Supreme Court upholds right to claim against 'malicious' civil cases

Out-Law News | 27 Jul 2016 | 2:27 pm | 3 min. read

Private individuals should have the right to bring a claim against another on the grounds that that person sued them in the civil courts with "unnecessary malice", the UK's highest court has ruled.

Although split by five judges to four, the majority of Supreme Court judges ruled that there was no reason why the 'malicious prosecution' law which applies in criminal cases should not also cover civil litigation.

Litigation expert Stuart McNeill of Pinsent Masons, the law firm behind Out-Law.com, said that the judgment provided a "back door" method for individuals unfairly targeted with court action to recover not only their costs, but also any consequential losses that had arisen as a result of unnecessary litigation.

"For many individuals, and small companies, litigation can become a nightmare with the prospect of having to sell a home to fund legal costs, nervous breakdowns from the stress and a material impact on their business," he said.

"The judgment provides a back door means for defendants that are unfairly targeted to recover not only their unrecovered costs, as costs on the standard basis may mean that around 30-40% are unrecoverable; but also any consequential losses, including health damage, loss of business etc. that would otherwise go unrecovered where thery are maliciously targeted. While that would be a matter for trial, it will be very interesting to see if this case succeeds," he said.

For the purposes of its judgment, the court assumed that the facts were such that the claim could be brought if in fact the right to sue for a malicious action existed. Peter Willers claimed that Albert Gubay's malicious pursuit of litigation had caused damage to his reputation and to his health, loss of earnings and court costs.

Gubay, now deceased, controlled a leisure company, Langstone, of which Willers was a director. In 2010, after dismissing Willers, Langstone sued him for alleged breach of contractual and fiduciary duties in relation to previous third party litigation. In 2013, Langstone discontinued its claim against Willers, who brought his own action alleging that the case was part of a "campaign" by Gubay to cause him harm.

Giving the judgment of the court, Lord Toulson said that there was no need to reiterate the arguments set out in previous cases as the law was "capable of more than one respectable interpretation". For him, the issue in this case was that it "seems instinctively unjust for a person to suffer injury as a result of the malicious prosecution of legal proceedings for which there is no reasonable ground, and yet not be entitled to compensation for the injury intentionally caused by the person responsible for instigating it".

"It was that consideration which led the judges to create the tort of malicious prosecution [in criminal cases]," he said.

He went on to consider some of the "counter-arguments" against extending the doctrine to civil cases. These included that it would open the "floodgates" to unmeritorious claims and deter those with valid civil claims from pursuing them. However, none of these considerations were "sufficient to outweigh the argument that simple justice dictates that Mr Willers' claim for malicious prosecution should be sustainable in English law", he said.

However Lord Mance, giving the first of four dissenting judgments, said that it was "unconvincing to suggest that, because there is a tort of malicious prosecution of criminal proceedings ... it is logical or sensible that there should be a tort of malicious prosecution of civil proceedings".

"Not only does that ignore the teaching of history, showing courts studiously avoiding any such parallel, it also ignores the fact that, in an era when private prosecutions have largely disappeared, the tort of malicious prosecution of criminal proceedings is virtually extinct. To create a tort of malicious prosecution of civil proceedings might in these circumstances be thought to come close to necromancy," he said.

In a separate judgment, the court also dealt with how trial judges should approach cases where, as in this case, both the House of Lords in its previous role as highest UK court and the Privy Council had decided the same question differently. This was important because the Privy Council, which acts as the highest appeal court for a number of Commonwealth jurisdictions, consists of the same judges that now sit on the Supreme Court.

The nine judges unanimously held that lower courts in England and Wales were bound by the decisions of the higher courts, and should follow them even where there was an inconsistent Privy Council decision. Strictly speaking, the Privy Council is not a UK court and so its decisions cannot be binding, only persuasive, the court said.