A particular irritation for lenders is where claimants seek to re-litigate failed claims by expressing them in a slightly different way. A recent Judgement from Flaux J is bittersweet for lenders in that situation.

In Camerata Property Inc v Credit Suisse Securities (Europe) Ltd [2012] EWHC 7 (QBD). Camerata invested in a five-year note issued by Lehman Brothers through Credit Suisse Securities (Europe) Ltd (“Credit Suisse”). When Lehman Brothers collapsed, Camerata lost a significant part of its investment.

Prior to the collapse of Lehman Brothers in 2008, Camerata sought advice from its relationship manager at Credit Suisse regarding its investments, including the note. Camerata claimed that the advice it received was negligent and in breach of its agreement with Credit Suisse. Camerata also claimed that, but for this advice, Camerata would have sold the note before Lehman Brothers failed. In March 2011, the Court dismissed Camerata’s claim.

In a second claim Camerata sought to bring new proceedings claiming that Credit Suisse had been negligent in its initial recommendation of the note, which was an unsuitable investment product. Camerata had notified Credit Suisse in the course of the first proceedings that it intended to bring this claim but had ultimately not sought permission to amend its Particulars of Claim.

Credit Suisse sought to dispose of the second claim on a summary basis as:

  1. It should be entitled to summary judgment because Camerata’s claim could only succeed if it advanced evidence which was inconsistent with the judgment in the first claim and there was no basis why the Court should be prepared to accept such evidence (indeed it would be an abuse of process to do so).
  2. It should be entitled to have the case struck out on the basis of estoppel, abuse of process and unsustainability.

The court agreed with Credit Suisse on the first point and gave summary judgment.

However in respect of the strike out application Flaux J considered that the bringing of the suitability claim in respect of the note in the second action was not in itself an abuse of process. Credit Suisse were aware that Camerata intended to bring suitability claims in a separate action. If Credit Suiise had been concerned that a claim in respect of the note might cause it oppression or vexation, it could and should have brought the matter before the court to make a case management decision as to whether the suitability claim should be determined in the first action.

The decision leaves Defendants in something of a cleft stick. It suggests that when made aware of a separate cause action arising from the same facts as a current claim it is incumbent on the Defendant to raise that at an appropriate time during the case management of the existing case if it wishes to preserve its able to strike out any subsequent claim. Defendants will need to consider carefully the merits of inviting the claimant to amplify current claims in this way versus strengthening their ability to strike out future claims.