Willers v Joyce (Re: Gubay deceased) [2016] UKSC 43

Mr Willers alleged that Mr Gubay maliciously caused a company to sue him in civil proceedings without reasonable cause, as part of a vendetta, causing reputational, financial and personal harm. The Supreme Court held that the tort of malicious prosecution applies to civil proceedings, allowing his claim to proceed.

Facts

Mr Peter Willers worked for businessman Mr Albert Gubay for over 20 years and was a director of Langstone Leisure Ltd (“Langstone”). Langstone had earlier pursued, and then abandoned, a wrongful trading claim against the directors of Aqua Design and Play Ltd (“Aqua”).

In 2010 Langstone sued Mr Willers for alleged breaches of contractual and fiduciary duties in causing it to incur costs in pursuing the Aqua directors. Mr Willers defended and issued a third party claim against Mr Gubay, asserting he had acted on Mr Gubay’s instructions. Shortly before a five-week trial, Langstone discontinued. Newey J ordered Langstone to pay Mr Willers’ costs on the standard basis.

Mr Willers then brought proceedings against Mr Gubay (whose executors were later substituted) alleging malicious prosecution of civil proceedings. He claimed that the Langstone action was part of a campaign by Mr Gubay to harm him, that it was brought without reasonable cause, with malice, and caused him damage to reputation, health, earnings, and a substantial shortfall between his actual defence costs (£3.9m) and the costs recovered (£1.7m).

The Chancery Division (Ms Amanda Tipples QC) struck out the claim, holding it disclosed no cause of action known to English law in light of Gregory v Portsmouth City Council. She granted a leapfrog certificate. The appeal raised whether malicious prosecution extends to civil proceedings and whether excess defence costs can be claimed.

Issues

Substantive tort issue

The central question was whether English law recognises a tort of malicious prosecution in respect of civil proceedings, beyond established special cases such as malicious winding-up or bankruptcy petitions, wrongful arrest of ships, search warrants and similar ex parte measures.

The court considered the apparent tension between the House of Lords in Gregory v Portsmouth City Council and the Privy Council majority in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd, which had allowed a malicious prosecution claim following civil fraud proceedings in the Cayman Islands.

Elements and scope of the tort

The Supreme Court examined historic authorities from the 16th to 19th centuries to determine whether the tort historically applied to civil proceedings, and what kind of damage and conduct were required (notably the absence of reasonable and probable cause and the presence of malice).

It also considered whether policy concerns (floodgates, duplication of remedies, inconsistency with witness immunity and the absence of a duty of care, finality of litigation, and risk of satellite claims) justified refusing to extend or recognise the tort in the civil context.

Excess costs

A further discrete issue was whether a claimant in malicious prosecution of civil proceedings can recover the excess of his actual costs over the costs awarded in the underlying action, or whether such a claim would amount to an impermissible collateral attack on the original costs order.

Judgment

Majority reasoning (Lord Toulson, with whom Lady Hale, Lord Kerr and Lord Wilson agreed; Lord Clarke concurring)

Lord Toulson characterised the appeal as asking whether English law should allow a remedy where legal process is maliciously used without reasonable cause and causes recognised damage. He emphasised the underlying rationale stated by Holt CJ in Savile v Roberts:

“if this injury be occasioned by a malicious prosecution, it is reason and justice that he should have an action to repair him the injury.”

Having reviewed early authorities, he concluded that historically the availability of the action depended more on the nature of the damage than on a rigid distinction between criminal and civil proceedings. He noted that courts had long provided remedies where a person suffered injury from malicious, groundless use of legal process.

He cited broad formulations from nineteenth-century cases, such as Wilde CJ in De Medina v Grove:

“The law allows every person to employ its process for the purpose of trying his rights, without subjecting him to any liability, unless he acts maliciously and without probable cause.”

and Lord Campbell CJ in Churchill v Siggers:

“To put into force the process of the law maliciously and without any reasonable or probable cause is wrongful; and, if thereby another is prejudiced in property or person, there is that conjunction of injury and loss which is the foundation of an action on the case.”

Lord Toulson considered that such reasoning was not confined to narrow categories like ex parte arrests or execution, but reflected a wider principle. Earlier cases, including Grainger v Hill, illustrated a judicial willingness to grant remedies where civil process was abused to cause harm, even in novel situations.

He accepted that Lord Steyn’s remarks in Gregory against extending the tort to civil proceedings were obiter and founded on practical rather than principled objections. Experience in Crawford and in the present case showed, in his view, that other torts such as defamation, malicious falsehood, conspiracy and misfeasance in public office did not always provide adequate protection.

Elements of malicious prosecution applied to civil claims

Lord Toulson reaffirmed that the claimant must prove both lack of reasonable and probable cause and malice, as well as resulting damage. He cited Lord Devlin in Glinski v McIver:

“it is a commonplace that in order to succeed in an action for malicious prosecution the plaintiff must prove both that the defendant was actuated by malice and that he had no reasonable and probable cause for prosecuting”

He endorsed Hobart CJ’s early formulation in Waterer v Freeman as a helpful starting point:

“if a man sue me in a proper court, yet if his suit be utterly without ground of truth, and that certainly known to himself, I may have an action of the case against him”

and explained that malice in this context means a deliberate misuse of the court’s process, for example knowing the claim is baseless or pursuing it for an improper collateral purpose.

He stressed that the combined requirements of want of reasonable and probable cause and malice impose a “heavy burden” on claimants, limiting the scope of the tort.

Policy analysis

On policy, Lord Toulson rejected arguments based on floodgates, deterrence of legitimate litigants, finality, duplication of remedies, inconsistency with witness immunity or absence of a duty of care, confinement to exercises of state coercive power, and supposed need for reciprocity (a tort for malicious defence).

On deterrence he observed that there are already many risks in litigation, including indemnity costs for improper conduct, without apparent chilling of honest claims. On finality he noted that malicious prosecution does not ordinarily attack the outcome of the first proceedings, save as regards the distinct issue of costs.

Addressing witness immunity, he relied on Roy v Prior, where Lord Morris of Borth-y-Gest said:

“This, however, does not involve that an action which is not brought in respect of evidence given in court but is brought in respect of an alleged abuse of process of the court must be defeated if one step in the course of the abuse of the process of the court involved or necessitated the giving of evidence.”

He rejected the suggestion that the tort should be confined to those exercising coercive state power, citing Gibbs v Rea where it was emphasised that malicious prosecution is not a public law remedy.

He concluded that these countervailing considerations did not outweigh “simple justice” in permitting a claim such as Mr Willers’.

Excess costs

On the claim for the difference between actual defence costs and costs recovered, Lord Toulson accepted that, had the underlying claim gone to full trial and indemnity costs been refused, a subsequent malicious prosecution action seeking effectively to re-open costs would be abusive. However, because Langstone discontinued before trial and the court had not adjudicated on indemnity costs, he held that recovery of excess costs in these circumstances would not undermine finality or amount to a collateral attack.

He described the assumption that a standard costs order made good the injury caused by malicious proceedings as “almost certainly a fiction” and stated that “expenditure of court time is sometimes the public price of justice”.

Lord Clarke

Lord Clarke agreed with Lord Toulson, expressly stating that he “would firmly answer” in the affirmative the question whether the tort includes the prosecution of civil proceedings. He drew additional support from the line of admiralty cases on wrongful arrest of ships, such as The Evangelismos and The Walter D Wallet, where damages were awarded for malicious or grossly negligent arrests, and noted the close affinity between malicious prosecution of crimes and of civil actions.

He considered that there was “no sensible basis” for recognising the former but not the latter, given that malicious civil claims can cause very substantial losses.

Dissenting views

Lord Mance, Lord Neuberger, Lord Sumption and Lord Reed dissented. They accepted that malicious prosecution clearly covers criminal cases and certain ex parte coercive civil measures (e.g. bankruptcy or winding-up petitions, wrongful arrest of ships, search warrants, bench warrants and execution), but argued that it should not extend to ordinary inter partes civil claims.

They relied on historical authority, especially Quartz Hill Consolidated Gold Mining Co v Eyre, and emphasised a long-standing rule that excess costs beyond those awarded in the original civil proceedings are irrecoverable in later malicious prosecution claims.

On policy, the dissenting Justices highlighted inconsistency with the absence of a duty of care between litigants and with witness immunity, risks of uncertainty over the scope of the tort (including possible extension to malicious defences, interlocutory steps and other fora), dangers of satellite litigation, chilling effects on access to justice, and conflicts with the court’s costs jurisdiction.

Lord Neuberger, for example, noted that a defendant’s remedy for serious wrongs committed in litigation “must depend on the control of the litigation by the court or tribunal in charge of it”, and warned of the hazards of adding a general tort in this sensitive area.

Implications

The majority held that English law recognises a tort of malicious prosecution of civil proceedings. Where a person maliciously prosecutes civil proceedings without reasonable and probable cause, causing recognised damage (to reputation, person, property, or economic interests), a cause of action may arise.

The judgment aligns English law with the majority approach in Crawford, and confirms that the older case law does not preclude application of the tort to civil claims. It also indicates that, in appropriate circumstances, a claimant may recover the excess of his actual defence costs over the costs awarded in the original proceedings, where doing so does not undermine a prior judicial determination of costs.

The decision is significant for litigators and insurers because it exposes those who instigate civil litigation for improper purposes, knowing it to be unfounded or indifferent to its foundation, to potential liability in damages, including for reputational and economic loss, in addition to existing sanctions such as adverse or indemnity costs orders.

At the same time, the stringent elements of the tort – lack of reasonable and probable cause, malice in the sense of deliberate misuse of process, and proof of actual damage – seek to confine liability to exceptional cases of serious abuse, limiting the risk of routine satellite litigation.

Verdict: Appeal allowed; the strike-out was set aside and the Supreme Court held that the tort of malicious prosecution extends to civil proceedings, permitting the entirety of Mr Willers’ claim to proceed to trial.

Source: Willers v Joyce (Re: Gubay deceased) [2016] UKSC 43