claim, even if made in the Gooda Walker action, would not have been determined in the course of that trial, and he does not argue that it should have been. But he does argue that the claim should have been made, and if it had been made there would either have been an agreement to defer trial or an order to that effect. For Mr Barrow to remain inactive until after the Gooda Walker trial and then bring this new claim, not even intimated before, is, says Mr Simon, precisely the mischief proscribed by Henderson v Henderson
: an abuse of the court's procedure, working injustice to a defendant called upon to resist multiple suits.
Mr Anthony Mann QC, for Mr Barrow, contends that the present unusual situation is not covered by the rule in Henderson v Henderson
at all. The basis of the rule is, he argues, that a plaintiff's whole claim should be brought forward and decided
at the same time. The rule has no application where it is common ground that part of a plaintiff's claim, whether it is brought forward or not, will not be ruled upon until later. In this submission he gains some help from the cases. In Henderson v Henderson
(1843) 3 Hare 100 at 115, [1843-60] All ER Rep 378 at 381 Wigram V-C spoke of a matter becoming 'the subject of litigation in, and of adjudication by', a court. In Yat Tung Investment Co Ltd v Dao Heng Bank Ltd
 AC 581 at 590 the Judicial Committee of the Privy Council spoke of 'matters which could and therefore should have been litigated in earlier proceedings'. In Afromar Inc v Greek Atlantic Cod Fishing Co, The Penelope II
 2 Lloyd's Rep 17 at 19 Lord Denning MR held that the doctrine of res judicata only applied where a defence could and should have been raised in the previous proceedings, and not where it would not have been sensible to raise it before.
The rule in Henderson v Henderson
is, as Stuart-Smith LJ observed in Talbot v Berkshire CC
 4 All ER 9 at 15,  QB 290 at 297, a salutary rule, and its application should not in my view be circumscribed by unnecessarily restrictive rules. It is important to focus on the purpose of the rule. As the Judicial Committee of the Privy Council said in Brisbane City Council v A-G for Queensland
 3 All ER 30 at 36,  AC 411 at 425:
'This reference to "abuse of process" had previously been made in Greenhalgh v Mallard
 2 All ER 255 at 257, per Somervell LJ, and their Lordships endorse it. This is the true basis of the doctrine and 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.'
So it seems right to begin by asking whether the procedure adopted by Mr Barrow is an abuse of the process of the court. I do not think it is. Since his portfolio selection claim would not have been decided before now anyway, he is not causing there to be two trials where there would have been one. He is not exposing the defendant to an unnecessary series of trials. The defendant is not, in truth, any worse off as matters now stand than if Mr Barrow had made and pleaded this new claim at the outset. One can, of course, understand the defendant's dismay at the emergence of this new claim, and Mr Barrow's may not986
be the only claim of its kind; but the claim would not have been other than unwelcome whenever presented.
I do not therefore think that this unusual case falls within the mischief at which Henderson v Henderson
was directed. But if that conclusion is wrong, and the case does fall within that mischief, one must consider whether Mr Barrow can plead special circumstances excusing him from compliance with the duty to bring forward his whole case at the outset. An exception based on special circumstances was recognised by Wigram V-C in Henderson v Henderson
and was recently recognised as necessary in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd
 AC 581 at 590 'in case justice should be found to require the non-application of the rule'. It is plain from both cases that negligence, inadvertence and even accident will not excuse non-compliance with the rule, but it is plainly unwise to attempt to define what may amount to a special circumstance. In this case, the same considerations which lead me to conclude that the rule does not apply also seem to me, if that first conclusion is wrong, to amount to special circumstances in the special setting of the Lloyd's litigation. If the defendant could point to any prejudice it had suffered as a result of Mr Barrow's course of conduct which it would not have suffered anyway, my view would probably be different. But the defendant can point to none. If Mr Barrow is in breach of the rule, the present facts in the context of the Lloyd's litigation do, in my judgment, provide a special circumstance.
When this issue was argued before Phillips J he reached the first conclusion that I also have reached. He said ( 2 Lloyd's Rep 472 at 478):
'Multiplicity of Proceedings
The principal justification for the rule in Henderson
's case is the desirability of avoiding a multiplicity of proceedings and of bringing a certain end to litigation. Had Mr. Barrow been the sole plaintiff in the Gooda Walker action I would, without hesitation, have held that he should have combined the allegation of negligent underwriting made in that action with the allegations of negligent advice that he makes against his members' agent in this action. That is not the position, however. Mr. Barrow was one of over 3000 potential plaintiffs with claims against over 70 separate agents. Many of these plaintiffs may have had individual grounds of complaint in respect of the advice given by their agents. One issue was, however, common to all names and all agents-was the business of underwriting conducted with reasonable skill and care? It was in the interests of all parties, and designed to achieve a massive reduction in multiplicity of proceedings and saving of costs, that the common issue should be litigated in a single action. This could only be achieved if the individual claims that names might have against their members' agents were not included in that action. Even if a number of the individual names now bring portfolio selection claims, the result will be far more manageable than if each had joined with his or her portfolio selection claim a claim in respect of negligent underwriting. Thus, in my judgment, Mr. Bryan cannot invoke the main principle that underlies the rule in Henderson
's case as rendering the course adopted by Mr. Barrow vexatious and an abuse of process.'
I agree. The judge acknowledged that there was some inconsistency between the argument of the names in Gooda Walker and the argument to be advanced by Mr Barrow in his portfolio selection claim. But he did not regard this inconsistency as an abuse. Again, I agree. Had Mr Barrow been a sole plaintiff from the outset, advancing all his claims together, it would have been open to987
him to argue: 'LMX syndicates involved no unusual risk of loss and I suffered loss because your underwriting was negligent. Alternatively, if these syndicates did involve an unusual risk of loss, I suffered loss because your underwriting was negligent. Alternatively, participation in these syndicates did involve an unusual risk of loss, and I should not have been asked to participate and I suffered loss as a result, even if your underwriting was not negligent.' I do not think the defendant is prejudiced by the development of these arguments in two actions rather than one. There can, of course, be no question of Mr Barrow recovering the same damages twice over.
For these reasons I conclude that the judge was right, and I would dismiss the appeal. Having had the opportunity to read in draft the judgment which Saville LJ will give, I would add that I am in complete agreement with it.
PETER GIBSON LJ.
For the reasons given by Sir Thomas Bingham MR and those to be given by Saville LJ, whose judgment in draft I, too, have had the opportunity of reading, I also would dismiss this appeal.
I agree with the judgment of Sir Thomas Bingham MR and with the reasons he gives in that judgment.
Mr Barrow is a member of the Gooda Walker action group, which consists of some 3,000 Lloyd's names who joined together to bring proceedings against their respective members' and managing agents. In this group action, which started in March 1993, the plaintiffs claimed damages on the basis that these agents were in breach of a duty to exercise reasonable care and skill in the conduct of the business of underwriting on behalf of certain Gooda Walker syndicates, as a result of which the plaintiffs, who were members of those syndicates, had sustained very heavy underwriting losses. So far as the members' agents were concerned, the case was put on the basis that these agents were responsible in law for the proper conduct of the underwriting, which was actually carried out by the managing agents. At an early stage in the proceedings it was decided that such responsibility did exist under the agency contracts between the names and the members' agents which covered the underwriting years 1987 to 1989.
On 4 October 1994, after a trial, Phillips J gave judgment for the plaintiffs, holding that the underwriting had not been carried out with reasonable care and skill. On 19 October 1994 Mr Barrow (acting on his own behalf and not as part of the Gooda Walker action group) started the present proceedings against his members' agent, who of course had been one of the defendants in the Gooda Walker action. In this new action Mr Barrow does not rely on any allegation of negligent underwriting, but claims that his agent was in breach of duty in advising him to join two of the Gooda Walker syndicates the subject of the Gooda Walker action. The reason for bringing this new action is that Mr Barrow hopes by this means to recover losses which Phillips J held were not recoverable, as flowing from the different breach of duty relied on in the Gooda Walker action. It would also appear likely that Mr Barrow deliberately waited until he knew the result of the Gooda Walker action before he started these new proceedings.
Mr Barrow's members' agent applied to strike out this new action, on the grounds that it offended against what is known as the rule in Henderson v Henderson
(1843) 3 Hare 100, [1843-60] All ER Rep 378 and was an abuse of the process of the court. In March 1995 Phillips J ( 2 Lloyd's Rep 472) declined to strike out the action, from which ruling the members' agent now appeals.988
The statement of the rule in Henderson v Henderson
has often been quoted in subsequent cases and at the risk of repetition I shall set it out here. In the course of his judgment Wigram V-C said:
'... 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[s] 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 ... It is plain that litigation would be interminable if such a rule did not prevail.' (See (1843) 3 Hare 100 at 114-116, [1843-60] All ER Rep 378 at 381-382.)
As Stuart-Smith LJ pointed out in Talbot v Berkshire CC
 4 All ER 9 at 13,  QB 290 at 296, the rule is in two parts. The first relates to those points which were actually decided by the court, the second to those which might have been brought forward at the time but were not. The present case is concerned with the second part, which has been variously described as 'res judicata in the wider sense', 'non-issue estoppel', or (in certain circumstances) as a form of cause of action estoppel.
The object of the rule of res judicata was said by Lord Blackburn in Lockyer v Ferryman
(1877) 2 App Cas 519 at 530 to be put on two grounds-the one public policy, that it is in the interest of the state that there should be an end to litigation, and the other, the hardship on the individual that he should be vexed twice for the same cause. Thus, as Somervell LJ stated in Greenhalgh v Mallard
 2 All ER 255 at 257, the principle covers issues or facts 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. In Brisbane City Council v A-G for Queensland
 3 All ER 30 at 36,  AC 411 at 425 Lord Wilberforce described 'abuse of process' as the true basis of the doctrine, a description approved by Lord Keith in the House of Lords in Arnold v National Westminster Bank plc
 3 All ER 41 at 48,  2 AC 93 at 107. What this and other cases have emphasised, of course, is that the rule does not apply to all circumstances. As Lord Keith observed in Arnold
 3 All ER 41 at 50,  2 AC 93 at 109, one of the purposes of estoppel being to work justice between the parties, it is open to the courts to recognise that in special circumstances inflexible application of it may have the opposite result. The existence of special circumstances excluding the application of the rule was, of course, recognised by Wigram V-C himself in the passage I have quoted.
In the present case, Mr Peregrine Simon QC submitted that there were no special circumstances which excluded the operation of the rule. In his submission, since it is clear that negligence or inadvertence in failing to raise a matter does not provide a special circumstance, a deliberate decision to await the result of the Gooda Walker action could hardly be treated differently.
Where I part company with Mr Simon is not so much with this part of his argument, as with his basic premise that the rule is applicable to the present case. In my judgment the circumstances are such that it could not fairly be said, to use the words of Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd
 AC 581 at 590, that the matters now raised could and therefore should have been litigated in the earlier proceedings.
The Gooda Walker group action formed part of the Lloyd's litigation, which in the early months of 1993 threatened to overwhelm the Commercial Court. In order to try to avoid this happening and to continue to provide a proper service to both the Lloyd's litigants and other users of the court, I (as the judge then in charge) held a meeting in the summer of 1993 to which I invited the legal representatives of all those who had started or who were considering starting proceedings arising out of the catastrophic losses that had been sustained at Lloyd's, in order to discuss, on a without prejudice basis, how the court could best handle the mass of actual and potential litigation. After that meeting I published a provisional management plan and invited concerned parties who disagreed or who had additional or different suggestions to make to come before me in the following days. At the end of July, after hearing some of the parties, I published a management plan covering the period up to the summer of 1995.
As will be seen from the management plan, and from revisions and additions to it made afterwards by Cresswell J, who took over the management of Lloyd's litigation from me at the end of 1993, the basic object was to select certain cases, and certain important issues in cases, in the hope that the resolution of the matters specified would assist other parties better to assess their respective positions. Implicit in this object was that those who believed that they had claims might (subject to other considerations such as limitation) be well advised to wait and see the outcome of the chosen cases and issues before launching their own proceedings.
One of the problems with the Lloyd's litigation and its management was (and is) that there were no issues common to all actual or potential litigants. Instead there were various categories of cases in which quite different issues were raised. Thus the 'long tail' cases were concerned with the writing of run-off contracts at the end of the 1970s and the beginning of the 1980s, while the 'LMX' cases were concerned with underwriting excess of loss in the late 1980s and in 1990. There were also those whose complaint was not of the underwriting itself, but of the advice given by their members' agents to join or remain members of particular syndicates, these being known as the 'portfolio selection' category of cases. In addition there were other issues, such as the liability of the auditors of certain syndicates, as well as proceedings by and against Lloyd's itself. In all or virtually all these various categories (and I have not listed them all) there were also numerous individuals or groups who were involved, some of whom were seeking priority for the hearing of their particular cases. It was for these reasons, and because the Lloyd's litigation as a whole represented potentially if not actually the largest and most complicated civil litigation that had ever arisen, that the management plan had the object that I have described.
In July 1993 I selected the Gooda Walker action group as a suitable vehicle for trying, first, the question whether members' and managing agents were under a duty to their names to conduct the underwriting with reasonable care and skill, and, second, if such responsibility existed, whether there was a breach of that duty and what damages flowed from that breach. It was possible to add both the Feltrim and the Merrett action groups to the hearing of the first of these matters, 990
which took place in the autumn of 1993
(see Henderson v Merrett Syndicates Ltd, Hallam-Eames v Merrett Syndicates Ltd, Hughes v Merrett Syndicates Ltd, Arbuthnott v Feltrim Underwriting Agencies Ltd, Deeny v Gooda Walker Ltd
)  2 Lloyd's Rep 193, subsequently affirmed on appeal in the House of Lords ( 3 All ER 506,  2 AC 145)), after which these groups were given different hearing dates for the other issues that arose in their respective cases. So far as Gooda Walker was concerned, certain issues were left over for later determination, since they could not be properly accommodated within the timetable I had set out.
Also in July 1993 I selected the Sword-Daniels and Brown actions as the first of the portfolio selection cases to be heard, with the trial beginning in the early part of 1994 (see Brown v KMR Services Ltd, Sword-Daniels v Pitel
 4 All ER 385). In addition, I gave directions for the resolution of other cases and issues in the other categories forming the Lloyd's litigation.
I have set out this background because it must be borne in mind when considering the suggestion that Mr Barrow could and therefore should have litigated in the Gooda Walker action not only the claim that the members' agents were responsible for negligent underwriting, but also the claim that those agents were in breach of duty in giving the advice they did about what syndicates the name in question should join.
In my view, such a suggestion cannot be sustained. It was possible to select and deal with the Gooda Walker issues on a global basis, without reference to the individual circumstances of each claimant name. It would not have been possible to deal with portfolio selection claims without going into those individual circumstances.
It seems to me to be clear from the cases that I have cited that the rule or principle is applicable to cases where the matter clearly could and should have been dealt with in the earlier proceedings. To my mind there is no doubt at all that had an attempt been made to bring into and deal as part of the Gooda Walker action (a case in the LMX category) what truly belonged to the portfolio selection category, that attempt would have failed, for, apart from anything else, the court would have directed that any such claims should stand over until after the claims relating to negligent underwriting had been determined.
Mr Simon conceded, as in my view he clearly had to, that this is what would have happened. What he was content to describe as the central plank of his argument was that Mr Barrow should have raised his portfolio selection claim before (at the latest) judgment in the Gooda Walker action, either by incorporating it in those proceedings and seeking appropriate directions for its determination, or by issuing separate proceedings and seeking directions for consolidation or the like with the Gooda Walker action, or, at the least, by seeking and obtaining from the members' agent a 'standstill agreement', so that by consent the matter could be left over.
I am more than doubtful whether, as a member of the Gooda Walker action group, Mr Barrow would have been allowed under the group arrangements to have advanced a portfolio selection claim in the Gooda Walker action, or to have sought to consolidate such a claim in those proceedings, since it is clear that the group was intent on preparing and fighting at the earliest opportunity their claim of negligent underwriting. For reasons already given, the incorporation of portfolio selection cases would have vastly increased the time and money needed to be ready for trial. In any event, however, the overwhelming difficulty with all the courses Mr Simon suggests that Mr Barrow should have taken remains that991
none of them would have resulted in the court dealing with the matter before or at the same time as the question of negligent underwriting.
The principle of Henderson v Henderson
on which Mr Simon relies, is not, as I have already indicated, concerned with what should have been raised in earlier proceedings, but what should have been dealt with in those proceedings. I am prepared to accept that circumstances may arise in which the prejudice caused to one party by the failure of another to raise some matter in the first litigation could be said to be so serious that it would amount to an abuse of process to start another proceeding raising that matter, even where that matter could not have been litigated (ie dealt with) at the first stage, but all Mr Simon was able to point to was the fact that the members' agent will now have to face another trial. On his own concession, however, this would have been the result had Mr Barrow followed one of the courses which Mr Simon said he should have done, so that in truth it has not been demonstrated that the failure to raise the matter earlier has caused any prejudice at all.
In the course of his submissions Mr Simon suggested that since the writ in the Gooda Walker action was framed in the broadest terms of unparticularised breach of contract or duty, whereas the points of claim confined themselves to allegations of responsibility for negligent underwriting, Mr Barrow is to be taken to have abandoned the claim he now seeks to assert. I disagree. In The Supreme Court Practice 1995
vol 1, para 18/15/10 it is stated that if in his statement of claim, the plaintiff drops all mention of any cause of action mentioned or any relief claimed on the writ, he will be deemed to have elected to have abandoned it. Cargill v Bower
(1878) 10 Ch D 502 and Lewis & Lewis v Durnford
(1907) 24 TLR 64 are cited in support of this proposition, but an examination of these cases shows that in both specific claims were made in the writ which were then not repeated in the statement of claim, in circumstances in which it could be said that the plaintiff had chosen to give up the claims not advanced in the statement of claim. In the present case there were no specific claims in the writ, and to my mind in the circumstances there is simply nothing to indicate that Mr Bower had given up any right to claim on a portfolio selection basis, let alone any suggestion that his members' agent was led to believe that this was the case.
In his closing submissions, Mr Simon suggested that if the new action were allowed to proceed, then the court would be replacing the rule in Henderson v Henderson
with a new rule, namely that parties are entitled to wait and see the outcome of one claim before deciding whether or not to pursue another. This is not the case. The rule remains that where a matter could and should have been litigated first time round, then in the absence of special circumstances a party will not be allowed to start subsequent proceedings raising that matter, because that would be an abuse of the process of the court. As I have tried to explain, in the circumstances of the present case the matter now raised could not and should not have been litigated first time round.
Appeal dismissed. Leave to appeal to the House of Lords refused.
31 January 1996. The Appeal Committee of the House of Lords (Lord Browne-Wilkinson, Lord Mustill and Lord Steyn) refused leave to appeal.
L I Zysman Esq Barrister.
end of selection