Shaping the tort of malicious prosecution of civil claims

Date: 
12 January 2018

Kathryn Garbett & Mehmet Karagoz discuss malicious prosecution of civil claims & analyse Willers v Joyce

  • Analyses the tests for malicious prosecution of civil claims.
  • Suggests updating professional guidance for solicitors and barristers on the issue to reflect existing guidelines re allegations of fraud.

Until relatively recently, a defendant that had successfully defended a maliciously advanced civil claim was prevented from bringing a claim for malicious prosecution against that claimant in respect of the damage caused. While it is right that, as a matter of policy, merely successfully defending a claim should not give rise to a claim for malicious prosecution against the claimant, it does not follow that a defendant should be left without redress where a claimant acts maliciously or proceeds on the basis of an illegitimate purpose.

Serious allegations of wrongdoing and fraud against individuals have an immediate and irreparable impact. Even if the defendant successfully defends the claim, or the claimant discontinues its claim, the genie has already left the bottle and the damage that has been done cannot be undone. It is in this context that the decision of the Supreme Court in Willers v Joyce [2016] UKSC 43, [2017] 2 All ER 327 which decided by a majority of 5:4 that the tort of malicious prosecution includes the prosecution of civil proceedings, is to be welcomed. Reflecting on this decision from 2016, it is perhaps surprising that there has not been a flurry of malicious prosecution claims in respect of civil proceedings. Here, we revisit the issues discussed in Willers v Joyce and consider some of the points that practitioners and the courts will need to consider in shaping the tort of malicious prosecution of civil claims.

Willers v Joyce

The key issue before the Supreme Court in Willers v Joyce was whether the tort of malicious prosecution includes the prosecution of civil proceedings. The appeal to the Supreme Court was from a decision of the Chancery Division [2015] EWHC 1315 which struck out a claim for malicious prosecution of a civil claim brought by Mr Willers against Mr Gubay. Judge Amanda Tipples QC’s ruling in the Chancery Division was made on the basis that the decision in Gregory v Portsmouth City Council ([2000] 1 AC 419, which decided that English law did not recognise the tort of malicious prosecution in relation to civil proceedings) was binding on the court and that in English law, the tort of malicious prosecution is not available beyond the limits of criminal proceedings. Therefore, Mr Willers’s claim for damages for malicious prosecution ought to be struck out as it disclosed no cause of action known to English law.

However, permission was given to appeal directly to the Supreme Court in light of the conflicting authorities of the House of Lords in Gregory and the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd ([2014] AC 366 which recognised the tort of malicious prosecution of civil claims).

The majority decision of the Supreme Court was delivered by Lord Toulson (with whom Lady Hale, Lord Kerr and Lord Wilson agreed) with Lord Clarke concurring and Lord Neuberger, Lord Mance, Lord Sumption and Lord Reed dissenting. Before analysing the judgments in Willers v Joyce, it is helpful to consider the legal requirements for a claim in malicious prosecution. The tort of malicious prosecution of civil claims requires the defendant (from the initial proceedings) to prove: the proceedings had been brought against the defendant; the proceedings had been determined in the defendant’s favour; the claimant brought the proceedings without reasonable and proper cause; the claimant brought the proceedings maliciously; and the defendant suffered loss and damage.

The majority decision

Lord Toulson explained that it seemed ‘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’. He went on to assess the countervailing factors for limiting the law of malicious prosecution. Lord Toulson considered, among others, the deterrence argument ie the suggestion that if the tort is available, it may deter those who have valid civil claims from pursuing them for fear that if the claim fails, they may face a vindictive action for malicious prosecution, and the finality argument ie avoiding satellite litigation.

However, in both instances, Lord Toulson recognised that those arguments were not considered a sufficient reason for disallowing a claim for malicious prosecution of criminal proceedings. Accordingly, he was not persuaded that these considerations were sufficient to outweigh the argument that ‘simple justice dictates that Mr Willers’s claim for malicious prosecution should be sustainable in English law’.

In relation to demonstrating the absence of reasonable and proper cause, Lord Toulson stated that the claimant ‘does not have to believe that the proceedings will succeed. It is enough that, on the material on which he acted, there was a proper case to lay before the court’. Lord Toulson also explained that malice was an additional requirement and in the context of malicious prosecution, ‘it requires the claimant to prove that the defendant deliberately misused the process of the court’. The critical feature which had to be proven was that ‘the proceedings instituted by the defendant were not a bona fide use of the court’s process’.

The dissenting arguments

There were four dissenting arguments in the Supreme Court, all making powerful arguments against the recognition of a tort for malicious prosecution of a civil claim. In Lord Mance’s dissenting judgment, he identified that a court awarding costs in a civil action is entitled to have regard to all relevant matters, including the absence of any prospects of success and state of mind in which it was pursued, and was of the view that ‘to permit litigation about these issues after the close of an unsuccessful action would be to invite or risk re-litigation of issues which were or could have been decided in the first action’. He also considered that, in so far as the costs assessed by the costs judge do not enable full recovery of all costs incurred, ‘the reason is likely to be that the costs incurred were not in the eyes of the law necessary, reasonable or proportionate in the context of the issues’.

Lord Neuberger’s dissenting judgment identified the uncertainties surrounding the tort and the possibility that it could extend to a malicious defence and even malicious applications. He also identified the problems in identifying what constitutes malice as well as deciding what types of loss and damage should be recoverable.

Malice, absence of reasonable & proper cause

There are likely to be obvious and significant hurdles for the defendant when attempting to prove the absence of reasonable and proper cause. As Lord Kerr identified in Crawford, demonstrating an absence of reasonable or proper causerequires the proof of a negative proposition, normally among the most difficult of evidential requirements’. The test for establishing whether there is an absence of reasonable and proper cause requires both a subjective and objective assessment. The subjective test requires an assessment as to whether the claimant honestly believed the defendant was liable in respect of the claims brought. If the court is convinced as to the subjective state of mind, it should then consider whether, based on the information available to the claimant at the time it initiated proceedings, it was reasonable for the claimant to have reached the conclusion it did in respect of the defendant.

Lord Kerr in Crawford considered that there was no reason for proof of malice in the civil context to be any less stringent than in the criminal context. Malice covers not only spite and ill-will, but also improper motive (Gibbs v Rea [1998] AC 786).

Recoverable losses

It is not yet clear what heads of loss are potentially recoverable under this tort. In Crawford, Lord Wilson considered that a tort of malicious prosecution of civil proceedings ‘should enable a claimant to recover damages for foreseeable economic loss beyond out-of-pocket expenses’. Lady Hale appeared to suggest that a claim could be brought in respect of damage to the defendant’s ‘reputation, person, liberty, property or finances’.

“The extension of the tort of malicious prosecution to civil claims provides a new dawn for justice to prevail”

In Willers v Joyce, Mr Willers sought relief in respect of damage to his reputation, damage to his health, loss of earnings and the difference between the full amount of the costs incurred by him in defending the previous claim (£3.9m) and the costs recovered (£1.7m). Lord Toulson commented that he ‘saw no difficulty in principle about the heads of damage claimed’. Accordingly, we anticipate future claims will also include these heads of damage and wait to see how Mr Willers’s claim against Mr Gubay’s estate will be resolved at trial.

The question of unrecovered costs in a claim for malicious prosecution of a civil claim is likely to require further analysis and guidance by the court. If the initial claim is discontinued by the claimant, and the court makes an award for costs on the standard basis without engaging in a detailed review of the claimant’s conduct, there appears to be no justifiable reason to prevent the defendant from seeking the difference between the costs recovered from those proceedings, and the amount it actually incurred in defending the proceedings in any subsequent malicious prosecution proceedings. However, if the defendant is successful at trial, and is unsuccessful in persuading the court to award indemnity costs, the defendant cannot then attempt to secure a more favourable costs outcome by pursuing a claim for malicious prosecution as this would be an abuse of process.

Conclusion

We agree with the majority decision in Willers v Joyce that it is right, as a matter of policy, for the tort of malicious prosecution of a civil claim to be recognised in English law. It is not uncommon for individuals to be accused of serious wrongdoing or fraud and be forced to engage in litigation which lasts several years. In our view, it follows that a successful defendant to a claim that has been progressed maliciously and without reasonable cause should be given the opportunity to seek redress for the losses it has suffered. The tort provides an opportunity for the defendant to be vindicated and to some extent limit the damage by the claimant. The ability for a defendant to bring its claim for malicious prosecution of a civil claim will also act as a deterrent to claimants that attempt to misuse the court in pursuit of personal vendettas and dishonest claims.

We also consider that in order to establish a sensible framework for the effective use of the claim in malicious prosecution of a civil claim, and to avoid this tort being abused by overzealous litigants, the professional obligations imposed on solicitors and barristers when making allegations of fraud (a reasonable belief the evidence demonstrates a case of fraud and clear instructions to allege fraud) should also be extended to allegations of malicious prosecution. This should assist in reducing the opportunities for the tort of malicious prosecution of a civil claim to be abused or used for collateral objectives.

To echo the words of Sir Thomas Bingham MR in X (Minors) v Bedfordshire County Council [1995] 2 AC 633; [1995] 3 All ER 353, ‘the rule of public policy which has first claim on the loyalty of the law: that wrongs should be remedied’. Justice should be allowed to prevail, and the extension of the tort of malicious prosecution to civil claims provides a new dawn for justice to prevail.

Kathryn Garbett is a partner in the Mishcon de Reya fraud defence team (Kathryn.garbett@mishcon.com). Mehmet Karagoz is an associate in the Mishcon de Reya fraud defence team (Mehmet.karagoz@mishcon.com).

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