Durkin v HSBC Bank PLC

Factual and Procedural Background

In December 1998, the Plaintiff sought to purchase a laptop with an internal modem from a retail outlet in The City, financed by a credit agreement with a bank. Upon discovering the laptop lacked the required modem, the Plaintiff returned it and sought to rescind the contracts with both the retailer and the bank. The retailer refused the return, and the bank insisted on payment, subsequently issuing default notices to credit reference agencies. The Plaintiff initiated litigation claiming rescission of contracts and damages for loss caused by the bank’s conduct, including harm to creditworthiness and consequential losses such as inability to purchase a family home abroad.

The initial Sheriff Court found in favour of the Plaintiff, awarding damages exceeding £116,000. On appeal, the Court of Session reversed the decision against the bank, limiting damages to £8,000 for general loss of creditworthiness and rejecting other heads of loss. The Plaintiff appealed to the UK Supreme Court, which reinstated the finding of breach of duty by the bank and the £8,000 damages award but declined to interfere with the Court of Session’s factual findings limiting other damages.

The Plaintiff then commenced a fresh action against the successor bank seeking provisional damages of £600,000 plus monthly payments, citing new legal grounds including malicious falsehood, fraud, and conspiracy. The Sheriff Court dismissed this action on grounds of res judicata, a decision upheld by the Sheriff Principal. The Plaintiff now appeals to the Court of Session.

Legal Issues Presented

1. Whether the plea of res judicata applies to bar the fresh action brought by the Plaintiff against the bank’s successor.
2. Whether any part of the fresh action, if not barred by res judicata, is prescribed under the Prescription and Limitation (Scotland) Act 1973.

Arguments of the Parties

Appellant's Arguments

• The fresh action raises new legal claims distinct from the original litigation, including malicious falsehood, intentional harm, fraud, conspiracy to defraud, and human rights violations.
• The original credit agreement was fraudulently created after the Plaintiff had rejected the sale, rendering the contract void and the subsequent default notices unlawful.
• The damages sought now include reimbursement of legal expenses from the first action and increased losses due to rising property prices, which were not previously recoverable.
• The courts below failed to properly consider or allow these new claims and evidence, thereby denying justice.
• The limitation period should not apply as the harm is continuing and stems from fraud.
• Assertions of judicial dishonesty and collusion are made, contending that prior courts ignored or falsified evidence.

Respondent's Arguments

• The fresh proceedings are barred by res judicata as they concern the same subject matter and cause of action as the prior litigation.
• The existence and validity of the credit agreement were conclusively determined in the prior litigation.
• New allegations of fraud and malicious conduct are unsupported by specific pleadings or evidence.
• Any claims not barred by res judicata are time-barred under the Prescription and Limitation (Scotland) Act 1973.
• The damages sought for legal expenses and increased property costs were either determined or are irrelevant in the current proceedings.
• The bank has complied with the Supreme Court’s orders, including payment of damages and costs.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined whether the fresh action was barred by the doctrine of res judicata, which prevents parties from re-litigating issues already finally decided between them. It emphasized that the court must look at the essence and reality of the matter rather than the legal labels or factual variations introduced by the Plaintiff.

The court found that, despite the Plaintiff’s attempt to recast the claim under new legal theories such as malicious falsehood and conspiracy, the core issue remained the same: damages for loss caused by the bank’s communication of default notices to credit reference agencies. This issue had been fully litigated and decided in the prior proceedings culminating in the Supreme Court judgment.

The court further noted that the Plaintiff’s new factual allegations, including assertions of fraud and a false credit account, were either vague, unsupported, or had been rejected as late or impermissible attempts to reopen settled matters. The Plaintiff’s claim for reimbursement of legal expenses was also irrelevant, as the Supreme Court had determined the handling of costs in the prior litigation.

Additionally, the court considered the bank’s subsidiary argument that any new claims would be time-barred under the Prescription and Limitation (Scotland) Act 1973, finding no sufficient basis to disapply prescription.

The court concluded that the fresh action was an unacceptable repetition of litigation, barred by res judicata, and that the Plaintiff’s arguments regarding fraud and conspiracy lacked the requisite specificity and evidential support.

Holding and Implications

The court REFUSED THE APPEAL, upholding the decisions of the Sheriff Court and Sheriff Principal that the fresh proceedings are barred by res judicata and, in any event, time-barred.

The direct effect is that the Plaintiff’s new claim for damages and other relief against the bank’s successor is dismissed, and the prior final judgments remain binding. No new precedent was established beyond reaffirming the settled principles of res judicata and prescription as applied to this case.