This is the story of a client that decided to sue a contractor but not its consultants. Then it changed its mind and went after them, too. The consultants claimed that this was abuse of process – but were they right?

In its judgment on the case of Aldi Stores vs WSP Group and Aspinwall, the Court of Appeal said that the case involved “complex contractual arrangements” and “problems that should have been dealt with through case management”.

Aldi was suing Holmes, a main design-and-build contractor that had given it a warranty in relation to works on a site in Luton, Bedfordshire that later suffered from subsidence. This contained an obligation for insurance cover up to a value of £5m.

Aldi was not the only party with a complaint about subsidence. Another tenant, B&Q, had a warranty from Holmes that contained similar insurance obligations but its claim was much greater.

Aldi’s claim was below the insurance cover limit in the warranty but B&Q’s claim greatly exceeded it. Accordingly B&Q started an action against Holmes and the consultants on the project team. There were then further actions brought by the landlord of the site.

Case management directions were given and Aldi’s action against Holmes proceeded separately from the one between B&Q, the landlord and their defendants. Meanwhile, Holmes joined WSP and Aspinwall but they were not directly pursued by Aldi, which thought its case could be processed relatively quickly and cost-efficiently against Holmes alone. Whereas Aldi’s claim proceeded satisfactorily, Holmes fared less well, and went into administrative receivership. However, the right to claim against Holmes’ insurance policy remained.

Meanwhile, the actions involving all the other parties were to go to trial in January 2004. There were so many parties that a “super court” was made available.

In the run-up to January 2004, Aldi had been paid some money by Holmes’ insurers, but it became apparent there was a first and a second layer of insurers. The first paid out but the second reserved their position initially. By late 2003 they decided to contest Aldi’s claim.

It was inappropriate for the consultants ‘to make no response earlier but to assert it was an abuse when the intentions turned into actions’

By then preparations for a super court trial were advanced. That action proceeded and was then settled. Aldi continued with its insurance action, before concluding that despite the willingness of first layer to pay out, the defence of the second layer had merit, which meant it would be unwise to proceed.

Aldi then sought to start an action against some of the consultants that had been involved in the case started by B&Q and had been brought in by Holmes in its own action. Those defendants then applied to strike out the Aldi action on the basis that it was an abuse of process. In January 2007 the Technology and Construction Court ruled in favour of the defendants. Aldi appealed and the three Court of Appeal judges said on

28 November that Aldi’s action was not an abuse, as Aldi had not previously sued these consultants; although it could have done so earlier, its decision to pursue Holmes instead was a fair approach. Aldi had also not disguised or misled anyone and had made its intentions clear. The court said it was inappropriate for the consultants “to make no response earlier but to assert it was an abuse when the intentions turned into actions”.

The court was keen to declare what should occur “if a similar problem arises in the future” and gave clear guidance that the parties faced with such circumstances should take the matter to the court. Had

that step been taken, the court could have decided that Aldi should have joined the action at the super court trial. Alternatively, all parties could have accepted the risk that Aldi might need to pursue other actions later.

Central to the defendant’s application was the question of whether or not there had been an abuse of process. Having concluded that Aldi’s approach was commercially reasonable, forensically legitimate and reasonably transparent, the court was unwilling to find that Aldi’s conduct was an abuse.

Ultimately, this is one of the few circumstances in which a party is not entitled simply to observe another party’s conduct without commenting. If you do not say something at the time, you will find it difficult later to persuade a court that a fresh action is abusive.