26 In those proceedings, the appellant had carried on a property development business using a company structure. The company encountered financial difficulties as a result, allegedly, of the conduct of its solicitors. It brought proceedings claiming damages for professional negligence against those solicitors. The solicitors were aware that at all times the appellant intended to bring a claim for professional negligence against them in his own right. The company settled the proceedings and as part of the settlement negotiations the appellant undertook that in any claim which he brought personally against the solicitors he would limit the amount of certain aspects of the claim. He subsequently commenced those proceedings and the solicitors applied to have the proceedings stayed as constituting an abuse of process. The matter was considered on appeal by the House of Lords.
27 The proceedings were based upon the principles established in Henderson v Henderson, the same principles which were at the heart of the reasons for the joint judgment in Anshun. The principal speech in the House of Lords concerning this aspect of the proceedings was that of Lord Bingham of Cornhill (Lords Goff, Cooke and Hutton agreeing with his Lordship's reasoning. Lord Millett delivered separate reasons.) Lord Bingham cited with approval the judgment of the Court of Appeal in Barrow v Bankside Members Agency Ltd [1996] 1 All ER 981 in which it was said:
"The rule in Henderson v Henderson …is very well known. It requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided (subject, of course, to any appeal) once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion, but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on forever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed." ((1996) 1 All ER 981 at 983)
28 However, Lord Bingham counselled that care needs to taken in applying the principle. It is necessary to consider all of the circumstances of the proceedings including the circumstances of the litigants. At 30 - 1 his Lordship said:
"It may very well be, as has been convincingly argued (Watt, "The Danger and Deceit of the Rule in Henderson v. Henderson : A new approach to successive civil actions arising from the same factual matter," 19 Civil Justice Quarterly, (July 2000), page 287), that what is now taken to be the rule in Henderson v. Henderson , has diverged from the ruling which Wigram V.-C. made, which was addressed to res judicata. But Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice."
29 It will be remembered that in Johnson the initial claim brought by the company against the solicitors had been settled by way of a compromise. It had been argued before the House of Lords that the rule in Henderson v Henderson did not apply because of the compromise result in the initial proceedings. Lord Bingham rejected this argument. His Lordship said:
"An important purpose of the rule is to protect a defendant against the harassment necessarily involved in repeated actions concerning the same subject matter. A second action is not the less harassing because the defendant has been driven or thought it prudent to settle the first; often, indeed, that outcome would make a second action the more harassing." (At 32).