Commercial Court considers the Application of Henderson v Henderson Abuse to Different Stages of the same Litigation in US$100 Million Bonus Claim

1 July, 2019

On Tuesday 25 June 2019 the Commercial Court (Andrew Baker J) gave a further judgment in the Gruber & Ors v AIG litigation. The judgment examines the principles which govern the application of the doctrine of Henderson v Henderson abuse to different stages in the same proceedings, and also contains useful guidance as to the requirements of pleading in a claim for damages to be assessed. The Judge allowed an application to strike out the principal defences raised by AIG to the damages assessment claim as an abuse of process.

The Court had previously given judgment (in November 2018) for damages to be assessed in breach of contract claims by 23 former employees of AIG for c.US$108 million in relation to deferred remuneration which was not paid following the US government bail-out of AIG in 2008. In the damages assessment AIG sought to raise a number of positive causation defences which, it contended, meant that the claimants had suffered no loss. Among other things it sought to allege that, if it had known that it was liable to pay the employees, it would instead have gone into bankruptcy or timed its transactional losses to as to be able to offset those losses against its liability to the employees.

Andrew Baker J held that AIG’s positive defences as to quantum should have been raised for determination at the substantive trial if they were to be raised at all: “Any defendant giving proper attention to pleading a case in response to the claim is bound to consider and plead, if he wishes to and properly can, defences… as to quantum, not only defences… as to liability.” The raising of the quantum defences at a later stage was a “classic Henderson abuse”. The Henderson doctrine: “is not restricted to cases where the alleged abuse comes in a separate, later action. It is possible to conclude that a claim or defence not initially raised ought properly, if it was to be raised at all, to have formed part of an earlier stage within a single action at which at least some matters were finally determined.” Costs were awarded on the indemnity basis.

Daniel Oudkerk QC acted for the claimants, leading James Sheehan, instructed by Anne Pritam at Stephenson Harwood LLP.