To Re-Litigate, Or Not To Re-Litigate, That Is The Question

What is res judicata?

Res judicata is the doctrine which prevents a party from re-litigating an issue or a defence which has already been determined (known as cause of action estoppel or issue estoppel) or which could have previously been litigated (the principle established in the 1843 case of Henderson v Henderson). There is a degree of confusion in this area of law and, although a number of recent cases, explored in more detail below, have sought to bring clarity, Claimants and Defendants alike need to be alert to the practical application of res judicata. Claimants seeking to plead an issue or cause of action that has either already been litigated or should have been raised in earlier proceedings, run the risk of having to defend a strike out action and possible adverse costs orders. Equally, Defendants need to understand when it is appropriate to raise a res judicata challenge.

When does res judicata apply?

The doctrine of estoppel by res judicata has two principles: issue estoppel and cause of action estoppel. Each is defined below per the explanation in Arnold v National Westminster Bank plc:

Issue estoppel - "...may arise when a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant, one of the parties seeks to reopen the issues."

Cause of action estoppel - "...applies where a cause of action in a second action is identical to a cause of action in the first, the latter having been between the same parties or their privies and having involved the same subject matter."

Points to note regarding issue estoppel and cause of action estoppel:

Should one party later claim that the original decision was incorrect, this will not enable a decision to be re-opened; instead the correct forum would be to have challenged the decision via appeal. Issue estoppel only applies when an issue has been decided. A default judgment creates a cause of action estoppel, not an issue estoppel as no issue has been decided. Res judicata may also apply to settlements, although consideration may be given to the circumstances in which the settlement was entered into. If a claim is discontinued, in opposition to being dismissed, it may be possible to bring subsequent proceedings based on the same facts, although permission of the Court would be required. It is not necessary for subsequent...