Does the doctrine of merger apply to declaratory judgements?

Zavarco plc v Nasir [2021] EWCA Civ 1217

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Does the doctrine of merger, whereby a judgment on a cause of action precludes a new action for further relief on the same cause of action, apply where the judgment is for declaratory relief only?

For nearly 100 years, the view of legal commentators (see?Spencer Bower & Handley: Res Judicata?(5th?ed. 2019)) has been that merger does not apply in the case of a purely declaratory judgment.?The point has never, however, been the subject of decision in England & Wales or in a Commonwealth country.?Until now.

In this case, the Chief Master had dismissed the action on the basis that since there had been a prior declaratory judgement (to the effect that certain company shares were unpaid), the doctrine of merger applied so as to preclude a subsequent claim on the same cause of action for payment of a debt (namely, seeking payment in respect of the shares).?Birss J (as he then was) allowed an appeal against the Chief Master's order. Permission for a second appeal was given by Newey LJ, and came before the full Court of Appeal in England on 29 April 2021. Judgement was handed down on 5 August 2021.

Sir David Richards (with whom Henderson and Warby LJJ agreed) held that a declaration was a quite different remedy from judgment for a debt or damages. It made sense to speak of a merger of a claim for a debt or damages into a judgment for the payment of a specified sum as debt or damages, so creating "an obligation of a higher nature". The lesser right was merged into the higher. The same simply could not be said of a purely declaratory judgment, which itself imposed no obligation but only confirmed an obligation which already existed. ?The statement that the doctrine of merger did not apply to a declaration, whilst made without citation of authority, was consistent with the underlying rationale of the doctrine. ?Sir David went further: he found it hard, indeed impossible, to think of a sound reason why a declaration of legal right or obligation should automatically bar a subsequent claim for enforceable relief.

Sir David also sounded an important note of caution.?Depending on the circumstances of the case, a claimant who first seeks only declaratory relief may be precluded, by the other principles designed to prevent abuse (Henderson v Henderson (1843) 3 Hare 100) from bringing further proceedings.