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Contents... 1 January...................................................................................................................................... 6
7 July................................................................................................................................................. 78
Contempt................................................................................................................................ 6
Claims against the Police -NCND......................................................................................... 78
Admission Cost........................................................................................................................ 8
False Imprisonment................................................................................................................. 80
Amendments Limitation......................................................................................................... 8
Service..................................................................................................................................... 82
Indemnity Costs...................................................................................................................... 10
Costs......................................................................................................................................... 14
Summary Judgment............................................................................................................... 85
Mitchell Guidance.................................................................................................................. 86
Strike Out.................................................................................................................................. 87
Costs Budgets-Relief from Sanctions.................................................................................... 88
Procedural Irregularity............................................................................................................ 14
2 February.................................................................................................................................... 18
Cost of Amendment.............................................................................................................. 18
Disclosure/Strike Out............................................................................................................... 22
7.5 Extension............................................................................................................................ 83
8 August......................................................................................................................................... 90
Service..................................................................................................................................... 23
Professional Negligence........................................................................................................ 90
Costs - Detailed Assessment.................................................................................................. 24
Security for Costs..................................................................................................................... 91
Non - Party Disclosure............................................................................................................. 25
Limitation................................................................................................................................. 94
JOINT TRIAL?............................................................................................................................ 95
Abuse of Process.................................................................................................................... 96
Freezing Injunctions................................................................................................................ 28
Protection from Harassment.................................................................................................. 98
Costs......................................................................................................................................... 30
Part 18 Requests...................................................................................................................... 99
Payments into Court Transfer of proceedings..................................................................... 33
“Leapfrog” Certificate to Supreme Court........................................................................... 100
Specific disclosure.................................................................................................................. 36
Procedure – Case Management......................................................................................... 37
3 March.......................................................................................................................................... 28
9 September............................................................................................................................... 102 Cost.......................................................................................................................................... 102
4 April............................................................................................................................................... 42
Harrison v Shepherd Homes Ltd[2014] All ER (D) 95 (Aug)................................................. 104
Service out of the Jurisdiction............................................................................................... 42
Security for Costs..................................................................................................................... 106
Statutory Duty to provide special education...................................................................... 45
Amendment to Particulars of Claim..................................................................................... 107
Defamation............................................................................................................................. 48
Disclosure and Inspection...................................................................................................... 109
Defamation preliminary issue................................................................................................ 49
Protection from Harassment Act 1997................................................................................. 113
Disclosure- Non-Party............................................................................................................. 51
10 October..................................................................................................................................... 116
5 May............................................................................................................................................... 54
Part 36 –Withdrawal of Offer................................................................................................. 116
Cost Budgets........................................................................................................................... 54
Amendment............................................................................................................................ 118
Costs /ADR............................................................................................................................... 54
Practice and Procedure........................................................................................................ 119
Relief from Sanctions –CPR 3.9.............................................................................................. 58
Costs Refusal to Mediate....................................................................................................... 121
Jurisdiction............................................................................................................................... 59
Costs......................................................................................................................................... 122
Costs......................................................................................................................................... 60 Pre-Trial v post judgment relief-Strike Out............................................................................ 63
11 November................................................................................................................................ 126
6 June.............................................................................................................................................. 66
Amendment............................................................................................................................ 128
Summary Judgment............................................................................................................... 126
Strike out.................................................................................................................................. 66
Standard of Proof................................................................................................................... 130
Strike out-Cause of action..................................................................................................... 67
Contractual Obligation......................................................................................................... 131
Service Jurisdiction................................................................................................................. 69
Relief from Sanctions.............................................................................................................. 132
Service of Committal proceedings out of the jurisdiction................................................. 71
Causation................................................................................................................................ 133
Summary Judgment............................................................................................................... 72
Extension of Claim Form Service........................................................................................... 75
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Section 1 January 2014
Contempt Hartmayes Ltd, Re Also known as: Griffin v Robinson Chancery Division 06 December 2013 Unreported A company director was found guilty of contempt of court for failing to comply with a court order requiring him to provide further information on the proceeds of a property sale. The applicant liquidator (G) applied for a committal order against the respondent former sole director (R) of a company (H) in liquidation. R had bought H in January 2008. H later entered into an agreement for the purchase of a property for £2 million. A few months later the property was sold for £2.7 million plus VAT. The VAT was not accounted for to the Revenue which assessed a penalty at £550,000. The penalty was unpaid and H was wound up on the Revenue’s petition. G found little paperwork relating to H but had the completion statement for the sale of the property which showed deductions including £112,185 “mortgage redemption to Claire Smith” (CS) and a £75,000 deposit for “Montague Road”. G sought further information from R which was not forthcoming. R failed to attend a private examination under the Insolvency Act 1986 s.236 and was brought before the court. He gave an undertaking to deliver up all paperwork and company information under his control. An order was made in February 2013 for R to deliver up documents relating to H and for explanations as to the nature of the deductions from the proceeds of the property sale. R failed to comply with the undertaking or the order by the time the application notice was issued in July 2013. He was due to stand trial in separate criminal proceedings in 2014. R submitted that he had since purged the contempt by the service of an affidavit in October 2013 and a second affidavit which was sworn on the day of the instant hearing. G argued that R had failed to provide any satisfactory information on two questions: the payments to CS and for Montague Road.
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Application granted. (1) R’s first affidavit was perfunctory and gave no information at all about the nature of the deal, CS’s identity, the nature of the relationship or how she came to be involved in the deal. His second affidavit provided no further particulars of any use. It beggared belief that R had no recollection of any further information about the deal. He was a professional property dealer and had to have some more recollection so that he could give a fuller description of the nature of the transaction. It was incredible that he could not explain how H owed CS £112,185. He had failed to give a full and detailed explanation in compliance with the February order. The lack of detail R gave about Montague Road was striking. Again he had given no information on the transaction and why H was involved. He should have been able to recall that information as it involved a substantial development. The court was satisfied to the criminal standard that R had not complied with the order and was in contempt of court. (2) R had been found guilty of a serious contempt of court and he had shown a lamentable disregard for the duties he owed as a director of a company in liquidation. His disclosures were too little, too late and he had disclosed the minimum he considered necessary. His offence merited a term of imprisonment of four months on each count to run concurrently. R was a defendant in a substantial trial and was heavily involved in the preparation of his defence. His sentence was suspended and would be activated only if he failed to file and serve an affidavit which fully complied with the February order and was not to be activated before the conclusion of his trial.
Admissions Costs Rapid Medical Services Ltd v Kansara Chancery Division 06 December 2013 Unreported A decision of a deputy registrar to set aside a statutory demand on the basis that the sum alleged due under the demand was disputed on substantial grounds was upheld, and the registrar had not erred in ordering the petitioner to bear the costs of that application.
Amendments Limitation Chandra v Brooke North (A Firm) BPC Hotels Ltd v Brooke North (A Firm) Court of Appeal (Civil Division) 05 December 2013 [2013] EWCA Civ 1559 In allowing a claimant’s application to amend their particulars of claim to include new claims, a judge had been wrong to conduct a trial of the defendant’s objection
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that the new claims were statute-barred without ordering that to be determined as a preliminary issue. Further, the amendments could not be justified on the basis that they fell within the scope of the original claim form because the court had to compare the original particulars of claim, not the claim form, with the proposed amendments.
Indemnity Costs Kearns v Kemp & anr 05 December 2013 Unreported A claimant who had discontinued his libel claim was ordered to pay costs on an indemnity basis from the date the offer of settlement was made as his conduct had become so unreasonable. The court was required to determine costs following the discontinuation of a claim for damages for libel brought by the claimant (C) against the first defendant (D). C, an Irish national resident in Quatar, had issued proceedings against D based on three tweets that D had published after a dispute concerning payment for D’s transcription services. D had not attended a case management conference on March 15, 2013 saying that she could not afford to do so. D was ordered to pay the costs of the CMC within 14 days, in default of which she would be debarred from defending the action. On April 5, 2013, D applied for permission to appeal the unless order and for a stay of the order. The stay was granted. C was also given permission to add the second defendant (T) as a party. On May 10, 2013, D made an open offer to settle all matters on the basis that each party bore their own costs. C refused and requested further witness statements to explain D’s financial situation. The matter was then listed before the High Court to determine whether the claim disclosed a real and substantial tort or whether it was an abuse of process. D applied for security for costs, which C said he intended to oppose. C failed to give reasons for opposing the application. C then served a notice of discontinuance citing “undisclosed personal reasons.” D submitted that costs should be on the indemnity basis because C’s behaviour had been unreasonable and disproportionate throughout; he had acted irrationally and disproportionately in demanding a number of witness statements from D explaining her financial situation; he had unreasonably threatened D with the prospect of an adverse costs order, even though D had not opposed joining T to the proceedings; he had failed to say on what basis the order for security for costs would be opposed; he should have withdrawn earlier from the appeal and had prevaricated on the reason for discontinuing the appeal; he had refused to make payments on account.
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Costs determined. The court could only allow reasonable costs that had been reasonably incurred. There had to be good reason why to depart from costs on the standard basis. It was important to look at the conduct of the parties; there had to be some conduct which took the case out of the norm. The test was not conduct that attracted moral condemnation, but unreasonableness, Three Rivers DC v Bank of England (Indemnity Costs) [2006] EWHC 816 (Comm), [2006] 5 Costs L.R. 714 followed. Indemnity costs order was made against an employer for making an overly aggressive and unjustified application for specific disclosure and urgent interim relief against a former employee. IFOT Services & Anor v Sherry (2013) QBD (Judge Ralls QC) 26/11/2013 IFOT Services’, the applicant (A), business involved selling tickets for events. A applied for specific disclosure and interim relief in its claim against a former sales manager, the respondent (R), for breach of confidence and misuse of company documents. The application was made in reliance on R’s disclosure that company documents had been emailed to his personal computer. The court dismissed the application, holding that the alleged breaches of duty had not been evidenced, the conduct complained of was historic and there was no immediate threat against A which required the court’s intervention. Further, A’s approach had overly aggressive and it had sought undertakings to which it was not entitled. It was appropriate to make an order for indemnity costs against A. Summary Judgment A defendant who applied for summary judgment when he knew, or ought to have known, that his application was not justified was ordered to pay the costs of the application on the indemnity basis. Simmons & Simmons LLP v Hickox [2013] EWHC 2141 (QB) The Claimant (C) issued proceedings against the Defendant (D), claiming outstanding fees and fees under a contingency fee agreement. Instead of serving a defence, D served an application for summary judgment in respect of the contingency fee claim on the basis that the agreement was unenforceable under Anguillan law. Despite C immediately (and correctly) pointing out that the evidence served by D did not support his argument, it was only some weeks later that the application was abandoned. Coulson J held that C was entitled to its costs of the application on the indemnity basis. D had not served a defence and had given no explanation for instead issuing
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the application for summary judgment. It was reasonable to infer that it had been a delaying tactic. Further, D should have known that the application was hopeless. Disclosure A defendant was ordered to provide a witness statement setting out whether it had adequate insurance to fund its participation in group litigation. XYZ v Various sub nom Re PIP breast implant litigation [2013] EWHC 3643 (QB) The Applicant (A) claimed damages in respect of defective breast implants supplied by companies running private hospitals. A was concerned about one of the Respondent’s (R) finances and, in particular, whether R was able to fund its participation in the litigation and to meet any order for damages and/or costs. R refused to provide details of its insurance. A applied for an order that R provide information about the extent of their liability insurance cover. Thirlwall J held that A’s request did not come within CPR r.18.1 as R’s insurance position was not a matter in dispute in the proceedings. The alternative provision was CPR r.3.1, but that was a case management rule. The court could not make an order that required R to answer whether it could meet any order for damages and/or costs as those were not case management issues. However, whether R could fund the litigation to trial did affect case management and CPR r.3.1(2)(m) gave the court the power to order a witness statement to be provided that set out whether R had adequate insurance to fund its participation in the litigation. Fresh Evidence Hussain v King Edward VII Hospital Court of Appeal (Civil Division)12 December 2013 Unreported An application to adduce fresh evidence on the basis that it would establish that chronic shoulder pain suffered immediately after an operation was due to the hospital’s negligence and not an underlying chronic degenerative condition was refused, as it had not been obtained with reasonable diligence and lacked credibility. Consequently, the judge’s dismissal of the claim was upheld. The appellant (H) appealed against a judge’s dismissal of a claim for clinical negligence ( [2012] EWHC 3441 (QB)) brought against the respondent hospital (K), and applied to adduce fresh evidence in support of his claim. H, who had been diagnosed with bladder cancer, underwent a cystoscopy at K in 2005. His employer, which was based in Kuwait, had arranged for his medical treatment in London. He
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experienced severe pain in his left shoulder following the operation. He had not been aware of any shoulder problem before the operation. H was referred to a consultant orthopaedic surgeon (L) by his consultant urologist (S) and L referred H for an MRI scan. L’s referral letter stated that there was no evidence of bruising or bleeding on examination and that H could not recall any such bruising. The scan showed that M was suffering from a chronic underlying degenerative condition. H issued a claim in 2010 asserting that K’s negligence had led to his injury. The parties’ medical experts agreed that there had been an acute exacerbation of a chronic underlying degenerative condition. At trial, H asserted that his shoulder had been bruised. The judge found in a reserved judgment that H had failed to establish a prima facie case of negligence, the relaxation of H’s muscles during the operation had caused the onset of the shoulder pain, and that if he had suffered trauma as result of K’s negligence there would have been bruising present but there was no contemporaneous evidence of bruising. During the period when the judge was considering his decision, H became aware of a fax cover sheet signed days after his operation in 2005 by a senior medical administrator from the Kuwait Health office in London which stated that blood had been seen underneath H’s skin. A letter, written after judgment, had been handed down by a doctor (X) who had been the head of the Kuwait Health office in London stating that he had seen bruising on H. H submitted that if the fresh evidence were to be admitted it would demonstrate that the judge’s decision was wrong and unjust, and that he was in fact bruised at the material time. Appeal dismissed, application refused. (1) After H had woken from his operation and had been examined, there was no note documenting any redness or lumps. Neither was there any evidence from his physiotherapist or S that he was bruised. L had also noted that there was no bruising or redness, and that H had not recalled any bruising or bleeding. The first mention of bruising had been when H’s medical expert had given evidence and stated that H had seen bruising after his operation. H should have tried to obtain all relevant documents to support that however nothing was done until 2011 when H explained to his solicitors that his employer had its own hospital in Kuwait, and even then a request for the documents was not made promptly. It was not until 2012 that the first written request for H’s medical notes was made, and the request was made under the Data Protection Act 1998 instead of CPR r.31.17. Further, even if H’s assertion in his witness statement that he did not appreciate the importance of the bruising was true, he had known the importance of the bruising by the time of trial. H should not have waited until judgment had been handed down before bringing it to the court’s attention. Similarly H had again behaved in a dilatory manner in drawing the court’s attention to X’s letter, as S had, in his witness statement, referred to X being responsible for co-ordinating H’s care. Inquiries could have been made much earlier in respect of
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X. In the circumstances, it was clear that the evidence could have been adduced at trial with reasonable diligence. (2) The fax cover sheet and X’s letter both lacked credibility. The fax cover sheet was vague; it stated that blood had been seen under H’s skin, but did not specify who had seen blood under H’s skin. Further, no attempt had been made to contact the senior administrator who had supposedly signed the document, nor was there any evidence from her. X had made no contemporaneous note of the bruising he now stated that he had seen in his letter, and it was inconsistent with the fax cover sheet, which noted the presence of blood but not bruising. Even if the fresh evidence had been before the trial judge it would not have changed his mind. The proposed evidence failed requirements one and three of the Ladd v Marshall test and thus could not be adduced, Ladd v Marshall applied.
Costs Gulati v MGN Ltd Chancery Division 10 December 2013 Unreported An order that the costs of an adjourned hearing be costs in the substantive application was reconsidered where the judge had wrongly considered the defendant to have culpably underestimated the hearing length. The defendant was entitled to the properly identified costs occasioned by the adjournment.
Procedural Irregularity Hatton v Connew Court of Appeal (Civil Division) 10 December 2013 [2013] EWCA Civ 1560 There had been procedural irregularity when a judge determining a boundary dispute had discussions with the parties’ expert surveyors during a site visit, there was no record made of those discussions, no opportunity was given to cross-examine the experts in open court, and the judge relied on what was said during the site visit in reaching his conclusions. The appellants (C) appealed against the resolution of a boundary dispute in favour of the respondents (H). The dispute concerned three pieces of land, known as the Bank Strip, the Triangle and the Swathe. Expert surveyors produced reports for each party. The trial judge conducted a site visit, during which he allowed the experts to explain their positions. No record was made of what was said on the site visit. The judge did not require the experts to give oral evidence or give any opportunity for cross-examination. H relied on comments made at the site visit by the expert they had instructed (P), and the judge had regard to that in his decisions regarding the Bank Strip and the Triangle. He found in H’s favour in relation to all three pieces
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of land. C argued that the judge’s treatment of the expert evidence had been procedurally irregular. Appeal allowed in part. (1) An expert’s report would generally stand as his evidence-in-chief. He could supplement or amplify his evidence if the court gave permission. That would generally happen in open court and any supplementary evidence would be recorded. If the judge undertook a site visit, he could be told something of which no formal recording could be made; accordingly, he had to be careful that such a site visit did not result in a party being disadvantaged. If he wished to ask one party’s expert a question, he should generally do so in the other party’s presence and should take steps to ensure that an accurate note was made of the question and any answer. He should also ensure that each party was given a fair opportunity to deal with anything arising from the visit which was material to the issues. The oral hearing was an important feature of the procedure; although a judge had discretion to limit cross-examination, it was another thing altogether to dispense with cross-examination completely. If a court was considering dispensing with cross-examination, it was desirable that it explained that to the parties in open court and invited them to make submissions. It could be necessary to explain the consequences of taking that course, particularly if one of the parties was unrepresented. There had been serious procedural irregularities. The judge had dispensed with formal cross-examination during the site visit and without telling the parties in open court that that was what he was minded to do. He had not explained that that would mean he would have to evaluate the expert evidence without further questioning and had given no opportunity to make submissions. The judge had had discussions with the experts at the site visit without any note being made of the questions or answers. The unsatisfactory nature of that was shown when H sought to rely on something P had said. That evidence had gone to a critical issue. The crucial evidence was not contained in P’s report, a transcript, an agreed note or the judgment; it was impossible for the instant court to evaluate it. However, the court would only allow an appeal on the grounds of serious procedural irregularity where the decision was unjust within CPR r.52.11(3)(b), depending on all the circumstances. The court therefore considered the impact of the irregularities on the judge’s conclusions regarding each piece of land (see paras 45-51 of judgment). (2) H had relied on P’s evidence regarding the Bank Strip, including what he had said at the site visit, and the judge had attached weight to his evidence. In the light of the unsatisfactory way that evidence had been given, that aspect of the case would have to be remitted unless the court was satisfied that the judge’s conclusion had in any event been right. In considering that question, P’s opinions 15
and reasoning had to be put to one side. However, the other relevant evidence was too insubstantial a basis to decide the issue in H’s favour; the judge had relied on that material merely as corroboration for P’s evidence. The Bank Strip issue would be remitted (paras 52-57). The issues relating to the Triangle were closely related to those regarding the Bank Strip. The Triangle issue would also be remitted (para.60). However, the issues relating to the Swathe were self-contained and not affected by those relating to the other pieces of land. The judge had had C’s arguments in relation to the Swathe well in mind and had a proper basis for his conclusion. The appeal would be dismissed in relation to the Swathe (paras 61-68).
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Section 2 February 2014
Costs of Amendment Taylor v Burnton Court of Appeal (Civil Division) 23 January 2014 [2014] EWCA Civ 21 The defendant in litigation concerning a right of way should not have been ordered to pay the costs occasioned by the claimants’ application to amend their particulars of claim, nor should he have been ordered to pay the costs of an interim injunction. However, there were no grounds upon which the appellate court should overturn an order that he pay the balance of the claimants’ costs. The appellant (T) appealed against decisions concerning costs in a dispute about a right of way. The respondents (B) had purchased a bungalow and 3.75 acres of land. The conveyance included the grant of a right of way over a track. Eight years later T purchased the land across which the track ran. He obtained planning permission to build a house on land adjoining the track and began to construct a road over parts of the track. B claimed that T had interfered with their right of way, in particular, that the track was at least 7.17 metres wide and T’s new house would infringe upon it. B obtained an interim injunction restraining T from building and requiring him to remove obstructions from the right of way. During the proceedings B amended their particulars of claim. The costs of amendment were reserved to the trial judge. At trial T was ordered to pay damages of £520 and B’s costs which amounted to approximately £120,000. T submitted that
(1)
he should not pay the costs of amendment;
(2)
he should not pay the costs of the injunction as the judge had concluded
that the new house was not part of the subservient land covered by the right
of way;
(3)
the judge was wrong to have ordered him to pay B’s remaining costs as B had lost on a number of issues.
Appeal allowed in part.
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(1) The trial judge had not been told that the costs of amendment had been reserved to him. As he did not address his mind to how to deal with them, he had fallen into error and the court could exercise its discretion as to what order to make in respect of the reserved costs. The general rule was that those who obtained permission to amend should pay the other party’s costs of and occasioned by the amendment. There was no good reason why the conventional order should not be made. The amendment raised a case based on prescription that succeeded, and also pleaded a case to the effect that the track was at least 7.17 metres wide for most of its length, which failed. It made an irrelevant pleading of the general boundaries rule and raised a non-dispute about boundaries which was not pursued. The amendment was, in material respects, a waste of paper and costs and there was no reason why B should not be required to bear the costs of it (see paras 33-34 of judgment). (2) At the hearing of the injunction application, the judge had ordered that B should receive their costs from T “if they succeed on the express right of way issue at trial”. That condition was expressed in imprecise language, but it was obvious that the “issue” contemplated by the condition was that concerned with B’s claim that the house encroached on the right of way. The judge could not have had in mind that B could have their costs if they failed on that point but succeeded on some unconnected issue in relation to the battle about the right of way. Therefore, the condition under which B were entitled to the costs of the interim application was not satisfied. The trial judge had fallen into error in holding otherwise. His order that T should pay the costs of the interim application was set aside. The parties were to bear their own costs of the interim application. T might regard that as harsh, but the winner of an interim application would commonly be awarded his costs there and then, regardless of what happened at trial. T should therefore be grateful that such an order had not been made (paras 36, 41-43). (3) Orders as to costs were matters for the discretion of the trial judge, who had a unique familiarity with the issues and how the proceedings had been conducted. Whilst an appellate court might feel that it would have made a different order that, without more, was no basis for interference with a judge’s costs order. An appellate court would only be justified in interfering if the judge had misdirected himself as to the applicable considerations, taken into account an irrelevant factor or failed to take into account a relevant factor. It might well have been reasonable and fairer for the judge to have reflected B’s failures in the litigation in his costs order in an appropriate manner, perhaps by applying a discount to their recoverable costs. However, it was not open to the instant court to reconsider the judge’s costs order. He had conducted the trial and was in the best position to assess the relative
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importance of the various issues canvassed. His decision was not irrational. To set aside his order and re-determine costs would be a step too far (paras 44, 50).
Disclosure/Strike out Khalil v Commissioner of Police of the Metropolis Queen’s Bench Division 30 January 2014 Unreported The defence of the Commissioner of Police of the Metropolis to a claim of assault at a police station was ordered to be struck out unless he disclosed a viewable copy of CCTV footage within 28 days. The applicant (K) applied for an order against the respondent commissioner that, unless he provided disclosure of certain CCTV footage by a certain date, his defence to K’s claim of assault at a police station would be struck out. In 2011 a master had given various directions, including that the commissioner give disclosure of CCTV footage of the custody area where K had been held during the relevant period. The commissioner failed to comply with that order, and he failed to comply with various subsequent orders to a similar effect. He had complied with the last disclosure order to the extent that he provided K with a copy of the relevant footage, but the footage he provided was recorded at such a speed that it was impossible to view it sensibly. The commissioner submitted that he had complied with the latest disclosure order, albeit that the footage he had provided was not viewable. He relied on CPR r.31.15(c) to argue that if K wanted a better copy of the footage, he should pay for it. Application granted. Justice and fairness as between the parties was at stake. In order for K to be able to pursue his claim, he needed to have a viewable copy of the footage. In those circumstances, it was appropriate to order the commissioner to provide K with a viewable copy of the footage, or some technical evidence that providing a viewable copy was impossible, within 28 days. Considering the terms of CPR r.31.15(c), it was appropriate that any costs incurred by the commissioner in producing a DVD of the footage should be recoverable as against K if K’s claim ultimately proved unsuccessful. In light of the commissioner’s history of noncompliance, it was fair to order that his defence would be struck out unless he complied with the order.
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Service Murrills v Berlanda Court of Appeal (Civil Division) 30 January 2014 [2014] EWCA Civ 6 A judge had been correct to strike out a claim for negligence against an Italian doctor on the basis that it had not been validly served. The claimant should have proceeded under the CPR r.6.41. The appellant (M) appealed against an order striking out her claim against the first respondent (R1). R1 was a cosmetic surgeon who worked a few days per month at the clinic of the second respondent company (R2) in London. He was an Italian national and lived in Italy. M claimed that her treatment by R1 was negligent, and that R2 was vicariously liable for his actions. By the time of M’s claim, R1 was no longer working for R2 but had his own clinic in Italy, which was listed on a website. M’s solicitors wrote to him at R2’s address, and he responded with details of his Italian insurers and offered to see M at a different clinic (Re-Shape) in the United Kingdom. Shortly before the expiry of the limitation period, M served the claim form upon R1 at Re-Shape. M’s claim form was returned by Re-Shape with a note stating that R1 did not work there and they had no forwarding address for him. M subsequently served R1 by email several months later. M’s claim against R1 was struck out on the basis that it had not been validly served, as Re-Shape had never been his residential address and M should have used CPR r.6.41 to serve him in Italy. Appeal dismissed. (1) If M’s claim form was to be served in the jurisdiction, r.6.9 applied since R1 had not given an address for service. The first question under that rule was whether he was an individual to be served at his usual or last known residence, or “an individual being sued in the name of a business”, in which case he could be served at his usual or last known residence or his last known place of business. A person practising medicine could be carrying on a business within the meaning of r.6.9, but not if he was an employee working in someone else’s business. An individual was sued in the name of a business when he was sued in the name of a business which was not his personal name. R1 was not sued in the name of a business; he was sued as an individual (see paras 18-19 of judgment). (2) M had no residential address for R1 in the jurisdiction. It was obvious that his residential address was in Italy, he had responded from Italy, he had a place of business in Italy and he had Italian insurers. It would not have been difficult to ascertain his residential address from his professional Italian address, but no attempt was made to discover it. M knew that he was no longer carrying on business at Re23
Shape. Accordingly, M’s solicitors should have proceeded under r.6.41. It followed that the judge was correct to find that there had been no valid service of the claim form on R1. M’s solicitors had delayed in commencing proceedings and in pursuing them. They failed to take the steps obviously required to serve R1 in Italy within the period for service of a claim form out of the jurisdiction, and there was no justification for an extension of time (paras 20-24).
Costs –detailed Assesment Stone Rowe Brewer LLP v Just Costs Ltd Queen’s Bench Division 30 January 2014 Unreported A master had erred in concluding that there were “special circumstances” within the meaning of the Solicitors Act 1974 s.70(10) justifying a departure from the normal rule under s.70(9) on the costs of detailed assessments. The “one-fifth rule” under s.70(9) applied to the total of all the bills ordered to go to a detailed assessment rather than to each of the bills individually. The appellant solicitors’ firm (S) appealed against an order requiring it to pay 70 per cent of the costs of the respondent costs specialists (J) of a detailed assessment. S had entered into a retainer with J under which J agreed to carry out work on detailed assessments on behalf of S’s clients. Following a breakdown in their relationship, S sought detailed assessments of 15 bills of costs pursuant to the Solicitors Act 1974 s.70. Before the hearing, S and J agreed that the bills should be assessed in the sum of £23,760 against the total of £33,543 claimed. Notwithstanding that that represented a reduction of more than one-fifth of the total sum claimed, the master ordered S to pay 70 per cent of J’s costs of the detailed assessment; he concluded that there were special circumstances within the meaning of s.70(10) justifying a departure from the normal rule under s.70(9) that J should pay the costs of the assessment because the amount of the bill had been reduced by more than one-fifth. In concluding that there existed special circumstances, the master had looked at the bills of costs individually, deciding who had been successful in respect of each of them, and then applied the one-fifth rule to each bill separately. Appeal allowed. (1) Although S’s appellant’s notice had been filed out of time because it had originally filed the notice with the wrong court office, in the circumstances it was not appropriate to prevent it from proceeding with its otherwise meritorious appeal. (2) The real issue was whether the master had erred in deciding that he should depart from the general rule on the basis that there were special circumstances within the meaning of s.70(10). On an ordinary reading of s.70(10) and the words “special circumstances”, there had to be exceptional grounds making it unfair for the normal rule to apply. In deciding whether s.70(10) applied, a costs judge
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had to ask himself whether something had happened which made it unfair for the claimant to get his costs. Existing case law showed that claimants had generally only been deprived of the normal costs order where they were guilty of some sort of reprehensible or unreasonable behaviour, including where they had failed to beat an offer to settle by their opponent, they had unreasonably refused to negotiate, or they had racked up the costs by arguing pointless matters of law, Bentine v Bentine [2013] EWHC 3098 (Ch), [2014] C.P. Rep. 2 considered. “Special circumstances” did not necessarily exclusively refer to a claimant’s behaviour, but a finding of special circumstances could not extend to a situation in which, on an examination of the individual bills making up the total, it transpired that the defendant would have been victorious if the bills had been assessed separately and the one-fifth rule had been applied to each to them. The master had erred in assessing who had been the winner on each of the bills separately, and his approach drove a coach and horses through the scheme under s.70. The proper approach was one of totality, looking at the overall amount billed and applying the one-fifth rule to that. No special circumstances existed in the instant case. It followed that, once the one-fifth rule was applied to the total bill, S was entitled to the costs of the assessment.
Non- Party Disclosure Adams v Allen & Overy LLP Chancery Division 24 January 2014 [2014] EWHC 53 (Ch) It would be appropriate to require a non-party to disclose documents which were relevant to an important issue in a negligence action against solicitors and surveyors, namely the value of certain land. The applicants (X) sought a non-party disclosure order against the respondent company (G). X were claiming damages for alleged negligence by their former solicitors and surveyors in connection with the sale of farming land to G pursuant to a sale agreement dating from 1997. The agreement provided for the making of a “topup” payment equal to 50 per cent of the open market value (OMV) of the land after deduction of infrastructure costs (net OMV), less the amount of an up-front payment. There were detailed provisions regarding the determination of the OMV. X asserted that those provisions were defective: they allowed G not to be bound by the result of an independent arbitration and instead to adopt a tendering process which would not arrive at a true OMV because G had the right to match the highest bid, thereby creating the risk that serious bids would not be forthcoming. In the event, the parties to the agreement did not apply the detailed provisions in the agreement for the determination of the OMV; instead, following negotiations about the OMV between April and July 2006 they reached a compromise as to the amount of the top-up payment. The result, it was alleged, was that the top-up payment received from G
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was substantially less than 50 per cent of the net OMV. X argued that if they had been properly advised they would not have entered into the agreement on those terms and would instead have entered into a more favourable agreement with G or someone else, whereby the OMV would have been determined by an independent arbitrator and they would have received more. Negligence was denied and it was also denied that X had suffered any loss. After negotiations were finalised with X, G divided the land 50:50 between itself and Taylor Wimpey (which had an option over the land), and then between December 2006 and April 2007 G resold its half in six parcels to six different building companies pursuant to agreements which required G to carry out infrastructure works. Those resales were disclosed on the Land Register, but the Register did not tell the whole story: G had granted each building company an option to buy the relevant parcel in return for a significant option fee, and at the same time or very shortly afterwards the building company exercised the option so that G sold the parcel to the building company for a stated sale price; the Register did not disclose the overall amounts paid by the building companies. X sought the disclosure of that information, asserting that it was highly relevant to a key issue in the case, namely the OMV of the land as at August 2006. Application granted. Disclosure would be ordered. First, the documents might well support X’s case. At the very least, information as to the overall amounts paid by the building companies would confirm that the Land Registry figures were all far too low; it might well also show that previous valuations based on “comparables” were also too low. Second, disclosure of the requested documents was necessary in order to dispose fairly of the claim: evidence of actual open market sales of parcels of the relevant land in the period from December 2006 to April 2007 was powerful, indeed the best, evidence of the OMV of the land as at August 2006. As to the court’s discretion, it was necessary to weigh up the unfairness to the parties not to have disclosure against any unfairness or other prejudice to G (and the building companies) if disclosure was ordered, including in particular prejudice resulting from breach of their privacy and confidentiality. The balance lay in favour of ordering disclosure. The documents were sufficiently important that there would be real and significant unfairness to the parties if there were not to be disclosure. On the other hand, there was no evidence that G or the building companies would be prejudiced in any way by the disclosure of information about the option agreements between them, having regard in particular to the fact that those transactions had been completed over seven years ago (see paras 9, 12, 29-32, 34, 38 of judgment).
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Freezing Injunctions Global Maritime Investments Cyprus v Gorgonia di Navigazione Queen’s Bench Division (Commercial Court) 21 February 2014 Unreported The court continued a freezing injunction on the basis that a sufficient risk of dissipation had been shown. Construed in context, the disclosure provisions of the injunction required the disclosure of choses in action. The applicant (C) applied to continue a without notice freezing injunction against the respondent (D). C had obtained the injunction under the Arbitration Act 1996 s.44 on the basis that the case was one of urgency and the arbitral tribunal had not been constituted. The freezing injunction was granted for a limited period until the LMAA tribunal was constituted and could itself consider granting relief. Application granted. (1) C complained of non-disclosure in relation to intercompany debts, but that complaint was not made out. D had disclosed the information obtained from its accountant. The overall position in relation to intercompany debt was that there was no net debt. In any event the disclosure obligation was of debt exceeding $100,000 and there did not appear to be any such intercompany debt. (2) D’s case was that the injunction did not require disclosure of choses in action as assets. There was authority on the meaning of “assets” in freezing injunctions, but that was not directed specifically at the disclosure provisions of such an injunction, JSC BTA Bank v Ablyazov [2013] EWCA Civ 928, [2014] 1 Lloyd’s Rep. 195 considered. Construed in context, the disclosure provisions of the injunction did require the disclosure of choses in action generally because they referred specifically to two members of the class, namely bank accounts and debts. Therefore D should have disclosed as assets certain contracts relating to the use of a vessel: the benefit of the lease or hiring of the vessel and a sub-charter. It was not necessary to order such disclosure under s.44 since that matter could not be described as urgent.
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(3) C had complied with its duty of full and frank disclosure on the without notice application and the case had been one of urgency within s.44. (4) C had made out a sufficient risk of dissipation. There appeared to be a real risk that assets available to meet a judgment might be deployed so as not to be so available. There was sufficient concern about D’s conduct to entitle C to protection. The duty of disclosure was not a duty of utmost good faith but D had not disclosed that it was in negotiations with a mortgagee bank about overdue payment. Instead, when asked about C’s concern that the vessel might be arrested on arrival in the United States, D had replied “frankly speaking and in good faith” that there was no information about arrest on arrival. It could have declined to answer or should have explained the position about its indebtedness to the bank. There were other matters that were not fully explained and gave rise to concern. The injunction was continued, covering in particular the benefit of the sub-charter, subject to the usual ordinary course of business exception.
Costs BT Plc v South Eastern Power Networks Plc (Formerly EDF Energy Networks (SPN) Plc) Queen’s Bench Division (Technology & Construction Court) 27 February 2014 Unreported It was appropriate that a party whose negligence claim had been struck out should pay the full costs of the proceedings. The court was required to determine costs following the striking out of a negligence claim brought by the claimant (B) against the first defendant energy supplier (E). B had claimed that E negligently failed adequately to maintain an electrical installation at its telephone exchange which resulted in a fire. B subsequently conceded that its claim should be struck out because E was neither the distributor nor the supplier of electricity to its telephone exchange. B argued that it should only have to pay a proportion of the costs of the proceedings because (1) although it had not found relevant correspondence to prove the point, the suggestion that E was not B’s electricity distributor or supplier had not been raised pre-issue; (2) the issue of whether E was the supplier was peculiarly within E’s knowledge, and so it should have provided evidence of that fact at an earlier stage and applied to strike out then to save costs and comply with the overriding objective. Costs determined. 30
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(1) The court was not prepared to infer that whether E was B’s electricity distributor or supplier had not been raised earlier. In any event, B had over two weeks to prepare its response to E’s strike out application and since the point was going to be important it should have located the relevant documents to support its assertion. It was not appropriate to adjourn to allow B to locate the documents. (2) E had pleaded alternative defences, including that it was not B’s electricity distributor or supplier. Its pleadings were reasonable and sensible: it would not have been prudent for E to hang its hat on the sole defence that it was not B’s distributor or supplier. Upon receipt of E’s defence, B should have been put on notice that E’s status as distributor or supplier was an issue, and it had wrongly pleaded its own case on the basis that E was not the distributor or supplier. It was clear from the property’s electricity bills that E was not the supplier, and B could have made reasonable enquiries as to whether it was the distributor. (3) In those circumstances, it was appropriate that B should pay all of E’s costs of the proceedings in the usual way JE (Jamaica) v Secretary of State for the Home Department Court of Appeal (Civil Division) 25 February 2014 [2014] EWCA Civ 192 The Court of Appeal gave guidance on the proper application of CPR r.52.9A, which concerned limiting the recoverable costs of appeals from a “no costs” or “low costs” jurisdiction. In particular, the court emphasised the need for parties to make applications under r.52.9A as soon as practicable and the fact that it was not concerned with one-way costs shifting. The applicant (J) applied for an order under CPR r.52.9A in respect of her immigration appeal against the respondent secretary of state. The order which J sought was that
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her reasonably incurred disbursements be paid by the secretary of state in
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applied. J submitted that r.52.9A empowered the court to make a one-way
costs order of the kind sought. She placed particular reliance on the words
“to the extent which the court specifies” in r.52.9A.
Application refused. 32
(1) J’s application was based on a misconception. Rule 52.9A referred to “the recoverable costs of the appeal”, which meant the costs recoverable by the winning party, whoever the winner might turn out to be. The rule dealt with appeals coming from a “no costs” or “low costs” jurisdiction and enabled the appeal court to put in place a similar regime to that which applied in the court or tribunal below; it did not contemplate an order in favour of just one party, win or lose. Three considerations supported that interpretation of r.52.9A. Firstly, the opening lines of CPR r.52.9A set the context: the rule was specifically concerned with appeals from jurisdictions in which all the parties were subjected to the same restrictions upon recoverable costs. Secondly, the considerations set out in r.52.9A(2) were relevant to considering whether to maintain a “no costs” or “low costs” regime upon appeal. Thirdly, there were no separate rules providing for qualified one-way costs shifting. On that basis, r.52.9A was not concerned with one-way costs shifting (see paras 6-9 of judgment). (2) (Per curiam) If an appeal was brought from a “no costs” or “low costs” jurisdiction, both parties should give prompt consideration to whether they wanted and would qualify for such an order. It was important that any application under r.52.9A was made at an early stage so that both parties knew the costs regime under which they were proceeding. Rule 52.9A(4) required the application to be made “as soon as practicable”, which did not mean immediately but envisaged that both parties would require a reasonable time in which to consider the position. Once made, the application could then be dealt with in writing at modest cost unless the court ordered otherwise. Any challenges to the court’s decision would not be entertained unless the court had made a clear error of principle. The court expressed the view that it would be helpful if the literature provided by HMCTS to appellants and respondents drew attention to the court’s power under r.52.9A and the need to make any application under the rule as soon as practicable to avoid such applications being made late on the eve of the appeal, as had occurred in the instant case (paras 10-11, 13, 15).
Payments into Court Transfer of proceedings Paratus AMC Ltd v Lewis Chancery Division 24 February 2014 Unreported Where a party had applied in the county court for the payment into court of a sum which exceeded the county court’s jurisdiction, it was appropriate for the High Court to order a transfer of the application to the High Court to allow it to order payment into court of the full amount, and to subsequently order the re-transfer of the matter back to the county court. The applicant (L) made an application arising out of the making of a possession order in favour of the respondent mortgagee (P). L had obtained a mortgage 33
from P which was secured by a property. He fell into arrears with his mortgage payments and a possession order over the property was made in P’s favour. L applied unsuccessfully for an injunction restraining completion of the sale of the property until he had been allowed to access the property to collect some of his belongings. P later sold the property, removed some of L’s belongings and put them into storage. There was a dispute between L and chargeholders in the property as to the extent of those chargeholders’ entitlements to the surplus proceeds of sale of the property, which P held pursuant to the Law of Property Act 1925 s.105 as trustee. In those circumstances, P applied in the county court under the Trustee Act 1925 s.63 for the surplus proceeds to be paid into court rather than for them to be paid to the chargeholder next in line. In the instant application, L sought an award of damages for the unlawful disposal of his chattels, an order for specific disclosure of audited mortgage accounts, and an order dismissing P’s application under s.63 in the county court. In light of the fact that the amount of the surplus proceeds of sale exceeded the county court’s jurisdiction, P applied for a transfer of its application under s.63 to the High Court pursuant to the County Courts Act 1984 s.41, an order for a payment into court of the surplus proceeds, and a subsequent re-transfer of the action to the county court for that court to adjudicate in a proportionate manner on the entitlement of the chargeholders. Judgment accordingly. (1) It was plain that L’s application was misconceived. The mortgage action was in the county court and so if L wished to seek compensation for any alleged damage caused to his chattels, it would be necessary for him to commence CPR Pt 7 proceedings in that court. It was also plain that unless L formally issued a claim alleging that P had sold the property at an undervalue, there was no extant ground on the basis of which specific disclosure of the relevant accounts could be ordered. Further, the correct forum for the dispute on the surplus proceeds of sale was the county court, not the High Court on an interim application. It followed that L was not entitled to relief sought. (2) It was appropriate to accede to the course proposed by P in relation to its s.63 application in order to preserve as much as possible the funds for those to whom L might owe debts.
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Specific disclosure Bromhead & Co v Baillie Chancery Division 25 February 2014 Unreported A patent attorney’s application for specific disclosure to assist its defence to a negligence claim brought by a former client was refused where the disclosure sought, which covered a wide range of documents over a four-year period, was disproportionate. The appellant patent attorney (C) appealed against a refusal of specific disclosure in a negligence claim brought against it by the respondent manufacturers (D). D had been retained to advise on patents covering C’s glow-in-the-dark material. C claimed that it had, in an attempt to secure patents and to develop commercial products using its material, spent large sums of money that it would not have spent had it been properly advised that there was no real prospect of obtaining the patents. C’s primary case was that as D had been retained to provide advice on suggested strategies to exploit the material, including a patent portfolio, the retainer was wide enough to allow for the recovery of losses. D’s defence was that C’s alleged losses had been caused by other factors. D unsuccessfully applied for specific disclosure under CPR r.31.12(2)(a), of any documents, including memorandums and notes, that were related to the downfall of the commercial endeavour, the losses suffered, any problems with the material, sales, marketing and market conditions. The master held that the disclosure sought was not necessary for determining the scope of D’s duty, and that only the factual matrix of the events was relevant, rather than an in-depth analysis. The issues were whether (i) the documents were relevant; (ii) the request for disclosure was proportionate. D argued that C’s disclosure of management accounts, minutes of board meetings, cash flow documents and business plans had been inadequate and failed to provide an overview of the causes of the losses, which was relevant to the pleaded case. Appeal dismissed. (1) There was an arguable case on relevance. If D was correct that the matter was an information case, it seemed likely that the primary case would fail. It was arguable that it might be difficult to determine whether the matter was an information case or an advice case, and that determining the scope of D’s duty required an investigation of the actual causes of C’s losses. (2) Even if the documents were relevant, the request was disproportionate. The disclosure sought was extremely wide ranging, covering a period of over four years and a wide range of documents concerning a wide range of subjects. It was clear that providing disclosure of any documents pertaining to any problems experienced
36
in the specified areas would be a massive exercise. Although it had not been D’s fault that the request was made so close to the trial, and there had been no specific evidence that the disclosure could not have been completed before trial, the review and disclosure of such a large volume of documents would have inevitably descended into the minutiae of causation, rather than merely a broad theme. Disclosure of thousands of emails was not going to remedy D’s concerns and would burden both parties with large costs. It would be possible to conduct an adequate investigation of causation on the available material. Judge: Arnold, J.
Procedure – Case Management Lincolnshire CC v Mouchel Business Services Ltd Queen’s Bench Division (Technology & Construction Court)21 February 2014 [2014] EWHC 352 (TCC) Neither the Protocol for Construction and Engineering Disputes nor the TCC Guide implied that construction and engineering disputes were subject to a special regime or special principles pursuant to which compliance with the Protocol took priority over the principles that were generally applicable to applications for extensions of time for the service of proceedings. On the contrary, part 6 of the Protocol and para 2.3.2 of the TCC Guide complemented those well-established principles by requiring a claimant to bring a case before the court for directions on notice. The first defendant (M) applied to set aside an order granting an extension of time for service of a claim form and particulars of claim by the claimant (L). M had undertaken architectural services under a contract with L for extension works to a school which was under L’s control as local education authority. Practical completion of the construction works was achieved on March 28, 2002. About a year later, a dispute arose as to the quality of the work. L issued proceedings on July 19, 2013 and applied without notice for an extension of time for service of the claim to January 18, 2014. The extension of time was granted to enable the parties to take the steps set out in the Protocol for Construction and Engineering Disputes. On September 11, 2013 L instructed an expert to prepare a report. L sent a letter of claim to M on December 3, 2013. On December 23, 2013, L again applied for an extension of time without notice but did not disclose that it had taken no effective steps between July and mid-September 2013. A further extension of time for service was granted until April 18, 2014. In January 2014 M brought the instant application, referring to L’s failure to comply with Pre-action Protocol requirements in breach of the order granting an extension of time. L relied on the decision in Charles Church
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Developments Ltd v Stent Foundations Ltd [2007] EWHC 855 (TCC), [2007] C.I.L.L. 2477 in arguing that compliance with the Protocol in TCC cases was paramount. L also submitted that the delay between the order of July 2013 and December 3, 2013 was due to staff holidays. 

 Application granted. (1) Applications for an extension of time for serving a claim form were an exception to the general rule that a copy of the application notice had to be served on each respondent. The court would expect the parties to have complied with any relevant pre-action protocol and would take any failure to do so into account when exercising its general management powers. While an application for an extension of time for serving the claim form might be made without notice pursuant to CPR r.7.6, a party issuing proceedings to which the Pre-action Protocol for Construction and Engineering Disputes applied, without complying with that Protocol because his claim might become time-barred, was obliged by part 6 of the Protocol to apply to the court on notice for directions as to the timetable and form of procedure to be adopted. Although the Protocol showed the importance attached by the court to compliance with its requirements, neither the Protocol nor the TCC Guide implied that construction and engineering disputes were subject to a special regime or special principles pursuant to which compliance with the Protocol was of paramount importance, or took priority over the principles that were generally applicable to applications for extensions of time for the service of proceedings. On the contrary, part 6 of the Protocol and para 2.3.2 of the TCC Guide complemented the wellestablished principles by requiring a claimant to bring the case before the court for directions on notice. Although a claimant might ask for an extension of time within the on-notice application for directions, an application for an extension under r.7.6 and an application on notice for directions pursuant to the Protocol were not the same thing: a claimant who applied without notice for an extension of time did not thereby comply with its obligations under part 6 of the Protocol and para 2.3.2 of the TCC Guide. The importance of a party issuing an application for directions on notice in a case to which part 6 of the Protocol applied could not be over-emphasised, Charles Church considered. The court would always have regard to the need to progress proceedings consistently with the overriding objective of enabling the court to deal with cases justly and at proportionate cost, particularly when limitation issues might arise (see paras 21-22, 24, 38-40 of judgment). (2) Staff absences on annual leave was no good reason for the failure to take any steps before mid-September 2013. A solicitor undertaking litigation had to ensure that it was run properly and efficiently and with the necessary allocation of resources (para.42). 38
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(3) Proceedings should have been served before January 18, 2014 and the continuing failure to comply with pre-action protocol requirements was no good reason for failing to do so, Collier v Williams [2006] EWCA Civ 20, [2006] 1 W.L.R. 1945 followed. Parties who issued late were obliged to act promptly and effectively and, in the absence of sound reasons, proceedings should be served within four months or in accordance with any direction of the court (paras 44-45). Stay of proceedings Summit Navigation Ltd v Generali Romania Asigurare Reasigurare SA Queen’s Bench Division (Commercial Court) 21 February 2014 [2014] EWHC 398 (Comm); A stay of proceedings which arose on a claimant’s failure to provide security for costs by a deadline agreed in a consent order was lifted pursuant to CPR r.3.9. The stay was clearly intended to be temporary; the deadline had been missed by a very narrow margin and there had otherwise been full compliance with the terms of the order; and the failure did not have any impact on the efficient conduct of the proceedings, or on the wider public interest of ensuring that litigants could obtain justice efficiently and proportionately. The claimant shipowner (S) applied to lift a stay of proceedings in a claim brought against the defendant insurer (G) in respect of damage to the vessel in question. G applied for an order that the action be stayed pursuant to CPR r.58.14. By a consent order dated November 26, 2013, S agreed to provide security for G’s costs by delivery of a bond by 4pm on December 5, 2013, failing which the action would be stayed. The security was to be exchanged for a security bond made under an earlier consent order made on October 11, 2013 which required S to give disclosure of ship’s documents. Due to the inability of S’s brokers to obtain the underwriter’s signature in time, S was unable to comply with the order. At 9.28am on December 6, G informed S that the action was now stayed. Even though the signature was obtained at 10.01 am and S was ready to proceed with the exchange, G maintained its position that the action was stayed and informed S that it would resist any application made under CPR r.3.9 for relief from sanctions. G’s application for a stay under CPR r.58.14 was made on the ground that S had failed to comply with the disclosure element of the earlier consent order. The issues were whether (i) the consent order of November 26, 2013 should be construed as meaning that the stay lifted automatically upon the provision of security at any time after that specified in the order; (ii) a stay such as that in the instant case could properly be described as a “sanction” from which relief was sought; (iii) S’s non-compliance was “trivial”. Claimant’s application granted, defendant’s application refused. (1) The consent order did not specify any event which would bring the stay to an end. If the parties had intended the stay to
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end automatically when security was given, the order would have made that clear. Such an intention was not obvious; therefore, the stay should not be construed as self-lifting upon the provision of security at any time after that specified in the order (see paras 20-21 of judgment). (2) The stay imposed by the consent order was a “sanction” within the meaning of CPR r.3.9. That term included any consequence adverse to the party to whom it applied. There was no reason to distinguish between a “sanction” under CPR r.3.9 and a “consequence” under CPR r.3.8; they should be regarded as a coherent scheme. Therefore, any application to disapply a consequence specified in an order for failure to act within a specified time was an application for relief from a “sanction”. However, the effect of the consent order was not to be equated with an “unless” order requiring the claim to be struck out for non-compliance. It could not have been reasonably intended in the instant case that the consequence of missing the deadline for providing security would be to bring a permanent end to the action. The only reasonable view was that the stay was intended to be temporary and would be lifted on appropriate terms. An order for security for costs was a special form of order unlike a sanction for failure to file a costs budget on time, Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2013] 6 Costs L.R. 1008 distinguished (paras 27-29, 31, 34-37). (3) The noncompliance could properly be characterised as “trivial”, since S had narrowly missed the deadline imposed but had otherwise fully complied with the terms of the order. The failure was one of form rather than substance, Mitchell followed. In any event, there would have been a sufficiently good reason for the default, since the principal reason why the deadline was not met was not the inefficiency of S or its solicitors, but of third parties who were not responsible for the conduct of the litigation. Moreover, the fact that S missed the deadline did not in itself have any impact on the efficient conduct of the proceedings or on the wider public interest of ensuring that litigants could obtain justice efficiently and proportionately. Further, G’s stance in refusing to lift the stay was unreasonable and disregarded the duty of the parties and their representatives to co-operate with each other in the conduct of proceedings and the need for litigation to be conducted efficiently and at a proportionate cost (paras 40, 46-48, 54). (4) It was not suggested when the order of October 11, 2013 was made that G was unable to prepare its case without the papers sought or that a stay was needed for that purpose; in fact, it already had copies of many of the relevant documents. Accordingly, the proper course was for G to apply to the court after the lifting of the stay for orders requiring S to provide any information that remained outstanding (para.60).
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Section 4 April 2014
Service out of the Jurisdiction Vitol Bahrain EC v Nasdec General Trading LLC and others [2014] EWHC 984 (ComCourt) The claimant (Vitol) was a company established in accordance with the laws of Bahrain and carried on business trading and refining oil and petroleum products. The first defendant (Nasdec) was a Dubai company which sold two cargoes of oil to Vitol in March and May 2012, for which Vitol paid the contractual price of almost US$ 120m. The cargoes were delivered into shore tanks which were owned by a company (VTTI). The second and third defendants (Fal Oil Dubai and Fal Oil) were members of the Fal group and were established in Dubai and Sharjah respectively. They claimed title to the oil delivered into storage at VTTI. The fourth defendant (Standard Chartered) was a bank, established under the laws of England and Wales, which had a security interest in a number of cargoes owned by the Fal group. Vitol commenced proceedings seeking a declaration that Nasdec had good title to the oil and passed good title to Vitol upon delivery at VTTI’s Fujairah terminal. The contracts of sale between Vitol and Nasdec were governed by the law of Dubai and Dubai jurisdiction. However, pursuant to the contracts, Nasdec provided warranties of title which had been provided by Nasdec for each cargo and which were governed by English law and provided for exclusive English jurisdiction. Jurisdiction against Nasdec was founded on English law and jurisdiction provisions in the warranties of title. England was said to be the appropriate forum because of the pursuit of claims against Nasdec in England, to which Fal Oil and Fal Oil Dubai were necessary or proper parties. Vitol applied in England for an anti-suit injunction in respect of civil proceedings brought in Fujairah. Subsequently, a judge dismissed an application to continue the anti suit injunction and held that Fujairah, not England, was the natural forum for resolution of the dispute. Vitol applied for permission to serve Nasdec, Fal Oil Dubai and Fal Oil out of the jurisdiction in Dubai and Sharjah. The judge granted the application ex parte (the order). The Fal Oil applied to set aside the order. Vitol cross-applied for a case management stay. Standard Chartered consented to that stay.
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Fal Oil submitted that the appropriate forum was Fujairah, where there were civil proceedings to which Fal Oil, Nasdec and Vitol were parties, in which the question of title to the cargoes would be determined. Vitol submitted that permission had been properly granted and that the order ought not to be set aside. Fal Oil submitted that an issue estoppel arose by reason the judge’s decision that Fujairah, not England, was the natural forum for resolution of the dispute. The court ruled: (1) It was settled law that, on an application for permission to serve a foreign defendant out of the jurisdiction, the claimant or counter-claimant had to satisfy three requirements:
(i)
that, in relation to the foreign defendant, there was a serious issue to be tried
on the merits;
(ii)
that there was a good arguable case that the claim fell within one or more classes of case in which permission to serve out might be given; and
(iii) that, in all the circumstances, the foreign jurisdiction was clearly or distinctly
the appropriate forum for the trial of the dispute, and that, in all the
circumstances, the court ought to exercise its discretion to permit service
of the proceedings out of the jurisdiction.
An application to set aside permission to serve out of the jurisdiction fell to be determined by reference to the position at the time permission was granted, not by reference to circumstances at the time the application to set aside was heard. Permission, which was rightly granted, would not be discharged simply because circumstances had changed. Subsequent changes in circumstances were not relevant as such, although subsequent events might throw light upon considerations which were relevant at that time. The starting point when considering the necessary or proper party head of jurisdiction was to examine the nature of the claim which arose against the anchor defendant(s). That was the claim to which it had to be necessary or proper for the additional defendant(s) to be party. At that first stage, the approach required consideration of such claim in isolation, that was to say assuming that there would be no joinder of the additional foreign defendant (see [40], [42], [45] of the judgment). On the facts, at the time of the permission application, England was not clearly or distinctly the appropriate forum for Vitol’s claim against Fal Oil. On the contrary, Fujairah was clearly a more appropriate forum. That was sufficient to dispose of the present application in Fal Oil’s favour (see [58], [59] of the judgment).
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The application to set aside the order would be granted (see [59] of the judgment). Investment CJSC v Krygyz Mobil Tel Ltd; Altimo Holdings and Investment Ltd v same; CP-Crédit Privé SA v same; Fellowes International Holdings Ltd v same [2011] 4 All ER 1027 applied; ISC Technologies Ltd v Guerin [1992] 2 Lloyd’s Rep 430 applied; Mohammed v Bank of Kuwait and Middle East KSC 140 Sol Jo LB 173 applied; Credit Agricole Indosuez v Unicof Ltd [2003] All ER (D) 32 (Nov) applied; Investment CJSC v Krygyz Mobil Tel Ltd; Altimo Holdings and Investment Ltd v same; CP-Crédit Privé SA v same; Fellowes International Holdings Ltd v same [2012] 1 All ER (Comm) 319 applied. (2) Issue estoppel did not arise as it could only do so where the issue was identical in each application and the issue decided by the judge on the anti-suit injunction was different from the issue before the instant court, which was whether England was clearly and distinctly the appropriate forum as matters stood on 16 November 2012. By contrast the application for an anti-suit injunction had depended upon the circumstances at that time, including the particular state of the English and United Arab Emirates proceedings at the relevant date (see [42] of the judgment). (3) In respect of Vitol’s application for a case management stay, which applied to the claim against Nasdec and Standard Chartered Bank, it was clearly appropriate that no further steps should be taken in these proceedings pending the outcome of the Fujairah proceedings. Accordingly the stay would be granted (see [60] of the judgment).
Statutory Duty to provide special education Haining v Warrington Borough Council [2014] EWCA Civ 398, [2014] All ER (D) 25 (Apr) [2014] EWCA Civ 398, [2014] All ER (D) 25 (Apr) B was 12 years old and had significant special educational needs within the meaning of Pt 4 of the Education Act 1996. The respondent local authority, as the responsible authority, made and maintained a statement of special educational needs (SSEN) in respect of him. B’s parents wanted him to attend an independent residential special school (WHS) which the authority accepted would meet his needs. However, the authority contended that B should attend an alternative school (GHS) which was a maintained day special school. The authority accepted that, if B attended GHS as a day pupil, it would also provide him with residential respite care. The total cost for a placement at WHS was £92,000 and for GHS it was £90,400. The main differences between the figures were that the school costs for WHS were £33,400 and the total school costs for GHS were £61,200. The cost of a placement at GHS included £29,300 for boarder/respite fees, whereas there was no such cost in respect of WHS. The SSEN named GHS. 45
B’s parents appealed. The First-tier Tribunal (Health, Education and Social Care Chamber) (the FTT) dismissed the appeal and concluded that WHS was much more expensive than a placement at GHS, there would be over-provision and it could not be justified on educational grounds. The Upper Tribunal (Administrative Appeals Chamber) (the tribunal) dismissed the parents’ appeal. It took the narrow interpretation of the term ‘unreasonable public expenditure’ in s 9 of the Act that had been established by Burridge v Harrow London Borough Council and others [2000] All ER (D) 73 and R (on the application of Oxfordshire County Council) v GB and others [2001] All ER (D) 74 (Aug). It decided that the FTT had been correct to leave out of account the respite care and other costs that had been met from public expenditure but which were not to be met from the education budget of the authority. The mother appealed. The issue for determination was whether, in comparing the cost of placements at the two schools, the authority and tribunals should have left out of account respite care and other costs that were to be met from public expenditure, and limited the comparison to the costs that had had to be met from its education budget. Consideration was given to para 3(3) of Sch 27 to the Act. The appeal would be allowed. The correct meaning of the words ‘public expenditure’ in s 9 of the Act was expenditure incurred by a public body, as opposed to expenditure by a private body. A natural reading of that section clearly supported the wider interpretation (see [27], [28], [43], [44] of the judgment). That interpretation accorded with the natural and ordinary meaning of the words. If it had been intended to limit the expenditure referred to in s 9 to expenditure incurred by the Secretary of State or local authorities in the exercise of education functions, the section could and would have said so. Secondly, if the public expenditure were limited to expenditure incurred by the Secretary of State or local authorities in the discharge of their education functions, the word ‘public’ would have been unnecessary. The Secretary of State and the local authorities were public bodies and expenditure incurred by them in discharging those functions was bound to be public, rather than private, expenditure. Thirdly, the language of para 3(3) of Sch 27 to the Act should be contrasted with that of s 9. Para 3(3) required the local authority to specify the name of the school preferred by the parent unless the attendance of the child at the school would be incompatible inter alia with ‘the efficient use of resources’. That phrase had been interpreted as referring to the resources of the local authority and no other authority.
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In s 9 Parliament could have used the words ‘so far as that is compatible with the … avoidance of the inefficient use of resources’. If it had done so, it would have been clear that the relevant expenditure was that incurred in the discharge of education functions and no other. The explicit purpose of the qualification to the s 9 duty was to avoid unreasonable public expenditure. The obligation to have regard to the general principle that pupils were to be educated in accordance with the wishes of their parents should not be at the cost of unreasonable public expenditure (see [27], [29], [43], [44] of the judgment). The tribunal had erred in holding that, for the purposes of s 9 of the Act, the FTT had been entitled to leave out of account the respite and other costs that were met from public expenditure but were not met from the education budget of the authority. If those costs were not left out of account, then the cost to the public purse of placing B at WHS was lower than the cost of placing him at GHS. In those circumstances, it was impossible to say that, if the tribunal had directed itself correctly, it would have reached the same conclusion that it had (see [41]-[44] of the judgment). Accordingly, the appeal would be allowed and the matter would be remitted to the FTT for reconsideration (see [37]
Defamation Johnston v League Publications Ltd[2014] EWHC 874 (QB), [2014] All ER (D) 270 (Mar) 26/03/2014 The claimant had been, between August 2008 and September 2011, the chairman of Barrow Raiders Rugby League Football Club, a professional rugby league club. The first defendant published a journal known as the Rugby Leaguer & League Express (the journal), which was the leading United Kingdom periodical on the sport. In August 2011, the journal published two related articles by the second defendant referring to the claimant. The articles involved an interview with C, a player at the club, who was the third defendant. The claimant issued proceedings, contending that the articles were defamatory. The court considered the meaning of the words complained of in the action by way of preliminary issue. Consideration was given to, among other things, six allegations made in the articles, namely, that the claimant had:
(i)
lied to police about C’s behaviour;
(ii)
withheld salary from C without justification;
(iii) made threats to fine C which he was contractually unable to follow through;
48
(iv) demanded that C reimburse monies to the club that he claimed were owed;
(v)
(vi) behaved unprofessionally and rudely towards C during a meeting, which
repeatedly threatened C with deportation, without lawful basis; and
he later claimed was an official disciplinary hearing. It was necessary to
determine whether the articles carried a further innuendo: namely, that the
claimant had committed serious offences of misconduct under the
Rugby Football League’s Betting Code and Operational Rules. Consideration
was given to the question of whether the allegations in the articles referred
to mismanagement on the whole, and not mismanagement only to the
extent that it affected staff morale.
The court ruled: A claimant who could show that the extrinsic facts were known to some of the readers would ex hypothesi have established a defamatory publication to them at least; whereas a defendant who could only show that some readers knew the extrinsic facts he prayed in aid would, by the same token, only be able make out a partial defence of justification. It could not avail him in respect of any readers who were unaware of the relevant facts (see [40] of the judgment). On the evidence, all six of the allegations were defamatory, and to be characterised as factual rather than the expression of opinion or comment. The allegations made in the articles referred to mismanagement on the whole, and not mismanagement only to the extent that it affected staff morale. To draw fine distinctions of that kind would be over-analytical and contrary to a reasonable interpretation of C’s words. The tone of the interview did not lend itself to careful distinctions and the content was general (see [22], [24] of the judgment).
Defamation preliminary issue Callaghan & White v Express Newspapers[2014] EWHC 814 (QB), [2014] All ER (D) 236 (Mar) QBD 25/03/2014 Following judgment in [2014] All ER (D) 177 (Mar) in a libel action where the application notices were in each case made pursuant to CPR Pt 53 PD 4.1(1), costs fell to be determined. The ruling sought in that case was that, in the case of each claimant, the words complained of were not capable of bearing the meaning attributed by the claimant. The court did not make a ruling on those applications. Instead the parties were invited to consider whether they wished to agree, and in due course they did agree, that the hearing should be treated as the trial of a preliminary issue in the action.
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The difference was that on the trial of a preliminary issue the court decided what the words complained of actually meant, and did not simply delimit the range of possible meanings. Following that decision, there was a hearing in relation to costs. The defendant newspaper sought an order that the claimants pay two thirds of the defendant’s costs of the proceedings arising from its application notices. In the alternative that there be no order as to cost. The claimants contended that the costs of the application should be ‘in the case’. The defendant submitted that the applications had been successful because it had been held that the words complained of did not bear the meaning pleaded namely that each of the claimants was guilty. Further, it was submitted that to plead a libel case too high was an interference with the right of the defendant to freedom of expression and as there was a general public interest in parties being discouraged from exaggerating their claims, such discouragement could be in the form of a costs order. Consideration was given to the Defamation Act 2013 and the Senior Courts Act 1981. The court ruled: A court did not normally decide issues of substance solely for the purpose of determining what was the appropriate order for costs (see [10] of the judgment). Applications in accordance with CPR Pt 53 PD 4.1 suffered from disadvantages. The reason the practice direction was in the form that it was resulted from the fact that, until the coming into force of the Defamation Act 2013, each party had a right to trial by jury under s 69 of the Senior Courts Act 1981. Since the actual meaning of words complained of was an issue for the jury, the judge could not decide the actual meaning as a preliminary issue. Therefore issues of meaning might have to be decided twice in the same action, first by the judge and by the jury thereafter. A defendant could succeed at trial having failed on the application pursuant to the practice direction. The trial of a preliminary issue therefore carried benefits to a defendant who had issued an application notice under the practice direction. The burden the defendant had to discharge was a lower one on the trial of a preliminary issue. If there was the trial of a preliminary issue there needed to be only one hearing on the question of meaning, instead of two. The trial of a preliminary issue also carried benefits for a claimant. It was not in the interests of either party to have two hearings when one would suffice. And if a claimant succeeded in resisting an application under the practice direction, but then failed at trial, his victory would have been a Pyrrhic one, and he might face an additional burden of costs (see [12][14] of the judgment).
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In the instant case, the defendant’s applications had not been successful. No ruling had been made that the words complained of had not been capable of bearing the meaning attributed to them by each of the claimants. The court had not foreseen that that issue needed to be decided. If it had needed to be decided, then it was solely in support of an application for costs. The issue of costs would be approached as if the hearing had been ordered to be a trial of a preliminary issue from the start. Accordingly there were benefits to both parties to agree, as they had done, to the matter proceeding by way of a trial of a preliminary issue. Neither party had sought to make their agreement to the hearing being treated as a trial of a preliminary issue subject to any condition as to costs, and they had been right not to have done so (see [15] of the judgment). The right order in respect of both of them was no order for costs (see [19] of the judgment).
Disclosure- Non-Party Abbas v Shah [2014] EWHC 662 (QB), [2014] All ER (D) 202 (Mar) QBD 18/03/2014 The claimant councillor and member of the Labour party was a candidate for the office of mayor. In October 2010, four days before the election, the defendant editor published an advertisement and an article in a newspaper. The claimant issued libel proceedings, alleging that the meaning of the publications was that he had a history of committing violent assaults upon women close to him, in particular, upon his former wife, A. In December 2012, the defendant issued an application notice, seeking orders for disclosure of documents against A, a non-party, under CPR 31.17. The documents of which the defendant sought disclosure were stated to be medical records, but he limited his application to records held by A’s GP. The defendant contended that if, as it appeared, the medical records contained information confirming that A had suffered domestic abuse at the claimant’s hands, his ability to inspect the documents would be key, as the evidence would give him a complete defence of justification. A contended that the application for disclosure before defence was premature, neither of the conditions in CPR 31.17(3)(a) or (b) were fulfilled, and the order would be a serious interference with her right to a private life and one which was not necessary or proportionate for the defendant to have a fair trial. It fell to be determined whether disclosure should be ordered. The application would be dismissed. The general rule relating to the sequence in which a defendant might seek disclosure from a claimant and serve a defence of truth, was that he had to serve a defence of truth (if he could) first and then he would be entitled to disclosure 51
which he related to the issues which he had pleaded. A defendant was not entitled to fish for a defence in a claimant’s papers. The same applied to applications for disclosure against non-parties (see [25], [26] of the judgment). In the instant case, the application had to fail on the basis that it was premature. Until the defendant had pleaded a defence, he had no ‘case’ within the meaning of CPR 31.17(3)(a) which the documents could support. Further, even if the defendant had pleaded a defence of truth, it was unlikely that the disclosure would support his case or adversely affect that of the claimant. In any event, the order for disclosure would not have been necessary for disposing fairly of the action or saving costs and would, rather, have been an unnecessary and disproportionate interference with A’s right to her private life (see [30], [31] of the judgment). Procedure- Time Extensions The Civil Procedure Rules are to be amended to allow parties to agree time extensions of up to 28 days for serving certain documents, without needing to make an application to the court. A conference to assess the impact of the Jackson reforms held by the Civil Justice Council (CJC) on Friday was told that the new ‘buffer’ measure will be approved by the Civil Procedure Rules Committee at its next meeting, in a few weeks’ time.
52
53
Section 5 May 2014
Cost Budgets Kershaw v Roberts (Representative of the Estate of Jones) and another [2014] EWHC 1037 (Ch) Directions Hearing in Part 8 Claim =First CMC (CPR3.12-14)? It was argued on appeal from the county court that the first directions hearing in a Part 8 Claim should be treated as the “first CMC” for the purposes of CPR 3.12-14 and thus costs budgets must be filed in advance. It was argued that whilst the claim had not been allocated to the multi-track, this was inevitable as it was commenced by way of Part 8. The learned judge however dismissed this argument, holding that the claim was not allocated to the multi-track until the district judge specifically allocated it to that track during the course of the county court hearing. IT was held that “consequently, that hearing itself was not – indeed could not have been – a CMC… The notice of the hearing did not refer to it as a CMC; and it seems to me clear that the court, in sending out that notice, never intended the hearing to be a CMC.” This guidance is however of somewhat limited scope in that it only really applied to unallocated Part 8 Claims. This is because, on 1 April 2014 (the same day as the hearing of Kershaw), the Civil Procedure Rules Committee made amendments to the CPR by the Civil Procedure (Amendment No 4) Rules 2014 (SI 2014 No 867). Which came into force on 22 April 2014. From that date, the costs management provisions of CPR Rule 3 Section 2 and CPR PD 3E (including costs budgets) will not automatically apply to any Part 8 claim. Those provisions will only apply if the court makes a positive order that they should (as expressly confirmed by new Rule 3.12(1A))
Costs /ADR R (on the application of Crawford) v University of Newcastle Upon Tyne [2014] EWHC 1197 (Admin), [2014] All ER (D) 07 (May)
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The claimant studied for a Bachelor of Medicine and Bachelor of Surgery degree at the defendant university. He failed his final exams and the re-sit. He appealed unsuccessfully to the defendant’s own procedure, contending that his grade had not been properly calculated in accordance with the MBBS Stage 5 Handbook (the handbook) that applied to that part of the course. In August 2011, he made a complaint to the Office of the Independent Adjudicator of Higher Education (OIA). Between those dates, the claimant brought a claim for judicial review (the proceedings). The proceedings were stayed in July 2012, to allow the OIA to make its findings. The stay on the proceedings was then lifted and the proceedings continued. The claimant expressed willingness to attend mediation in the form of alternative dispute resolution (ADR). The OIA issued a final decision in January 2013, in which it dismissed the claimant’s complaint. His claim for judicial review was dismissed in January 2014. The issue of costs remained to be determined. The defendant sought payment of its costs, and the claimant sought an order of ‘no order as to costs’. Defendant The defendant submitted that it was the successful party in the proceedings and was entitled to its costs in accordance with the general rule set out in CPR Part 44.2. Claimant The claimant submitted, among other things, that, First, the defendant had unreasonably failed to engage in alternative dispute resolution (‘ADR’), in particular mediation when invited to do so by the claimant. Secondly, he submitted that the defendant did not succeed on all the issues raised in the proceedings. Consideration was given to Halsey v Milton Keynes General NHS Trust; Steel v Joy [2004] 4 All ER 920 (Halsey). Consideration was also given to PGF II SA v OMFS Co 1 Ltd[2014] All ER 970, in which the principle was expressed that, as a general rule, silence in the face of an invitation to participate in ADR was unreasonable in itself. The claim would be dismissed. (1) The reality in the case was that the claimant initially, and after the proceedings had been stayed in July 2012, had in effect been pursuing a form of ADR in which the defendant had actively and fully engaged. The claimant had been ‘opting in’ and ‘opting out’ of the proceedings and the OIA procedure between August 2011 (when he first made a complaint to the OIA) and January 2013 (when the OIA issued its final decision on his complaint). At the time that the claimant had
56
proposed mediation, both parties had been fully engaged in the OIA procedure, the substance of which had been the very same issues that the claimant had raised in the instant proceedings. Further, it was a relevant and important factor that the substance of the claimant’s case, namely that his examination had not been marked in accordance with the handbook, was a matter, potentially at least, of wider impact affecting other students who had or were currently studying medicine at the University. Considering the factors in Halsey, the defendant had at no time given an unqualified acceptance that mediation had been appropriate. Further, there had been, on the evidence, nothing further to mediate beyond the substance of the claimant’s case that he had been entitled to his degree because he had been wrongly marked in his final examinations. Regarding the merits of the case, the defendant had been entitled to take the view that, despite the grant of permission, it had grounds to resist the challenge made to its decision. Furthermore, on the proper construction of Halsey, the question of whether other settlement methods had been interpreted was no more than an aspect of the question of whether the ADR had had a reasonable prospect of success. On the evidence, it was not clear that the mediation had had any reasonable prospect of success (see [48]-[50], [56] of the judgment). Taking all the relevant factors into account, the defendant had not been unreasonable in failing to engage in ADR (see [58] of the judgment). (2) It had been unfortunate and discourteous of the defendant not to have responded to the claimant’s invitation to participate in ADR. However, faced with the claimant pursuing the OIA procedure, it was not appropriate to characterise the defendant’s silence as unreasonable. It did not, in itself suffice to deprive the defendant of all its costs (see [74] of the judgment). It would not be appropriate to depart from the general rule on the basis of the defendant’s unreasonable failure to respond to an invitation to engage in mediation or to engage in mediation (see [75] of the judgment). (3) On the evidence, the defendant had not only succeeded in part so that it should be deprived of its costs under the general rule. The substantative interpretive point had been decided against the claimant. The defendant had been, in substance, the successful party, and there was no basis to deprive it of its costs under the general rule as a successful party (see [80], [81] of the judgment). The appropriate order in the case was that the claimant should pay the defendant’s costs in the case subject to detailed assessment if not agreed (see [92] of the judgment).
57
Relief from Sanctions –CPR 3.9 Chartwell Estate Agents Ltd v Fergies Properties SA[2014] EWCA Civ 506, [2014] All ER (D) 04 (May) The claimant issued proceedings against the defendants for commission on the sale of a property allegedly due under the terms of an agency agreement. Failure to serve witness Statements The claimant failed to serve witness statements within the time specified by a court order. It subsequently sought an extension of time for the exchange of witness statements and an order that relief be given to ‘the parties’ from sanction, under CPR 3.9. It complained that the defendants’ solicitors had been uncooperative, if not positively obstructive, with regard to disclosure, and that further disclosure was still being sought. Relief Granted The judge decided to grant relief from sanction to both sides, having considered that:
(i)
both parties were at fault;
(ii)
the claimant’s non-compliance had not been trivial;
(iii) a refusal to give relief on the basis of a robust application of CPR 3.9
would effectively mean the end of the action, which would be too severe a
consequence and an unjust result; (iv) the trial date could be maintained;
(v)
there were no significant additional cost implications; and
(vi) the proportionate cost of the whole action was not affected by a relief from
sanction. The defendants appealed.
It fell to be determined whether the judge had failed to adopt an appropriately robust approach and had failed to give proper effect to the decision in Mitchell v News Group Newspapers Ltd ([2014] 2 All ER 430). Appeal The appeal would be dismissed. The judge had been entitled to decide the matter as he had. He had been justified in finding that the claimant’s non-compliance had not been trivial and that there had been no good reason advanced to explain the non-compliance. But……. 58
However, the circumstances included the important fact that the trial date would not be lost if relief were granted and a fair trial could still be had, and the fact that no significant extra cost would be occasioned if relief were granted. A further circumstance which the judge had been justified in taking into account, and to which he had been entitled to attribute importance, had been that refusal to grant relief from the sanction would effectively mean the end of the claim. Additionally, there had been the default of the defendants and the judge had been entitled to attach importance to that. There was no proper basis for interfering with the judge’s evaluation of the position and his exercise of discretion (see [46], [47], [50], [58], [59], [65], [66] of the judgment).
Jurisdiction Mid-East Sales Limited v United Engineering and Trading Company (PVT)[2014] EWHC 1457 (Comm), [2014] All ER (D) 95 (May) The proceedings concerned a contract for the sale of parts and equipment by the claimant company to the defendant Pakistani companies. Negotiations were carried out on behalf of the claimant with the first defendant company and another company, KRL. The contract was governed by English law. The work was carried out in Pakistan. A dispute arose about payment, and in April 2004, the claimant threatened to bring proceedings in the English and Welsh courts. In June 2004, the first defendant commenced proceedings in Pakistan. KRL was a claimant in those proceedings. On discovering the Pakistani proceedings, the claimant served a defence stating that the Pakistan court had no jurisdiction. The Pakistani court dismissed the defence, and the claimant appealed in May 2007. Also in May, the Pakistani court stayed the action. UK Proceedings In June, the claimant brought proceedings in England. In December, permission to was given to serve out of the jurisdiction. In 2009, the claimant applied to have the Pakistani claim struck out, which had not occurred at the instant time. The English proceedings were served in January 2009. Judgment in Default Judgment in default in the English proceedings was entered in January 2011. In September 2012, the default judgment was served. In April 2013, the second defendant, the Islamic Republic of Pakistan (IRP), applied to set aside the English proceedings on the grounds of, among other things, lack of jurisdiction and absence of arguable case. 
IRP submitted that, first, the order to serve out of the jurisdiction
59
should be set aside on the grounds that, among other things, there was not a serious issue to be tried, and that KRL was not a separate legal entity with juridical personality. The issue of immunity arose in connection to IRP. It further sought to set aside the default judgment, under CPR 13.3. Consideration was given to, among other things, the case of Mitchell v News Group Newspapers [2014] 2 All ER 430 (Mitchell), which stressed the importance, under CPR 3.9, of conducting the trial efficiently and at proportionate cost, and the attitude to be taken to cases falling within CPR 3.0. The court ruled: (1) With regard to the order permitting service out of the jurisdiction, the court was entirely satisfied that there was a serious issue to be tried, with regard to the liability of IRP under the contract. Further, KRL was not a separate legal entity with juridical personality, or that it was so closely intertwined and confused that it could not be regarded for any significant purpose as distinct from the state and vice versa. That in itself was sufficient for determination in respect to the challenge to jurisdiction (see [74], [75] of the judgment). (2) Although applications under CPR 13.3 fell to be considered by reference to the new approach, there needed to be a somewhat different approach from that in relation to a case falling within CPR 3.0, such as Mitchell. A sanction set out by the rule itself for breach might be said to be pre-estimated as the appropriate course, absent good reason. But a sanction imposed pursuant to CPR 3.9, or an application by reference to CPR 3.9 and 13.3, might allow different or wider considerations to be taken into account, or more than trivial delays to be addressed (see [88] of the judgment). On the facts, IRP plainly had arguable defences, such as more than to satisfy the first condition in CPR 13.3(1). There was also, in the instant case, the important issue of allowing the claim of immunity to be resolved on the balance of probabilities (see [88] of the judgment). Judgment would be set aside to allow IRP to defend the claimant’s case within terms as to costs and the continuation of security (see [89], [90] of the judgment).
Costs Fenlands Coachways Ltd v O’Hare (a protected party by his sister and litigation friend Ms Portia Crees)[2014] EWHC 1513 (QB) The applicant coach company had been a defendant in a personal injury action brought by the respondent, a 23 year old man who had suffered injuries following a serious road traffic accident when his Honda Civic motor car collided with the
60
applicant’s double decker bus. The respondent suffered significant and extensive brain injuries with associated past and future losses and quantum valued in the region of £3-4m. The respondent brought his claim on the grounds that the applicant’s driver had driven through a red or amber light. The applicant denied liability and contended that it was the respondent who had driven through a red light. Accident reconstruction evidence led to the respondent’s expert altering his opinion and the respondent withdrew his claim. The applicant served its bill of costs in the sum of £60,000. Following a detailed assessment hearing, the applicant’s costs were assessed in the sum of £37,803.89 plus interest. The applicant applied for permission to appeal with an appeal to follow if granted. Necessity v Reasonableness The applicant contended that on the basis of CPR 44, the judge had erred in principle by assessing the costs by reference to the stricter test of necessity, as opposed to reasonableness and there had been no finding or any argument about the costs being disproportionate, which was the legal prerequisite to considering necessity. Costs of just over £60,000 could not sensibly be said to be prima facie disproportionate in a heavily fought claim valued at a minimum of £3m. Nor was there any argument that any particular item or group of items were disproportionate. Further, the failure to apply the correct test was a serious procedural irregularity and the judge’s error pervaded the entirety of the assessment such that the final assessment had been reached in a manner which was fundamentally wrong and unjust (ground 1). With grounds 2-4 the applicant submitted that the judge had stepped significantly outside the ambit of his discretion upon which reasonable agreement was possible. The case raised the issue of whether under CPR 44, a costs judge was entitled to consider if individual items of costs claimed were proportionate and necessary for the conduct of litigation, even if the costs of the litigation overall appeared proportionate. The applicant’s contention was that in those circumstances a costs judge was confined to applying the less onerous test of whether individual items of costs had been reasonably incurred.
61
The court ruled: Prior to 2013, the starting point for assessing costs on a standard basis was CPR 44.4(2):
(i)
the court would only allow costs proportionate to the matters in issue and
(ii) would resolve doubts as to whether costs were reasonably incurred or
reasonable and proportionate in amount in favour of the paying party. The
court was to have regard to all of the circumstances of the case and to
the specific factors, such as the value of a claim, specified in CPR 44.5.
CPR 44.4(2) of the old rules meant that the court would, of its own initiative,
disallow disproportionate costs even if the paying party had not raised the
point. Whether costs, in a general sense, were necessary was integral to
whether they were proportionate.
In assessing costs under the old version of the rules, a court could consider on an item by item basis whether a particular item of costs was proportionate and necessary even if costs were proportionate on a global basis. There was nothing difficult in deciding whether particular items of a bill of costs were proportionate or necessary to the conduct of litigation (see [19], [27], [28] of the judgment). Although the judge used the terms ‘necessary’ and ‘need’ indiscriminately, that conclusion was not fatal. In using the term the judge had been inquiring whether the costs were justified in the sense of being proportionate. Secondly, in assessing particular items of costs the judge almost always used the term ‘reasonable’, sometimes coupled with ‘necessary’. The use of the word ‘necessary’ had to be judged in this context and in circumstances. Even if the judge had applied the test of necessity he had not been wrong to do so. Proportionality There was nothing which confined the proportionality template to costs as a whole and excluded its application to individual items. The judge had not misdirected himself in law, nor had his approach been procedurally irregular or unjust. In relation to grounds 2-4 in relation to specific items, the applicant had not surmounted the high threshold for the court to interfere with the judge’s exercise of discretion. Nothing before the court suggested that the judge had exceeded the generous discretion conferred on him or had been wrong in his approach to the assessment of the individual items. The application for permission to appeal, and the appeal itself, would be dismissed. The applicant had to pay the claimant’s costs of the appeal (see [26]-[29], [32] of the judgment).
62
Lownds v Home Office [2002] All ER (D) 329 (Mar) considered; Giambrone v JMC Holidays Ltd (Sunworld Holidays Ltd) (No 2) [2004] All ER (D) 305 (Feb) considered; Motto v Trafigura Ltd [2011] All ER (D) 138 (Oct) considered.
Pre-Trial v post judgment relief-Strike Out Wissa v Associated Newspapers Ltd [2014] EWHC 1518 (QB) The defendant newspaper published an article on its website in relation to the claimant doctor. The headline was ‘Patient, 34, died from a brain tumour the size of a tennis ball after THREE doctors mistook symptoms for depression’. Within the publication were statements such as ‘…..inadequate care was provided by the GP’ and ‘in its report, the GMC concluded that the overall standard of care was seriously below that of a reasonably competent GP’. It was the claimant’s case that the statements complained of referred to him and he brought a libel action against the defendant. The defendant applied to strike out the claim pursuant to CPR 3.4(2)(a) and/or (b) on the grounds that the statements of case did not disclose any reasonable grounds for bringing the claim and/or it was an abuse of the court’s process. CPR 16.4, which was also relevant to the disposal of the case provided, so far as material: ‘
(1) Particulars of claim must include
(a) a concise statement of the facts on which the Claimant relies;…
(e) such other matters as may be set out in a practice direction…. Practice
Direction 53 applied to defamation claims (see [24] of the judgment).
There was further guidance as to what was required given in Best v Charter Medical of England Limited[2001] All ER (D) 395 (Oct) (Best). The defendant submitted that the claimant had failed to sufficiently identify the publication of which he complained, and had failed to provide the defendant with a copy of the publication despite repeated requests. The URL set out in the particulars of claim directed to an article which did not concern the claimant. Although the defendant had published an article about the claimant on or around 5 July 2013, to the best of the defendant’s knowledge it had not contained the specific words complained of in the particulars of claim. Further, in any event, the article published by the defendant on or around 5 July 2013 was removed from the internet less that a month later, and more than five months before the claimant’s claim was issued.
63
The application would be allowed. The effect of the CPR 16, the Practice Direction and the guidance given in Best, was that in a claim for libel, it was necessary that the claimant should set out word for word precisely those words which he alleged defamed him, whether that was the whole of the text or, as was more commonly the case, an extract from a much larger text (see [29] of the judgment). In the instant case, the URL had not by itself identified particular words. The defendant needed to know exactly what words were complained of in a long article, so that it could frame its defence appropriately. It entirely defeated the function of a statement of case if there should be that degree of uncertainty as to the precise words allegedly published by the defendant and complained of as a libel (see [30], [32] of the judgment). The claim would be struck out (see [56] of the judgment). Best v Charter Medical of England Ltd [2001] All ER (D) 395 (Oct) applied.  
64
65
Section 6 June 2014
Strike out GG v YY and another [2014] EWHC 1627 (QB) The claimant solicitor acted for the first defendant in a boundary dispute. The claimant engaged the second defendant retired solicitor to assist the claimant in that litigation. The first defendant was aggrieved by what she claimed to be the misconduct of the boundary dispute and made a number of allegations against the claimant. In January 2011, the claimant, on giving a cross-undertaking in damages, was granted an interim non-disclosure order against the defendants, prohibiting them from publishing information or allegations against the claimant. The claimant then issued proceedings, claiming relief under the Protection from Harassment Act 1977. In February, the second defendant gave a permanent undertaking to the court and the claim against him was stayed upon terms set out in an agreement (the agreement), which he later alleged had been entered under duress. The judge continued the injunction against the first defendant, subject to qualifications. In December 2013, the second defendant sought orders, including that damages be assessed in respect of further claims made by the claimant in a letter which had already been solved by the agreement. In February 2014, the first defendant sought orders, including that the claimant’s claim be struck out. The claimant sought orders, including: (i) that the defendants file proper replies to his request for further information on their applications; (ii) an injunction restraining the defendants from disclosing any witness statements in the proceedings; and (iii) the witness statements of the second defendant and his wife be struck out. The issues for determination were the appropriate disposal of the applications of the: (i) applicant: (ii) the first defendant; and (iii) the second defendant. The court ruled: (1) There was no purpose in the claimant’s request for further information. However, with respect to the application for an injunction, it was strongly arguable that the contents of the witness statements of the defendants and of the second defendant’s wife were ‘abusive dirt’ thrown as part of a malicious campaign, and were irrelevant
66
to the applications before the court and in support of which they were purportedly made and filed. Insofar as parts of the second defendant’s witness statement included matters which were the subject of the undertaking, no further injunctive relief was necessary. Insofar as parts of the second defendant’s witness statement were arguably part of a course of conduct amounting to harassment under the Act, if the claimant wanted injunctive relief he would have to identify the nature of the allegations further publication of which he asked the court to prohibit in a draft order. Accordingly, the witness statements of the defendants and the second defendant’s wife would be struck out on the ground that they were irrelevant to the matters in respect of which they were purportedly made, and so were an abuse of the court’s process and likely to obstruct the just disposal of the proceedings (see [29], [46]-[49], [51] of the judgment). Iqbal v Dean Manson Solicitors [2011] All ER (D) 163 (Feb) applied. (2) There was simply no basis at all for the application by the first claimant to strike out the application. None was stated in her application notice. It was not an abuse of process for a solicitor to sue a defendant who was his former client and there was nothing in her witness statement to support her application to strike out the claim (see [37] of the judgment). (3) Even if the second defendant had been right in saying that the claimant’s letter had included claims which had been settled by the agreement, that could not have given an arguable basis for striking out the claim or releasing the second defendant from the undertaking he had given to the court. Further, nothing in the evidence of the second defendant or his wife could arguably be a basis for a successful plea of duress (see [35], [36] of the judgment).
Strike out-Cause of action Hannon and another v News Group Newspapers Ltd and another [2014] EWHC 1580 (Ch) Following separate incidents, the claimants were arrested and articles concerning their arrests were published in the first defendant’s newspaper. The claimants issued proceedings, alleging that a journalist paid a police officer of the second defendant Commissioner of Police of the Metropolis for supplying information about the events and that, as a result, the newspaper was able to publish the articles. They alleged that the publications constituted a breach of confidence, an unjustified infringement of their rights to privacy, under art 8 of the European Convention on Human Rights and a misuse of private information. The first defendant applied to strike out the actions as being an abuse of process. That abuse was said to arise from the fact
67
that: (i) the real nub of the claims was damage to reputation; (ii) a claim involving damage to reputation lay only in defamation, such that the claims were bound to fail because they were either statute-barred, under s 4A of the Limitation Act 1980, or an abuse of process; (iii) as the main damages lay for damage to reputation arising out of the original publication, which were not recoverable or were statute-barred, any damages for any other damage would be minimal, if not nominal and the case was an abuse of process; (iv) the claims were bound to fail because the claimants had no reasonable expectation of confidence and privacy, relying on Axel Springer AG v Germany ((2012) 32 BHRC 493) (Axel). It fell to be determined: (i) whether the claims were really claims for damage to reputation; (ii) whether damage to reputation could be the subject of a confidence or privacy claim; (iii) whether damages would be too small to justify the proceedings; and (iv) whether the claimants had had a reasonable expectation of privacy. The application would be dismissed. (1) Looking at the claims overall, it was apparent that there was a heavy reputational element to them, though that did not describe the essence of the claim. However, despite that emphasis, there were other claims as well and they were not de minimus. It was not possible to describe the ‘nub’ or reality of the claims as claims based on damage to reputation only (see [22], [23] of the judgment). (2) The proposition that it was sufficiently plain that a claim based on damage to reputation could only be brought in defamation and not on the basis of confidentiality/privacy, such that the claims were an abuse of process was not one which could be taken to be clear enough to justify an averment that a contrary pleading should be struck out as an abuse, even at an early stage in the action. The first defendant had failed to establish that, given the pleaded facts, which were assumed to be true, the legal consequence was inevitable because of the state of the law. It had not established its proposition either as a matter of basic principle or as a matter which could be drawn from the authorities. The first defendant had an argument, but not a sufficiently conclusive one. Further, it was not clear that, if and insofar as a claim for damage to reputation could be mounted in confidence or privacy, policy had required that it be affected by the same restrictions and restraints as would apply to defamation actions. Accordingly, the limitation period in s 4A of the Act could not apply because none of the descriptions could be made to apply to the proceedings and there was no legal basis on which they might be made to apply by analogy or some other indirect manner (see [76], [78] of the judgment).
68
Bonnard v Perryman [1891-4] All ER Rep 965 considered; Foaminol Laboratories Ltd v British Artid Plastics Ltd [1941] 2 All ER 393 considered; Kavanagh, Re, ex p Bankrupt v Jackson (Trustee) [1949] 2 All ER 264 considered; Woodward v Hutchins [1977] 2 All ER 751 considered; Khashoggi v Smith 130 NLJ 168 considered; Gulf Oil (GB) Ltd v Page [1987] 3 All ER 14 considered; Lonrho plc v Fayed (No 5) [1994] 1 All ER 188 considered; Service Corpn International plc v Channel Four Television Corpn [1999] EMLR 83 considered; Tillery Valley Foods v Channel Four Television [2004] All ER (D) 133 (May) considered; McKennitt v Ash [2006] All ER (D) 200 (Dec) considered; Mosley v News Group Newspapers Ltd [2008] All ER (D) 322 (Jul) considered; LNS v Persons Unknown [2010] All ER (D) 197 (Jan) considered; Guardian News and Media Ltd, Re [2010] 2 All ER 799 considered. (3) Since the possibility of recovering damages to reputation had not been excluded, the basic premise of the submission as to damages being minimal could not be established so it was unnecessary to consider the point further. In both cases, the damage which had flowed from the disclosure and acquisition of private information, assuming it to have been private for such purposes, would have to be considered in the light of the facts found at trial (see [81] of the judgment). Jameel v Dow Jones & Co Inc [2005] All ER (D) 43 (Feb) considered. (4) Axel did not support an absolute right of the press to have and to publish the fact of an arrest and its circumstances. At most, it supported a submission that, if the facts justified it, that right existed and the countervailing privacy rights did not. As with a large number of disputes under Convention rights, that was a question of fact and degree, and was highly fact sensitive. Since the alleged invasion of privacy or confidentiality arising out of the potentially wrongful acquisition of information remained in play in the action, because the claim was at least arguable, it was not necessary to go on and consider the separate merits of other aspects on the footing that the arrest-based claim had gone, because it had not (see [96], [99] of the judgment).
Service Jurisdiction Sanders v Trigor One Ltd [2014] EWHC 1646 (Comm) CPR 6.33(2), so far as material, provides: ‘The claimant may serve the claim form on a defendant out of the United Kingdom where each claim made against the defendant to be served and included in the claim form is a claim which the court has power to determine under the Judgments Regulation and (b)(iii) the defendant is a party to an agreement conferring jurisdiction, within article 23 of the Judgments Regulation’.
69
The defendant, a company based in Gibraltar, operated a fund (the fund), which was governed by the law of Gibraltar. The fund, which had been set up to finance volume consumer credit litigation in the English courts, lost its entire capital. The claimant had invested £200,000 in the fund and held unsecured loan notes, governed by a loan note certificate. The loan note certificate had been entered into by the defendant as a deed (the loan notes deed). The terms and conditions of the loan notes were in the defendant’s terms and the claimant had accepted them by applying and paying for the loan notes. The claimant brought a claim, contending that the defendant had negligently and in breach of contract made loans and other payments in a manner contrary to the investment strategy of the fund, as stated in a private placement memorandum (the PPM), as amended. The PPM provided that the notes and all connected matters were to be governed in accordance with English law. Clause 13.2 of the PPM provided that the English courts had non-exclusive jurisdiction to settle any dispute arising from or connected with the notes. The claimant contended that cl 13.2 of the PPM conferred jurisdiction on the English court. Relying on art 23 of Council Regulation (EC) 44/2001 (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) (the Regulation) and CPR 6.33(2)(b)(iii), the claimant served the claim form without permission outside the jurisdiction. The defendant applied to set aside the service. The issue for consideration was whether the jurisdiction of the English court had been established or whether service outside the jurisdiction ought to be set aside. The application would be dismissed. In order to establish jurisdiction, the claimant had to show that it had a good arguable case, meaning a much better argument than the defendant, and that there had been a concluded agreement within art 23 of the Regulation, either in or evidenced by writing (see [22] of the judgment). The instant case was clearly a civil and commercial matter, which the courts had the power to determine under the Regulation. For the purposes of the Regulation, Gibraltar and the United Kingdom treated each other as if each was a separate member state. The terms and conditions of the loan notes had been in writing. They were in the defendant’s terms which the claimant had accepted by applying and paying for the loan notes. Applying settled law, it was amply made out in the evidence that the claimant had a good arguable case that there had been a concluded agreement, within art 23 of the Regulation (see [19], [22] of the judgment).
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Service of Committal proceedings out of the jurisdiction Dar Al Arkan Real Estate Development Co v Al Refai [2014] EWCA Civ 715, [2014] All ER (D) 32 (Jun) The claimant companies, incorporated in Saudi Arabia (DAAR) and Bahrain (BA), obtained a without notice injunction against the second defendant (Kroll) and a number of other persons. The injunction was subsequently discharged because DAAR and BA had breached their duties to make full disclosure and had failed to comply with an undertaking, reflected in the order, to preserve two hard drives and the data on them, and to deliver the hard drives to their solicitors. Kroll issued proceedings for committal against DAAR, BA and their director (the director). The judge ordered that proceedings against the director were within the scope of CPR 81.4(1) and (3), and that service on him of the committal proceedings out of the jurisdiction was authorised by CPR 6.36 and para 3.1(3) of Practice Direction 6B. The director appealed. The director contended that, first, the principle against the extra-territorial application of legislation meant that the language used in CPR 61.4(1) could not properly be construed to enable a committal order to be made against a foreign director who was not within the jurisdiction, as the judge had:
(i)
erred in not sufficiently recognising the strength of the presumption against
extra-territoriality where the liberty of the person affected was at risk, relying
on Air-India v Wiggins ([1980] 2 All ER 593) (Wiggins);
adopted an approach that was contrary to the decision in Masri v
(ii)
(iii) insufficiently recognised that the primary purpose of civil contempt
Consolidated Contractors International Co SAL ([2009] 4 All ER 847) (Masri);
proceedings was the protection of a litigant’s private rights; and
(iv) insufficiently recognised the importance, as a factor, of the impracticability
of enforcing any order against a foreign director not within the jurisdiction.
Secondly, the requirements of CPR 6.36 and para 3.1(3) of Practice Direction 6B had not been met because:
(i)
the application had not been ‘a claim’ brought on a ‘claim form’; and
(ii)
there had been no ‘real issue’ between Kroll, and DAAR and BA in respect
of the committal application. CPR 31.23(1), 32.14(1), 81.1 and 81.3,
concerning proceedings for contempt of court, were considered. he
appeal would be dismissed. (1) Largely for the reasons given by the
71
judge, the director could derive only very limited assistance from cases
such as Wiggins. That was because CPR 81.3, and 81.4(1) and (3) were
not provisions in a criminal statute or regulation, but were a vehicle and a
mechanism for the court’s disciplinary powers over corporate contemnors
which were undoubtedly subject to its jurisdiction, in the instant case,
because they had instituted proceedings in it.
The combination of the overriding objective, the need to ensure that the courts had the ability to control proceedings which were properly brought in the jurisdiction, and the anomalies that would result if the provision designed to provide such control for a corporation in contempt, did not apply to foreign directors of that company which were responsible for its contempt, provided the underlying reason of principle for reading CPR 81.4(3) as including foreign directors out of the jurisdiction. The decision in Masri and the approach taken in it had not put that into question. Further, any problems about the impracticability of enforcement were also not of great significance in the context of the facts of the case. There might come a point in which the motive of advancing personal and private interests in a particular case made it inappropriate for the court to exercise its powers of committal, but that would not justify the effective negation of that part of the rule in cases involving a foreign director or officer (see [32], [38], [41], [50], [51], [66], [67] of the judgment). (2) It was clear that an application for committal was the commencement of proceedings. That was seen from the wording of CPR 31.23(1) and 32.14(1). Further, the director’s submission that there was no ‘real issue’ between Kroll and him mischaracterised the term ‘cause of action’. There was clearly a real issue between Kroll, and DAAR and BA as to whether the companies fell within the scope of CPR 81.1(1). Under the rule of attribution in CPR 81.1(3), there was clearly a real issue as to whether the jurisdiction to seek an order for the committal of the director existed. The cause of action against the director asserted a factual situation, namely, DAAR and BA’s contumacious breaches of the preservation, undertaking and delivery order, and the director’s responsibility for the same (see [55], [58], [66], [67] of the judgment).
Summary Judgment ABM Amro Commercial Finance plc [2014] EWHC 1674 (Comm), [2014] All ER (D) 206 (May) The claimant finance company purchased the debts of its client (the company), pursuant to an agreement dated 30 June 2003. The company was an importer and
72
distributor of food products. The defendants were the directors of the company. Each of them had entered into a deed of indemnity with the claimant, dated 2 May 2007, in the case of the first and second defendants, and 10 December 2008, in the case of the third defendant. In May 2009, the company entered administration and many debts were disputed. In June 2009, the claimant wrote to the company making a demand under cl 19 of the agreement for the immediate payment of all funds in use together with discount and costs accrued, amounting at that stage to over £13m. No payment was received at that stage and outstanding invoices proved irrecoverable. The administrators of the company subsequently acknowledged in writing to the claimant that the company was indebted to the claimant in the sum of £8,924,783 (the sum). The company subsequently went into liquidation. The claimant commenced proceedings, seeking to recover the sum from the defendants under the deeds of indemnity. The claimant served certificates of indebtedness on the defendants in October 2013, which it contended were conclusive against the defendants by virtue of cl 3 of each of the deeds of indemnity. The claimant contended that the company had breached a requirement, under cl 16(3) of the agreement, to promptly provide the claimant with financial records ‘or copies of them and of any other records or documents’ of the company as the claimant might require. The claimant further contended that the company had breached a clause in the agreement requiring it to obtain signed proofs of delivery in respect of each debt and to retain them for inspection by the claimant from time to time. The claimant had asked for the proofs of delivery and the company could not produce them promptly or at all. The defendants denied liability, contending that there had been a number of variations to the agreement over time, which had been material and which had discharged them from the deeds of indemnity, pursuant to the so-called rule in Holme v Brunskill ((1878) 3 QBD 495). They further contended that the claimant was in breach of the agreement in failing to collect particular debts. The claimant applied for summary judgment on issues of construction and law, on which it contended the defendants had no real prospect of success at trial. The issues for consideration were: (i) whether, upon their true construction, the deeds of indemnity were contracts of indemnity or performance bonds, such that the liability of the defendants was primary rather than secondary, so as to prevent them from relying on defences available to the company and whether the deeds of indemnity had been discharged by subsequent material variations of the agreement; (ii) whether the parties had agreed on or around 8 December 2008 that the agreement would be supported by new personal guarantees executed on or around the same date, in substitution for the first and second defendants’ deeds of indemnity; (iii) whether proofs of delivery constituted ‘financial records’ within the meaning of the agreement; and (iv) whether, as contended by the defendants, the
73
claimant had failed to collect the debts of the company and/or had taken proper steps to enforce the same and, consequently, there was a manifest error in any certificate which included those debts. Issue (ii) was only pursued against the third defendant, who had only signed his deed of indemnity on 10 December 2008 and who had not provided a personal guarantee. The application would be allowed. (1) On the true construction of the deeds of indemnity, the defendants’ liability in each case was primary, so that the defence based upon the rule in Holme v Brunskill was not available to the defendants. It followed that, irrespective of the factual position which seemed to demonstrate clearly that the first and/or second defendants had been aware of and had consented to the allegedly material variations, the defendants’ case that they had been discharged from liability under the deeds of indemnity by virtue of those variations had no real prospect of success at trial and was completely hopeless (see [37] of the judgment). (2) Because his deed of indemnity had not been signed until 10 December 2008, the personal guarantees given by the first and second defendants two days earlier could not discharge the third defendant from liability under that deed, whatever their effect on the first and second defendants (see [38] of the judgment). (3) Proofs of delivery did fall within the definition of ‘financial records’ in the agreement because they were ‘other information pertaining to a debt’. The claimant had asked for the proofs of delivery and the company had not produced them promptly or at all. That had been the clearest possible breach of the agreement. The liability of the company to the claimant was clearly established (see [39], [41] of the judgment). (4) The defendants’ submission on manifest error could not be accepted. What might be described as the wider approach to manifest error in authority had to be viewed with some circumspection. The breach of cl 16(3) of the agreement had undoubtedly caused the claimant loss in respect of the invoices. The claimant had exercised its rights under the agreement and had made demand on the company for immediate payment of the debit balance on the running account. It was only at that stage that any loss had been suffered by the claimant and only when, thereafter, outstanding invoices proved irrecoverable that the claimant had suffered loss in consequence of breach by the company of clause 16(3) of the agreement, all of which had post-dated the signature by the third defendant of the deed of indemnity. The suggestion that the claimant had failed to mitigate its loss or caused its own loss was equally misconceived. Under the agreement, the claimant had purchased and had thus owned the entire debt and the agreement had made it 74
clear that it was in the claimant’s discretion whether and how to enforce any part of the overall debt. In those circumstances, it could not be said that the claimant was in breach of the agreement in failing to collect particular debts. Equally, failure to collect debts did not give rise to a defence of failure to mitigate under a contract of indemnity. On the facts, in the absence of a manifest error, cl 3 of the deeds of indemnity precluded any argument which the defendants sought to put forward to the effect that the claimant had caused its own loss (see [53], [56], [57], [59] of the judgment). The defendants had no real prospect of success in any of their defences on the issues on which the claimant had sought summary judgment (see [60] of the judgment).
Extension of Claim Form Service Stoute (a minor by his litigation friend) v LTA Operations Ltd trading as Lawn Tennis Association[2014] EWCA Civ 657 The claimant, who was aged 18, was a black professional tennis player. He brought a claim contending that he had been discriminated against on the grounds of his race by the defendant governing body for professional tennis in the United Kingdom. The claimant, through his father, sought to commence proceedings in county court. The father attended the relevant court office and handed in the claim form with a letter from his solicitors stating that ‘We enclose N1 [that is, the claim form] to issue for solicitor service. Please do not serve it on the defendant in the usual manner but return the claim form to us for service.’ That was a notification to the court under CPR 6.4 (1) (b). Instead of following the claimant’s solicitors’ instructions and returning the claim form to them for solicitor service, the county court money claims centre (the centre). undertook service itself and sent the claim form to the defendant by firstclass post on 11 March. The claimant’s solicitors wrote to the defendant’s solicitors saying that the claim form had been served contrary to their instructions to the court, that it had been referred back to county court and that it would be served within four months of issue by solicitor service. The defendant’s solicitors accordingly treated the service as ineffective. On 14 May, the claimant lodged what purported to be an application under CPR 7.6 for an extension until 14 September of the time for serving the claim form. The district judge granted the application and extended time to 16 November. The defendant applied for the extension to be set aside. If that application were successful, the result would be that the proceedings would lapse, since it would be too late to serve the claim form within the original four-month limit. On 15 November 2012, the claimant served the claim form (as amended), accompanied by particulars of claim. In January 2013, the district judge heard the defendant’s
75
application to set aside the order granting the claimant an extension of time for service of the claim form. He held, construing CPR 6.4(1)(b), that the service by the court in March had been effective service, notwithstanding that it was contrary to the claimant’s notification that he wished to effect service himself. That conclusion meant that the claimant was in breach of his obligation under CPR 7.4 to serve particulars of claim within 14 days of service of the claim form and that amendments made on 14 May 2012 were ineffective since the claim form had already been served. However, the district judge exercised his case management powers and allowed the claim to continue on the basis of the amended claim form. He made an order retrospectively extending the time for service of the particulars of claim to their date of actual service. The defendant appealed. The judge, allowing the appeal, held that the service by the court in March 2012 was a nullity because it was effected contrary to the claimant’s notification that he wished to effect service himself. The judge dismissed the claim. The claimant appealed against that decision. The issues for consideration were:
(i)
whether the service of the claim form by the court, in disregard of the
claimant’s notification that he wished to effect service himself, constituted
‘an error of procedure’ within the meaning of CPR 3.10, which the court
could rectify; and
(ii)
whether the district judge had erred in extending time for service of the
particulars of claim by failing to follow the approach to relief from sanctions
as laid down by CPR 3.9.
The appeal would be allowed. (1) The service of a claim form by the court, in disregard of a claimant’s notification that he wished to effect service himself could constitute ‘an error of procedure’ within the meaning of CPR 3.10. The language of CPR 3.10 was not confined to errors by a party and the policy considerations which underlay the rule would seem to be the same whether a procedural mistake was the responsibility of the party or the court. There might be cases of what might, on a literal approach, be describable as ‘errors of procedure’, but which were nevertheless of such a nature that they were evidently irremediable and could not have been intended to fall within the scope of CPR 3.10. However, there was no reason why service in breach of CPR 6.4(1) should be regarded in that way or why it should be inferred that the rule-maker intended that CPR 3.10 should be inapplicable in such a case. There was nothing wrong in 76
principle about service being affected by the court. However, there would be cases where the error did deprive a claimant of a real advantage, most obviously if he had wanted to defer service for the time being, or perhaps retain the possibility of not proceeding at all. However, the possibility of prejudice of that kind was not a reason for treating premature service by the court as a nullity. Insofar as the claimant had suffered some tactical prejudice, the damage would have been done whether it was a nullity, so that service had to be effected afresh, or not. Insofar as there was procedural prejudice, that could be addressed by the grant of an appropriate extension see [(36], [37], [40, [55], [56] of the judgment). Applying settled law, the service of the claim form by the court, in disregard of the claimant’s notification that he wished to effect service himself had constituted ‘an error of procedure’ within the meaning of CPR 3.10. What happened in the instant case fell comfortably within the natural meaning of that phrase. In all the circumstances, the service by the court of the claimant’s claim form in March 2012 had constituted effective service, and the judge had been wrong to hold otherwise (see [36], [44, [55], [56] of the judgment). Vinos v Marks & Spencer plc [2001] 3 All ER 784 applied; Steele v Mooney [2005] 2 All ER 256 applied; Phillips v Symes (sub nom Phillips v Nussberger) [2008] 2 All ER 537 applied. (2) It was settled law that, notwithstanding the importance attached in the guideline cases to a systematic approach being taken to the factors identified in CPR 3.9, a decision was not automatically bad in law because those factors had not been individually set out and considered (see [49], [55], [56] of the judgment). The judge’s reasoning on relief from sanctions had been both full and careful. It was clear that the judge had taken a balanced overall view, paying explicit regard to the overriding objective, about what course was most likely to get the continuing disputes between the parties substantively resolved as quickly and as cheaply as possible. The district judge had considered all circumstances, including such of the particular CPR 3.9 factors as were relevant in the circumstances of the instant case. The claimant’s failure to serve particulars of claim timeously could not fairly be described as intentional. He had not served them because he had not believed that the claim form had been served. The district judge had been entitled to take the view that, however unsatisfactory the conduct of the claimant or his solicitors in that respect, it had been outweighed by the reasons for granting permission which he had given
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Section 7 July 2014
Claims against the Police -NCND DIL and others v Commissioner of Police of the Metropolis[2014] EWHC 2184 (QB)2 July 2014 The claimants were seeking damages for deceit, assault, misfeasance in public office and negligence arising out of long term and intimate sexual relationships which they had with four men, who they alleged were undercover police officers (UPO) acting under the direction and control of the defendant, Metropolitian Police Commissioner. There was a general allegation in relation to the use of such a policy and specific allegations in relation to the specific individuals, all of whom had been publicly named in the media. Application for Strike Out Following service of the particulars of claim and defence, the defendant applied, relying on the decision of Carnduff v Rock[2001] All ER (D) 151 (May), to strike out all the claims on the grounds that he could not take any active role in the case without infringing the neither confirm nor deny policy (NCND policy); alternatively, for an order releasing him from the standard disclosure obligations and prohibiting the disclosure of the identity of each alleged tortfeasor and each witness in the proceedings. The claimants sought a determination and consequential order that pursuant to CPR 3.1(m) the defendant was not entitled to rely on NCND so as to resist pleading a defence in accordance with CPR 16.5(1). The NCND application came before the court. The defendant sought to justify the NCND policy by stating that the police operational methods should not be revealed. In relation to the specific identity of the UCO’s involved the defendant submitted that to comment either way would raise clear inferences in other cases where no comment could be made and the position was essential to ensure that danger and additional risk could be avoided.
78
The court ruled: There was a very strong public interest in protecting the anonymity of informers, and similarly of UCOs, and thus of permitting them and their superiors neither to confirm nor deny their status, but it was for the court to balance the public interest in the NCND policy against any other competing public interests which might be applicable. There was a well-established exception in a criminal trial where revealing the identity of the informer or the UCO was necessary to avoid a miscarriage of justice. Even where an individual informant or UCO had self-disclosed, the police (or the Secretary of State) might nevertheless be permitted to rely on NCND in respect of allegations in the case where to admit or deny them might endanger other people, hamper police investigations, assist criminals, or reveal police operational methods. There was no confidence as to the disclosure of iniquity, so there could be no public policy reason to permit the police neither to confirm nor deny whether an illegitimate or arguably illegitimate operational method had been used as a tactic in the past (see [39], [42] of the judgment). In the present case, there was no legitimate public interest entitling the defendant to maintain the stance of NCND in respect of the general allegation that officers of the police service, as part of their work as UCO’s engaged in long term intimate sexual relationships with those whose activities the MPS wished to observed. The claims related to alleged activities prior to 2008. Non disclosure of operational methods only applied to operational methods which continued to be in use or were likely to be used in future. The defendant could not rely on NCND to avoid answering the general allegation. In relation to the specific allegations, all the individuals had been publicly named in the media. The circumstances of the individuals varied and on the facts in relation to some the UCO’s should not be required to admit or deny whether certain of the mend were an undercover officer or had the real name alleged (see [41]-[43] of the judgment). The defendant had 28 days in which to amend the defence in order either to admit or deny that UCO’s, as part of their work as undercover officers and using false identities, engaged in long term intimate sexual relationships with those whose activities the police wished to observe; (b) that was authorised or acquiesced in by senior management; and that certain men were or were not UCO’s (see [48] of the judgment).
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False Imprisonment Walker v Commissioner of the Police of the Metropolis[2014] EWCA Civ 897Court of Appeal, Civil Division1 July 2014 A complaint had been made by the appellant’s girlfriend that he had hit her. The police had attended and, after a violent incident, the appellant was arrested and taken into custody. He was later released on bail. The appellant was charged with assault of a police officer in the execution of his duty. The district judge found that the police officer concerned, PCA, had restricted the appellant’s movements in a doorway, without having intended or purported to arrest him, thereby having detained him unlawfully and that the appellant’s actions had been reasonable. He was acquitted on the ground that his initial detention had been unlawful and, consequently, the charge had failed on an essential ingredient of the offence. Two years later, the appellant issued a claim for damages for false imprisonment, assault and malicious prosecution. The circumstances of the incident, including the initial detention and arrest, were disputed. The judge preferred the evidence given on behalf of the respondent Police and the corroborating evidence of an eye witness. PCA’s evidence had been that on his arrival at the scene, the appellant’s girlfriend said that the appellant had punched her. PCA had considered that he had had reasonable grounds to suspect the appellant of an arrestable offence, but that he had decided to make enquiries first in the hope of avoiding making an arrest. The appellant had been standing in a doorway and PCA had positioned himself so that the appellant could not get past. PCA did not touch the appellant while he was shouting and swearing in an aggressive manner and threatened PCA. PCA’s first words, which he repeated, were ‘Calm down mate or you will end up getting arrested’. The appellant firmly pushed PCA in the chest, at which point PCA told him that he was under arrest for ‘public order’. He had not had time to add ‘section 5 [of the Public Order Act 1986]’ or words to that effect because the appellant began a fight. Another police officer came to assist. PCA was bitten on his arm and finger by the appellant before being arrested. The defence counsel accepted that the appellant’s initial detention in the doorway had not been for the purpose of arrest, but for the purpose of pursuing enquiries and that that had amounted to a detention. The appellant contended that that initial detention had been unlawful and had justified his use of reasonable force to extricate himself from what had been an unlawful, if brief, imprisonment. That initial unlawfulness was, it was submitted, compounded by PCA’s failure to effect a lawful arrest at the time when, on PCA’s evidence, he had purported to arrest the appellant, namely immediately before the fight broke out. The judge dismissed the claim. He found that PCA had positioned
80
himself in such a way as to prevent the appellant from escaping and that he had honestly and reasonably feared that the appellant would try to escape. Further, the appellant had threatened PCA and pushed him violently. That had been a wholly disproportionate, unnecessary and unreasonable response and reaction to PCA’s request to calm down. Furthermore, very shortly after, PCA had arrested the appellant for a public order offence and he had had S 5 of the 1986 Act in mind. Matters had escalated quickly because of the appellant’s violence and temper, but he had heard that he was under arrest and had been given full and adequate reasons for that action. The judge concluded that the detention, which had lasted for a matter of seconds, had been a trivial and fully justified interference with the appellant’s freedom of movement which had not constituted a deprivation of liberty. In the circumstances and on the facts as found, PCA had been fully entitled to detain the appellant. The appellant’s reaction to having been told to calm down had been disproportionate, unreasonable and an unlawful overreaction. The appellant appealed. The issues for determination were:
(i)
whether the appellant’s initial detention in the doorway had been unlawful,
thus having amounted to false imprisonment; if so,
had the appellant’s reaction to that detention been a reasonable and
(ii)
proportionate exercise in self-defence; and
(iii) whether the purported arrest for ‘public order’ had been a valid arrest within
s 28(3) of the Police and Criminal Evidence Act 1984.
The appeal would be allowed in part. (1) The appellant had been unlawfully imprisoned in the doorway by PCA for a brief period, even if such detention might, in the circumstances, have been called ‘technical’. The judge’s reasons for having held that the detention and confinement had been within generally acceptable standards of the conduct of ordinary citizens and thus lawful had not been good reasons. It was not acceptable for an ordinary citizen to interfere with a person’s liberty by confining him in a doorway. Although the confinement had been for only a few seconds, the principle in question was framed in terms of ‘for however short a time’. It was understandable that where liberty was in question, as in the case of assault, there was no room for complaisance. Moreover, the confinement would have been longer if the situation had not developed into an arrest and fight. The judge had remarked that the appellant had not been, in the true sense, deprived of his liberty. That concept was not identical with the tort of false imprisonment, and, it was established law that there might be a deprivation of liberty
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without false imprisonment and vice versa (see [30], [31], [33], [46], [50] of the judgment). The appeal would be allowed on the first ground. The appellant was entitled to damages of £5 for the brief and ‘technical’ imprisonment immediately before his own unlawful violence and initial arrest (see [44], [45] of the judgment). Collins v Wilcock [1984] 3 All ER 374 applied; Bird v Jones (1845) 7 QB 742 applied; Donnelly v Jackman [1970] 1 All ER 987 distinguished; Austin v Metropolitan Police Comr [2008] 1 All ER 564 applied. (2) There had been several alternatives open to the appellant short of violence to have emphasised that he had not wanted to speak to PCA; but the appellant had resorted directly to threats and actual violence for the very reason that he had been already angry and aggressive. The court would not revisit the judge’s findings on the issue of whether the appellant’s reaction had been a reasonable and proportionate exercise in self-defence (see [34], [35] of the judgment). The appeal would be dismissed on the second ground (see [44] of the judgment). (3) The court would not go behind the judge’s finding that PCA had arrested the appellant for public order and had had s 5 of the 1986 Act in mind. In the particular circumstances of the relevant incident, the appellant had to have been fully aware that he was being arrested for his conduct in the face of PCA and that that had been regarded as a public order offence. That had been a legally and factually adequate explanation of the reason for the arrest (see [38], [43], [46], [50] of the judgment). The appeal would be dismissed on the third ground (see [44] of the judgment).
Service Zumax Nigeria Ltd v First City Monument Bank plc[2014] EWHC 2075 (Ch)Chancery Division The claimant, Zumax, was a Nigerian company involved in oil services. The defendant bank, FMBC, was registered in Nigeria. It was the product of mergers by which it had assumed the liabilities and obligations of other banks, including IMB, which was the banker of Zumax. Between May 2000 and April 2002, US $ 5.547m was transferred from Redsear Ltd, which was a nominee of Zumax, to the accounts of IMB and its subsidiary, IMB Morgan. In September 2013, the court granted Zumax permission to serve the claim form out of the jurisdiction. Service was effected in Nigeria and acknowledged. In the proceedings, Zumax claimed that the instructions to transfer the money had been such that the money had been received by IMB
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and IMB Morgan subject to a Quistclose trust. Zumax contended that it had never received those funds, and that it was entitled to make proprietary claims against FMBC as successors in title of IMB. Zamax subsequently went into receivership as a result of its inability to pay a loan made by IMB. FMBC made applications to the court, seeking to challenge the validity of the proceedings. FMBC applied, among other things, for an extension of time to apply to challenge the jurisdiction of the court. Zumax contended that, since no application challenging the jurisdiction had been made within the required time limits, FCMB would be deemed to have submitted to the jurisdiction. In the circumstances, although the court had the power to grant relief from sanctions, no relief should be granted. In any event, it contended, FCMB’s actions had confirmed that it submitted to the jurisdiction. The order for service out had been justified, and there had been no nondisclosure. Further, the appropriate forum was England. The application would be dismissed. The failure to put evidence of specific prejudice caused by a failure to make an application on time could not be a precondition of refusing an extension of time. In the circumstances, no good reason had been shown for the failure to make an application in time to justify an extension of time (see [47] of the judgment).
7.5 Extension American Leisure Group Ltd v Garrard and others[2014] EWHC 2101 (Ch)26 June 2014 The claimant was a company incorporated in the British Virgin Islands. The first to sixth defendants were directors of the claimant at the relevant time and the seventh defendant was one of its consultants. In 2007, the claimant issued ordinary shares to institutional and other investors, and all its ordinary shares were admitted to trading on the alternative investment market operated by the London Stock Exchange. Proceedings were commenced in Florida against, amongst others, the claimant, seeking damages in respect of investments made as a result of alleged misrepresentations concerning the financial position of the claimant contained in the offering documents. The claimant issued a claim against the defendants for damages or compensation by way of indemnity against any liability that might be established in the Florida proceedings. The claim form was stamped ‘Not for service out of the jurisdiction’. It gave two addresses for the first defendant, an individual, one in Switzerland and one in London. The first defendant was resident in London and had been since about January 2011. He had resided at the Swiss address for two years or so, but had moved back to the London flat where he had previously resided for over 20 years. The first defendant received from the court a copy of an
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order giving permission for service out of the jurisdiction of the claim form on three defendants with addresses in the United States. His solicitors wrote to the claimant’s solicitors, informing them of his residential address in London and stating that they had instructions to accept service on his behalf. The claimant’s solicitors sent the claim form by way of service to the first defendant’s solicitors in January 2014. The first defendant’s solicitors raised objections to its late service, on the grounds that no steps to serve it had been taken within the period of four months allowed by CPR 7.5(1). The first defendant applied for a declaration that the purported service of the claim form, which was dated 7 August 2013, and the accompanying particulars of claim on 20 January 2014 were not valid and for an order dismissing the proceedings as against the first defendant. The claimant contended that claim form had been duly served, but, in the event that service of the claim form had not been duly effected, it applied, either for an extension of time under CPR 7.6(3) to comply with the rules for serving the claim form on the first defendant or for an order, under CPR 6.15(2), that the steps already taken had been sufficient to have brought the claim form to the attention of the first defendant. The issues for consideration were:
(i)
whether service of the claim form had been duly effected within the time
limits prescribed by CPR 7.5; and
if not, whether the court, in its discretion, should exercise powers under CPR
(ii)
7.6(3) or CPR 6.15(2) so as to make effective the service of the claim form on
the first defendant’s solicitors in January 2014.
The claimant submitted, among other things, that the case was governed by CPR 7.5(2), that the claim form was ‘to be served out of the jurisdiction’ and, therefore service could validly be effected within six months after the date of its issue, and that although the claim form had been stamped ‘Not for service out of the jurisdiction’, it was properly to be regarded as one to be served out of the jurisdiction because one of the addresses given for the first defendant was in Switzerland (the claimant’s submission). The court ruled: (1) CPR 7.5(2) was not concerned with, and did not permit, service of a claim form within the jurisdiction. The scheme of CPR 7.5 was clear. CPR 7.5(1) was concerned with the service of a claim form within the jurisdiction and CPR 7.5(2) was concerned with its service out of the jurisdiction. That was made clear, not only by the words in CPR 7.5(2), but also by the opening words of CPR 7.5(1). The effect of CPR 7.5 was that a claim form was valid for service within the jurisdiction for four months after the
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date of its issue or, if it was to be served out of the jurisdiction, for six months after the date of issue (see [2], [19] of the judgment). The claimant’s submission could not be sustained. At all times from the issue of the claim form, the first defendant had resided in England, not Switzerland. Unless personal service had been effected, the correct place for service of the claim form on the first defendant, as an individual, had been his ‘usual or last known residence’ (CPR 6.9(2)). In all the circumstances, the claim form had not been served within the time limit imposed by CPR 7.5. It was, therefore, necessary to turn to the application made by the claimant (see [3], [10],[19], [21] of the judgment). A declaration would be made that the purported service of the claim form and accompanying particulars of claim on the first defendant in January 2014 had not been valid, together with such further orders as were appropriate (see [33] of the judgment). (2) On the facts, the claimant had not shown that it had taken all reasonable steps to comply with CPR 7.5. It followed that an order for the extension of time under CPR 7.6(3) could not be made in its favour (see [28] of the judgment). The claimant’s application would be dismissed (see [33] of the judgment).
Summary Judgment Sainsbury’s Supermarkets Ltd v Condek Holdings Ltd and others[2014] EWHC 2016 (TCC)24 June 2014 In 2006, construction of a car park took place at the Sainsbury’s supermarket in North Cheam. Sainsbury’s subsequently commenced proceedings against a number of parties involved in the construction, alleging that the car park was defective as a consequence of inadequate design and construction, and that it needed to be demolished. The third defendant, P, was the inventor of a modular car park system and he conducted business through the first defendant company. P and the fourth defendant company, CSL, were joined to the proceedings by Sainsbury’s, because the second defendant company was in administration and was believed to lack financial substance. The liability of CSL was said to have been transferred to it from another company, NRM. P made applications for further information about the case against him. He and CSL brought applications, pursuant to CPR 3.4(2)(a), to strike out the claims against them and, pursuant to CPR 24, for summary judgment. P submitted that the claim against him did not sustain an allegation that he was subject to a personal duty to protect Sainsbury’s from economic loss. Further, he
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contended, the pleading did not contain adequate allegations of breach of duty, and hence ought to be struck out. On behalf of CSL, it was submitted that, among other things, the pleadings did not state whether Sainsbury’s had relied upon NRM’s work and that they did not supply a basis for finding that NRM had owed a duty of care to Sainsbury’s. The applications would be allowed. (1) The facts pleaded by Sainsbury’s against P did not sustain an allegation that he was subject to a personal duty to protect Sainsbury’s from economic loss. Further, there was not adequate pleading of any allegations of breach of duty by P. The deficiencies in the pleading were fundamental in failing to identify facts that could have given rise to any duty of care (see [32], [36] of the judgment). The case against P would be struck out pursuant to CPR 3.4(2). He would be given summary judgment in the action pursuant to CPR 24 (see [37] of the judgment). Williams v Natural Life Health Foods Ltd [1998] 2 All ER 577 applied; Fairline Shipping Corpn v Adamson [1974] 2 All ER 967 considered; Smith v Eric S Bush (a firm), Harris v Wyre Forest District Council [1989] 2 All ER 514 considered; Merrett v Babb [2001] All ER (D) 183 (Feb) considered. (2) The particulars of claim did not disclose whether and to what extent NRM had known that Sainsbury’s relied upon its work, and failed to plead either direct action between Sainsbury’s and NRM or any facts from which an assumption of responsibility or the existence of a special relationship of proximity could reasonably be inferred. Sainsbury’s pleadings did not disclose a legally admissible basis for a finding that NRM had owed a duty of care to Sainsbury’s. The evidence adduced did not remedy that deficiency (see [52], [58] of the judgment). Sainsbury’s pleading that NRM owed a duty of care to it would be struck out. Summary judgment would be given on the issue (see [58] of the judgment). Henderson v Merrett Syndicates [1994] 3 All ER 506 applied; Architype Projects Ltd v Dewhurst MacFarlane & Partners (a firm) [2004] All ER (D) 282 (Feb) considered; Caparo Industries plc v Dickman [1990] 1 All ER 568 considered; Candler v Crane Christmas & Co [1951] 1 All ER 426 considered.
Mitchell Guidance Denton and others v TH White Ltd and another; Decadent Vapours Ltd v Bevan and others; Utilise TDS Ltd v Davies and others[2014] EWCA Civ 906Lord Dyson MR, Jackson and Vos LJJ4 July 2014
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Practice – Civil litigation. The Court of Appeal, Civil Division, heard three appeals concerning relief from sanctions under CPR r 3.9. In allowing those appeals, the court clarified the earlier guidance given in Mitchell v News Group Newspapers Ltd[2014] 2 All ER 430 and put in place a three stage test for judges assessing an application for relief from sanctions. Further comments were made regarding satellite litigation and cooperation between parties where the court would, in the future, be more ready to penalise non-cooperation. See PI SCRIBE
Strike Out Patterson (trustee in bankruptcy of George Spencer) v Spencer and others[2014] EWHC 1878 (Ch) In October 2013, the court heard an application made by the claimant trustee in bankruptcy of the first defendant (the trustee) for a declaration that the transfer by the first defendant of a property to the third, fourth and fifth defendants and the appellant constituted a transaction defrauding creditors, contrary to s 423 of the Insolvency Act 1986 and/or was a transaction at an undervalue, contrary to s 339 of the Act (the underlying application). The trustee also applied for an order that the first and fourth defendants and the appellant be debarred from defending the action because of their breach of an order dated the 21 May. By an order dated 29th October, the court ordered that the first and fourth defendants and the appellant be debarred from defending the underlying application and granted, amongst other things, a declaration in the terms sought by the trustee. Application to Set aside order By an order of November, the court dismissed an application to set aside the order of the 29 October. Appeal In December, the appellant filed an appellant’s notice seeking permission to appeal from, amongst other orders, the orders of October and November. The appellant subsequently failed to file documents to support her appeal, as required by an order of March 2014, and it was struck out.
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Appeal and Application for relief from sanctions She appealed against that decision, seeking relief from sanctions pursuant to CPR 3.9(1). She submitted, first, that she had not received the order of March 2014 in the normal course of postage, and that that order had referred to ‘service upon’ the appellant, rather than ‘service’. That, she submitted, meant that receipt, rather than postage, was required to prove service. Secondly, she submitted that she had mistaken one court document for another and had effectively committed a trivial breach by mistake. Thirdly, she submitted that it was in the interest of justice for her claim to continue. The application would be dismissed. On the evidence, the wording of the order had not been intended to create an exception to that which was accepted to be the norm. It was clear that the instant circumstances were one more instance of default by the appellant, the effect of which had been to delay the litigation. She had demonstrated a persistent failure to comply with the rules and orders of the court. Further, the court did not accept that the full facts had been provided to it regarding the appellant’s claim to have committed a trivial breach by mistake. Having regard to the justice of the case, it was not unjust to deny the appellant relief from sanctions. It would help to promote a culture of delay and non-compliance to allow the appellant’s application (see [27][29] of the judgment). Mitchell v News Group Newspapers Ltd [2014] 2 All ER 430 applied.
Costs Budgets-Relief from Sanctions Americhem Europe Ltd v Rakem Ltd[2014] EWHC 1881 (TCC) The proceedings concerned the supply by the defendant to the claimant of 1,000kg of chemical which was not the chemical that the claimant had ordered. The third party was the haulier who had made the delivery. Following a case management conference, the parties were obliged to file costs budgets in the form of precedent H (the form) by a certain date. The defendant did so. However, the form, whilst otherwise compliant, had been signed by an individual, C, who was described on the form as a ‘costs draftsman, and who was a manager and senior costs draftsman in the internal costs litigation team of the solicitors’ firm representing the defendant. The third party submitted that C was not a ‘senior legal representative’ of the defendant, pursuant to CPR PD 3E, and accordingly, that the defendant’s precedent H was a nullity. Consideration was given to CPR 2.3(1), 3.13 and 3.14.
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The court ruled: Viewed overall, the CPR 2.3(1) definition of ‘legal representative’ seemed to connote someone who was representing in a legal capacity, which was not what was being done by a costs draftsman, whose only involvement consisted in preparing a costs budget and who did not give any form of legal advice or legally based representation. It followed that C was not a ‘senior legal representative’ within the meaning of PD 3E. That did not render the defendant’s costs budget a nullity. The fact that it had been signed by C was an irregularity, just as it would have been if the costs budget had failed to set out the statement of truth in full. Accordingly, no question of a need for relief from sanctions arose. The proportionate and just response, given that no one had been significantly disadvantaged by the irregularity, was to require it to be remedied at the defendant’s cost and to compensate the third party for the modest cost involved in bringing the matter to the attention of the court, summarily assessed in the sum of £50 (see [10], [12]-[14] of the judgment). Summit Navigation Ltd v Generali Romania [2014] All ER (D) 202 (Feb) applied; The Governor and Company of the Bank of Ireland v Philip Pank Partnership [2014] EWHC 284 (TCC) applied.
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Section 8 August 2014
Professional Negligence Chweidan v Mishcon de Reya Solicitors[2014] EWHC 2685 (QB), [2014] All ER (D) 304 (Jul) The claimant became an employee of JP Morgan. He was involved in an accident on a work skiing trip which resulted in serious injury to his thoracic spine. Following a redundancy, JP Morgan offered the claimant compensation of £120,316 in respect of redundancy. That was a standard redundancy offer by reference to the claimant’s length of service. The claimant instructed the defendant solicitor in relation to the redundancy situation with JP Morgan, and brought claims for unfair dismissal, unlawful direct age and disability discrimination, and disability related discrimination claims. The ultimate result of the proceedings brought by the claimant was an award of £68,000 odd in respect of unfair dismissal and a costs bill that exceeded this sum. The claimant then brought a claim against the defendant for damages in contract and tort for professional negligence. In addition to the claims of professional negligence pursued in connection with the failure to plead a case based on reasonable adjustments and in relation to the failure to lodge the cross-appeal within the deadline, allegations of failure to advise on the prospects of bettering the settlement offer made by JP Morgan or to negotiate a more favourable settlement offer in advance of the employment tribunal liability hearing, were made. The defendant admitted breach of duty in relation to the failure to lodge the claimant’s cross-appeal before the relevant deadline but maintained that the claimant had not lost an opportunity of any value because the grounds of cross-appeal had no more than a negligible prospect of success. The remaining allegations of breach of duty were denied. The main issue before the court was whether there was a breach of duty in relation to the question of reasonable adjustments. The defendant admitted breach of duty in relation to the lodging of the cross appeal resulting in the claimant being deprived of the opportunity to challenge the tribunal’s decision on the grounds he wished to raise. Had that failure not occurred, the fate of the cross appeal and the underlying
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action would have depended on a number of factors including whether or not the cross appeal would have been permitted to proceed as raising an arguable point of law. The court ruled: The claimant had to prove that the claim had a real and substantial, rather than merely a negligible prospect of success. Evaluation of chances meant that the court had to make a realistic assessment of what would have been the claimant’s prospects of success had the original litigation been fought out. The court should assess the likely level of damages which the claimant would most probably have recovered had the underlying action proceeded to judgment and then applied an appropriate fraction to that sum to reflect the uncertainties of recovering such damages. In some loss of a chance cases, it might be appropriate to view the prospects on a fairly broad brush basis whilst in other cases it might be correct to look at the prospects in greater detail (see [94] of the judgment). The application to amend was made promptly in regard to making reasonable and therefore there had been no breach in that respect. The claimant was however, entitled to recover damages for the loss of opportunity suffered as a consequence of the defendant’s breach. The loss of that opportunity as a loss of an 18% chance of overall success, either in the litigation or by achieving a settlement (see [102] of the judgment). The most probable value of the claimant’s claim would be assessed as £357,574.86. He was therefore entitled to recover damages assessed in the sum of £64,363.47 being 18% of £357,574.86 (see [117] of the judgment).
Security for Costs Deutsche Bank AG v Sebastian Holdings Inc[2014] EWCA Civ 1100, [2014] All ER (D) 294 (Jul)30/07/2014 The defendant company (which was incorporated in the Turks and Caicos Islands) conducted a series of prime brokerage agreements with the claimant bank. The trading was conducted by either V, the defendant’s sole shareholder and director, or by the defendant’s agent. V was a man of substantial wealth. Following massive losses, the defendant owed about US$243m to the claimant, which it issued proceedings to reclaim. The defendant counterclaimed for US$8bn and alleged, inter alia, that margin calls made by the claimant in respect of its trading had forced it to close positions at significant losses and to have incurred billions of dollars of lost profits. A key issue had been whether the defendant had had funds available to it which it had chosen not to use to meet those margin calls. Judgment was given in favour of the claimant for US$243m. The counterclaim was dismissed. The judge made an unequivocal finding that when V had had a clear idea that the defendant’s trading liabilities had run to many hundreds of millions of dollars, he 91
caused had US$896m of funds and assets to be transferred from the defendant either to himself or to companies closely associated with him or with his family. The judge found that V had procured those transfers for no bona fide commercial reason, and that he had done so with a view to depleting the defendant’s assets and making it more difficult for the claimant to seek recovery of the amounts owed to it. Those funds had been available prior to transfer and V could, at a moment’s notice, have procured the transfer of those funds back to the defendant should he have chosen to do so. The defendant was also directed to make an interim payment on account of costs of £34.5m by 22 November 2013. The judge also made a non-party costs order against V to pay the claimant £36m, namely the interim payment on accounts of costs ordered against the claimant together with accrued interest. V made that payment within 48 hours of being so ordered. The defendant was refused permission to appeal by the judge. The defendant applied to the Court of Appeal for permission to appeal. It was ordered that the application would be heard at a rolled up hearing with the substantive appeal to follow if successful. The claimant sought an order imposing conditions on the defendant’s application for permission to appeal in the following form:
(i)
payment into court of the judgment sum together with accrued interest;
(ii)
payment into court of the interim payment ordered on account of costs
together with accrued interest; and
(iii) payment into court of £1,887,000 as security for the defendant’s costs of the
claimant’s proposed appeal.
Defendant The defendant submitted, first, that there was no evidence to suggest that the position of the claimant would materially deteriorate between the present application and the hearing of the application for permission to appeal and, if appropriate, the appeal. The emphasis should be on what the defendant might in the interim do in an effort to frustrate enforcement. Secondly, the court could be satisfied by V’s evidence that in the event that a condition was imposed, the application for permission to appeal and, if appropriate, the appeal would be stifled because (i) the defendant had no funds and (ii) it was
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manifest that V would not fund the condition. Furthermore, to require V to fund the condition would effectively short-circuit the New York and other proceedings in which he was resisting attempts to impose upon him personal liability. The defendant did not dispute that it was a case in which it was, in principle, appropriate to require it to give security for the claimant’s costs of the application and appeal. However, it submitted that it could pay no more than £1m, that sum having been made available by a third party. The court ruled: A case where the judgment debtor had already taken steps to frustrate enforcement of the judgment was ordinarily less likely to be a stronger case for imposition of a condition than one where the court had to assess the likelihood of the appellant so acting in the future (see [37], [45] of the judgment). The defendant could itself pay the judgment debt into court if V chose to procure it to do so. That did not involve V funding the defendant or paying the judgment debt on its behalf. It involved V taking steps to restore to the defendant what were rightfully its assets. The evidence in the present case did not demonstrate that the imposition of a condition would stifle the appeal. It was the defendant which had rendered itself judgmentproof by having transferred its assets into hands and places where enforcement might be difficult or even impossible. It could not rely upon its own conduct as stifling the appeal. Further, the defendant’s owner had a choice. If it was in the interests of the defendant for the application for permission to appeal and, if appropriate, the appeal to continue, he had to procure the payment into court of the judgment debt. If he did, the application, and if appropriate the appeal, would proceed. There was nothing unjust or inconsistent with the overriding objective in giving to V, and thus to the defendant, the choice (see [36], [38], [39], [45] of the judgment). The defendant would be ordered to pay into court the judgment sum, together with interest accrued to the date of the instant judgment as a condition of further pursuit of the application for permission to appeal and, if permission was granted, the appeal. The same order would be made in respect of the interim payment on account of costs. If that payment was made, then V would be entitled to the return of his payment of the like amount. Further, security for costs had to be provided in the sum of £1.7m and, if not, the appeal would be struck out (see [40], [41], [43], [45] of the judgment).
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Limitation David T Morrison & Co Ltd (t/a Gael Home Interiors) v ICL Plastics Ltd[2014] UKSC 48, [2014] All ER (D) 282 (Jul)30/07/2014 In May 2004, there was an explosion at the factory of the appellants (ICL). Extensive damage was caused to neighbouring properties, including the shop of the respondent (Morrison). In August 2009, Morrison issued proceedings, seeking damages against ICL on the basis that the damage to the shop was caused by ICL’s negligence, nuisance or breach of statutory duty. The proceedings were defended on the basis that any obligation owed by ICL to make reparation to Morrison had prescribed before the proceedings began, by virtue of s 6(1) of the Prescription and Limitation (Scotland) Act 1973. Morrison, relying on s 11(3) of the Act, argued that the five-year prescriptive period did not begin to run until long after the explosion had occurred, since it was not aware and could not, with reasonable diligence, have been aware that the damage had been caused by negligence, nuisance or breach of statutory duty until a much later date. There was no doubt that Morrison knew that damage had occurred on the date of the explosion. In order to establish that Morrison knew or could, with reasonable diligence, have known at that date or soon after that the explosion had been caused by a breach of duty, ICL relied on the principle expressed in the maxim res ipsa loquitur. ICL succeeded before the judge on the basis that the principle res ipsa loquitur applied in the circumstances of the explosion (see [2012] CSOH 44). Morrisons IH Appeal However, Morrison succeeded before the Inner House of Court of Session on the basis that it did not. ICL Appeal ICL appealed, where it was permitted to raise the more fundamental issue of the correct interpretation of s 11(3) of the Act. ICL contended that s 11(3) of the Act was of no assistance, as Morrison had to have been aware that loss, injury or damage had occurred on the very day the explosion had taken place or possibly a day later and, if for some reason it had not been so aware, it was clear that it could, with reasonable diligence, have been so aware. Morrison laid stress on the words ‘caused as aforesaid’ after the words ‘loss, injury or damage’. It contended that those words carried with them a requirement that the creditor knew the cause of the loss, injury or damage and that that could not have happened until late August 2004 at the earliest, when a promptly expert would have reported. 94
The appeal would be allowed. On its proper interpretation, s 11(3) of the Act was to be read as if it said ‘the creditor was not aware … that loss, injury or damage, which had been caused as aforesaid, had occurred’. That was to read the word ‘aware’ as referring to the loss, injury or damage and to treat the phrase ‘caused as aforesaid’ as adjectival. The creditor then had to be aware only of the occurrence of loss, while the words ‘caused as aforesaid’ connected the loss to the cause of action. Accordingly, s 11(3) of the Act applied merely in cases of latent damage, not in every case where the creditor had not been aware at the time when the loss had occurred that it had been caused by an act, neglect or default (see [15], [16] of the judgment). It followed that the principle expressed by the maxim res ipsa loquitur was of no relevance to the application of s 11(3) of the Act and, therefore, the appeal would succeed (see [37], [39] of the judgment).
JOINT TRIAL? Mitchell v News Group Newspapers Ltd[2014] EWHC 2615 (QB), [2014] All ER (D) 269 (Jul) In September 2012, as the claimant, then Chief Whip of the Conservative Party, was leaving Downing Street with his bicycle there was an altercation between him and police officers manning the gates. One of those officers was PC TR. That incident and allegations about exactly what occurred gave rise to very extensive publicity, the resignation of the claimant from his post as Chief Whip, the criminal conviction of one officer for misconduct in public office, disciplinary proceedings leading to the dismissal of three other officers, and the two libel actions which came before the court for decisions as to case management. One of those libel actions was brought by the claimant against the publishers of the defendant, News Group Newspapers Ltd. The other was brought by PC TR against the claimant. In a case management conference, the issue of whether a trial should be by judge alone or jury arose as did the possibility of ordering preliminary issues. The issue of whether a matter should be by judge or jury was governed by s 69 of the Senior Courts Act 1981. There was a great deal of overlap between the issues in the two actions. At the heart of each action was the issue of what was said by the claimant at the Downing Street gates on the evening of 19 September 2012. It was proposed by the parties that the action should be tried by a judge sitting without a jury, and that there should be a joint trial of certain preliminary issues in the actions.
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The preliminary issues proposed by both parties were:
(i)
the meaning of the words complained of in the particulars of claim in both
actions;
(ii)
(iii) the issue pleaded in para 37.4 of the particulars of claim in Rowland v
the justification defences pleaded by the defendants in both actions;
Mitchell [2014] All ER (D) 273 (Mar).
The court ruled: The court approved the approach proposed by the parties. It would be ordered that the actions should be tried by a judge sitting without a jury, and that there should be a joint trial the preliminary issues suggested. The proposal met the important objectives of avoiding inconsistent findings and duplication and the issues encapsulated, in a sufficiently clear and well-defined way, issues the determination of which stood a reasonable chance of resolving the disputes between the parties and thereby saving resources. The court also had in mind the public interest in focusing resources on ascertaining the truth of the allegations and counter-allegations about those events which had attracted so much publicity, involving as they had done, a senior politician and a police officer (see [14], [15] of the judgment). The order would be made in substantially the terms of a draft order which had been largely agreed between the parties in advance of the hearing (see [2] of the judgment).
Abuse of Process Ridgewood Properties Group Ltd v Kilpatrick Stockton LLP[2014] EWHC 2502 (Ch), [2014] All ER (D) 268 (Jul) Between 2001 and 2004, the first claimant company entered into a series of contracts with a company, Texaco, known as the airspace agreements (the agreements), under which it acquired options to purchase a number of sites used by Texaco as petrol stations (the sites). The claimants subsequently brought proceedings against Texaco, alleging that it had committed a repudiatory breach of the airspace agreements (the Texaco proceedings). Part 20 proceedings Texaco brought pt 20 proceedings against its solicitors, Pannone LLP (Pannone). In January 2013, the court gave judgment. It held that, while Texaco had breached the agreements, the claimants had consciously and deliberately affirmed them and could not rely on repudiatory breach. The court adjourned the question of whether the claimants were entitled to damages for breach of the agreements which did not depend on the claimants having terminated the agreements for repudiatory breach.
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In July 2011, the present proceedings were issued and subsequently stayed pending the outcome of the claim against Texaco. In April 2013, the court gave a second judgment in the Texaco proceedings, in which it held that there would be judgment for the claimants on liability for breach of the agreements, but without prejudice to the ability of Texaco and Pannone to argue that that gave rise to nominal damages only. The claimants sought to claim against the defendants for, among other things, loss of the opportunity to terminate the agreements and to bring a claim for damages for loss of the chance of developing the sites for profi). The defendants sought to, among other things, strike out part of the claim against them on the grounds that was an abuse of process, and pursuing it brought the administration of justice into disrepute. The defendants submitted that, as a matter of substance, para 62(1) of the claim amounted to a collateral attack on the judge’s findings. In order to establish their claim for lost profits, the claimants had to prove that they had lost the opportunity to obtain planning permission, but the judge had already found that Texaco’s breaches of the agreements had not caused the claimants any loss because in fact the claimants had attempted to obtain planning permission in respect of the sites, but in each case had failed to do so for reasons unconnected with Texaco’s breaches. With regard to bringing the administration of justice into disrepute, the answer rested on two questions. First, whether the claimants had had a proper opportunity to put their case on those matters to the judge. Secondly, whether the claimants had been in a position realistically to challenge the judge’s findings by means of an appeal. Consideration was also given to whether the new evidence satisfied the test in Phosphate Sewage Co Ltd v Molleson(4 App Cas 801). The court ruled: It would not be manifestly unfair to the defendants to make them defend para 62(1). The defendants had not been parties in the Texaco proceedings. Thus they were in the same position as any other defendant who had to defend a claim made against him. As to whether they had been realistically in a position to challenge the judge’s findings on appeal, on the evidence, the claimants had had a proper opportunity to put their case before the judge. Given that, and that they had been in a position to challenge her findings on appeal, it would bring the administration of justice into disrepute if they were allowed to challenge those findings in the present proceedings rather than by an appeal in the Texaco proceedings. 97
Further, the additional evidence did not satisfy the Phosphate Sewage test (see [54], [56], [57] of the judgment). Paragraph 62(1) of the particulars of claim was an abuse of process and would be struck out (see [60] of the judgment).
Protection from Harassment Crawford v Jenkins[2014] EWCA Civ 1035, [2014] All ER (D) 241 (Jul) The parties were involved in an acrimonious sequence of litigation arising from the breakdown of their marriage. In June 2009, the claimant attended an event at their daughter’s school and the defendant sent the claimant two text messages, objecting to his presence. In July, the defendant made statements to the police orally and, subsequently, in writing. The claimant was arrested for breaches of orders made in the matrimonial proceedings and detained for just over four hours. The Crown Prosecution Service decided that no further action should be taken. The claimant issued proceedings against the defendant for false imprisonment and harassment, under the Protection from Harassment Act 1997. The defendant relied on the witness immunity rule in both respects as to her complaint to the police. The judge found that the defendant’s complaint to the police was protected by immunity from suit and struck out the harassment claim. The claimant appealed. It fell to be determined:
(i)
whether the judge had erred in finding that the defendant had been
immune from suit; and
whether the judge had erred in striking out the harassment claims.
(ii)
The appeal would be dismissed. (1) If proceedings were commenced and, if the events complained of had either led to those proceedings or occurred in the course of the proceedings, so that the court process was abused, then it was appropriate for the tort of malicious prosecution or a related tort based on malicious abuse of the process of court to be available so as to afford the claimant a remedy, and it was justifiable that such a claim should not be defeated or precluded by the witness immunity rule. However, if there were no court proceedings, the claimant’s arrest not being preceded or followed by any proceedings, whether criminal or civil, then there was no question of an abuse of the process of the court, no reason why, if the relevant facts could be proved, the person responsible for the arrest should not be answerable for the imprisonment, and correspondingly, no reason to treat a claim for compensation for the arrest as one
98
to which the otherwise general witness immunity rule did not apply (see [56], [77], [78] of the judgment). The case did not have the feature of abuse of the process of the court which, because no claim could be made against the court, justified the possibility of a separate claim for the malicious abuse of the court’s process, which should be possible despite the witness immunity rule. Accordingly, the judge had been right in her decision on the defendant’s immunity (see [57], [58], [77], [78] of the judgment). (2) The policy of the immunity rule applied just as much to a claim in harassment based on a statement to the police. Accordingly, the judge had been right to hold that the harassment claim could not be brought on the basis of the complaint to the police or the statements made in support of that complaint. Further, even if the two text messages might constitute a course of conduct, they could not be held to amount to harassment. Their language was simply not capable of being seen as harassment. They could not be characterised as, objectively, likely to cause alarm or distress, or judged, in the context of the long-running dispute between the parties, as oppressive or unacceptable (see [70], [73], [74], [77], [78] of the judgment).
Part 18 Requests Stocker v Stocker[2014] EWHC 2402 (QB), [2014] All ER (D) 223 (Jul) The claimant, husband, brought defamation proceedings against his ex-wife, the defendant. The claim was founded on two instances of publication by the defendant. They were an email sent by the defendant to the claimant’s new girlfriend’s, ex-partner in France, and a Facebook exchange between the defendant, and the new girlfriend. Relations between the two parties continued to be very bitter. Defendant Application The defendant applied for an order that the claimant should answer a number of requests made in a request made under CPR 18 (the Pt 18 request) and that time for service of the defence should be extended until 14 days after provision of the answers. It was for the purpose of enabling the defendant’s solicitors to provide informed advice to the defendant about the substantive merits of the defences, and about the possibility of a Pt 20 claim against the new girlfriend, that the Pt 18 request was made. on 26 February 2014, the claim was stayed for three months by consent. There was no defence on the record, so that it was not possible to see what the issues in the action would be.
99
The claimant submitted, inter alia, that the application was no more than fishing and that ‘fishing’ interrogatories were always refused. CPR 18.1 provided that the court might at any time order a party to: (a) clarify any matter which was in dispute in the proceedings; or (b) give additional information in relation to any such matter. Paragraph 1.2 PD Pt 18 provided that a request should be concise and strictly confined to matters which were reasonably necessary and proportionate to enable the first party to prepare his case or to understand the case he has to meet. The application would be dismissed. Under the CPR, ‘necessity’ was not a requirement of Pt 18 itself. Requests were to be strictly confined to matters which were ‘reasonably necessary and proportionate to enable the first party to prepare his case or to understand the case he has to meet’. There was a clear distinction between requests designed to fulfil a proper and constructive litigious purpose which was likely to save costs and court time, and requests, which were primarily designed to strengthen the defendant’s hand in pleading proposed defences. That was not the function of Pt 18 particulars, any more than it was the function of interrogatories (see [24], [26] of the judgment). In the instant case, these requests were neither necessary nor proportionate to enable the defendant to prepare her case or to understand the case she had to meet. There was no proper litigious purpose in forcing answers to the requests before that point in the action was reached; nor would it be either proportionate or necessary to do so (see [26], [27] of the judgment).
“Leapfrog” Certificate to Supreme Court Al-Waheed v Ministry of Defence[2014] EWHC 2714 (QB), [2014] All ER (D) 302 (Jul) Several hundred claims had been brought in the High Court in which Iraqi civilians sought damages from the defendant Ministry of Defence for their allegedly unlawful detention and/or unlawful treatment by British armed forces when British armed forces were present in Iraq. The claims were made under the Human Rights Act 1998. Those claimants who alleged that they were unlawfully detained contended that they had been deprived of their liberty in violation of art 5 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (the Convention) and were accordingly entitled to compensation under art 5(5) of the Convention and s 8 of the 1998 Act. It was common ground that, on the basis of established law, the court was bound to follow the decision in R (Al-Jedda) v Secretary of State [2007]1 All ER 85 (Dec) and to dismiss the claims. The claimants applied to the court to dismiss one or more of the claims and to grant a ‘leapfrog’ certificate under s 12 of the Administration of Justice 100
Act 1969 (the 1969 Act) to enable an appeal to proceed directly to the Supreme Court. The issue was whether the application should be allowed. The court ruled: Pursuant to s 12 of the Administration of Justice Act 1969, a judge of the High Court could grant such a certificate in civil proceedings, if the judge was satisfied that a point of law of general public importance was involved in which the judge was bound by a decision of the Court of Appeal or of the Supreme Court. That a sufficient case for an appeal to the Supreme Court had been made out to justify an application for leave to bring such an appeal; and ) that all the parties to the proceedings consented to the grant of a certificate. In addition, the court had to be satisfied that, if no certificate was granted, the case would be a proper one for granting permission to appeal to the Court of Appeal (see [17], [18] of the judgment). All the conditions were met in the case. Thus, all the parties had consented to the grant of a certificate. If the power to grant such a certificate had not been available, the case would certainly have been a proper one in which to give permission to appeal to the Court of Appeal (see [19] of the judgment). An order dismissing the claim and granting the application for a certificate under s 12 of the Administration of Justice Act 1969, would be made (see [20] of the judgment).
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Section 9 September 2014
Costs Kellie v Wheatley & Lloyd Architects Ltd[2014] EWHC 2886 (TCC), [2014] All ER (D) 152 (Aug)Tech & Constr Ct The present proceedings concerned three reserved issues as to costs. The court had previously dismissed the claimants’ claim for damages for professional negligence against the defendant (see Kellie and another v Wheatley & Lloyd Architects Ltd [2014] EWHC 2212 (TCC).) The claimants conceded that they had to pay at least 90 per cent of the assessed costs of the defendant and it was ordered that they pay £70,000 on account of costs within 28 days, with interest, both before and after judgment. The parties sought orders regarding reserved issues as to costs, namely, whether:
(i)
the claimants should pay more than 90 per cent of the defendant’s
assessed costs;
(ii)
the assessment of the defendant’s costs should be on the indemnity basis;
and
(iii) the claimants should pay any further amount by way of interim
payment. The defendant submitted that, first, the no-loss defence and
the no-liability defence, which had been pursued at trial but had not
succeeded, had not been truly discrete issues, that they had not materially
lengthened the trial and had not increased counsels’ fees.
Secondly, that an order should be made for an award of indemnity costs because of, inter alia, the speculative, weak and thin nature of the claim. In particular, proceedings were served in November 2010 but the claimants did not disclose expert evidence until June 2012. Thirdly, there should be a further payment on account of costs in the full amount of the approved costs budget of £91,700, together with an additional amount to reflect the fact that the trial was not concluded within the anticipated four days.
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The court ruled: (1) The two defences had not affected the outcome of the case and had made no identifiable difference to the costs which had been incurred by either party. They should not affect the basic outcome, which was that the unsuccessful party had to pay the costs of the successful party (see [10] of the judgment). (2) The appropriate order was that costs be assessed on the standard basis. It was true that the claim had not been a strong one. However, it was not so weak as to be especially remarkable. Although the claimants had been slow in obtaining expert evidence to support their case, they had, in due course, produced such evidence. That evidence had not been greatly impressive on paper, and its weakness had been starkly exposed at trial. However, that was a different matter from saying that the pursuit of the case in reliance on it had been unreasonable to a high degree and ought to be marked by an award of indemnity costs. The other matters relied on the by the defendant did not affect that conclusion, either singly or when taken together (see [26]-[28] of the judgment). In the circumstances, the claimants had to pay all of the defendant’s costs, to be subject to a detailed assessment on the standard basis if not agreed (see [29] of the judgment). (3) In circumstances where there was an approved costs budget in the sum of £91,700 and where the only material considerations which had been raised tended to indicate the probability of a modest increase to the approved amount, but no reduction from it, there was no good reason why the claimants ought not to pay £90,000 on account of the costs awarded to the defendant. However, the defendant’s invitation to pre-empt entirely the assessment process, by ordering a payment in excess of £91,700 on account of the lengthened trial, would be resisted (see [32] of the judgment). Per curiam: ‘Although the proliferation of obiter dicta at first instance is no doubt to be avoided, I would wish to express my respectful disagreement with that approach [of Coulson J in Elvanite Full Circle Ltd v AMEC Earth & Environment (UK) Ltd [2012] EWHC 1643 (TCC), [2013] BLR 473] ... costs management orders are designed to set out the probable limits of the costs that will be proportionately incurred. It is for that reason, and not because of any quirk of drafting, that r. 3.18 refers specifically to standard assessment and not to indemnity assessment. Proportionality is central to assessment on the standard basis and it trumps reasonableness; cf. Motto v Trafigura Ltd [2011] EWCA Civ 1150, per Lord Neuberger of Abbotsbury at [49]. However, proportionality is not in issue if costs are to be assessed on the indemnity basis; see r. 44.3(3). I therefore find it difficult to see why logical analysis requires importing the approach in r. 3.18 into assessment on the indemnity basis ... I accept, of course, that
103
a party seeking to recover disproportionate costs on an assessment on the indemnity basis is required to show that those costs were reasonably incurred; though that requirement is subject to the provisions of r. 44.3(3). That does not, however, justify the analogous use of r. 3.18, which has three disadvantages. First, it is both unnecessary and contrary to the rationale of that rule. Second, it tends to obscure the fact that the nature of the justification required of a receiving party is quite different under the two bases of assessment. Third, and consequently, it risks the assimilation of the indemnity basis of assessment to the standard basis, which is not justified by the costs management regime in the CPR. In my judgment, the proper way of addressing the concern identified by Coulson J in Elvanite at [30] is, first, by ensuring that applications for indemnity costs are carefully scrutinised and, second, by the proper application of the well understood criteria of assessment in r. 44.3(3) to the facts of the particular case. It might also be remembered that, even if there exist grounds on which an award of indemnity costs could properly be made, such an award always remains in the discretion of the court’ (see [17] of the judgment).
Harrison v Shepherd Homes Ltd[2014] All ER (D) 95 (Aug) The instant litigation arose out of defects in the construction of properties by the first defendant development company, SHL, at a housing estate. There were, accordingly, claims in respect of the defects by the claimant owners of properties. When the claimants issued proceedings against SHL, they also joined the second and third defendants, NHBC and NHBC-BCS (the NHBC Parties). Soon after service of the proceedings on the NHBC parties, the claims against those two parties were stayed. In [2011] All ER (D) 140 (Jul), the judge found in summary that SHL was liable to the claimants in contract, under the Defective Premises Act 1972 and also under s 2 of the NHBC Buildmark Policy’s (the policy). In relation to the costs of the trial, it was held that SHL should pay the claimants 95% of their costs of dealing with those foundation claims against SHL. A particular aspect of the costs was unresolved, namely, the costs relating to the proceedings against the NHBC Parties. NHBC had further issued an application to strike out the claims made against it or for summary judgment dismissing those claims. The claimants then wrote to NHBC to say they were no longer pursuing claims against NHBC based on a common law duty of care or under the 1972 Act. The claimants wished to maintain the remaining claims under s 3 of the policy. An order was made that the claimants’ claims against NHBC for breach of a common law duty of care and under the 1972 Act should be struck out with costs reserved. NHBC’s application to strike out the claims under s 3 of the policy
104
was dismissed and NHBC’s application to strike out/for summary judgment was also dismissed reserving all questions of costs. The stay of the proceedings between the claimants and NHBC was then continued and had remained in place as had the stay against NHBC-BCS. The issues regarding costs were:
(i)
what was the appropriate order for costs in relation to the claims brought by
the claimants against the NHBC Parties, in particular, whether those costs
should be borne by the claimants, SHL or the NHBC Parties;
if the claimants could not recover from the NHBC Parties the costs which
(ii)
they had expended in pursuing the claims against the NHBC Parties, what
order, if any, should be made as between the claimants and SHL in respect
of those costs. The claimants’ primary position was that SHL, on the principle
that it was the unsuccessful defendant, should bear the claimants’ costs
of pursuing the NHBC Parties. SHL submitted that NHBC should be treated
as an unsuccessful party and should, therefore, bear the relevant costs.
Consideration was given to CPR 44.2.
The court ruled: (1) The discretion to order costs under CPR 44.2 included a discretion to order an unsuccessful defendant to pay costs relating to a co-defendant. That was generally on the basis that the claimant was liable for those costs and so an order for costs in favour of the claimant would include those costs. There did not always have to be a determination of liability and, for instance, the court would sometimes be called upon to determine liability for costs when the parties had settled proceedings (see [67], [69] of the judgment). In the present case, all that had happened was that the proceedings between the claimants and the NHBC Parties had been stayed, those parties had undertaken a pre-action protocol process and there had been an unsuccessful application by NHBC to strike out the proceedings or for summary judgment. On that basis, the court was unable to make an assessment of liability. Equally, though, it could not be said that the NHBC Parties had been successful parties as they had not been held not liable to the claimants. In all the circumstances, the appropriate order as between the claimants and the NHBC Parties was that there should be no order as to costs (see [70], [74], [76] of the judgment). As between the claimants and the NHBC Parties no order as to costs, would be made save that the NHBC were to pay the claimants’ costs of the strike out application and that the claimants were to pay the NHBC’s party’s costs in relation to certain claims (see [79], [80] of the judgment). 105
(2) In multi-party cases the exercise of the discretion involved consideration of whether orders should be made for one defendant to pay the costs relating to proceedings against another party. Where a party sued two or more defendants and succeeded against one but failed against one or more other defendants, the court had a discretion to order the unsuccessful defendant to pay the costs of the claimant in pursuing the successful defendant and the costs of the successful defendant or defendants. Whether the unsuccessful defendant was ordered to pay the costs of the successful defendant or defendants directly, or by payment to the claimant was a question for the court’s discretion (see [61] of the judgment). The general discretion as to costs would allow the court to order SHL to pay the claimants’ costs of dealing with the NHBC Parties. Considering all the relevant matters, it was evident that the causes of action relied upon in the case against SHL and against the NHBC were connected with each other. It had clearly been reasonable for the claimants to have brought proceedings against the NHBC and to have pursued those claims. On that basis it was an appropriate case where the costs which the claimants have incurred in dealing with the NHBC should be paid by SHL (see [81]-[87] of the judgment). SHL should pay the claimants’ costs of the proceedings against the NHBC party’s, excluding the costs of the application to strike out/for summary judgment and excluding the costs of certain claims (see [87] of the judgment).
Security for Costs Seakom Ltd and another v Knowledgepool Group Ltd[2014] EWCA Civ 1164 The first claimant company, SL, developed a website, which was a database and search engine for professional training courses. In September 2005, SL entered into a contract with a company, BTP (the BTP contract). Clause 3.1 of the BTP contract stated that the claimant companies (together, Seakom) were entitled to commission in respect of every transaction connected to training entered into by BTP with a ‘lead’. A ‘lead’ was defined as ‘any person who makes a request and/or enquiry for training to Seakom and/or an associate whether through a website or by any other means’. In December 2008, the second claimant company, SIL, entered into a contract with the defendant company, KGL (the KGL contract). By that point, KGL had bought out BTP. Following the KGL contract, sales in the website dropped, and SIL investigated and discovered alleged improper activity by BTP and KGL. In June 2009, KGL served notice of termination of the contract. Seakom alleged that it was owed significant commission from KGL under the contract, and commenced proceedings. The trial judge held in favour of the defendant. The claimants obtained permission to appeal. The defendant applied for security for the costs of the appeal on the basis of: (i) CPR 25.13(2)(a), that the SIL was resident outside the jurisdiction, 106
and was not resident in Brussels Contracting State; (ii) CPR 25.13(2)(c), that the claimants were companies and there was reason to believe that they would be unable to pay the defendant’s costs if ordered to do so; and (iii) CPR 25.13(2)(g), that the claimants had taken steps in relation to their assets that would make it difficult to enforce an order for costs against them. The issue was whether security for costs should be ordered. The application would be allowed. The court was satisfied that, there was every reason to believe that the defendant would be unable to pay the costs of the appeal, if the appeal was unsuccessful. Accordingly, on the evidence the court was also satisfied that the second ground upon which the application had been based, namely that there was reason to believe that the claimants would be unable to pay the defendant’s costs of the appeal if ordered to do so, had been satisfied. The court was therefore satisfied that the claimants had made out its case that it was unlikely that the defendant would be able to pay the costs of the appeal if ordered to do so. The grounds in CPR 25.13(2)(g) were also satisfied. It was clear from the evidence that the defendants had taken steps in relation to their assets which would make it more difficult to enforce an order for costs against them (see [10], [18] of the judgment). An order for security for costs under CPR Rule 25.15 would be made in the sum of £50,000 (see [25] of the judgment).
Amendment to Particulars of Claim Bailey and another company v Barclays Bank plc[2014] EWHC 2882 (QB) The claimant, B, conducted business through a company. In 2007, he arranged a loan with the defendant bank to help fund purchases. The loan was agreed with S, the bank’s Business Relations Manager. An interest swap was carried out under a swap agreement. S repeated advice that he had given earlier that interest rates were going to rise, and assured him that the agreement would provide protection against such rises. In 2010, B sought to restructure his borrowings by transferring properties from his personal portfolio to the company. He was informed that, to avoid the risk of breakage fees, he could novate the swap agreement to the company. He did so, thus making the company subject to the swap on terms identical to those to which B had been subject. B made a number of complaints about the suitability of the swap and the manner in which he had been sold it. He subsequently brought proceedings, contending that the bank had failed to discharge its duty to exercise reasonable skill and care in the giving of information and advice that would allow him to understand the implications of the swap and its unsuitability for his needs. 107
The claimants made a number of claims, relating to, among other things: breaches of the Financial Services Authority’s Conduct of Business sourcebook (COBS); unjust enrichment; and that, as a result of misrepresentations, there had been no true novation. The bank applied for summary determination of:
(i)
the company’s entire claim;
(ii)
the claims based on breach of fiduciary duty;
(iii) claims for a declaration of unenforcability under s 27 of the Financial Services
and Markets Act 2000 and rescission of the swap. The company applied
to amend its claim, seeking to address matters arising on the bank’s
application. The court ruled: (1) Regarding the company’s application to amend, none of the alleged breaches of the COBS rules had a realistic prospect of succeeding. Further, the claim in unjust enrichment had no prospect of success. Furthermore, having regard to the particular contractual terms in the case, there was no good reason for interpreting the swap agreement as anything other than a true novation (see [36], [67], [77] of the judgment). The company’s application for permission to amend the particulars of claim would be dismissed in its entirety (see [78] of the judgment). (2) Regarding the bank’s application for summary judgment against the company, there was no question of the company having in any relevant sense reposed trust and confidence in the bank, or having relied on the bank to subordinate its interests to those of the company at the relevant time. It had taken the novation on the swap not because it had relied on the bank’s advice, but because it had been the only way to relieve B of a contract by which he no longer wished to remain bound. With regard to the making of a declaration of uneforceability, S could not be considered a ‘third party’ carrying on a regulated activity in contravention of the general prohibition. He had been the bank’s employee and agent. Further, S had not been involved in the transactions in 2011 (see [89], [92]-[94] of the judgment). The company’s claim failed and would be dismissed. Judgment would be given for the bank (see [95] of the judgment). .
108
Disclosure and Inspection JSC BTA Bank v Ablyazov and others[2014] EWHC 2788 (Comm) Proceedings had been ongoing in excess of five years regarding an alleged fraud by the first and second respondents (A and S), and others, committed against the applicant bank which had resulted in the misappropriation of more than US$6bn, of which A and S were said to have benefited in the sum of US$295m. The court had made a worldwide freezing order against A limited to assets with a value of £175m, with the usual provision for disclosure of assets on affidavit. A committed numerous breaches of the freezing order by granting security over certain of his assets. Following ‘extraordinarily inadequate’ disclosure, A was ordered to attend court for cross examination, in which he was found to have lied in providing his asset disclosure. Receivers were appointed, on the bank’s application, over A’s disclosed assets. A worldwide freezing order was granted against S. S went into hiding and failed to comply with the disclosure obligations. The bank obtained a number of search and disclosure orders which produced documentation that demonstrated that A had a vast secret network of undisclosed companies and assets, principally administered by S. That led to further companies being added to the receivership order. S was sentenced to a term of imprisonment for contempt of court for his failure to comply with the disclosure obligations. The bank applied to commit A for contempt. During the hearing, A and S were found to have lied about A’s assets. Judgment was reserved and A gave an undertaking to the court that he would attend for handing down. Instead, he fled the jurisdiction. In the committal judgment, the judge found that A had breached the disclosure obligations in the freezing order, had lied under oath, had dealt with his assets in breach of the freezing order, that he and S had given false and deliberately misleading evidence, that he had relied upon backdated and fabricated documentation, and that he had suborned the giving of false evidence on a wide basis. A was sentenced in absentia to three concurrent terms of imprisonment. In subsequent judgments on other applications, A was found to have committed numerous breaches of the freezing order and was found to be the owner of assets that he had failed to disclose. A failed to comply with an order to adduce evidence in regard to the breaches. The receivers were ordered to share non-privileged information with the bank. The bank estimated the value of the assets that A had disclosed and which it had been able to secure at about US$100m. The value of those which had been identified as being beneficially owned by A and which he had concealed was estimated at US$800m. A was located in France and extradition proceedings were commenced by multiple countries. Judgment was given in favour of the bank in three actions. The bank sought disclosure from A and S of documents that related to their assets which would
109
attract legal professional privilege, unless they fell within the iniquity exception to such privilege and which were held by the third to fifth respondents who were, or had been, their solicitors. A submitted that:
(i)
it was not sufficient to prevent privilege attaching that a solicitor was used in
the conduct of litigation to advance a case on behalf of his client which
the client knew to be untrue, and therefore, involved perjury, or an attempt
to deceive the other party and the court, or to disobey court orders,
particularly where there was no principled distinction to be drawn between
his conduct and the ordinary run of case;
the bank’s case involved an impermissibly sweeping approach and failed
(ii)
to establish the necessary requirement that the communication in question
had to be ‘in furtherance’ of the fraud, and in doing so it was inconsistent
with both the common law and European caselaw on arts 6 and 8 of the
European Convention on Human Rights;
(iii) disclosure should not be granted because he invoked the privilege against
self incrimination; and
(iv) disclosure should not be granted as a matter of discretion because the
application constituted a vast and pointless fishing expedition. Consideration
was given to Kuwait Airways Corpn v Iraqi Airways Co[2005] All ER (D) 268
(Mar) (Kuwait Airways (No 6)). As S was not represented in the proceedings,
the court approached the matter on the basis that there was no distinction
between him and A, and that what applied to documents that related to
A’s assets in the hands of the three firms applied equally to documents that
related to S’s assets.
The application would be allowed. (1) In drawing the line between the ‘ordinary run of cases’ in which privilege attached to communications with a solicitor by a client with a view to advancing a knowingly false case and the conduct in Kuwait Airways (No 6), the established authorities focussed on three aspects of legal professional privilege and the iniquity exception. First, legal professional privilege attached to communications between solicitor and client which were confidential. The quality of confidence was a prerequisite to the privilege because it was the protection of such confidence which formed the bedrock of the rationale for the privilege as essential to the administration of justice.
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Secondly, communications made in furtherance of an iniquitous purpose negated the necessary condition of confidentiality. It was that which prevented legal professional privilege attaching to communications for such purpose. Thirdly, the reason that communications in furtherance of iniquity lacked the necessary quality of confidentiality was that communications could only attract the confidence if they were made in the ordinary course of professional engagement of a solicitor. It was the absence or abuse of the normal relationship which arose where a solicitor was rendering a service falling within the ordinary course of professional engagement which negated the necessary confidentiality and, therefore, the privilege. The ‘ordinary run of cases’ involved no such abuse: a solicitor instructed to defend his client of a criminal charge performed his proper professional role in advancing what the client knew to be an untrue case. The touchstone was whether the communication was made for the purposes of giving or receiving legal advice, or for the purposes of the conduct of actual or contemplated litigation, which was advice or conduct in which the solicitor was acting in the ordinary course of the professional engagement of a solicitor. If the iniquity put the advice or conduct outside the normal scope of such professional engagement, or rendered it an abuse of the relationship which properly fell within the ordinary course of such an engagement, a communication for such purpose could not attract legal professional privilege. In cases where a lawyer was engaged to put forward a false case supported by false evidence, it would be a question of fact and degree whether it involved an abuse of the ordinary professional engagement of a solicitor in the circumstances in question. In the ‘ordinary run’ of criminal cases, the solicitor would be acting in the ordinary course of professional engagement and the client doing no more than using him to provide the services inherent in the proper fulfilment of such engagement, even where in denying the crime the defendant had put forward what the jury found to be a bogus defence. However, where, in civil proceedings, there was a deception of the solicitors in order to use them as an instrument to perpetrate a substantial fraud on the other party and the court, that might well be indicative of a lack of confidentiality which was the essential prerequisite for the attachment of legal professional privilege. The deception of the solicitors, and therefore the abuse of the normal solicitor/client relationship, would often be the hallmark of iniquity which negated the privilege (see [76], [93] of the judgment). (2) It seemed self-evident that rights pursuant to art 6 of the Convention could not be invoked to protect communications in furtherance of a purpose which was the very opposite of securing a fair trial, namely the perversion of the course of justice by concealment, perjury and the defiance of court orders (see [97] of the judgment).
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The order sought by the bank did carry a real prospect of yielding valuable material to assist in enforcement of the orders of the court. The interference with art 8 of the Convention was necessary for that legitimate aim and was proportionate. The solicitors had been unwittingly used as an instrument to pursue a strategy of concealment and deceit which had involved perjury, forgery and contempt, and which, had they known of it, they would have been unable to pursue on A’s behalf. It was an abuse of the normal relationship between solicitor and client to engage the solicitors in order to effect such a strategy and there could be no confidence in communications by which a client sought to further such a strategy whilst trying to keep the solicitor in the dark about it. The quality of confidence had been equally negated by the solicitors having been used as A’s instrument in seeking to achieve the purpose of a conspiracy to pervert the course of justice (which it was not suggested that the solicitors had connived to do). There was at least a very strong prima facie case that A’s strategy in relation to his assets was one which brought relevant communications within the iniquity exception. Those relevant communications included all those which limited them to communications that concerned or contained information about current and former assets. Anything which was supplied to the solicitors, or that passed between solicitor and client, which might cast light on A’s assets and his dealings with those assets, could properly be said to have arisen in furtherance of the abusive engagement of the solicitors to be an instrument of an iniquitous strategy in relation to all the assets. The conclusion that there was a strong prima facie case of iniquity in relation to the asset strategy was not a conclusion that disclosure should be ordered as there remained the issue of the exercise of discretion (see [96], [99], [103], [109] of the judgment). (3) Insofar as communications related to assets which A had chosen not to disclose, disclosure of the communications could not engage the privilege against self incrimination, which had not been invoked in relation to those assets. Insofar as communications related to assets which it had been part of the iniquitous strategy to conceal, lie about and transfer in breach of the freezing order, the communications could not have been the result of the compulsive orders of the court. What mattered was whether the creation of the document which contained or evidenced the communication in question had been compelled by a relevant order of the court. It was not sufficient if such an order merely provided the occasion or motive for its creation. If the solicitors held documents which might cast light on assets which A had not disclosed, or might provide further undisclosed information into assets which had been disclosed, they had not been brought into existence in response to the compulsive effect of the court’s disclosure orders, but rather as part of a strategy designed to avoid compliance with such orders (see [117] of the judgment).
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Sociedade Nacional de Combustiveis de Angola UEE v Lundqvist [1990] 3 All ER 283 applied. (4) There was a real prospect of material being disclosed in response to a disclosure order which made the complex and expensive exercise involved proportionate. First, it was reasonable to suppose that A or S would have included in a communication to their solicitors greater information in relation to a disclosed asset than the bank currently held, which would assist the bank in enforcement, either because it cast light on company structures and underlying assets which A retained, or because it assisted in tracing assets into new structures. Secondly, given the vast web of companies used by A, it was not fanciful to suppose that, despite the strategy being to use the solicitors to conceal assets, there would be references in communications with them to assets which were not disclosed. Thirdly, disclosure had been ordered in previous proceedings but not made. It was possible that the acting solicitors held documents which would respond to such disclosure order. Fourthly, A’s solicitors in the present proceedings were being funded to conduct the litigation by a company which there was good reason to believe might be beneficially held by A. There had to have been investigation of that company by the solicitors under regulatory requirements and to have satisfied themselves that there would be no breach of the freezing order. Fifthly, the scale and expense of the exercise had to be judged against the scale of the litigation and the sums at stake. Given the sums of money which the bank alleged A had stolen and the value of some of the assets already identified, a single company or single asset might be worth tens or hundreds of millions of dollars as against the solicitors’ estimate that the disclosure exercise would cost £2.5m (see [123]-[130] of the judgment). Accordingly, the bank’s disclosure application would be allowed (see [133] of the judgment).
Protection from Harassment Act 1997 Fox v Hall [2014] EWHC 2747 (QB) The claimant claimed that the defendant was liable to him by way of assignment in respect of claims arising under an agreement made as long ago as March 2002 (the Wilson agreement). The manner in which the defendant contended that the claimant had gone about seeking to enforce those claims had been the subject of
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an earlier action brought by the defendant against the claimant under s 3 of the Protection from Harassment Act 1997 (the 1997 Act) in which, after a three day trial, the trial judge found against the defendant (see Michael Hall v Kevin Fox[2012] All ER (D) 88 (Aug)). In turn, the manner in which the defendant sought to defend himself against what he regarded as harassment by the claimant was the subject of the instant action in which the claimant sought damages under the 1997 Act against the defendant for harassment. The defendant, as well as defending the claim, counterclaimed for a declaration that he had no liability to the claimant in respect of the claims made under the Wilson Agreement. Finally, by amendment to the particulars of claim the claimant responded to the counterclaim by including those claims in his action. There were therefore, two separate claims in the action, the first being the claimant’s claims under the Wilson Agreement and the second being his claim for harassment. Some of the conduct relied on by the claimant in relation to the harassment action related to the previous harassment action. In seeking to prove harassment, the claimant sought to rely on the conduct of others, two were former employees. The issues were, inter alia:
(i)
whether the defendant was a contracting party under the Wilson
agreement;
(ii)
whether the claimant had made out his claim in harassment.
The claim would be dismissed. (1) There was no basis for the defendant having any liability to the claimant on the basis contended for or on any basis. It followed that the claims made by the claimant against the defendant under the Wilson agreement and under the assignment had to be dismissed and the defendant was entitled to the declarations sought in the counterclaim (see [109] of the judgment). (2) Section 1 of the 1997 Act contained a general prohibition against a person pursuing a course of conduct which amounted to harassment and which that person knew or ought to have known amounted to harassment. A course of conduct which amounted to harassment was a criminal offence under s 2 and also gave rise to civil liability under s 3. It followed that the course of conduct had to be grave before the criminal offence or tort of harassment was proved, since the only difference between the criminal offence and the tort was the burden of proof. Things had to be fairly severe before the law, civil or criminal, would intervene. It was clear that, as a matter of law, it was possible for litigation to constitute harassment (see [110], [114] of the judgment).
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On the evidence, none of the individual allegations constituted harassment. Even if the court was to agglomerate them all together and to consider together all of those allegations which were capable as a matter of law of amounting to harassment, the court would still not be convinced that they demonstrated a course of conduct amounting to harassment so as to found civil liability. In the circumstances the claim for harassment failed, and had to be dismissed (see [123], [130], [152], [153] of the judgment).  
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Section 10 October 2014
Part 36 –Withdrawal of Offer Evans v Royal Wolverhampton Hospitals NHS Foundation Trust [2014] EWHC 3185 (QB), [2014] All ER (D) 86 (Oct) There was a claim for damages for personal injury allegedly caused by a delay in treatment of the claimant at the defendant’s hospital. Following a settlement meeting, by a letter dated 3 July 2014, the defendant made an offer under CPR 36 to settle the claim by paying a gross sum of £325,000. On 23 July 2014, at 11.25am the defendant’s solicitors served by fax on the claimant’s solicitors a notice of withdrawal of the defendant’s Pt 36 offer. At 12.45pm on the same day the claimant’s solicitors served on the defendant’s solicitors by fax a notice of acceptance of the defendant’s Pt 36 offer. Both of the notices were served before the expiry of the 21 day relevant period referred to in CPR 36.3(5). The effectiveness of the claimant’s notice of acceptance, depended on whether the defendant was subsequently given permission by the court for the withdrawal of its offer. Unknown to the claimant, the defendant had on 24 July 2014 issued an application for permission to withdraw its Pt 36 offer. No notice of the application was served on or given to the claimant. Permission was given by the judge. On 13 August 2014, the claimant received a copy of the ex parte order. However, the claimant was not served with the application notice or the evidence which had been relied on in support of the defendant’s application. On 14 August 2014, the claimant issued an application under CPR 23.10 to have the ex parte order set aside and also seeking an order for a copy of the defendant’s application notice dated 24 July 2014 and evidence in support to be served on the claimant. On 23 September 2014, a judge decided as a preliminary issue the question of whether the court had the jurisdiction to permit the defendant to withdraw its Pt 36 offer after the claimant had accepted it within the 21 day relevant period. He held that the court did have such jurisdiction. He also made an order that
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the remaining questions be answered as to whether: (a) the claimant was entitled to be provided with the notice of application and supporting evidence filed by the defendant in support of its application dated 24 July 2014 to withdraw the Pt 36 offer; (b) the court should permit the defendant to withdraw its offer; and (c) the action should be stayed until 7 November 2014 on he defendant’s application for an adjournment. The issue was whether a party who required the court’s permission to withdraw a Pt 36 offer might be granted such permission on the basis of information and for reasons not disclosed to the party to whom the offer was made. The claimant’s primary argument was that the procedure which the defendant had invited the court to follow in the case was contrary to natural justice and was impermissible as a matter of law. The court ruled: Adherence to the principle of natural justice was not an optional feature of litigation from which a court had power to derogate because it considered that in the particular circumstances the need to follow a fair procedure was outweighed by a conflicting public or private interest. Subject only to certain established and tightly defined exceptions, the right to participate in proceedings in accordance with the principle of natural justice was absolute. Whenever a court was deciding a question of substantive legal right as between the parties to the litigation, it was not open to the court to introduce a special procedure (see [29] of the judgment). It was not permissible to allow the defendant to withdraw its Pt 36 offer and to set aside the claimant’s purported acceptance of that offer on an application made without notice to the claimant, and the ex parte order dated 7 August 2014 had therefore be set aside. The defendant could not rely in opposition to the claimant’s application to enter judgment or in support of a request to adjourn the hearing on evidence or arguments not disclosed to the claimant and to which the claimant has no opportunity to respond. The defendant could not avoid that conclusion by requesting an adjournment in circumstances where no evidence had been served and no reasons had been disclosed in support of that request. It followed that, unless the defendant served the evidence and disclosed the arguments on which it wished to rely in opposition to the claimant’s application forthwith, the claimant was entitled to enter judgment pursuant to CPR 36.11(7) (see [48], [55] of the judgment). The only new circumstances which could make it just to permit the party to withdraw its offer before the expiry of the relevant period were circumstances which the offeror was able and willing to make known to the offeree at the time of serving notice of withdrawal (see [54] of the judgment).
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Amendment Macleod v Mears Ltd [2014] EWHC 3140 (QB), [2014] All ER (D) 88 (Oct) The court previously gave judgment, finding that there was a contractual agreement made between the parties, but that the agreement was that a bonus would be provided to the claimant’s team, rather than to him personally (see [2014] All ER (D) 105 (Jul)). The present proceedings concerned the matters consequential upon that judgment. The issues for determination included:
(i)
whether the claim as pleaded included a claim for a share in a bonus pool
or if it only claimed an individual bonus of a specified sum due personally;
and
(ii)
whether the claimant should be granted permission to amend his claim to include a claim for a share in a bonus pool as pleaded in initial and
further amendments. The court ruled: (1) A claim made for part of a pool bonus was different to a claim for personal entitlement to a bonus. Therefore, it was necessary for the claimant to amend if he wished to pursue a claim on the basis of an entitlement to, or damages for, failing to pay from a pooled bonus (see [12], [13] of the judgment). (2) The initial amendments had not covered a claim for a share in a pool bonus and, therefore, the proposed initial amendment should be refused on that ground alone. The further amendments identified a different way of putting the case which was premised on being entitled to a share in the pool bonus or to damages for failing to set up the pool bonus and being paid out appropriately. Balancing all the various factors, including lateness and consequential prejudice to the defendant, the present was an appropriate case for permission to amend to be granted (see [16], [20], [45] of the judgment).
Service out of the Jurisdiction Surrey (UK) Ltd v Mazandaran Wood & Paper Industries [2014] EWHC 3165 (Comm), [2014] All ER (D) 87 (Oct) The claimant advanced claims in relation to contracts allegedly entered into by it as seller and the defendant as buyer for the sale and shipment from Russia, China
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and Chile to Iran of wood products for the manufacture of paper at the defendant’s paper mill. The judge granted the claimant leave to serve the proceedings out of the jurisdiction and other related relief. The defendant sought to set aside the order. The defendant contended that it had never entered into any contracts with the claimant, but had contracted with another company (Lignum). The claimant contended that there could be no doubt that it was the contracting party with the defendant, rather than Lignum. In particular, it relied on evidence that it had sent its standard terms and conditions, which had specifically referred to it. The application would be allowed. The claimant’s name, or even any less complete or accurate version of it, appeared nowhere in any of the documents admittedly sent and received between the parties until long after the contracts had been formed and had come to an end. Neither the claimant’s own evidence nor the contemporaneous documents began to prove to the requisite standard that the claimant had been the defendant’s contracting counter-party. The claimant fell far short of showing that it had the better argument with regard to the terms and conditions. Accordingly, the claimant had failed to show the better argument that it had been a contracting party. That conclusion was fatal to the claimant’s position on the application (see [14], [16], [17] of the judgment). The order for service out of the jurisdiction had to be set aside (see [47] of the judgment).
Practice and Procedure Polypearl Ltd v E.On Energy Solutions Ltd [2014] EWHC 3045 (QB), [2014] All ER (D) 31 (Oct) The claimant was a company engaged in the business of cavity wall insulation and the manufacture and supply of polystyrene bead and adhesive. The defendant was a supplier of, amongst other things, electricity. The parties entered into two written agreements, a master agreement (the master agreement) containing general terms and conditions and an insulation scheme event transaction document (the document). The claimant contended that under the terms of the document the defendant was obliged to purchase 153,000 m3 products at £44.44 per m3 during the contract period and in fact only 39,295 m3 of products had been purchased leaving a shortfall of 113,705 m3. It contended that the defendant was, therefore, in breach of contract in failing to purchase the shortfall and that as a result it had suffered significant loss. The defendant did nor accept that there was any obligation to purchase the products as alleged and denied that it was in breach of the document or at all. Furthermore, it sought to rely on, inter alia, cll 10.1 of the
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master agreement which excluded liability for indirect losses and limited liability for direct losses to £1,000,000. Clause 10.1 read: ‘Neither party will be liable to the other for any indirect or consequential loss, (both of which include, without limitation, pure economic loss, loss of profit, loss of business, depletion of goodwill and like loss) howsoever caused (including as a result of negligence) under this Agreement, except in so far as it relates to personal injury or death caused by negligence’. The claimant denied that those mentioned clauses limited or excluded liability for the losses it suffered as a result of the breach of the document. Accordingly there was ordered a trial of certain preliminary issues. The main issue was whether cl 10.1 of the master agreement excluded liability for the claimants losses. The claimant submitted that the starting point was that a claim for loss of profit arising out of the defendant’s failure to purchase product was damage occurring naturally. Thus, if and in so far as the loss was within cl 10.1, it could only be because the words were deeming the loss of profit to be ‘indirect’ loss. He submitted that if that was the correct construction it begged the question as to what ‘direct’ loss could be such as to fall within cl 10.7. and that the most obvious direct loss from a failure to purchase was the loss of profit on those purchases. The court ruled: The general principles of construction of a contract were well established. In relation to exclusion and limitation of liability clauses specifically, it was generally for the party seeking to rely on the exemption or limitation of liability clause. If there was an exception to the exemption, then the burden rested upon the claimant to establish that his case fell within the exception. That form however was not conclusive and the matter was in every case a question of construction of the instrument as a whole (see [25], [32] of the judgment). In the light of the authorities, the preliminary issues had to be determined as a matter of construction of cl 10.1 of the master agreement. The views of different judges on the construction of differently worded clauses were of limited assistance. The wording of cl 10.1 was ambiguous. The construction contended for by the claimant was more consistent with business common sense. It was unlikely that a business man would wish to exclude direct loss (see [62], [64], [68] of the judgment). Clause 10.1 of the master agreement had not excluded liability for the claimants losses (see [69] of the judgment).
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Costs Refusal to Mediate Northrop Grumman Mission Systems Europe Ltd v BAE Systems (Al Diriyah C4I) Ltd [2014] EWHC 3148 (TCC), [2014] All ER (D) 66 (Oct) The court gave judgment upholding the defendant’s contention that on a true construction of the licence agreement, the defendant was entitled to terminate that agreement for convenience under the provisions of cl 10.4 of the enabling agreement which governed the licence agreement (see [2014] All ER (D) 53 (Oct)). In relation to costs, the claimant accepted the principle that the defendant was entitled to its costs to be assessed on a standard basis if not agreed, but contended that those costs should be reduced by 50% by reason of the defendant’s unreasonable refusal to mediate the dispute. The defendant challenged both the premise and the appropriateness of any reduction in its costs in this case. The defendant had made an admissible offer to settle with a letter of 20 January 2014, which the claimant had not accepted and had not been successful in bettering. It was submitted, inter alia, that the defendant had reasonably concluded that the case was not a borderline case and that had justified the refusal of the defendant to mediate. Consideration was given to CPR 44.2(4)(c). The court ruled: Where a party to a dispute, which there were reasonable prospects of successfully resolving by mediation, rejected mediation on grounds which were not strong enough to justify not mediating, then that conduct would generally be unreasonable. The refusal to mediate was not the only factor to take into account. CPR 44.2(4)(c) pointed out that one of the circumstances to be taken into account in deciding what order to make in relation to costs included ‘any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply’ (see [72], [73] of the judgment). The instant case was a case susceptible to mediation and mediation had reasonable prospects of success. The defendant reasonably considered that it had a strong case. Nevertheless, it had been unreasonable for the defendant to reject the claimant’s offer to mediate. Whilst the defendant’s view of their claim provided some justification for not mediating, there were other factors which showed that it was unreasonable for the defendant not to mediate the dispute. The letter of 20 January 2014 was an admissible offer. The existence of the letter was a relevant factor that BAE made an offer which NGM was not successful in bettering. NGM’s conduct in not accepting that offer was similarly a matter to be taken into account. Taking
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those two aspects of conduct into account where BAE had been, overall, the successful party, the fair and just outcome should be that neither party’s conduct should be taken into account to modify what would otherwise be the general rule on costs (see [71], [73]-[75] of the judgment). The appropriate order was that NGM should pay BAE its costs, to be assessed on a standard basis, if not agreed, without any reduction (see [76] of the judgment).
Costs Coward v Phaestos Ltd [2014] EWCA Civ 1256, [2014] All ER (D) 17 (Oct) In 1992, the claimant and EA, who were then married, together started a quantitative trading business which developed into a highly successful enterprise. Over the years the business was carried on through a number of partnerships and companies, including the defendants (IKOS). In 2009, the marriage and business relationship between the claimant and EA broke up acrimoniously. The present proceedings were commenced by the claimant in August 2010. He sought, amongst other things, declarations that he was the owner, or in some instances the co-owner, of the copyright in software being used by IKOS and the owner of database rights in associated databases. In May 2013, the claims were dismissed. On the counterclaim by IKOS, the judge, amongst other things, made declarations that the software and databases used by it were not the subject of any copyright or database rights owner by the claimant and that IKOS was, without his consent, entitled to use, maintain and update the software and databases. The parties had incurred costs of £19m. IKOS applied for its costs of the action. The claimant resisted that application, seeking an order for costs in his favour, principally on the basis that by a letter, dated 30 July 2012 and marked ‘without prejudice save as to costs’ (the Calderbank offer), IKOS had been offered substantially all that it had achieved at trial. In making her award, the judge took the view that overall IKOS had clearly been the successful party, making a discount only to reflect partial success on the counterclaim. The claimant appealed. In respect of the Calderbank offer, the claimant submitted that an undertaking he had provided in place of an injunction was the only feature of the order which could arguably be regarded as a substantial improvement over the terms of the Calderbank offer. Secondly, more generally, he submitted that the judge had failed to have regard to the disparity between the liability to pay a very large sum by way of costs to IKOS and the limited extent to which the order at trial represented an improvement on the terms of the Calderbank offer. He submitted that the approach adopted by 122
the courts in Walker Construction (UK) Ltd v Quayside Homes Ltd ([2014] All ER (D) 71 (Feb)) (Walker Construction) and Fulham Leisure Holdings Ltd v Nicholson Graham & Jones (a firm) ([2008] All ER (D) 408 (Feb)) (Fulham Leisure Holdings) pointed to the right approach in the present case. Thirdly, separately from the effects of the Calderbank offer, the claimant appealed specifically against the apportionment of the costs of IKOS’s counterclaim. IKOS submitted that the effect of a Calderbank offer was to be assessed by analogy with the terms of CPR 36.14(1A) and that the approach in all cases where there had been an offer to settle, whether under CPR Pt 36 or in Calderbank terms, should be the same. Rather than adopting the more ‘open-textured’ approach to the application of a ‘more advantageous’ test adopted in Carver v BAA plc ([2008] 3 All ER 911) the court should adopt the more precise, strict approach exemplified by CPR 36.14(1A). The appeal would be dismissed. (1) The judge had rightly identified three aspects of the final order which had represented substantial improvements on the Calderbank offer. She had carefully considered the Calderbank offer and the submissions made on behalf of the claimant but, by reason of those differences, she had concluded that it would not justify a departure from the usual rule that, if there was to be any order as to costs, the costs should be paid by the unsuccessful party. That exercise of the discretion vested in her by the rules could not be faulted (see [69] of the judgment). (2) There was no analogy to be drawn between Walker Construction or Fulham Leisure Holdings and the present case. First, in both those cases, the claimants had recovered only a small fraction of their claims. There was no parallel with the present case, where IKOS had succeeded entirely in its defence of the claim and to a very substantial extent in its counterclaim. Equally, there was no parallel between the offers made in those cases and the Calderbank offer in the present case (see [82], [83] of the judgment). (3) As to the apportionment of costs, there was no further evidence before the court than was before the judge and, given her far greater understanding of the detail of the issues in the case, there was no basis for challenging her estimate, which in any event appeared reasonable on the evidence before her. The logic of the judge’s approach could not be faulted (see [86], [87] of the judgment). (4) It would be contrary to the express terms of CPR Pt 44 to read into it a rigid approach drawn by analogy from CPR 36.14(1A). CPR Pt 36 and CPR Pt 44 were separate regimes with separate purposes. While CPR Pt 36 was highly prescriptive in its terms, and highly restrictive of the exercise of any discretion by the court in any
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particular case, CPR Pt 44 conferred on the court a discretion in almost the widest possible terms. CPR Pt 44 contained no rules as to the way in which the court was to have regard to offers. In particular, and most obviously, even in the case of a money claim, there was no provision equivalent to CPR 36.14(1A). There was no warrant in the terms of CPR Pt 44 for applying, by analogy or otherwise, a similarly rigid test (see [93], [94], [98], [102] of the judgment).
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Section 11 November 2014
Summary Judgment Deutsche Bank AG v Unitech Global Ltd [2014] EWHC 3117 (Comm), [2014] All ER (D) 55 (Oct) The proceedings concerned two conjoined actions which raised common issues. The claimant banks brought claims against the defendant borrowers in which they sought to recover sums due under loan agreements and swap agreements. The defendants sought to amend their defences to plead a number of new defences, namely amending their existing plea that the claimants misrepresented the suitability of the swap. The remedy sought was rescission. The claimants contended:
(i)
that none of the new defences had any real prospect of success and that
permission to amend should be refused; and
that the existing defences had no prospect of success and that they were
(ii)
entitled to summary judgment in respect of them.
The court relied upon the earlier decision of Cooke J (see [2013] EWHC 471 (Comm)) as creating an issue estoppel as to the non-availability of rescission and, in consequence: (i) refused to grant the defendants permission to amend their pleading to raise a claim to rescission (ruling (i)); and (ii) granted the claimants summary judgment for almost US$177.3m (ruling (ii)). However, in light of a subsequent decision by the Court of Appeal, it became apparent that there was no such issue estoppel (see [2013] All ER (D) 100 (Nov)). On the contrary, the issue estoppel was to the contrary effect, namely, that the remedy of rescission was available to the defendants. The parties returned to the court in order for it to decide how the matter would proceed in the light of those changed circumstances. It was common ground that, following the Court of Appeal’s judgment, rulings (i) and (ii) could not stand and, accordingly, would be set aside.

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The claimants submitted that the court, in response to the summary judgment application, should, first, make a conditional order, as contemplated by CPR PD 24, para 5, that US$120m be paid into court and that if it was not so paid, the borrowers’ defence would be struck out. That was because, even if the borrowers did succeed in establishing a misrepresentation by the bank, the court would only order rescission on terms that the borrowers repaid the principal and interest, calculated as US$120m. Secondly, and in the alternative, the court should impose a condition that a sum of money be paid into court pursuant to CPR 3.1(3). Thirdly, and in the alternative, the court could and should order an interim payment of US$120m to the bank, pursuant to CPR 25.7(1)(c). The court ruled: (1) In light of the judgment of the Court of Appeal, the borrowers could no longer be regarded as having no real prospect of establishing their defence and, moreover, one which could not be said to be ‘improbable’. The application for summary judgment should therefore be dismissed and it would not be appropriate to order a conditional payment. That result could be said to be unsatisfactory because the truth was that, even if the borrower made good its case for rescission, it could not avoid being required by the court to pay US$120m as the price of obtaining an order for rescission of the loan agreement. However, CPR Pt 24 did not provide for a conditional order being made in the circumstances of the present case. That point had not been before the Court of Appeal (see [9], [10] of the judgment). (2) For the reasons which had already been given, there was no proper basis upon which an order for payment in the sum of US$120m could be made pursuant to CPR Pt 24. Applying settled authority, in those circumstances, it would be wrong, in principle, to set aside the summary judgment on terms that US$120m was paid into court. Such an order could not have been made under CPR Pt 24. If CPR Pt 24 did not assist, then the case management powers in CPR Pt 3 could not come to the aid of the bank. That would involve circumventing the requirements of CPR Pt 24 (see [13], [14] of the judgment). (3) It could not properly be said that, if the bank’s claim to sums due under the loan agreement was dismissed because the defence of rescission succeeded on terms that the borrower paid US$120m to the bank, the bank had ‘obtained judgment’ for US$120m. When one spoke of a claimant obtaining judgment, at any rate in the context of the CPR, that ordinarily meant that the judgment gave effect to the cause of action, which had been alleged by the claimant. A judgment that the bank’s claim failed and that the defence succeeded on terms that US$120m be
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paid to the bank would not ordinarily be regarded as the bank obtaining judgment for that sum. Therefore, an order for an interim payment pursuant to CPR 25.7 would not be ordered. As with the claimant’s other arguments, that result could be said to be unsatisfactory because the borrower could not achieve a better result than having to pay the bank a minimum of US$120m. However, CPR 25.7 could not be given an interpretation which it could not properly bear, simply to give effect to that reality (see [16], [17] of the judgment).
Amendment Interface Europe Ltd v Premier Hank Dyers Ltd [2014] EWHC 2610 (QB), [2014] All ER (D) 98 (Sep) The defendant company (Premier) dyed yarn for use in the carpet industry. The third party (Airedale) manufactured dyestuffs for natural and man-made fibres. The claimant company (Interface) was a United Kingdom company within a global group carrying on the manufacture and supply of modular flowing and carpet tiles. In 2007/2008, Premier dyed yarn with which it had been supplied by Interface, who then used that dyed yarn in the manufacture of carpet tiles, which it then supplied to another company in the Interface group, which then on supplied them. In February 2010, Interface informed Premier that the carpet tiles had turned from charcoal grey to a greenish colour. In April, Airedale were put on formal notice that Premier considered that the dyestuffs supplied by Airedale for the dyeing of yarn had failed to meet the required standard. In 2013, Premier learnt that the problem was attributable to Airedale’s negligent advice or negligent omission to advise as to the colour fastness of the dye when applied to nylon and exposed to light. Interface brought proceedings against Premier for breach of contract, which were settled. Before the settlement was achieved, Premier brought CPR Pt 20 proceedings against Airedale, limited to breach of contract. In the present proceedings, Premier applied for permission to amend its CPR Pt 20 particulars of claim, including to introduce a claim in negligence. The third party opposed the amendments insofar as they introduced the negligence claim on the basis that such a claim was statute-barred, pursuant to s 2 of the Limitation Act 1980 and Premier could not satisfy the criteria in CPR 17.4(2).
 The issues for determination were:
(i)
whether the negligence claim was statute-barred;
(ii)
whether the negligence claim was statute-barred under s 14A of the Act;
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(iii) whether the criteria in CPR 17.4(2) were met; and
(iv) whether the discretion to permit the amendment should be exercised.
The application would be allowed. (1) Premier’s cause of action, if any, against Airedale had accrued at the latest when Premier had supplied dyed yarn to Interface and not simply when the carpet tiles had changed colour. Premier’s legal position had changed, at the latest, when it had supplied the unsatisfactory dyed yarn. That was because, at that point, Premier had become a contract breaker whose rights under its contract with Interface had been devalued by the extent to which Interface’s contract with its customers had been devalued. Accordingly, the primary limitation period had expired by the date of the hearing of the application (see [97], [106], [107] of the judgment). (2) The claim was statute-barred, even under s 14A of the Act. It did not matter that, in 2010, when the problem had first surfaced, it had not been clear why the problem had come about and that that conundrum had not actually been resolved until 2013. What mattered was that, in 2010, Premier had known that it had been facing a claim in respect of the quality of its dyeing process when that had taken place using Airedale products and in reliance on their guidance. That had to furnish Premier with the necessary knowledge of its claim against Airedale in the sense of giving it sufficient confidence to justify embarking on the preliminaries to the issue of proceedings (see [146] of the judgment). (3) The new claim framed in negligence arose out of substantially the same facts as the current claim, as defined in the current statements of case. The allegation of negligence was based upon a contention that the close relationship gave rise to a duty of care. The nature of the relationship was already a pleaded matter. The inference of negligence was drawn from facts already in play. That the proposed pleadings introduced new facts was not overlooked. In any event, the point was that the facts did not need to be the same; they needed to be substantially the same. They were and so there was power to permit the amendment (see [169]-[171] of the judgment). (4) Taking all factors into account, Premier would be permitted to amend, pursuant to CPR 17.4(2). The factors against the exercise of discretion were outweighed by the findings that the factual matrix for both causes of action was substantially the same, the new claim was not more than a year or so out of time, it did not extend the value of the claim and investigations that the new claim brought were not significantly different to those which would be necessary in any event (see [180], [182] of the judgment). 129
Standard of Proof Genesisuk.net Ltd v Allianz Insurance Ltd [2014] EWHC 3676 (QB), [2014] All ER (D) 132 (Nov) On the night of the 26 February, 2011, a fire occurred at premises owned by the claimant company. The outside security cameras showed a man starting a fire at the front of the premises. It was common ground that diesel had been introduced to the premises to assist it catching fire. The defendant company, which insured the claimant, avoided the policy, on the grounds that the claimant’s director, R, had either set the fire or deliberately procured the setting of it. The claimant commenced proceedings, seeking to recover losses under the policy. The issue was whether, on the balance of probabilities, R, as the director of the claimant, had caused the premises to be set alight. A number of factors were considered by the court, including:
(i)
whether R had not been truthful;
(ii)
whether R had changed the mode of the CCTV prior to the fire;
(iii) whether R had taken goods from the premises prior to the fire, presumably to
avoid them being burned; and
(iv) whether R had been involved in the spreading of diesel at the premises
before the fire. The claim would be dismissed.
On the evidence, R’s evidence was not reliable. While the fact that he had been untruthful about certain matters did not mean that he had caused the fire, it did throw doubt on the truth of what he had said about the central issues. He had changed the mode of the CCTV and had taken things from the premises prior to the fire. His interference with the CCTV had been done to conceal the spreading of diesel. In reality, nobody else could have done that. Overall, the defendant had clearly shown to the appropriate standard that R, or someone acting on his behalf, had deliberately caused the fire (see [106] of the judgment).
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Contractual Obligation Hodges v Aegis Defence Services (BVI) Ltd [2014] EWCA Civ 1449, [2014] All ER (D) 127 (Nov) The claimant’s late husband (C) had been engaged by the defendant company, pursuant to a written contract, as a ‘security escort team’ member for a term of one year, subject to an option to renew on both sides (the contract). The contract stated that it was a contract for services and not a contract of employment. C’s function was to provide support and security escort to United States personnel based in Iraq. The contract expressly stated that deployment involved working in a high risk, hostile environment. The annual fee for C’s services was US$150,789. In the second year of the contract, C was fatally injured in the course of carrying out his duties and died. The contract had required the defendant to insure C against death or injury while performing services under it (for the relevant contractual provisions see [9]-[12] of the judgment). Under cl 7 of the contract, the summary of minimum levels of insurance cover gave a guideline sum of US$200,000 payable in the event of death. Under cl 4 of the general terms and conditions of engagement (the general conditions) which were incorporated into the contract, full details of the insurance cover available were stated to be contained in the relevant policy documents which prevailed at all times. The clause further stated that the person engaged would normally be covered for personal accident (PA) and, as applicable, Defense Base Act (DBA) insurance during the period of engagement. Under the PA cover policy, the stipulated death benefit was US$150,000, but an endorsement to that policy provided that accidental death benefit was increased to US$200,000 in the event that next of kin were not entitled to remuneration under the DBA insurance policy that was in place and which covered the defendant’s personnel. In the present case, the claimant was entitled to recover under the DBA policy. Following C’s death, a sum of US$150,000 was paid, divided as to 80% to the claimant and 20% to C’s father, in accordance with C’s nomination. Further periodical payments were made to the claimant which resulted in a total of some US$362,500 having been paid to the claimant by the date of the trial. An issue arose regarding the claimant’s entitlement under the terms of the contract. She contended that, on the true construction of the contract, the defendant was required to pay to C’s nominee a minimum lump sum of US$200,000. As she had only received a proportionate share of US$150,000, she was entitled to a further proportionate share of the additional US$50,000 plus interest. The judge held, inter alia, that she was not entitled to a minimum lump sum of US$200,000 under the insurance provisions contained in the contractual documents.
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Her claim was dismissed and she appealed. The issue for determination was, inter alia, whether, on the true construction of the contract, the claimant was entitled to be paid US$200,000 as a lump sum from one insurer on C’s death. The appeal would be dismissed (Vos LJ dissenting). (per McCombe LJ) On the true construction of the contract, the cover to have been provided was that provided under the policies themselves whose terms were expressly to prevail at all times. Further, none of the contractual documents or the policies indicated that a minimum lump sum of US$200,000 would be payable. C, as the insured, and any person who claimed through him could only have relied upon the benefits conferred by the policies, which were the lump sums provided by them (in varying circumstances) and the benefits payable under the DBA policy. Those benefits appeared to be clear in the events that had happened. The claimant had duly received benefits in excess of US$200,000 and was not, therefore, entitled to more. Further, cl 7 of the contract had made no reference to any payment being a lump sum. The summary of benefits in that clause was said to be for guidance only. Clause 4 of the general conditions stated clearly that the full details of cover were available in the policy documents which were to prevail. Under those policies, the claimant had received benefits in excess of the guidance minimum sum (see [25], [27] of the judgment). (per Longmore LJ) Clause 4 of the general conditions had said nothing about how much the insurance would be for or how it would be divided up. It had merely stated that the contract would give a summary of what insurance would be available to the consultant, namely, C. Clause 7 of the contract stated that US$200,000 was to be payable on death, but it did not state how the insurance would be divided up if there were two insurers. Nor did it state that the sum would be paid in one indivisible lump sum. Provided that the claimant had received US$200,000 in all, there was no breach of contract by the defendant (see [48], [49] of the judgment).
Relief from Sanctions Lord Chancellor v Taylor Willcocks Solicitors [2014] EWHC 3664 (QB), [2014] All ER (D) 84 (Nov) The nature of the appellant’s claim related to money paid by the Legal Aid Board as interim payments on account under two legal aid certificates issued to clients of the second defendant, a firm of solicitors, the assets and business of which were acquired by the first defendant. The master refused the claimant’s application to extend time for service of the particulars of claim. In his judgment, the master referred to the provisions in CPR 3.9 as ‘paramount’. There was a requirement for ‘litigation to be conducted efficiently’, which meant ‘getting on with it’, particularly 132
if one was at the end of, or beyond the end of, the limitation period. Compliance with rules was also important. The master accepted that he had to look at all the circumstances of the case. However, no good reason had been advanced for the delay, which he found not to be trivial but ‘very, very much the opposite, very serious’. At the time the master considered the matter, he relied solely on the guidance in Mitchell v News Group Newspapers Ltd ([2014] 2 All ER 430) (Mitchell). The judgment in Denton and others v TH White Ltd and another; Decadent Vapours Ltd v Bevan and others; Utilise TDS Ltd v Davies and others (154 ConLR 1) (Denton) had not yet been handed down. The claimant appealed. It submitted that the master had erred in the exercise of his discretion to refuse to grant it relief from sanction. The appeal would be dismissed. The decision of the master was one that he had been entitled to reach. It had been within the generous ambit within which a reasonable disagreement was possible. It had not been wholly wrong. It had been a considered decision which had applied the Mitchell guidance correctly. It stood up to scrutiny, even when studied alongside the later, amplified Denton guidance. The master had had considerable knowledge and experience of CPR 3.9 and had had a full grasp of the Mitchell principles. Even without the benefit of the judgment in Denton, it was apparent that the master had conducted the three-stage test approach recommended in Denton. Factors (a) and (b) in CPR 3.9 had been stated to be ‘paramount’, but only in the context of ‘the overall circumstances of the case’. However, it was apparent from the judgment that the master had not applied factors (a) and (b) to the exclusion of all else. In that he had not, the difference between the nuanced approach in Denton of regarding factors (a) and (b) as having been of ‘particular importance’ rather than ‘of paramount importance’ was not significant against the full background of the case (see [71], [72] of the judgment).
Causation Reaney v University Hospital of North Staffordshire NHS Trust and another [2014] EWHC 3016 (QB), [2014] All ER (D) 153 (Sep) The defendants admitted the negligent exacerbation of the claimant’s T7 paraplegia by deep (grade 4) pressure sores with the consequent infection of the bone marrow, abnormal shortening of the muscle tissue of her legs and a hip dislocation. The Queen’s Bench Division considered the extent to which the claimant’s condition had been made worse and what damages should be paid. Applying the principle that a tortfeasor had to take his victim as he found him and make full compensation for their worsened condition, the court found 133
the defendants’ negligence had made the claimant’s position materially and significantly worse than it would have been but for that negligence. The focus of the argument in this case is how the court should approach the award of damages when there is an underlying injury, that was non-negligently caused, and the subsequent negligent injury dramatically increases the claimant’s needs. This case was complicated by the fact that the claimant had a very serious spinal injury which preceded the negligence and so the claimant started from a position of already needing and receiving care and assistance. The court had to determine what level of compensation was appropriate taking into account what the claimant had been receiving and what she now actually required. The claimant argued that the case should be approached on the basis of what the claimant was actually receiving by way of care and support prior to the negligence. Having taken that as the starting point the judge was invited to take the claimant from that position all the way to supporting her with the significant amount of care that she requires following the negligence. The defendants sought to say that that wasn’t the right approach and that the defendants should only ‘top-up’ the care that the claimant would otherwise have needed prior to that negligence. The defendants’ argument was that because of the paraplegia the claimant had, that everyone accepted was not negligently caused, she was always going to be someone who had significant care needs but those needs should not rest at the door of these defendants. Therefore the defendants invited the court to assess the claimant’s needs as a whole, give credit for the care that was being provided, take account of the care that she needed but was not being provided and thereafter only compensate the claimant for the additional care that arose because of the pressure sores. While the claimant was paraplegic before the pressure sores developed, she was only able to receive seven hours of care from the local authority and on top of that she received gratuitous care from her friends and family. After the negligence, the judge accepted that the claimant now needed 24-hour care, seven days a week, provided by two carers. The defendants said that it wasn’t fair that they should pay for this full care package because they were being asked to compensate for the underlying paraplegia and not simply for the pressure sores and the problems developing from there. When this was argued out the judge took a very practical view on the case. He said that he first of all needed to establish an objective ‘but for’ position and decide what her needs were ignoring the negligence. He then looked at the factual position of 134
what she was actually receiving—ie the seven hours and the family support—and thereafter, having heard the legal arguments from the defendants and the claimant, determine the appropriate level of compensation to meet the claimant’s needs. The claimant’s position was that it was a matter of fact the claimant was only able to receive seven hours of care plus the family support previously and now, as a consequence of the defendants’ negligence, she needed such an extreme amount of care and support and that the defendants should pay for that as a consequence of the negligence. The judge found in the claimant’s favour and said that was the correct approach to take. It wasn’t up to the defendants to ‘top-up’ what might otherwise or should have been in place as a consequence of the underlying injury. The consequence of the defendants’ negligence was that by injuring an already injured party, the defendants were responsible for the costs associated with the care package (and other associated expenses) that the claimant required. To injure someone who is already injured is more serious than to injure someone who starts from an uninjured position. The judge quoted the fact that it has long been established that if a person loses one eye, that is bad, but if they then go on to lose a second eye and they are rendered completely blind then the consequences are devastating.
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