Oliver Manley succeeds in the High Court on an Abuse of Process Argument

18/07/2025

“Oliver Manley succeeds in the High Court on an abuse of process argument.  On appeal, Mr. Justice Bourne found that the judge below had erred in law by deciding the substantive argument prior to considering the abuse of process argument, putting the cart before the proverbial horse.  Applying the principles in Johnson v. Gore Wood [2000] UKHL 65 the judge held, that the fact that the substantive underlying argument was strong on the merits, whilst being a factor in favour of not finding an abuse argument made out, it should not have been a decisive one. 

The fact is that whenever an abuse argument succeeds, the other party will always have the windfall of not having to face their opponent’s case on its merits, be they strong or weak.  The mere fact that the substantive argument had been heard before the judge below was of little or no relevance and certainly should not have had the decisive effect that it did.  Further, only limited weight could be given to developments in caselaw, as being justification for re-opening a closed or conceded point, as to hold otherwise would undermine the fundamental principle of finality in litigation. 

The background to the dispute was a long running one (16 years and counting), over service charges contained in leases at a holiday park in Devon, which started back in 2009 and involved previous appeals in the High Court and Court of Appeal.  The substantive proceedings were eventually resolved in a series of three separate trials taking place before HHJ Cotter QC (now Mr. Justice Cotter) between 2011 and 2017.  The part one trial was meant to deal with matters of principle, including issues of construction of the leases, part two was to deal with determination of the quantum of the service charges and part three ended up being a section 20C application under the Landlord and Tenant Act 1985.  Of course, the part three trial proceeded on the basis that the parties agreed that there was a contractual right to recover litigation cost through the service charge provisions. 

HHJ Cotter QC, (as he was then) at the conclusion of the part two trial, had made no order as to costs, but then in the part three trial, HHJ Cotter QC effectively subverted his own costs order by permitting the Landlords to recover 25% of their litigation costs through the service charge, when dealing with the section 20C application.  The reason for this being that the judge found that there had been failures by the tenants to disclosure certain documents, which would likely have led to the part one proceedings being struck out had this been known at the time. 

Mr. Manley was instructed on the detailed assessment of those costs by the Defendant Landlords.  At the detailed assessment the tenants, by their points of dispute, sought to argue that there was no contractual right to the costs claimed under the terms of the lease and sought for this to be decided at a preliminary hearing.  Mr. Manley argued at the preliminary hearing, relying on Henderson v. Henderson that it was an abuse of process to raise this issue now since this point could and should have been raised during the part one trial.  Further, it was argued that not only did the tenants fail to argue the point they conceded it, having initially taken the point in their pleadings only to abandon it at the trial of part one.  Instead , the tenants had elected to fall back on their section 20C application, which presupposed that the contractual entitlement litigation costs did exist. 

This position had led HHJ Cotter QC, to find in his part three judgment, from which there was no appeal, that there was indeed a prima facie contractual right to recover such costs.  The tenants argued (inter alia) that their change of stance was justified due to the case of Kensquare v. Boakye [2021] EWCA Civ 1725 being handed down by the Court of Appeal, meaning that they were now more likely to succeed on their argument that the litigation costs were not in fact contractually recoverable.

The circuit judge at first instance, found that the matter ought to have been raised earlier, and that it had effectively been conceded during the proceedings.  The judge however, declined to find the abuse argument made out, given that he had already decided the substantive point, that on proper construction the costs were not in fact contractually recoverable. The judge therefore considered that by giving effect to the abuse, he would be fixing the tenants with a contractual liability they did not have.  Further, he found that the evolution in the caselaw from Iperion Investments v Broadwalk House (1994) 27 HLR 196 and Kensquare v. Boakye [2021] EWCA Civ 1725 made the shift in position understandable.

On appeal, Bourne J found that, by deciding the construction point before the abuse argument, the judge below had erred in law.  The High Court found that this meant that the success of the construction argument was given too much weight.  Further, the court found that it was wrong to place so much weight on the evolution of case law as this undermined the fundamental principle in the finality of litigation.   The High Court in allowing the appeal, remade the decision and found that it was an abuse of process for the tenants to argue the construction argument and accordingly dismissed the preliminary points of dispute.  The case will now be remitted back to the County Court for the line-by-line detailed assessment to take place, in what will hopefully be the last chapter, of what must be one of the longest running service charge disputes in the country”.